Document:

EX-10.6

 

Exhibit 10.6

     This REGISTRATION RIGHTS AGREEMENT (the “Agreement”) dated as of June 30, 2005 is made
and entered into by and between American Real Estate Partners, L.P., a Delaware limited partnership
(the “Company”), and the other signatories listed hereto (each a “Holder” and collectively
the “Holders”). Capitalized terms used herein, but not otherwise defined shall have the
meaning set forth in the Amended and Restated Agreement of Limited Partnership of the Company (as
amended from time to time, the “Partnership Agreement”).

     WHEREAS, the Company contemplates the issuance to Holders (the “Issuance”) of
depositary units representing limited partnership interests the Company (“Depositary Units”);
and

     WHEREAS, the Holders desire, and the Company agrees to grant to the Holders, certain
registration rights with respect to the Depositary Units.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this
Agreement, and for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

GRANT OF REGISTRATION RIGHTS

          Section 1.1 RIGHTS GRANTED. The Company agrees that, upon consummation of the Issuance, the
Holders shall be entitled to the registration rights described in Article IV herein.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

          The Company hereby represents and warrants to the Holders as follows:

          Section 2.1 DUE FORMATION OF THE COMPANY. The Company is a limited partnership duly formed,
validly existing and in good standing under the Laws of the State of Delaware. The Company has
full organizational power and authority to execute and deliver this Agreement and to perform the
Company’s obligations hereunder and to consummate the transactions contemplated hereby.

          Section 2.2 AUTHORITY. The execution and delivery by the Company of this Agreement, and the
performance by such party of its obligations hereunder, have been duly and validly authorized by
the Board of Directors of its general partner, no other corporate

 

 

action on the part of the Company or its partners being necessary. This Agreement has been
duly and validly executed and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its terms.

          Section 2.3 CAPITAL STRUCTURE. The Depositary Units, when issued, will be duly authorized,
validly issued, fully paid and nonassessable.

          Section 2.4 NO CONFLICTS. The execution and delivery by the Company of this Agreement do not,
and the performance by the Company of its obligations under this Agreement and the consummation of
the transactions contemplated hereby will not:

               (a) conflict with or result in a violation or breach of any of the terms, conditions or
provisions of the organizational documents of the Company;

               (b) conflict with or result in a violation or breach of any term or provision of any Law or
Order applicable to the Company or any of its Assets and Properties (other than such conflicts,
violations or breaches (i) which will not in the aggregate adversely affect the validity or
enforceability of this Agreement or have a material adverse effect on the Business or Condition of
the Company or (ii) as would occur solely as a result of the identity or the legal or regulatory
status of the Holders or any of its Affiliates); or

               (c)(i) conflict with or result in a violation or breach of, (ii) constitute (with or without
notice or lapse of time or both) a default under, (iii) require the Company to obtain any consent,
approval or action of, make any filing with or give any notice to any Person as a result or under
the terms of, (iv) result in or give to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, or (v) result in the creation or imposition of
any Lien upon the Company or any of its Assets and Properties under, any
Contract or License to which the Company is a party or by which any of its Assets and Properties is
bound.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE HOLDERS

          Each of the Holders severally represents and warrants to the Company as follows:

          Section 3.1 ORGANIZATION OF THE HOLDERS. Such Holder is duly organized, validly existing
and in good standing under the Laws of the state of its organization. Such Holder is duly
authorized to execute and deliver this Agreement and to perform such Holder’s obligations
hereunder and to consummate the transactions contemplated hereby.

          Section 3.2 AUTHORITY. The execution and delivery by such Holder of this Agreement, and the
performance by such Holder of its obligations hereunder, have been duly and validly authorized,
no other action on the part of such Holder being necessary. This

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Agreement has been duly and validly executed and delivered by such Holder and constitutes
a legal, valid and binding obligation of the Holder enforceable against the Holder in
accordance with its terms.

          Section 3.3 NO CONFLICTS. The execution and delivery by such Holder of this
Agreement does not, the performance by such Holder of its obligations under this
Agreement and the consummation of the transactions contemplated hereby will not:

               (a) conflict with or result in a violation or breach of any of the terms, conditions or
provisions of its operating agreement (or other comparable organizational documents) of such
Holder;

               (b) conflict with or result in a violation or breach of any term or provision of any Law or
Order applicable to such Holder or any of its Assets and Properties (other than such conflicts,
violations or breaches (i) which will not in the aggregate adversely affect the validity or
enforceability of this Agreement or have a material adverse effect on the Business or Condition
of such Holder or (ii) as would occur solely as a result of the identity or the legal or
regulatory status of the Company or any of its Affiliates); or

               (c) (i) conflict with or result in a violation or breach of, (ii) constitute (with or without
notice or lapse of time or both) a default under, (iii) require such Holder to obtain any consent,
approval or action of, make any filing with or give any notice to any Person as a result or under
the terms of, (iv) result in or give to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, or (v) result in the creation or imposition of
any Lien upon such Holder or any of its Assets and Properties under, any Contract or License to
which such Holder is a party or by which any of its Assets and Properties is bound.

ARTICLE IV

COVENANTS OF THE COMPANY

          The Company covenants and agrees with the Holders that the Company will comply with the
covenants and provisions of this ARTICLE IV, except to the extent the Holders may otherwise
consent in writing:

          Section 4.1 PIGGY-BACK REGISTRATION. If at any time the Company shall determine to register
for its own account or the account of others under the Securities Act (including pursuant to a
demand for registration made by any Holder of Registrable Securities) any of its equity
securities, or warrants to purchase equity securities, other than on Form S-4 or Form S-8 or
their then equivalents relating to Depositary Units to be issued solely in connection with any
acquisition of any entity or business, it shall send to each Holder of Registrable Securities as
reflected on the books and records of or maintained on behalf of the Company,

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including each Holder who has the right to acquire, who is entitled to registration rights
under this SECTION 4.1 written notice of such determination and, if within fifteen (15) days after
receipt of such notice, such Holder shall so request in writing, the Company shall use its
reasonable efforts to include in such registration statement all or any part of the Registrable
Securities such Holder requests to be registered, except that if, in connection with any
underwritten public offering of the Company the managing underwriter shall impose a limitation on
the number of Units which may be included in the registration statement because, in its judgment,
such limitation is necessary to effect an orderly public distribution, then the Company shall be
obligated to include in such registration statement only such limited portion of the Registrable
Securities with respect to which such Holder has requested inclusion hereunder. Any exclusion of
Registrable Securities shall be made pro rata among the Holders seeking to include Registrable
Securities, in proportion to the number of Registrable Securities sought to be included by such
Holders; provided, however, that the Company shall not exclude any Registrable
Securities unless the Company has first excluded all outstanding securities which are not entitled
by right to inclusion of securities in such registration statement pursuant to this ARTICLE IV. No
incidental right under this SECTION 4.1 shall be construed to limit any registration required under
SECTION 4.2. The obligations of the Company to a Holder under this SECTION 4.1 may be waived only
by such Holder. Anything herein to the contrary notwithstanding, no other registration rights
(demand or piggy-back) with respect to any debt or equity securities shall be granted to any Person
without the consent of the Holders.

          Section 4.2 DEMAND REGISTRATION.

               (a) If at any time and from time to time after the date hereof Holders of a majority
(determined by capital account balance) of Registrable Securities owned by all Holders (the
“Required Holders”) shall notify the Company in writing that it or they intend to offer or cause
to be offered for public sale Registrable Securities held by such Holders which constitute at
least twenty percent (20%) of the Registrable Securities, then the Company will so notify all
Holders of Registrable Securities, including all Holders who have a right to acquire Registrable
Securities. Upon written request of any Holder given within fifteen (15) days after the receipt by
such Holder from the Company of such notification, the Company will use its best efforts to cause
such of the Registrable Securities as may be requested by any Holder thereof (including the Holder
or Holders giving the initial notice of intent to offer) to be registered under the Securities Act
as expeditiously as possible. In connection with any request by any Holder of Registrable
Securities for registration thereof pursuant to this SECTION 4.2, the Company shall have the right
(to be exercised not more than one time in any 365 day period) to defer the filing of a
registration statement with the Commission for up to 90 days after such filing would otherwise be
required hereunder if the Company shall furnish to the Holders requesting such registration a
certificate approved by the Board of Directors of the General Partner of the Company stating that,
in the good faith judgment of the Company, it would be materially detrimental to the interests of
the Company for such registration statement to be filed at such time.

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               The Company will not be obligated to effect more than two registrations pursuant to this
Section 4.2, provided that a request for registration will not count for the purposes of
this limitation if (i) the Required Holders determine in good faith to withdraw (prior to the
effective date of the registration statement relating to such request) the proposed registration
due to marketing or regulatory reasons, (ii) the registration statement relating to such
request is not declared effective within 180 days of the date such registration statement is first
filed with the Commission, (iii) prior to the sale of at least 90% of the Registrable Securities
included in the registration relating to such request, such registration is adversely affected by
any stop order, injunction or other order or requirement of the Commission or other governmental
agency or court for any reason and the Company fails to have such stop order, injunction or other
order or requirement removed, withdrawn or resolved to the Required Holders’ reasonable
satisfaction within 30 days of the date of such order, or (iv) the conditions to closing specified
in the underwriting agreement or purchase agreement entered into in connection with the
registration relating to such request are not satisfied (other than as a result of a material
default or breach thereunder by the Required Holders). Notwithstanding the foregoing, the Company
will pay all reasonable expenses in connection with any request for registration pursuant to
Section 4.2 regardless of whether or not such request counts toward the limitation set forth
above.

          Section 4.3 REGISTRATIONS ON FORM S-3. In addition to the rights provided the Holders of
Registrable Securities in SECTIONS 4.1 and 4.2, if the registration of Registrable Securities under
the Securities Act can be effected on Form S-3 (or any similar form promulgated by the Commission),
then upon the written request of one or more Holders of Registrable Securities for the registration
of at least twenty percent (20%) of the Registrable Securities, the Company will so notify each
Holder of Registrable Securities, including each Holder who has a right to acquire Registrable
Securities, and then will, as expeditiously as possible, use its best efforts to effect
qualification and registration under the Securities Act on Form S-3 of all or such portion of the
Registrable Securities as the Holder or Holders shall specify in the initial request to the Company
or upon written request of a Holder to the Company given within fifteen (15) days after the receipt
by the Holders from the Company of such notification.

          Section 4.4 EFFECTIVENESS. The Company will use its best efforts to maintain the
effectiveness for up to 90 days (or such shorter period of time as the underwriters need to
complete the distribution of the registered offering, or one year in the case of a “shelf’
registration statement on Form S-3) of any registration statement pursuant to which any of the
Registrable Securities are being offered, and from time to time will use reasonable efforts to
amend or supplement such registration statement and the prospectus contained therein to the
extent necessary to comply with the Securities Act and any applicable state securities statute
or regulation. The Company will also provide each Holder of Registrable Securities with as many
copies of the prospectus contained in any such registration statement as it may reasonably
request.

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          Section 4.5 INDEMNIFICATION BY THE COMPANY. (a) In the event that the Company registers
any of the Registrable Securities under the Securities Act, the Company will indemnify and hold
harmless each Holder and each underwriter of the Registrable Securities (including their officers,
directors, affiliates and partners) so registered (including any broker or dealer through whom such
Units may be sold) and each Person, if any, who controls such Holder or any such underwriter within
the meaning of Section 15 of the Securities Act from and against any and all losses, claims,
damages, expenses or liabilities, joint or several, to which they or any of them become subject
under the Securities Act, applicable state securities laws or under any other statute or at common
law or otherwise, as incurred, and, except as hereinafter provided, will reimburse each such
Holder, each such underwriter and each such controlling Person, if any, for any legal or other
expenses reasonably incurred by them or any of them in connection with investigating or defending
any actions whether or not resulting in any liability, as incurred, insofar as such losses, claims,
damages, expenses, liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the registration statement, in any
preliminary or amended preliminary prospectus or in the final prospectus (or the registration
statement or prospectus as from time to time amended or supplemented by the Company) or arise out
of or are based upon the omission or alleged omission to state therein a material fact required to
be stated therein or necessary in order to make the statements therein not misleading, or any
violation by the Company of any rule or regulation promulgated under the Securities Act or any
state securities laws applicable to the Company and relating to action or inaction required of the
Company in connection with such registration, unless (i) such untrue statement or alleged
untrue statement or omission or alleged omission was made in such registration statement,
preliminary or amended preliminary prospectus or final prospectus in reliance upon and in
conformity with information furnished in writing to the Company in connection therewith by any such
Holder of Registrable Securities (in the case of indemnification of such Holder), any such
underwriter (in the case of indemnification of such underwriter) or any such controlling Person (in
the case of indemnification of such controlling Person) expressly for use therein, or
unless (ii) in the case of a sale directly by such Holder of Registrable Securities
(including a sale of such Registrable Securities through any underwriter retained by such Holder of
Registrable Securities to engage in a distribution solely on behalf of such Holder of Registrable
Securities), such untrue statement or alleged untrue statement or omission or alleged omission was
contained in a preliminary prospectus and corrected in a final or amended prospectus copies of
which were delivered to such Holder of Registrable Securities or such underwriter on a timely
basis, and such Holder of Registrable Securities failed to deliver a copy of the final or amended
prospectus at or prior to the confirmation for the sale of the Registerable Securities to the
person asserting any such loss, claim, damage or liability in any case where such delivery is
required by the Securities Act.

               (b) Promptly after receipt by any Holder of Registrable Securities, any underwriter or any
controlling Person, of notice of the commencement of any action in respect of which indemnity may
be sought against the Company, such Holder of Registrable Securities, or such underwriter or such
controlling person, as the case may be, will notify the Company in writing of the commencement
thereof (provided, that failure by any such person to so notify the

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Company shall not relieve the Company from any liability it may have hereunder to any other
Person entitled to claim indemnity or contribution hereunder) and, subject to the provisions
hereinafter stated, the Company shall be entitled to assume the defense of such action (including
the employment of counsel, who shall be counsel reasonably satisfactory to such Holder of
Registrable Securities, such underwriter or such controlling Person, as the case may be), and the
payment of expenses insofar as such action shall relate to any alleged liability in respect of
which indemnity may be sought against the Company.

               (c) Such Holder of Registrable Securities, any such underwriter or any such controlling Person
shall have the right to employ separate counsel in any such action and to participate in the
defense thereof but the fees and expenses of such counsel subsequent to any assumption of the
defense by the Company shall not be at the expense of the Company unless the employment of such
counsel has been specifically authorized in writing by the Company. The Company shall not be liable
to indemnify any Person for any settlement of any such loss, claim, damage, expense, liability or
action effected without the Company’s written consent. The Company shall not, except with the
approval of each party being indemnified under this SECTION 4.5, consent to entry of any judgment
or enter into any settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to the parties being so indemnified of a release from all liability in
respect to such claim or litigation.

               (d) In order to provide for just and equitable contribution to joint liability under the
Securities Act in any case in which any Holder of Registrable Securities exercising rights under
this ARTICLE IV, or any controlling Person of any such Holder, makes a claim for indemnification
pursuant to this SECTION 4.5 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this SECTION 4.5 provides for indemnification in such case, then, the
Company and such Holder will contribute to the aggregate losses, claims, damages or liabilities to
which they may be subject (after contribution from others) in such proportion as is appropriate to
reflect the relative fault of the Company on the one hand and of the Holder of Registrable
Securities on the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of the Holder of Registrable Securities on the
other shall be determined by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or by the Holder of Registrable Securities on
the other, and each party’s relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission; provided, however, that, in any such
case, (A) no such Holder will be required to contribute any amount in excess of the public offering
price of all such Registrable Securities offered by it pursuant to such registration statement, net
of any underwriting discounts or commissions paid by such Holder; and (B) no person or
entity guilty of fraudulent misrepresentation (within the meaning of Section

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1 I (f) of the Securities Act) will be entitled to contribution from any person or entity
who was not guilty of such fraudulent misrepresentation.

          Section 4.6 INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES. (a) In the event that the
Company registers any of the Registrable Securities under the Securities Act, each Holder of the
Registrable Securities so registered will indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed or otherwise participated in the preparation of
the registration statement, each underwriter of the Registrable Securities so registered
(including any broker or dealer through whom such of the Units may be sold) and each Person, if
any, who controls the Company within the meaning of Section 15 of the Securities Act from and
against any and all losses, claims, damages, expenses or liabilities, joint or several, to which
they or any of them may become subject under the Securities Act, applicable state securities laws
or under any other statute or at common law or otherwise, and, except as hereinafter provided,
will reimburse the Company and each such director, officer, underwriter or controlling Person for
any legal or other expenses reasonably incurred by them or any of them in connection with
investigating or defending any actions whether or not resulting in any liability, insofar as such
losses, claims, damages, expenses, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the registration
statement, in any preliminary or amended preliminary prospectus or in the final prospectus (or in
the registration statement or prospectus as from time to time amended or supplemented) or arise
out of or are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements therein not misleading,
but only insofar as (i) any such statement or omission was made in reliance upon and in conformity
with information furnished in writing to the Company in connection therewith by such Holder of
Registrable Securities expressly for use therein and (ii) in the case of a sale directly by such
Holder of Registrable Securities (including a sale of such Registrable Securities through any
underwriter retained by such Holder of Registrable Securities to engage in a distribution solely
on behalf of such Holder of Registrable Securities), such untrue statement or alleged untrue
statement or omission or alleged omission was contained in a preliminary prospectus and corrected
in a final or amended prospectus copies of which were delivered to such Holder of Registrable
Securities or such underwriter on a timely basis, and such Holder of Registrable Securities failed
to deliver a copy of the final or amended prospectus at or prior to the confirmation for the sale
of the Registerable Securities to the person asserting any such loss, claim, damage or liability
in any case where such delivery is required by the Securities Act; provided,
however, that such Holder’s obligations hereunder shall be limited to an amount equal to
the aggregate public offering price of the Registrable Securities sold by such Holder in such
registration, net of any underwriting discounts or commissions paid by such Holder.

               (b) Promptly after receipt of notice of the commencement of any action in respect of which
indemnity may be sought against such Holder of Registrable Securities hereunder, the Company will
notify such Holder of Registrable Securities in writing of the commencement thereof
(provided, that failure by the Company to so notify such Holder shall not

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relieve such Holder from any liability it may have hereunder to any other Person entitled to
claim indemnity or contribution hereunder), and such Holder of Registrable Securities shall,
subject to the provisions hereinafter stated, be entitled to assume the defense of such action
(including the employment of counsel, who shall be counsel reasonably satisfactory to the Company)
and the payment of expenses insofar as such action shall relate to the alleged liability in respect
of which indemnity may be sought against such Holder of Registrable Securities. The Company and
each such director, officer, underwriter or controlling Person shall have the right to employ
separate counsel in any such action and to participate in the defense thereof, but the fees and
expenses of such counsel subsequent to any assumption of the defense by such Holder of Registrable
Securities shall not be at the expense of such Holder of Registrable Securities unless employment
of such counsel has been specifically authorized in writing by such Holder of Registrable
Securities. Such Holder of Registrable Securities shall not be liable to indemnify any Person for
any settlement of any such loss, claim, damage, expense, or liability or action effected without
such Holder’s written consent.

               (c) In order to provide for just and equitable contribution to joint liability under the
Securities Act in any case in which the Company or another Person entitled to indemnification
pursuant to this SECTION 4.6 makes a claim for indemnification pursuant to this SECTION 4.6, but
it is judicially determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding that this SECTION 4.6
provides for indemnification, in such case, then, the Company and such Holder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be subject (after
contribution from others) in such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and of the Holder of Registrable Securities on the other in connection
with the statements or omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative fault of the Company on the one
hand and of the Holder of Registrable Securities on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information supplied by the Company on the
one hand or by the Holder of Registrable Securities on the other, and each party’s relative
intent, knowledge, access to information and opportunity to correct or prevent such statement or
omission; provided, however, that, in any such case, (A) no such Holder will be
required to contribute any amount in excess of the public offering price of all such Registrable
Securities offered by it pursuant to such registration statement, net of any underwriting
discounts or commissions paid by such Holder; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

          Section 4.7 EXCHANGE ACT REGISTRATION. If the Company at any time shall list any class of
equity securities on any national securities exchange or obtain authorization for Units of such
class to be quoted on an automated quotation system and shall register such

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class of equity securities under the Exchange Act, the Company will, at its expense,
simultaneously list on such exchange or qualify for trading on such automated quotation system and
maintain such listing or authorization of, the Registrable Securities of such class. If the
Company becomes subject to the reporting requirements of either Section 13 or Section 15(d) of the
Exchange Act, the Company will use its best efforts to timely file with the Commission such
information as the Commission may require under either of said Sections; and in such event, the
Company shall use its best efforts to take all action as may be required as a condition to the
availability of Rule 144 or Rule 144A under the Securities Act (or any successor exemptive rule
hereafter in effect) with respect to such equity securities. The Company shall furnish to any
Holder of Registrable Securities forthwith upon request (i) a written statement by the Company as
to its compliance with the reporting requirements of Rule 144, (ii) a copy of the most recent
annual or quarterly report of the Company as filed with the Commission, and (iii) such other
reports and documents as a Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such Registrable Securities without
registration. The Company agrees to use its best efforts to facilitate and expedite transfers of
the Registrable Securities pursuant to Rule 144 under the Securities Act, which efforts shall
include timely notice to its transfer agent to expedite such transfers of Registrable Securities.

          Section 4.8 DAMAGES. The Company recognizes and agrees that the Holder of Registrable
Securities will not have an adequate remedy if the Company fails to comply with this ARTICLE IV and
that damages may not be readily ascertainable, and the Company expressly agrees that, in the event
of such failure, it shall not oppose an application by the Holder of Registrable Securities or any
other Person entitled to the benefits of this ARTICLE IV requiring specific performance of any and
all provisions hereof or enjoining the Company from continuing to commit any such breach of this
ARTICLE.

          Section 4.9 FURTHER OBLIGATIONS OF THE COMPANY. Whenever under the preceding SECTIONS of
this ARTICLE IV, the Company is required hereunder to register Registrable Securities, it
agrees that it shall also do the following:

               (i) Furnish to each selling Holder such copies of each preliminary and final prospectus and
such other documents as said Holder may reasonably request to facilitate the public offering of
its Registrable Securities;

               (ii) Use its best efforts to register or qualify the Registrable Securities covered by said
registration statement under the applicable securities or “blue sky” laws of such jurisdictions as
any selling Holder may reasonably request; provided, however, that the Company
shall not be obligated to qualify to do business in any jurisdictions where it is not then so
qualified or to take any action which would subject it to the service of process in suits other
than those arising out of the offer or sale of the securities covered by the registration statement
in any jurisdiction where it is not then so subject;

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               (iii) Furnish to each selling Holder a signed counterpart, addressed to the selling Holders and
any underwriter, of “comfort” letters signed by the Company’s independent public accountants who
have examined and reported on the Company’s financial statements included in the registration
statement, to the extent permitted by the standards of the American Institute of Certified Public
Accountants, covering substantially the same matters with respect to the registration statement
(and the prospectus included therein) and (in the case of the accountants’ “comfort” letters) with
respect to events subsequent to the date of the financial statements, as are customarily covered in
opinions of issuer’s counsel and in accountants’ “comfort” letters delivered to the underwriters in
underwritten public offerings of securities, to the extent that the Company is required to deliver
or cause the delivery of such opinion or “comfort” letters to the underwriters in an underwritten
public offering of securities;

               (iv) Permit each selling Holder of Registrable Securities or such Holder’s counsel or
other representatives to inspect and copy such non-confidential corporate documents and records
as may reasonably be requested by them;

               (v) Furnish to each selling Holder of Registrable Securities a copy of all documents filed
with and all correspondence from or to the Commission in connection with any such offering of
securities;

               (vi) Use its best efforts to insure the obtaining of all necessary approvals from
the NASD or other applicable regulatory authority, if applicable;

               (vii) Use its best efforts to cause all Registrable Securities so registered pursuant hereto
to be listed on any securities exchange or authorized for quotation in any automated quotation
system on or in which outstanding Units are listed or authorized for quotation at the time such
registration is declared effective by the Commission;

               (viii) Designate a transfer agent and registrar for the class or classes, or series or
series, of Units which include such Registrable Securities and obtain a CUSIP number for same, in
each case not later than the date such registration is declared effective by the Commission; and

               (ix) Otherwise use its best efforts to comply with all applicable rules and regulations of
the Commission, and make available to its security Holders, as soon as reasonably practicable,
an earning statement covering the period of at least twelve months, but not more than eighteen
months, beginning with the first month after the effective date of the registration statement
covering the initial public offering, which earning statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder.

          Whenever under the preceding SECTIONS of this ARTICLE IV the Holders of Registrable
Securities are registering such securities pursuant to any registration statement, each such
Holder agrees to timely provide to the Company, at its request, such information and

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materials as it may reasonably request in order to effect the registration of such
Registrable Securities.

          Section 4.10 EXPENSES. In the case of each registration effected under this Article IV, the
Company shall bear all reasonable costs and expenses of each such registration on behalf of the
selling Holders of Registrable Securities, including, but not limited to, the Company’s printing,
legal and accounting fees and expenses, Commission and NASD filing fees and “Blue Sky” fees;
provided, however, that the Company shall have no obligation to pay or otherwise
bear any portion of the underwriters’ commissions or discounts attributable to the Registrable
Securities being offered and sold by the Holders of the Registrable Securities, or the fees and
expenses of counsel for the selling Holders of Registrable Securities in connection with the
registration of the Registrable Securities. The Company shall also pay all expenses of the Holders
of the Registrable Securities in connection with any registration initiated pursuant to this
ARTICLE IV which is withdrawn or abandoned at the request of the Company.

          Section 4.11 TRANSFERABILITY. (a) For all purposes of ARTICLE IV of this Agreement, a Holder
or assignee thereof who becomes a party to this Agreement in accordance with SECTION 4.11(b)
hereof shall be deemed at any particular time to be the Holder of all Registrable Securities of
which such Person shall at such time be the “beneficial owner,” determined in accordance with
Rule 13d-3 under the Exchange Act.

               (b) For all purposes of ARTICLE IV of this Agreement, the Holder of Registrable Securities
shall include not only the Holder, but also any assignee or transferee of the Registrable
Securities; provided, however, that such assignee or transferee agrees in writing
to be bound by all of the provisions of this Agreement.

          Section 4.12 MERGERS, ETC. The Company shall not, directly or indirectly, enter into any
merger, consolidation or reorganization in which the Company shall not be the surviving entity
unless the proposed surviving entity shall, prior to such merger, consolidation or reorganization,
agree in writing to assume the obligations of the Company under this Agreement, and for that
purpose references hereunder to Registrable Securities shall be deemed to be references to the
securities which the Holders would be entitled to receive in exchange for Registrable Securities
under any such merger, consolidation or reorganization; provided, however, that the
provisions of this SECTION 4.12 shall not apply in the event of any merger, consolidation, or
reorganization in which the Company is not the surviving entity if all Holders are entitled to
receive in exchange for their Registrable Securities consideration consisting solely of (i) cash,
or (ii) securities of the acquiring entity which may be immediately sold to the public without
registration under the Securities Act.

ARTICLE V DEFINITIONS

12

 

          Section 5.1 DEFINITIONS. As used in this Agreement, the following defined terms have
the meanings indicated below:

          “Affiliate” means any Person that directly, or indirectly through one of more intermediaries,
controls or is controlled by or is under common control with the Person specified. For purposes of
this definition, control of a Person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by Contract or otherwise.

          “Agreement” has the meaning ascribed to it in the forepart of this Agreement.

          “Assets and Properties” of any Person means all assets and properties of every kind,
nature, character and description (whether real, personal or mixed, whether tangible or
intangible, and wherever situated), including the goodwill related thereto, operated, owned or
leased by such Person.

          “Business or Condition of the Company” means the business, financial condition or results of
operations of the Company and the Subsidiaries taken as a whole.

          “Commission” shall mean the United States Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act or the Exchange Act.

          “Company” has the meaning ascribed to it in the forepart of this Agreement.

          “Contract” means any agreement, lease, license, evidence of indebtedness, mortgage,
indenture, security agreement or other contract.

          “Depositary Units” has the meaning ascribed to it in the recitals of this
Agreement.

          “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal
statute, and the rules and regulations of the Commission (or of any other Federal agency then
administering the Exchange Act) thereunder, all as the same shall be in effect at the time.

          “Governmental or Regulatory Authority” means any court, tribunal, arbitrator, authority,
agency, commission, official or other instrumentality of the United States or any state, county,
city or other political subdivision.

13

 

          “Holder” has the meaning ascribed to it in the forepart of this
Agreement. “Holders” has the meaning ascribed to it in the forepart of this
Agreement. “Issuance” has the meaning ascribed to it in the recitals of this
Agreement.

          “Laws” means all laws, statutes, rules, regulations, ordinances and other pronouncements
having the effect of law of the United States or any state, county, city or other political
subdivision or of any Governmental or Regulatory Authority.

          “License” means all licenses, permits, certificates of authority, authorizations, approvals,
registrations, franchises and similar consents granted or issued by any Governmental or Regulatory
Authority.

          “Liens” means any mortgage, pledge, assessment, security interest, lease, lien, adverse
claim, levy, charge or other encumbrance of any kind, or any conditional sale Contract, title
retention Contract or other Contract to give any of the foregoing.

          “NASD” means the National Association of Securities Dealers, Inc.

          “Order” means any writ, judgment, decree, injunction or similar order of any
Governmental or Regulatory Authority (in each such case whether preliminary or final).

          “Partnership Agreement” has the meaning ascribed to it in the forepart of this Agreement.

          “Person” means any natural person, corporation, limited liability company, general
partnership, limited partnership, proprietorship, other business organization, trust, union,
association or Governmental or Regulatory Authority.

          “Registrable Securities” shall mean and include the Depositary Units owned by a Holder;
provided, however, that Registrable Securities shall cease to be Registrable
Securities upon the consummation of any sale pursuant to a registration statement or Rule 144
under the Securities Act.

          “Required Holders” has the meaning ascribed to it in Section 4.2(a) of this Agreement.

          “Securities Act” means the Securities Act of 1933, as amended, or any similar federal
statute, and the rules and regulations of the Commission (or of any other federal agency then
administering the Securities Act) thereunder, all as the same shall be in effect at the time.

14

 

          “Subsidiaries” means all Persons in which the Company, directly or indirectly,
beneficially owns more than 50% of either the equity interests in, or the voting control of, such
Persons.

ARTICLE VI

MISCELLANEOUS

          Section 6.1 ENTIRE AGREEMENT. This Agreement supersedes all prior discussions and agreements
between the parties with respect to the subject matter hereof and contains the sole and entire
agreement between the parties hereto with respect to the subject matter hereof.

          Section 6.2 WAIVER. Any term or condition of this Agreement may be waived at any time by the
party that is entitled to the benefit thereof, but no such waiver shall be effective unless set
forth in a written instrument duly executed by or on behalf of the party waiving such term or
condition. No waiver by any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under this Agreement or by
Law or otherwise afforded, will be cumulative and not alternative.

          Section 6.3 AMENDMENT. This Agreement may be amended, supplemented or modified only by a
written instrument duly executed by or on behalf of each party hereto.

          Section 6.4 NO THIRD PARTY BENEFICIARY. The terms and provisions of this Agreement are
intended solely for the benefit of each party hereto and their respective successors or
permitted assigns, and it is not the intention of the parties to confer third-party beneficiary
rights upon any other Person.

          Section 6.5 ASSIGNMENT; BINDING EFFECT. This Agreement and any right, interest or obligation
hereunder may be assigned by Holder without the prior written consent of the Company. This
Agreement is binding upon, inures to the benefit of and is enforceable by the parties hereto and
their respective successors and assigns.

          Section 6.6 HEADINGS. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.

          Section 6.7 INVALID PROVISIONS. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under any present or future Law, and if the rights or obligations of any
party hereto under this Agreement will not be materially and adversely

15

 

affected thereby, (a) such provision will be fully severable, (b) this Agreement will be
construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a
part hereof, and (c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable provision or by its
severance here from.

          Section 6.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the Laws of the State of New York applicable to a Contract executed and performed
in such State, without giving effect to the conflicts of laws principles thereof.

          Section 6.9 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each
of which will be deemed an original, but all of which together will constitute one and the same
instrument.

 

 

          IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized
officer of each party hereto as of the date first above written.

	 	 	 	 	 	 	 
	 	 	AMERICAN REAL ESTATE PARTNERS, L.P.	 	 
	 	 	By: American Property Investors, Inc.,	 	 
	 

	 	 	 	Its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keith Meister

 

	 	 
	 

	 	Name:
	 	Keith Meister	 	 
	 

	 	Title:
	 	 Chief Executive Officer	 	 

	 	 	 	 	 	 	 
	 	 	HOLDERS:	 	 
	 
	 	 	 	 	 	 
	 	 	HIGHCREST INVESTORS CORP.,	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Richard Buonato

 

	 	 
	 

	 	Name:
	 	Richard Buonato	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	ARNOS CORP.,	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Edward Mattner

 

	 	 
	 

	 	Name:
	 	Edward Mattner	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	CYPRUS, LLC	 	 
	 	 	By: Barberry Corp., Managing Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Edward Mattner

 

	 	 
	 

	 	Name:
	 	Edward Mattner	 	 
	 

	 	Title:
	 	Authorized Signatory	 	 
	 
	 	 	 	 	 	 
	 	 	GASCON PARTNERS	 	 
	 	 	By:Cigas Corp., Managing General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Edward Mattner

 

	 	 
	 

	 	Name:
	 	Edward Mattner	 	 
	 

	 	Title:
	 	President	 	 

[signature page to AREP registration rights agreement]EX-4.1

 

EXHIBIT 4.1

GARTNER, INC.

AMENDED AND RESTATED 2003 LONG TERM INCENTIVE PLAN AND

UNDERLYING FORMS OF STOCK OPTION AGREEMENTS

1

 

GARTNER, INC.

2003 LONG-TERM INCENTIVE PLAN

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

     2. Definitions.

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

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

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

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

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

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

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

2

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

3

 

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

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

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

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

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

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

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

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

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

4

 

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

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

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

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

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

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

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

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

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

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

     3. Shares Available Under the Plan.

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

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

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

 

			
	*	 	 This reflects 9,928,000 shares reserved
for issuance under the Plan upon its adoption in 2003, and an increase of
11,000,000 shares in June 2005, for a total of 20,928,000 shares reserved for issuance under the
Plan.

5

 

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

     4. Eligibility, Award Limits and Other General Matters.

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

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

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

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

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

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

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

          (g) Unless otherwise determined by the Committee, Awards may not be sold, pledged, assigned,
transferred or disposed of in any manner other than by will or by the laws of descent or
distribution, and during the lifetime of a Participant may be exercised only by a Participant. The
Committee may, in its discretion, provide for the transfer of an Award by a Participant to any
member of the Participant’s immediate family. In such case, the Award will be exercisable only by
such transferee. Following transfer, any such Award will continue to be subject to the same terms
and conditions as were applicable immediately prior to the transfer. For purposes of this Section
4(g), a Participant’s “immediate family” shall mean any of the

6

 

following who have acquired the Award from the Participant through a gift or domestic
relations order: a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including adoptive relationships, trusts for the exclusive benefit of these persons and any other
entity owned solely by these persons, and such other persons and entities as shall be eligible to
be included as transferees in the Form S-8 Registration Statement under the Securities Act of 1933,
as amended, filed or to be filed by the Company to register shares of Common Stock to be issued
upon the exercise of Awards granted under the Plan.

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

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

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

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

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

          (l) Unless otherwise determined by the Committee upon the grant of an Award, with respect to
Awards granted on or after the date the amended and restated Plan (as presented to stockholders in
the

7

 

Company’s 2005 proxy) is approved by the stockholders, the following provisions shall apply in
the event of a participant’s termination of employment without Cause within twelve (12) months
following a Change in Control of the Company:

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

     5. Options.

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

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

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

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

	 	•	 	the aggregate Fair Market Value (determined on the grant date(s)) of the Shares with
respect to which Incentive Stock Options are exercisable for the first time by any Employee
during any calendar year (under all plans of the Company and its Subsidiaries and any
Parent of the Company) shall not exceed $100,000;
	 
	 	•	 	the exercise price of an Incentive Stock Option shall be not less than one hundred and
ten percent (110%) of the Fair Market Value of a Share on the grant date that if on the
grant date, the Employee (together with persons whose stock ownership is attributed to the
Employee pursuant to Section 424(d) of the Code) owns stock possessing more than 10% of the
total combined voting

8

 

	 	 	 	power of all classes of stock of the Company or any of its Subsidiaries or any Parent of the
Company; and
	 
	 	•	 	no Incentive Stock Option will be exercisable more than 5 years after its date of grant
if it is granted to an Employee who, together with persons whose stock ownership is
attributed to the Employee pursuant to Section 424(d) of the Code, owns stock possessing
more than 10% of the total combined voting power of all classes of the stock of the Company
or any of its Subsidiaries or any Parent of the Company.
	 
	 	 	 	6. SARs.
	 
	 	          (a) Tandem SARs. The Committee may grant Tandem SARs to eligible Employees in
connection with all or part of an Option, either concurrently with the grant of the Option or at
any time thereafter during the term of the Option, subject to the following:

	 	•	 	the Tandem SAR will entitle the Participant to exercise it by surrendering to
the Company the unexercised Option in connection with which the Tandem SAR was
granted. The Participant will receive in exchange from the Company an amount equal
to the excess of (i) the Fair Market Value on the date of exercise of the Tandem
SAR of the Shares covered by the surrendered Option, over (ii) the exercise price
of the Shares covered by the surrendered Option, provided that the Committee may
place limits on the amount that may be paid upon exercise of a Tandem SAR, which
limits will not restrict the exercisability of the related Option;
	 
	 	•	 	amounts payable pursuant to a Tandem SAR may be paid, in the sole discretion of
the Committee, in cash, Shares, or a combination thereof.
	 
	 	•	 	when a Tandem SAR is exercised, the related Option will cease to be
exercisable;
	 
	 	•	 	a Tandem SAR will be exercisable only when and to the extent that the related
Option is exercisable and shall expire no later than the date on which the related
Option expires; and
	 
	 	•	 	each grant will specify the other terms and conditions under which the Tandem
SAR is exercisable, including any vesting requirements and the treatment of the
Tandem SAR upon termination of the Participant’s employment (including by reason
of death or disability).
	 
	 	(b) Freestanding SARs. The Committee may grant Freestanding SARs to eligible Employees
without related Options, subject to the following:

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

9

 

     7. Restricted Stock Awards.

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

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

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

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

8. Restricted Stock Units.

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

10

 

payout.

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

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

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

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

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

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

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

	 	•	 	each grant will specify the payment for which the Participant is eligible,
which may be a fixed or variable number of Shares (subject to adjustment in
accordance with Section 12), or a fixed or variable cash bonus. The Committee may
provide any Participant with a choice to elect between Shares, cash and a
combination of Shares and cash;
	 
	 	•	 	each grant will specify the nature, length and starting date of the
performance period during which the payment under the Long-Term Performance Award
may be earned;
	 
	 	•	 	each grant will specify the Performance Objectives that are to be achieved by
the Participant and, to the extent that any payments under the Long-Term
Performance Award are variable, the formula under which such payments are to be
computed;
	 
	 	•	 	each grant will specify the terms and manner of payment of any Shares or
amounts earned under the Long-Term Performance Award;
	 
	 	•	 	a grant may provide, in the Committee’s discretion, for the payment of
dividend equivalents in cash or additional Shares on a current, deferred or
contingent basis; and

11

 

	 	•	 	no payment will be made with respect to a Long-Term Performance Award until
the Committee has determined that the relevant Performance Objectives have been
achieved.

     10. Awards to Outside Directors.

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

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

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

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

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

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

12

 

     11. Administration.

          (a) The Committee. This Plan shall be administered by one or more committees appointed
by the Board. If the Board does not appoint a specific committee, the Compensation Committee of the
Board, or a subcommittee appointed by the Compensation Committee, shall administer the Plan. Each
member of the Committee shall meet such standards of independence as the Board shall determine from
time to time. With respect to Awards granted to Section 16 Persons or intended to qualify as
“performance-based” compensation under Section 162(m) of the Code, the Committee shall consist
solely of not less than two (2) Directors who both are (a) “non-employee directors” under Rule
16b-3, and (b) “outside directors” under Section 162(m) of the Code. The interpretation and
construction by the Committee of any provision of this Plan or of any Award Agreement or other
document evidencing the grant of any Award and any determination by the Committee pursuant to any
provision of this Plan or any such Award Agreement or other document, shall be final and
conclusive. No member of the Committee shall be liable to any person for any such action taken or
determination made in good faith.

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

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

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

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

          (a) Changes in Capitalization. Subject to any required action by the stockholders of
the Company, the number of shares of Common Stock covered by each outstanding Award, the number of
Shares and other Awards provided for in Section 10 (Outside Directors), the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to which no Awards have
yet been granted or

13

 

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

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

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

     13. Conditions Upon Issuance of Shares.

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

          (b) Investment Representations. As a condition to the exercise of an Award, the
Company may require the person exercising such Award to represent and warrant at the time of any
such exercise that the Shares issuable upon exercise of the Award are being purchased only for
investment and

14

 

without any present intention to sell or distribute such Shares if, in the opinion of counsel
for the Company, such a representation is necessary or desirable.

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

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

     16. Amendment and Termination of the Plan.

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

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

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

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

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

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

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

     19. Options Granted to Employees of French Subsidiaries.

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

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

          (c) Eligible Participants. Only Employees of French Subsidiaries are eligible to
receive Options granted pursuant to this Section. Payment of Director fees by the Company shall not
be sufficient to constitute

15

 

employment for this purpose. Employees of French subsidiaries may not be granted Options if,
at the date of grant, they hold more than ten percent (10%) of the Common Stock of the Company.

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

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

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

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

     20. Options Granted to Employees of Italian Subsidiaries.

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

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

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

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

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

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

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

16

 

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

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

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

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

17

 

GARTNER, INC.

2003 LONG-TERM INCENTIVE PLAN

FORM OF STOCK OPTION AGREEMENT

TERMS AND CONDITIONS

NONSTATUTORY STOCK OPTION (U.S. CONSULTANTS)

          1. Grant of Option. The Committee grants you a Nonstatutory Stock Option (the
“Option”) to purchase the number of Shares (the “Option Shares”), at the exercise
price (the “Exercise Price”), reflected on the attached Notice of Grant under the 2003
Long-Term Incentive Plan (the “Plan”), the terms and conditions of which are incorporated
herein by reference. The Option granted under this Stock Option Agreement is intended by the
Committee to be a Nonstatutory Stock Option and the provisions of this Stock Option Agreement shall
be interpreted on a basis consistent with such intent. If there is a conflict between the terms
and conditions of the Plan and this Stock Option Agreement, the terms and conditions of the Plan
will govern.

          2. Exercise of Option.

     a. Term of Option. You may exercise this Option at anytime prior to the close of
business on the Expiration Date in accordance with the applicable provisions of the Plan and
this Stock Option Agreement.

          b. Method of Exercise. You must exercise this Option in accordance with the Company’s
published exercise procedures, as in effect from time to time, which may require you to exercise
this Option through the Company’s designated broker or administrator. All exercises must be
accompanied by payment of the aggregate exercise price together with all required withholding
taxes. Exercise forms are available from the Treasury Department. No Shares will be issued upon
exercise of this Option unless such issuance and exercise complies with all relevant provisions of
(i) of this Stock Option Agreement and the Plan, (ii) applicable law, and (iii) the requirements of
any stock exchange or quotation service upon which the Shares are then listed.

          c. Method of Payment. Payment of the aggregate exercise price must be (i) in cash
(including check, bank draft or money order), or (ii) for “cashless exercises” during the trading
window, by delivery of such documentation as the Committee and any broker of deposit, if
applicable, shall require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price, in each case plus any applicable
withholding taxes.

          d. Non-Transferability of Option. This Option may not be transferred in any manner
without the consent of the Committee other than by will, the laws of descent or distribution or
pursuant to a qualified domestic relations order, and may be exercised during your lifetime only by
you or a permitted transferee. The terms of the Plan and this Stock Option Agreement will be
binding upon you, your executors, administrators, heirs, successors and any permitted assigns.

          e. Acceleration in Connection with a Change in Control. This Option will immediately
vest in full if you are terminated by the Company without Cause within twelve (12) months following
a Change in Control in accordance with the terms of the Plan.

          3. Withholding of Taxes. If necessary or desirable, the Company will be entitled to
withhold any amounts due and payable by the Company to you (or secure payment from you in lieu of
withholding) for

1

 

the amount of any withholding or other tax due with respect to any Shares issued or issuable
under the Plan, and the Company may defer such issuance unless you indemnify the Company to its
satisfaction for all such taxes.

          4. Governing Law. This agreement is governed by Delaware law except for that body of
law pertaining to conflict of laws.

          5. Defined Terms: Capitalized terms used in this Stock Option Agreement without
definition will have the meanings provided for in the Plan.

          6. Additional Provisions.

          a. No Rights to Employment or Future Grants. No provisions of this Agreement will be
deemed to confer upon you any right to (i) be considered an employee of the Company or any Parent
or Subsidiary or will in any way affect the right of the Company or any Parent or Subsidiary to
terminate your consulting arrangement at any time for any reason, with or without cause, subject to
the terms of any written consulting agreement between you and the Company, or (ii) entitle you to
the grant of any future equity compensation.

          b. No Liability for Good Faith Business Acts or Omissions. You recognize and agree
that the Board, the Committee, the officers, agents or employees of the Company and any Parent and
Subsidiary, in their oversight or conduct of the business and affairs of the Company and its
Parents and Subsidiaries, may in good faith cause the Company or any Parent and Subsidiary to act,
or to omit to act, in a manner that may, directly or indirectly, affect your rights with respect to
the Option. No provision of this Agreement will be interpreted or construed to impose any
liability upon the Company, or any Parent or Subsidiary, the Board, the Committee, or any officer,
agent or employee of the Company or of any Parent or Subsidiary, for any such action or omission.

          c. Administration, Interpretation and Construction. The terms and conditions of this
Stock Option Agreement will be administered, interpreted and construed by the Committee. The
Committee’s decisions will be final, conclusive and binding on the Company, on you and on anyone
claiming under or through the Company or you. By accepting the Option, you irrevocably consent and
agree to the terms and conditions of this Stock Option Agreement and the Plan and to all actions,
decisions and determinations to be taken or made by the Committee or the Board in good faith
pursuant to the terms and conditions of this Stock Option Agreement and the Plan.

          d. Titles. The titles to sections or paragraphs of this Agreement are intended solely
for convenience and no provision of this Agreement is to be construed by reference to the title of
any section or paragraph.

2

 

GARTNER, INC.

2003 LONG-TERM INCENTIVE PLAN

FORM OF STOCK OPTION AGREEMENT

TERMS AND CONDITIONS

NONSTATUTORY STOCK OPTION (U.S. EMPLOYEES)

     1. Grant of Option. The Committee grants you a Nonstatutory Stock Option (the
“Option”) to purchase the number of Shares (the “Option Shares”), at the exercise
price (the “Exercise Price”), reflected on the attached Notice of Grant under the 2003
Long-Term Incentive Plan (the “Plan”), the terms and conditions of which are incorporated
herein by reference. The Option granted under this Stock Option Agreement is intended by the
Committee to be a Nonstatutory Stock Option and the provisions of this Stock Option Agreement shall
be interpreted on a basis consistent with such intent. If there is a conflict between the terms
and conditions of the Plan and this Stock Option Agreement, the terms and conditions of the Plan
will govern.

     2. Exercise of Option.

     a. Term of Option. Assuming your Continued Service, you may exercise this Option prior
to the close of business on the Expiration Date in accordance with the vesting schedule shown on
the attached Notice of Grant and the applicable provisions of the Plan and this Stock Option
Agreement (the “Vesting Schedule”). This Option will immediately vest in full if you are
terminated by the Company without Cause within twelve (12) months following a Change in Control in
accordance with the terms of the Plan. In addition, any portion of this Option that would have
vested, assuming your Continued Service, during the twelve (12) month period following your
Retirement will automatically vest upon such Retirement. Should your Continued Service end at any
time, that portion of this Option that has not vested will be immediately cancelled; any vested
portion of this Option may be exercised until the earlier of the close of business on the
expiration date reflected on the attached Notice of Grant (the “Expiration Date”) or:

	 	 	 	 	 
	•

	 	If your termination results from your Retirement:
	 	One year from your termination date
	 
	 	 	 	 
	•

	 	If your termination results from your death:
	 	One year from your termination date
	 
	 	 	 	 
	•

	 	If your termination results from your Disability:
	 	One year from your termination date
	 
	 	 	 	 
	•

	 	If your termination is by the Company without Cause
within 12 months following a Change in Control:
	 	90 days from your termination date
	 
	 	 	 	 
	•

	 	If your termination results from any other cause:
	 	30 days from your termination date
(excluding any period during which you are prohibited from trading under the
Company’s insider trading policy) 

     b. Method of Exercise. You must exercise this Option in accordance with the Company’s
published exercise procedures, as in effect from time to time, which may require you to exercise
this Option through the Company’s designated broker or administrator. All exercises must be
accompanied by payment of the aggregate exercise price together with all required withholding
taxes. Exercise forms are available from the Treasury Department. No Shares will be issued upon
exercise of this Option unless such issuance

1

 

and exercise complies with all relevant provisions of (i) of this Stock Option Agreement and
the Plan, (ii) applicable law, and (iii) the requirements of any stock exchange or quotation
service upon which the Shares are then listed.

     c. Method of Payment. Payment of the aggregate exercise price must be (i) in cash
(including check, bank draft or money order), or (ii) for “cashless exercises” during the trading
window, by delivery of such documentation as the Committee and any broker of deposit, if
applicable, shall require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price, in each case plus any applicable
withholding taxes.

     d. Non-Transferability of Option. This Option may not be transferred in any manner
without the consent of the Committee other than by will, the laws of descent or distribution or
pursuant to a qualified domestic relations order, and may be exercised during your lifetime only by
you or a permitted transferee. The terms of the Plan and this Stock Option Agreement will be
binding upon you, your executors, administrators, heirs, successors and any permitted assigns.

     3. Withholding of Taxes. If necessary or desirable, the Company will be entitled to
withhold any amounts due and payable by the Company to you (or secure payment from you in lieu of
withholding) for the amount of any withholding or other tax due with respect to any Shares issued
or issuable under the Plan, and the Company may defer such issuance unless you indemnify the
Company to its satisfaction for all such taxes.

     4. Governing Law. This agreement is governed by Delaware law except for that body of
law pertaining to conflict of laws.

     5. Defined Terms: Capitalized terms used in this Stock Option Agreement without
definition will have the meanings provided for in the Plan. When used in this Stock Option
Agreement, the following capitalized terms will have the following meanings:

     “Continued Service” means that your employment relationship is not interrupted
or terminated by you, the Company, or any Parent or Subsidiary of the Company. Your
employment relationship will not be considered interrupted in the case of: (i) any leave of
absence approved in accordance with the Company’s written personnel policies, including sick
leave, family leave, military leave, or any other personal leave; or (ii) transfers between
locations of the Company or between the Company and any Parent, Subsidiary or successor;
provided, however, that, unless otherwise provided in the Company’s written
personnel policies, in this Stock Option Agreement or under applicable laws, rules or
regulations, or unless the Committee has otherwise expressly provided for different
treatment with respect to this Stock Option Agreement, (x) no such leave may exceed ninety
(90) days, and (y) any vesting shall cease on the ninety-first (91st) consecutive
date of any leave of absence during which your employment relationship is deemed to continue
and will not recommence until such date, if any, upon which you resume service with the
Company, its Parent, Subsidiary or successor. If you resume such service in accordance with
the terms of the Company’s military leave policy, upon resumption of service you will be
given vesting credit for the full duration of your leave of absence. Continuous employment
will be deemed interrupted and terminated for an Employee if the Employee’s weekly work
hours change from full time to part time. Part-time status for the purpose of vesting
continuation or eligibility to receive Options or Rights will be determined in accordance
with policies adopted by the Company from time to time, which policies, if any, shall
supercede the determination of part-time status set forth in the Company’s posted “employee
status definitions”.

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

2

 

     “Retirement” means termination of your employment in accordance with the
Company’s retirement policies, as in effect from time to time, if on the date of such
termination (i) you are at least 55 years old and your Continued Service has extended for at
least five years, and (ii) the number of full years in your age and your number of full
years of Continued Service total at least 65. By way of illustration, if you terminate your
employment in accordance with the Company’s retirement policies on your 63rd
birthday after six years of Continued Service, your total would be 69 and your termination
would be treated as a Retirement; if your Continued Service had extended for only four
years, your total would be 67 but your termination would not be treated as a Retirement
since you would not have met the minimum of five years of Continued Service.

     6. Additional Provisions.

     a. No Rights to Employment or Future Grants. No provisions of this Agreement will be
deemed to confer upon you any right to (i) continue in the employ of the Company or any Parent or
Subsidiary or will in any way affect the right of the Company or any Parent or Subsidiary to
dismiss or otherwise terminate your employment at any time for any reason, with or without cause,
or (ii) entitle you to the grant of any future equity compensation.

     b. No Liability for Good Faith Business Acts or Omissions. You recognize and agree
that the Board, the Committee, the officers, agents or employees of the Company and any Parent and
Subsidiary, in their oversight or conduct of the business and affairs of the Company and its
Parents and Subsidiaries, may in good faith cause the Company or any Parent and Subsidiary to act,
or to omit to act, in a manner that may, directly or indirectly, affect your rights with respect to
the Option. No provision of this Agreement will be interpreted or construed to impose any
liability upon the Company, or any Parent or Subsidiary, the Board, the Committee, or any officer,
agent or employee of the Company or of any Parent or Subsidiary, for any such action or omission.

     c. Administration, Interpretation and Construction. The terms and conditions of this
Stock Option Agreement will be administered, interpreted and construed by the Committee. The
Committee’s decisions will be final, conclusive and binding on the Company, on you and on anyone
claiming under or through the Company or you. By accepting the Option, you irrevocably consent and
agree to the terms and conditions of this Stock Option Agreement and the Plan and to all actions,
decisions and determinations to be taken or made by the Committee or the Board in good faith
pursuant to the terms and conditions of this Stock Option Agreement and the Plan.

     d. Titles. The titles to sections or paragraphs of this Agreement are intended solely
for convenience and no provision of this Agreement is to be construed by reference to the title of
any section or paragraph.

     e. Acceptance. This option must be accepted and acknowledged by you within 107 days from
the date of grant. If you fail to accept and acknowledge this Option by such date then this Option
shall become null and void and you shall forfeit any and all rights that you have to this Option
and any Option Shares.

3

 

GARTNER, INC.

2003 LONG-TERM INCENTIVE PLAN

FORM OF STOCK OPTION AGREEMENT

TERMS AND CONDITIONS

NONSTATUTORY STOCK OPTION (NON-U.S. EMPLOYEES)

     1. Grant of Option. The Committee grants you a Nonstatutory Stock Option (the
“Option”) to purchase the number of Shares (the “Option Shares”), at the exercise
price (the “Exercise Price”), reflected on the attached Notice of Grant under the 2003
Long-Term Incentive Plan (the “Plan”), the terms and conditions of which are incorporated
herein by reference. The Option granted under this Stock Option Agreement is intended by the
Committee to be a Nonstatutory Stock Option under the U.S. tax laws and the provisions of this
Stock Option Agreement shall be interpreted on a basis consistent with such intent. However, you
acknowledge that the tax impact of this grant will also depend upon the tax laws of the
jurisdictions in which you are employed and in which you reside. The Company encourages you to
contact your own tax advisor if you have any questions concerning the tax impact of this grant. If
there is a conflict between the terms and conditions of the Plan and this Stock Option Agreement,
the terms and conditions of the Plan will govern.

     2. Exercise of Option.

     b. Term of Option. Assuming your Continued Service, you may exercise this Option prior
to the close of business on the Expiration Date in accordance with the vesting schedule shown on
the attached Notice of Grant and the applicable provisions of the Plan and this Stock Option
Agreement (the “Vesting Schedule”). This Option will immediately vest in full if you are
terminated by the Company without Cause within twelve (12) months following a Change in Control in
accordance with the terms of the Plan. In addition, any portion of this Option that would have
vested, assuming your Continued Service, during the twelve (12) month period following your
Retirement will automatically vest upon such Retirement. Should your Continued Service end at any
time, that portion of this Option that has not vested will be immediately cancelled; any vested
portion of this Option may be exercised until the earlier of the close of business on the
expiration date reflected on the attached Notice of Grant (the “Expiration Date”) or:

	 	 	 	 	 
	•

	 	If your termination results from your Retirement:
	 	One year from your termination date
	 

	 	 	 	 
	•

	 	If your termination results from your death:
	 	One year from your termination date
	 

	 	 	 	 
	•

	 	If your termination results from your Disability:
	 	One year from your termination date
	 

	 	 	 	 
	•

	 	If your termination is by the Company without Cause
within 12 months following a Change in Control:
	 	 90 days from your termination date
	 

	 	 	 	 
	•

	 	If your termination results from any other cause:
	 	30 days from your termination date
(excluding any period during which you are prohibited from trading under the
Company’s insider trading policy)

     b. Method of Exercise. You must exercise this Option in accordance with the Company’s
published exercise procedures, as in effect from time to time. In certain jurisdictions, these
exercise

1

 

procedures may require you to exercise this Option through the Company’s designated broker or
administrator, or may require you to exercise this Option through a “cashless exercise” in which
shares underlying the Option are used to pay the exercise price. Additional restrictions or
requirements may apply in other jurisdictions. Except as otherwise provided in the Company’s
exercise procedures, all exercises must be accompanied by payment of the aggregate exercise
price together with all required withholding taxes. Exercise forms are available from the Treasury
Department. No Shares will be issued upon exercise of this Option unless such issuance and exercise
complies with all relevant provisions of (i) of this Stock Option Agreement and the Plan, (ii)
applicable law, and (iii) the requirements of any stock exchange or quotation service upon which
the Shares are then listed.

     c. Method of Payment. Payment of the aggregate exercise price must be (i) in cash
(including check, bank draft or money order), or (ii) for “cashless exercises” during the trading
window, by delivery of such documentation as the Committee and any broker of deposit, if
applicable, shall require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price, in each case plus any applicable
withholding taxes.

     d. Non-Transferability of Option. This Option may not be transferred in any manner
without the consent of the Committee other than by will, the laws of descent or distribution or
pursuant to a qualified domestic relations order, and may be exercised during your lifetime only by
you or a permitted transferee. The terms of the Plan and this Stock Option Agreement will be
binding upon you, your executors, administrators, heirs, successors and any permitted assigns.

     3. Withholding of Taxes. If necessary or desirable, the Company will be entitled to
withhold any amounts due and payable by the Company to you (or secure payment from you in lieu of
withholding) for the amount of any withholding or other tax due with respect to any Shares issued
or issuable under the Plan, and the Company may defer such issuance unless you indemnify the
Company to its satisfaction for all such taxes.

     4. Governing Law. This agreement is governed by Delaware law except for that body of
law pertaining to conflict of laws.

     5. Defined Terms: Capitalized terms used in this Stock Option Agreement without
definition will have the meanings provided for in the Plan. When used in this Stock Option
Agreement, the following capitalized terms will have the following meanings:

     “Continued Service” means that your employment relationship is not interrupted
or terminated by you, the Company, or any Parent or Subsidiary of the Company. Your
employment relationship will not be considered interrupted in the case of: (i) any leave of
absence approved in accordance with the Company’s written personnel policies, including sick
leave, family leave, military leave, or any other personal leave; or (ii) transfers between
locations of the Company or between the Company and any Parent, Subsidiary or successor;
provided, however, that, unless otherwise provided in the Company’s written
personnel policies, in this Stock Option Agreement or under applicable laws, rules or
regulations, or unless the Committee has otherwise expressly provided for different
treatment with respect to this Stock Option Agreement, (x) no such leave may exceed ninety
(90) days, and (y) any vesting shall cease on the ninety-first (91st) consecutive
date of any leave of absence during which your employment relationship is deemed to continue
and will not recommence until such date, if any, upon which you resume service with the
Company, its Parent, Subsidiary or successor. If you resume such service in accordance with
the terms of the Company’s military leave policy, upon resumption of service you will be
given vesting credit for the full duration of your leave of absence. Continuous employment
will be deemed interrupted and terminated for an Employee if the Employee’s weekly work
hours change from full time to part time. Part-time status

2

 

for the purpose of vesting continuation or eligibility to receive Options or Rights
will be determined in accordance with policies adopted by the Company from time to time,
which policies, if any, shall supercede the determination of part-time status set forth in
the Company’s posted “employee status definitions”.

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

     “Retirement” means termination of your employment in accordance with the
Company’s retirement policies, as in effect from time to time, if on the date of such
termination (i) you are at least 55 years old and your Continued Service has extended for at
least five years, and (ii) the number of full years in your age and your number of full
years of Continued Service total at least 65. By way of illustration, if you terminate your
employment in accordance with the Company’s retirement policies on your 63rd
birthday after six years of Continued Service, your total would be 69 and your termination
would be treated as a Retirement; if your Continued Service had extended for only four
years, your total would be 67 but your termination would not be treated as a Retirement
since you would not have met the minimum of five years of Continued Service.

     6. Additional Provisions.

     a. No Rights to Employment or Future Grants. No provisions of this Agreement will be
deemed to confer upon you any right to (i) continue in the employ of the Company or any Parent or
Subsidiary or will in any way affect the right of the Company or any Parent or Subsidiary to
dismiss or otherwise terminate your employment at any time for any reason, with or without cause,
or (ii) entitle you to the grant of any future equity compensation.

     b. No Liability for Good Faith Business Acts or Omissions. You recognize and agree
that the Board, the Committee, the officers, agents or employees of the Company and any Parent and
Subsidiary, in their oversight or conduct of the business and affairs of the Company and its
Parents and Subsidiaries, may in good faith cause the Company or any Parent and Subsidiary to act,
or to omit to act, in a manner that may, directly or indirectly, affect your rights with respect to
the Option. No provision of this Agreement will be interpreted or construed to impose any
liability upon the Company, or any Parent or Subsidiary, the Board, the Committee, or any officer,
agent or employee of the Company or of any Parent or Subsidiary, for any such action or omission.

     c. Administration, Interpretation and Construction. The terms and conditions of this
Stock Option Agreement will be administered, interpreted and construed by the Committee. The
Committee’s decisions will be final, conclusive and binding on the Company, on you and on anyone
claiming under or through the Company or you. By accepting the Option, you irrevocably consent and
agree to the terms and conditions of this Stock Option Agreement and the Plan and to all actions,
decisions and determinations to be taken or made by the Committee or the Board in good faith
pursuant to the terms and conditions of this Stock Option Agreement and the Plan.

     d. Titles. The titles to sections or paragraphs of this Agreement are intended solely
for convenience and no provision of this Agreement is to be construed by reference to the title of
any section or paragraph.

3

 

GARTNER, INC.

2003 LONG-TERM INCENTIVE PLAN

FORM OF STOCK OPTION AGREEMENT

TERMS AND CONDITIONS

NONSTATUTORY STOCK OPTION (DIRECTORS)

     1. Grant of Option. You have been granted a Nonstatutory Stock Option (the
“Option”) to purchase the number of Shares (the “Option Shares”), at the exercise
price (the “Exercise Price”), reflected on the attached Notice of Grant in accordance with
the terms of the 2003 Long-Term Incentive Plan (the “Plan”), the terms and conditions of
which are incorporated herein by reference. The Option granted under this Stock Option Agreement
is intended to be a Nonstatutory Stock Option and the provisions of this Stock Option Agreement
shall be interpreted on a basis consistent with such intent. If there is a conflict between the
terms and conditions of the Plan and this Stock Option Agreement, the terms and conditions of the
Plan will govern.

     2. Exercise of Option.

     c. Term of Option. Assuming your Continued Service, you may exercise this Option prior
to the close of business on the Expiration Date in accordance with the vesting schedule shown on
the attached Notice of Grant and the applicable provisions of the Plan and this Stock Option
Agreement (the “Vesting Schedule”). This Option will immediately vest in full if you are
terminated by the Company without Cause within twelve (12) months following a Change in Control in
accordance with the terms of the Plan. Should your Continued Service end at any time, that portion
of this Option that has not vested will be immediately cancelled; any vested portion of this Option
may be exercised until the earlier of the close of business on the expiration date reflected on the
attached Notice of Grant (the “Expiration Date”) or:

	 	 	 	 	 
	•

	 	If your termination results from your death:
	 	One year from your termination date
	 
	 	 	 	 
	•

	 	If your termination results from your Disability:
	 	Six months from your termination date
	 
	 	 	 	 
	•

	 	If your termination is by the Company without Cause
within 12 months following a Change in Control:
	 	90 days from your termination date
	 
	 	 	 	 
	•

	 	If your termination results from any other cause:
	 	90 days from your termination date

     b. Method of Exercise. You must exercise this Option in accordance with the Company’s
published exercise procedures, as in effect from time to time, which may require you to exercise
this Option through the Company’s designated broker or administrator. All exercises must be
accompanied by payment of the aggregate exercise price together with all required withholding
taxes. Exercise forms are available from the Treasury Department. No Shares will be issued upon
exercise of this Option unless such issuance and exercise complies with all relevant provisions of
(i) of this Stock Option Agreement and the Plan, (ii) applicable law, and (iii) the requirements of
any stock exchange or quotation service upon which the Shares are then listed.

     c. Method of Payment. Payment of the aggregate exercise price must be (i) in cash
(including check, bank draft or money order), or (ii) for “cashless exercises” during the trading
window, by delivery of such documentation as the Committee and any broker of deposit, if
applicable, shall require to effect an

1

 

exercise of the Option and delivery to the Company of the sale or loan proceeds required to
pay the exercise price, in each case plus any applicable withholding taxes.

     d. Non-Transferability of Option. This Option may not be transferred in any manner
without the consent of the Committee other than by will, the laws of descent or distribution or
pursuant to a qualified domestic relations order, and may be exercised during your lifetime only by
you or a permitted transferee. The terms of the Plan and this Stock Option Agreement will be
binding upon you, your executors, administrators, heirs, successors and any permitted assigns.

     3. Withholding of Taxes. If necessary or desirable, the Company will be entitled to
withhold any amounts due and payable by the Company to you (or secure payment from you in lieu of
withholding) for the amount of any withholding or other tax due with respect to any Shares issued
or issuable under the Plan, and the Company may defer such issuance unless you indemnify the
Company to its satisfaction for all such taxes.

     4. Governing Law. This agreement is governed by Delaware law except for that body of
law pertaining to conflict of laws.

     5. Defined Terms: Capitalized terms used in this Stock Option Agreement without
definition will have the meanings provided for in the Plan. When used in this Stock Option
Agreement, the following capitalized terms will have the following meanings:

     “Continued Service” means that your directorship on the Company’s Board of
Directors is not interrupted or terminated by you or the Company’s stockholders, or
otherwise by operation of the Company’s charter or by-laws.

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

     6. Additional Provisions.

     a. No Liability for Good Faith Business Acts or Omissions. You recognize and agree
that the Board, the Committee, the officers, agents or employees of the Company and any Parent and
Subsidiary, in their oversight or conduct of the business and affairs of the Company and its
Parents and Subsidiaries, may in good faith cause the Company or any Parent and Subsidiary to act,
or to omit to act, in a manner that may, directly or indirectly, affect your rights with respect to
the Option. No provision of this Agreement will be interpreted or construed to impose any
liability upon the Company, or any Parent or Subsidiary, the Board, the Committee, or any officer,
agent or employee of the Company or of any Parent or Subsidiary, for any such action or omission.

     b. Administration, Interpretation and Construction. The terms and conditions of this
Stock Option Agreement will be administered, interpreted and construed by the Committee. The
Committee’s decisions will be final, conclusive and binding on the Company, on you and on anyone
claiming under or through the Company or you. By accepting the Option, you irrevocably consent and
agree to the terms and conditions of this Stock Option Agreement and the Plan and to all actions,
decisions and determinations to be taken or made by the Committee or the Board in good faith
pursuant to the terms and conditions of this Stock Option Agreement and the Plan.

     c. Titles. The titles to sections or paragraphs of this Agreement are intended solely
for convenience and no provision of this Agreement is to be construed by reference to the title of
any section or paragraph.

2

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