Document:

EX-10.1:

 

Exhibit 10.1

GARTNER GROUP, INC.

1994 LONG TERM STOCK OPTION PLAN

As amended and restated on June 29, 2005

     1. Purpose of the Plan. The purposes of this 1994 Long Term Stock Option Plan (the
“Plan”) are:

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

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

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

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

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

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

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

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

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

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

          (h) “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. 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.

          (i) “Continuous Status as an Employee or Consultant” means that the employment or
consulting relationship with the Company, any Parent, or Subsidiary, is not interrupted or
terminated. Continuous Status as an Employee or Consultant shall not be considered

 

 

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

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

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

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

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

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

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

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

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

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

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

          (q) “Notice of Grant” means a written notice evidencing certain terms and conditions
of an individual Option grant. The Notice of Grant is part of the Option Agreement.

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

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

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

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

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

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

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

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

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

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

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

     3. Stock Subject to the Plan. Subject to the provisions of Section 12 of the Plan,
the maximum aggregate number of Shares which may be optioned and sold under the Plan is 1,640,000
Shares. The Shares may be authorized, but unissued, or reacquired Common Stock.

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

     4. Administration of the Plan.

          (a) Procedure 

               (i) Multiple Administrative Bodies. If permitted by Rule 16b-3, the Plan may be
administered by different bodies with respect to Directors, Officers who are not Directors, and
Senior Managers who are neither Directors nor Officers.

               (ii) Administration With Respect to Directors and Officers Subject to Section 16(b).
With respect to Option grants made to Senior Managers who are also Officers or Directors subject to
Section 16(b) of the Exchange Act, the Plan shall be administered by (A) the Board, if the Board
may administer the Plan in compliance with the rules governing a plan intended to qualify as a
discretionary plan under Rule 16b-3, or (B) a committee designated by the Board to administer the
Plan, which committee shall be constituted to comply with the rules governing a plan intended to
qualify as a discretionary plan under Rule 16b-3. Once appointed, such Committee shall continue to
serve in its designated capacity until otherwise directed by the Board. From time to time the
Board may increase the size of the Committee and appoint additional members, remove members (with
or without cause) and substitute new members, fill vacancies (however caused), and remove all
members of the Committee and thereafter directly administer the Plan, all to the extent permitted
by the rules governing a plan intended to qualify as a discretionary plan under Rule 16b-3.

               (iii) Administration With Respect to Other Persons. With respect to Option grants
made to Senior Managers who are neither Directors nor Officers of the Company, the Plan shall be
administered by (A) the Board or (B) a committee designated by the Board, which committee shall be
constituted to satisfy Applicable Laws. Once appointed, such Committee shall serve in its
designated capacity until otherwise directed by the Board. The Board may increase the size of the
Committee and appoint additional members, remove members (with or without cause) and substitute new
members, fill vacancies (however caused), and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by Applicable Laws.

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

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

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

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

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

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

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

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

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

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

               (x) to modify or amend each Option (subject to Section 14(c) of the Plan), including the
discretionary authority to extend the post-termination exercisability period of Options longer than
is otherwise provided for in the Plan;

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

               (xii) to institute an Option Exchange Program;

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

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

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

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

     6. Limitations.

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

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

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

               (i) No Employee shall be granted, in any fiscal year of the Company, Options to purchase more
than 500,000 shares.

               (ii) In connection with his or her initial employment, an Employee may be granted Options to
purchase up to an additional 500,000 Shares which shall not count against the limit set forth in
subsection (i) above.

               (iii) The foregoing limitations shall be adjusted proportionately in connection with any
change in the Company’s capitalization as described in Section 12.

               (iv) If an Option is canceled in the same fiscal year of the Company in which it was granted
(other than in connection with a transaction describe in Section 12), the canceled Option will be
counted against the limit set forth in Section 6(c)(i). For this purpose, if the exercise price of
an Option is reduced, the transaction will be treated as a cancellation of the Option and the grant
of a new Option.

     7. Term of Plan. Subject to Section 18 of the Plan, the Plan shall become effective
upon the earlier to occur of its adoption by the Board or its approval by the shareholders of the
Company

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as described in Section 18 of the Plan. It shall continue in effect for a term of ten (10)
years unless terminated earlier under Section 14 of the Plan.

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

     9. Option Exercise Price and Consideration.

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

               (i) In the case of an Incentive Stock Option

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

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

               (ii) In the case of a Nonstatutory Stock Option, the per Share exercise price shall be
determined by the Administrator.

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

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

               (i) cash;

               (ii) check;

               (iii) promissory note;

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               (iv) other Shares which (A) in the case of Shares acquired upon exercise of an option, have
been owned by the Optionee for more than six months on the date of surrender, and (B) have a Fair
Market Value on the date of surrender not greater than the aggregate exercise price of the Shares
as to which said Option shall be exercised;

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

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

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

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

     10. Exercise of Option.

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

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

     An Option shall be deemed exercised when the Company receives: (i) written notice of exercise
(in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii)
full payment for the Shares with respect to which the Option is exercised. Full payment may
consist of any consideration and method of payment authorized by the Administrator and permitted by
the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the
name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her
spouse. Until the stock certificate evidencing such Shares is issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 12 of the Plan.

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

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          (b) Termination of Employment or Consulting Relationship.

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

               (ii) An Optionee’s change of status from Employee to Consultant shall not be treated as a
termination of the Optionee’s Continuous Status as an Employee or Consultant, and any Option held
by the Optionee shall remain in effect, except as provided hereinbelow. Any Incentive Stock Option
held by such Optionee shall automatically cease to be treated for tax purposes as an Incentive
Stock Option and shall be treated as a Nonstatutory Stock Option on the ninety-first (91st) day
following such change of status. Notwithstanding the above, within thirty (30) days after any such
change of status, the Administrator may in its discretion determine that this Section 10(b)(ii)
shall not apply to such change of status and that such change of status shall be treated as a
termination of the Optionee’s Continuous Status as an Employee or Consultant as provided in Section
10(b)(i).

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

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

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

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          (e) Rule 16b-3. Options granted to individuals subject to Section 16 of the Exchange
Act (“Insiders”) must comply with the applicable provisions of Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify for the maximum
exemption from Section 16 of the Exchange Act with respect to Plan transactions.

     11. Transferability of Options. Unless otherwise determined by the Administrator to
the contrary, Options may not be sold, pledged, assigned, hypothecated, transferred or disposed of
in any manner other than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee. The Administrator may, in the manner
established by the Administrator, provide for the transfer of a Nonstatuatory Stock Option by the
Optionee to any member of the Optionee’s immediate family. In such case, the Nonstatutory Stock
Option shall be exercisable only by such transferee. Following transfer, any such Nonstatutory
Stock Options shall continue to be subject to the same terms and conditions as were applicable
immediately prior to the transfer. For purposes of this Section, an Optionee’s “immediate family”
shall mean any of the following who have acquired the Option from the Optionee through a gift or
domestic relations order: a child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, trusts for the exclusive benefit of these persons
and any other entity owned solely by these persons, and such other persons and entities as shall be
eligible to be included as transferees in the Form S-8 Registration Statement under the Securities
Act of 1933, as amended, filed or to be filed by the Company to register shares of Common Stock to
be issued upon the exercise of Options granted pursuant to the Plan.

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

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

          (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, to the extent that an Option has not been previously exercised, it will
terminate immediately prior to the consummation of such proposed action. The Board may, in the
exercise of its sole discretion in such instances, declare that any Option shall terminate as of a
date

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fixed by the Board and give each Optionee the right to exercise his or her Option as to all or
any part of the Optioned Stock, including Shares as to which the Option would not otherwise be
exercisable.

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

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

     14. Amendment and Termination of the Plan.

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

          (b) Shareholder Approval. The Company shall obtain shareholder approval of any Plan
amendment to the extent necessary and desirable to comply with Rule 16b-3 or with Section 422 of
the Code (or any successor rule or statute or other applicable law, rule or regulation, including
the requirements of any exchange or quotation system on which the Common Stock is listed or
quoted). Such shareholder approval, if required, shall be obtained in such a manner and to such a
degree as is required by the applicable law, rule or regulation.

          (c) Effect of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise

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between the Optionee and the Administrator, which agreement must be in writing and signed by
the Optionee and the Company.

     15. Conditions Upon Issuance of Shares.

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

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

     16. Liability of Company.

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

          (b) Grants Exceeding Allotted Shares. If the Optioned Stock covered by an Option
exceeds, as of the date of grant, the number of Shares which may be issued under the Plan without
additional shareholder approval, such Option shall be void with respect to such excess Optioned
Stock, unless shareholder approval of an amendment sufficiently increasing the number of Shares
subject to the Plan is timely obtained in accordance with Section 14(b) of the Plan.

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

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

-12-

 

     19. Tax and Social Security Indemnity. An Optionee shall indemnify the Company
against any tax arising in respect of the grant or exercise of the Option which is a liability of
the Optionee but for which the Company is required to account under the laws of any relevant
territory. The Company may recover the tax from the Optionee in such manner as the Administrator
deems appropriate, including (but without prejudice to the generality of the foregoing):

	 	(a)	 	withholding shares upon the exercise of the Option and selling the same;
	 
	 	(b)	 	deducting the necessary amount from the Optionee’s compensation; or
	 
	 	(c)	 	requiring the Optionee to make cash payment to the Company for such tax.

-13-EX-10.2:

 

Exhibit 10.2

GARTNER GROUP, INC.

1996 LONG TERM STOCK OPTION PLAN

As amended and restated June 29, 2005

     1. Purpose of the Plan. The purposes of the 1996 Long Term Stock Option Plan (the
“Plan”) are:

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

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

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

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

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

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

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

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

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

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

          (h) “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. 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.

          (i) “Continuous Status as an Employee or Consultant” means that the employment or
consulting relationship with the Company, any Parent, or Subsidiary, is not interrupted or
terminated. Continuous Status as an Employee or Consultant shall not be considered

          

 

 

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

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

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

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

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

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

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

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

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

-2-

 

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

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

          (q) “Notice of Grant” means a written notice evidencing certain terms and conditions
of an individual Option grant. The Notice of Grant is part of the Option Agreement.

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

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

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

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

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

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

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

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

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

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

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

     3. Stock Subject to the Plan. Subject to the provisions of Section 12 of the Plan,
the maximum aggregate number of Shares which may be optioned and sold under the Plan is 1,800,000
Shares. The Shares may be authorized, but unissued, or reacquired Common Stock.

-3-

 

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

     4. Administration of the Plan.

          (a) Procedure 

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

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

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

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

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

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

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

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

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

-4-

 

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

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

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

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

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

               (x) to modify or amend each Option (subject to Section 14(c) of the Plan), including the
discretionary authority to extend the post-termination exercisability period of Options longer than
is otherwise provided for in the Plan;

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

               (xii) to institute an Option Exchange Program;

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

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

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

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

     6. Limitations.

          (a) Each Option shall be designated in the Notice of Grant as either an Incentive Stock Option
or a Nonstatutory Stock Option. However, notwithstanding such designations, to the extent that the
aggregate Fair Market Value of Shares subject to an Optionee’s Incentive Stock Options granted by
the Company, any Parent or Subsidiary, which become exercisable for the first

-5-

 

time during any calendar year (under all plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock Options. For purposes
of this Section 6(a), Incentive Stock Options shall be taken into account in the order in which
they were granted, and the Fair Market Value of the Shares shall be determined as of the time of
grant.

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

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

               (i) No Employee shall be granted, in any fiscal year of the Company, Options to purchase more
than 500,000 shares.

               (ii) In connection with his or her initial employment, an Employee may be granted Options to
purchase up to an additional 500,000 Shares which shall not count against the limit set forth in
subsection (i) above.

               (iii) The foregoing limitations shall be adjusted proportionately in connection with any
change in the Company’s capitalization as described in Section 12.

               (iv) If an Option is canceled in the same fiscal year of the Company in which it was granted
(other than in connection with a transaction describe in Section 12), the canceled Option will be
counted against the limit set forth in Section 6(c)(i). For this purpose, if the exercise price of
an Option is reduced, the transaction will be treated as a cancellation of the Option and the grant
of a new Option.

     7. Term of Plan. Subject to Section 18 of the Plan, the Plan shall become effective
upon the earlier to occur of its adoption by the Board or its approval by the shareholders of the
Company as described in Section 18 of the Plan. It shall continue in effect for a term of ten (10)
years unless terminated earlier under Section 14 of the Plan.

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

     9. Option Exercise Price and Consideration.

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

               (i) In the case of an Incentive Stock Option

-6-

 

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

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

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

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

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

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

               (i) cash;

               (ii) check;

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

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

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

-7-

 

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

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

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

     10. Exercise of Option.

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

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

     An Option shall be deemed exercised when the Company receives: (i) written notice of exercise
(in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii)
full payment for the Shares with respect to which the Option is exercised. Full payment may
consist of any consideration and method of payment authorized by the Administrator and permitted by
the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the
name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her
spouse. Until the stock certificate evidencing such Shares is issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 12 of the Plan.

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

          (b) Termination of Employment or Consulting Relationship.

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

               (ii) An Optionee’s change of status from Employee to Consultant shall not be treated as a
termination of the Optionee’s Continuous Status as an Employee or Consultant, and

-8-

 

any Option held by the Optionee shall remain in effect, except as provided hereinbelow. Any
Incentive Stock Option held by such Optionee shall automatically cease to be treated for tax
purposes as an Incentive Stock Option and shall be treated as a Nonstatutory Stock Option on the
ninety-first (91st) day following such change of status. Notwithstanding the above, within thirty
(30) days after any such change of status, the Administrator may in its discretion determine that
this Section 10(b)(ii) shall not apply to such change of status and that such change of status
shall be treated as a termination of the Optionee’s Continuous Status as an Employee or Consultant
as provided in Section 10(b)(i).

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

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

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

     11. Transferability of Options. Unless otherwise determined by the Administrator to
the contrary, Options may not be sold, pledged, assigned, hypothecated, transferred or disposed of
in any manner other than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee. The Administrator may, in the manner
established by the Administrator, provide for the transfer of a Nonstatuatory Stock Option by the
Optionee to any member of the Optionee’s immediate family. In such case, the Nonstatutory Stock
Option shall be exercisable only by such transferee. Following transfer, any such Nonstatutory
Stock Options shall continue to be subject to the same terms and conditions as were applicable
immediately prior to the transfer. For purposes of this Section, an Optionee’s “immediate family”
shall mean any of the following who have acquired the Option from the Optionee through a gift or
domestic relations order: a child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law,

-9-

 

including adoptive relationships, trusts for the exclusive benefit of these persons and any
other entity owned solely by these persons, and such other persons and entities as shall be
eligible to be included as transferees in the Form S-8 Registration Statement under the Securities
Act of 1933, as amended, filed or to be filed by the Company to register shares of Common Stock to
be issued upon the exercise of Options granted pursuant to the Plan.

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

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

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

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

-10-

 

type of consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of assets was not
solely common stock of the successor corporation or its Parent, the Administrator may, with the
consent of the successor corporation, provide for the consideration to be received upon the
exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common
stock of the successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of assets.

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

     14. Amendment and Termination of the Plan.

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

          (b) Shareholder Approval. The Company shall obtain shareholder approval of any Plan
amendment to the extent necessary and desirable to comply with Rule 16b-3 or with Section 422 of
the Code (or any successor rule or statute or other applicable law, rule or regulation, including
the requirements of any exchange or quotation system on which the Common Stock is listed or
quoted). Such shareholder approval, if required, shall be obtained in such a manner and to such a
degree as is required by the applicable law, rule or regulation.

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

     15. Conditions Upon Issuance of Shares.

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

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

     16. Liability of Company.

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

          (b) Grants Exceeding Allotted Shares. If the Optioned Stock covered by an Option
exceeds, as of the date of grant, the number of Shares which may be issued under the Plan without
additional shareholder approval, such Option shall be void with respect to such excess Optioned
Stock, unless shareholder approval of an amendment sufficiently increasing the number of Shares
subject to the Plan is timely obtained in accordance with Section 14(b) of the Plan.

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

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

     19. Tax and Social Security Indemnity. An Optionee shall indemnify the Company
against any tax arising in respect of the grant or exercise of the Option which is a liability of
the Optionee but for which the Company is required to account under the laws of any relevant
territory. The Company may recover the tax from the Optionee in such manner as the Administrator
deems appropriate, including (but without prejudice to the generality of the foregoing):

	 	(a)	 	withholding shares upon the exercise of the Option and selling the same;
	 
	 	(b)	 	deducting the necessary amount from the Optionee’s compensation; or
	 
	 	(c)	 	requiring the Optionee to make cash payment to the Company for such tax.

-12-

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