Document:

Exhibit 10.5

 

 

 

 

 

 

	
   

  
	
   

  
	
  SOLERA HOLDINGS, INC.

  
	
   

  
	
  2007  LONG-TERM EQUITY INCENTIVE PLAN

  
	
   

  
	
   

  
	
   

  

 

 

 

TABLE OF CONTENTS

	
   

  	
   

  	
  Page

  
	
  1.

  	
  Purpose

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Administration

  	
  5

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Shares Available for the Plan; Limitations on Grants

  	
  6

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Participation

  	
  7

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Incentive and Non Qualified Stock Options;
  Expiration and Termination of Options and SARs

  	
  7

  
	
   

  	
  (a)

  	
  Price

  	
  7

  
	
   

  	
  (b)

  	
  Payment

  	
  8

  
	
   

  	
  (c)

  	
  Terms of Options

  	
  8

  
	
   

  	
  (d)

  	
  Other Limitations on Grants

  	
  9

  
	
   

  	
  (e)

  	
  Termination

  	
  9

  
	
   

  	
  (f)

  	
  Forfeiture

  	
  10

  
	
   

  	
  (g)

  	
  Written Agreement

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Stock Appreciation Rights

  	
  11

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Restricted Stock

  	
  12

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Restricted Stock Units

  	
  12

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Performance Awards

  	
  14

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Withholding Taxes

  	
  15

  
	
   

  	
  (a)

  	
  Participant Election

  	
  15

  
	
   

  	
  (b)

  	
  Company Requirement

  	
  15

  
	
   

  	
   

  	
   

  
	
  12.

  	
  Written Agreement; Vesting

  	
  15

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Transferability

  	
  16

  
	
   

  	
   

  	
   

  
	
  14.

  	
  Prohibition on Tax Gross Ups

  	
  16

  
	
   

  	
   

  	
   

  
	
  15.

  	
  Prohibition on Loans to Participants

  	
  16

  
	
   

  	
   

  	
   

  
	
  16.

  	
  Prohibition on Repricing

  	
  16

  
	
   

  	
   

  	
   

  
	
  17.

  	
  Listing, Registration and Qualification

  	
  17

  

 

 

 

 

 

i

 

	
   

  	
   

  	
   

  
	
  18.

  	
  Transfer of Employee

  	
  17

  
	
   

  	
   

  	
   

  
	
  19.

  	
  Adjustments

  	
  17

  
	
   

  	
   

  	
   

  
	
  20.

  	
  Merger, Consolidation or Other Reorganization;
  Change in Control

  	
  17

  
	
   

  	
   

  	
   

  
	
  21.

  	
  Amendment and Termination of the Plan

  	
  18

  
	
   

  	
   

  	
   

  
	
  22.

  	
  Amendment or Substitution of Awards under the Plan

  	
  19

  
	
   

  	
   

  	
   

  
	
  23.

  	
  Other Tax Matters

  	
  19

  
	
   

  	
   

  	
   

  
	
  24.

  	
  Commencement Date; Termination Date

  	
  19

  
	
   

  	
   

  	
   

  
	
  25.

  	
  Indemnification

  	
  20

  
	
   

  	
   

  	
   

  
	
  26.

  	
  No Corporate Action Restriction

  	
  21

  
	
   

  	
   

  	
   

  
	
  27.

  	
  Severability

  	
  21

  
	
   

  	
   

  	
   

  
	
  28.

  	
  Governing Law

  	
  21

  
	
   

  	
   

  	
   

  
	
  29.

  	
  Purchase Agreement Restrictions

  	
  22

  
	
   

  	
   

  	
   

  
	
  30.

  	
  Effect on Employment

  	
  22

  

 

 

 

ii

 

 

SOLERA HOLDINGS, INC.  

2007 LONG-TERM EQUITY INCENTIVE PLAN (1)

1.             Purpose.

This plan shall be known as the Solera Holdings, Inc.
2007 Long-Term Equity Incentive Plan (the “Plan”).  The purpose of the Plan shall be to promote
the long-term growth and profitability of Solera Holdings, Inc. (the “Company”)
and its Subsidiaries by (i) providing certain directors, officers and employees of, and certain other individuals who perform services for, or to whom an
offer of employment has been extended by, the Company and its
Subsidiaries with incentives to maximize stockholder value and otherwise
contribute to the success of the Company and (ii) enabling the Company to
attract, retain and reward the best available persons for positions of
responsibility.  Grants of incentive or
non-qualified stock options, restricted stock, restricted stock units,
stock appreciation rights (“SARs”), performance awards, or any
combination of the foregoing may be made under the Plan (each of the foregoing
made under the Plan, a “grant” or “award”).

2.             Definitions.

(a)                                 “Affiliate” shall mean, with
respect to any person, entity or group, any other person, entity or group,
which, directly or indirectly, controls, is controlled by, or is under common
control with such person, entity or group.

(b)                                 “Board of Directors” and “Board”
mean the board of directors of the Company.

(c)                                  “Cause” has the meaning set forth
in the applicable Award Agreement, or if such agreement does not define
“Cause,” then “Cause” has the meaning set forth in the employment agreement or
senior management agreement between the participant and the Company or its
Subsidiaries and, in the absence of such an employment agreement or senior
management agreement, means a determination by the Board that one or more of
the following events has occurred:

(i)                                     the commission of a felony or a crime
involving moral turpitude by a participant or the commission of any other act
or omission by a participant involving dishonesty or fraud with respect to the
Company or any of its Subsidiaries or any of their customers or suppliers,

(ii)                                  a participant’s failure or inability
(other than by reason of Disability) to carry out effectively his or her duties
and obligations to the Company and its Subsidiaries or to participate
effectively and actively in the management of the Company and its Subsidiaries,
as determined by the Company or a Subsidiary thereof, as the case may be,

(1) The Plan should be reviewed by Solera's
accountants.

 

 

 

(iii)                               gross negligence or willful misconduct by a
participant with respect to the Company or any of its Subsidiaries,

(iv)                              conduct by a participant tending to bring
the Company or any of its Subsidiaries into substantial public disgrace or
disrepute, and

(v)                                 any material breach by a participant of
any Award Agreement or such participant’s senior management agreement or
employment agreement, if any, with the Company or its Subsidiaries.

(d)                                 “Change in Control” means the occurrence
of one of the following events (other than in connection with a sale to an
Exempt Person):

(i)                                     if any “person” or “group” as those terms
are used in Sections 13(d) and 14(d) of the Exchange Act or any successors
thereto, other than an Exempt Person, is
or becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act or any successor thereto), directly or indirectly, of securities
of the Company representing 50%
or more of the combined voting power of the Company’s then outstanding securities
excluding any acquisition pursuant to any Combination that would not otherwise
constitute a Change in Control; or

(ii)                                  during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board and
any new directors whose election by the Board or nomination for election by the
Company’s stockholders was approved by at least two-thirds of the
directors then still in office who either were directors at the beginning of
the period or whose election was previously so approved, cease for any reason
to constitute a majority thereof; or

(iii)                               consummation of a merger or consolidation of the
Company or any Subsidiary of the Company (a “Combination”) with any other
corporation, other than a merger or consolidation (A) with an Exempt Person,
(B) which would result in all or a portion of the voting securities of the
Company (or, if the Company is a Subsidiary of another company, the ultimate
parent company 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) more than 50% of the combined voting power
of the voting securities of the Company (or, if the Company is a Subsidiary of
another company, the ultimate parent company of the Company) or such surviving
entity outstanding immediately after such merger or consolidation or (C) by
which the corporate existence of the Company is not affected and following
which the Company’s chief executive officer and directors retain their
positions with the Company (and constitute at least a majority of the Board);
or

 

2

(iv)                              consummation of a plan of complete
liquidation of the Company or a sale or disposition by the Company of all or
substantially all the Company’s assets,
other than a sale to an Exempt Person.

(e)                                  “Code”  means the Internal Revenue Code of 1986, as
amended.  Reference to a specific section
of the Code or regulation thereunder shall include such section or regulation,
any valid regulation or interpretation promulgated under such section, and any
comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.

(f)                                   “Committee” means the Compensation Committee of the Board,
which shall consist solely of two or more members of the Board, and each member
of the Committee shall be (i) a “non-employee director” within the meaning of
Rule 16b-3 under the Exchange Act, unless administration of the Plan by
“non-employee directors” is not then required in order for exemptions under
Rule 16b-3 to apply to transactions under the Plan, (ii) an “outside director”
within the meaning of Section 162(m) of the Code, unless administration of the
Plan by “outside directors” is not then required in order to qualify for tax
deductibility under Section 162(m) of the Code, and (iii) independent, as
defined by the rules of the New York Stock Exchange or any national securities
exchange on which any securities of the Company are listed for trading, and if
not listed for trading, by the rules of the New York Stock Exchange.

(g)                                  “Common Stock” means the Common Stock, par value $0.01 per share,
of the Company, and any other shares into which such stock may be changed by
reason of a recapitalization, reorganization, merger, consolidation or any
other change in the corporate structure or capital stock of the Company.

(h)                                 “Disability” means a disability
that would entitle an eligible participant to payment of monthly disability
payments under any Company disability plan or as otherwise determined by the
Committee.

(i)                                     “Exchange Act” means the
Securities Exchange Act of 1934, as amended. 
Reference to a specific section of the Exchange Act or regulation
thereunder shall include such section or regulation, any valid regulation or
interpretation promulgated under such section, and any comparable provision of
any future legislation or regulation amending, supplementing or superseding
such section or regulation.

(j)                                    “Exempt Person” means
(i) GTCR Golder Rauner, L.L.C., GTCR Golder Rauner II, L.L.C. and their
respective Affiliates, (ii) any person, entity or group under the control
of any party included in clause (i), (iii) any employee benefit plan of
the Company or any of its Subsidiaries or a trustee or other administrator or
fiduciary holding securities under an employee benefit plan of the Company or
any Subsidiary or (iv) any underwriter holding securities as part of a public
offering.

 

3

(k)                                 “Fair Market Value” of a share of
Common Stock of the Company means, as of the date in question (the
“Determination Date”), the officially-quoted closing selling price in the
primary trading session of the stock on the principal securities exchange on
which the Common Stock is then listed for trading (including for this purpose
the New York Stock Exchange) (the “Market”) for the applicable trading
day or, if such day is not a trading day, the last trading day before the
Determination Date; provided that if the Common Stock is not then listed or
quoted in any Market, the Fair Market Value shall be the fair value of the
Common Stock determined in good faith by the Committee; provided, however,
that when shares received upon exercise of an option are immediately sold in
the open market, the net sale price received may be used to determine the Fair
Market Value of any shares used, to the extent permitted by the Plan, to pay
the exercise price or to pay any applicable withholding taxes.

(l)                                     “Family Member” has the meaning
given to such term in General Instruction A.1(a)(5) to Form S-8 under the
Securities Act of 1933, as amended, and any successor thereto.

(m)                              “Incentive Stock Option” means an
option conforming to the requirements of Section 422 of the Code and any
successor thereto.

(n)                                 “Non-Employee Director” has
the meaning given to such term in Rule 16b-3 under the Exchange Act and
any successor thereto.

(o)                                 “Non-Qualified Stock Option”
means any stock option other than an Incentive Stock Option.

(p)                                 “Other Company Securities” mean
securities of the Company other than Common Stock, which may include, without
limitation, unbundled stock units or components thereof, debentures, preferred
stock, warrants and securities convertible into or exchangeable for Common
Stock or other property.

(q)                                 “Purchase Agreement” means the
Second Amended and Restated Unit Purchase Agreement, dated as of
                    ,
2007, by and among the Company, GTCR Fund VIII, L.P., a Delaware limited
partnership, GTCR Fund VIII/B, L.P., a Delaware limited partnership, and GTCR
Co-Invest II, L.P., a Delaware limited partnership, as otherwise amended,
supplemented or modified from time to time in accordance with its terms.

(r)                                    “Retirement” means retirement as
defined under any Company pension plan or retirement program or termination of
one’s employment on retirement with the approval of the Committee.

(s)                                   “Solicitation” is deemed to occur
if a person whose employment with the Company or its Subsidiaries has
terminated (the “Former Employee”), directly or indirectly through
another entity, (i) induces or attempts to induce any employee 

 

4

of the Company or
its Subsidiaries to leave the employ of the Company or such Subsidiary, or in
any way interferes with the relationship between the Company and any of its
Subsidiaries and any employee thereof (which restriction shall not preclude
placing advertisements in trade publications or similar general solicitations
for employment, so long as such advertisements or solicitations do not target
any employee of the Company or its Subsidiaries), (ii) hire any person who was
an employee of the Company or its Subsidiaries, which the Former Employee had
material business contact with during the Former Employee’s employment with the
Company or its Subsidiaries, within 180 days after such person ceased to be an
employee of the Company and any of its Subsidiaries, or (iii) induce or attempt
to induce any customer, supplier, licensee or other business relation of the
Company or its Subsidiaries to cease doing business with the Company or its
Subsidiaries or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and the Company or any of its
Subsidiaries, in each case, if any such inducement, attempted inducement or
interference would involve, use or rely upon any of the Company’s or any of its
Subsidiaries’ trade secrets or other confidential information.

(t)                                    “Subsidiary” means a corporation
or other entity of which outstanding shares or ownership interests representing
50% or more of the combined voting power of such corporation or other entity
entitled to elect the management thereof, or such lesser percentage as may be
approved by the Committee, are owned directly or indirectly by the Company.

3.             Administration.

The Plan shall be administered by the Committee; provided
that the Board may, in its discretion, at any time and from time to time,
resolve to administer the Plan, in which case the term “Committee” shall
be deemed to mean the Board for all purposes herein.  Subject to the provisions of the Plan, the
Committee shall have all power, authorization and discretion necessary or
appropriate to administer the Plan and to control its operation including,
without limitation, the power, authorization and discretion to (i) select
persons to participate in the Plan (each, a “participant”),
(ii) determine the form and substance of grants made under the Plan to
each participant, and the conditions and restrictions, if any, subject to which
such grants will be made, (iii) certify that the conditions and
restrictions applicable to any grant have been met, (iv) modify the terms
of grants made under the Plan, (v) interpret the Plan and grants made thereunder
(including, without limitation, Award Agreements) and any rules, regulations or
procedures made in respect thereof, (vi) make any adjustments necessary or
desirable in connection with grants made under the Plan to eligible
participants located outside the United States, (vii) adopt, amend, or rescind
such rules, regulations and procedures, and make such other determinations, in
each case, for administering, interpreting and carrying out the Plan as it may
deem appropriate, and (viii) correct any technical defect(s) or technical
omission(s), or reconcile any technical inconsistency(ies), in the Plan and/or
any Award Agreement.

Decisions of the Committee on all matters relating to
the Plan shall be in the Committee’s sole discretion and shall be conclusive
and binding on all parties.  The
validity, 

 

5

construction, and effect
of the Plan and any rules and regulations relating to the Plan shall be
determined in accordance with applicable federal and state laws and rules and
regulations promulgated pursuant thereto and the rules and regulations of the
principal securities exchange on which the Common Stock is then listed for
trading.  The Committee’s determinations
under the Plan need not be uniform and may be made selectively among
participants, whether or not such participants are similarly situated.

Each member of the Committee is entitled to, in good
faith, rely or act upon any report or other information furnished to that
member by any employee of the Company or any of its Subsidiaries or Affiliates,
the Company’s independent certified public accountants or any executive
compensation consultant or other professional retained by the Company or any of
its Subsidiaries to assist in the administration of the Plan.  No member of the Board or the Committee and
no officer of the Company shall be liable for any action taken or omitted to be
taken by such member, by any other member of the Committee or by any officer of
the Company in connection with the performance of duties under the Plan, except
for such person’s own willful misconduct or as expressly provided by statute.

The expenses of the Plan shall be borne by the
Company.  The Plan shall not be required
to establish any special or separate fund or make any other segregation of
assets to assume the payment of any award under the Plan, and rights to the
payment of such awards shall be no greater than the rights of the Company’s
general creditors.

4.             Shares
Available for the Plan; Limitations on Grants.

Subject to adjustments as provided in Section 19,
the maximum aggregate number of shares of Common Stock (“Shares”)
available for grant and issuance pursuant to the Plan shall be 4,300,000 (the “Shares
Cap”).  Notwithstanding the foregoing
but subject to adjustments as provided in Section 19, (i) the maximum
aggregate number of Shares for which grants may be made under the Plan prior to
the end of the fiscal year in which the Commencement Date occurred shall not
exceed     % of the Shares Cap, (ii) the maximum aggregate number
of Shares for which grants may be made under the Plan during any fiscal year of
the Company (other than the fiscal year of the Company in which the
Commencement Date occurred) to all Participants shall not exceed
            , (iii)
the maximum aggregate number of Shares for which grants may be made under the
Plan for Incentive Stock Options shall not exceed
            , and
(iv) the maximum aggregate number of Shares for which grants may be made under
the Plan to any one participant during any fiscal year of the Company shall not
exceed     % of the Shares Cap.  Such Shares may be in whole or in part
authorized and unissued or held by the Company as treasury shares.  If any grant under the Plan expires or
terminates unexercised, becomes unexercisable or is forfeited as to any Shares,
then such unpurchased or forfeited Shares shall thereafter be available for
further grants under the Plan.

The Committee may not make any grants or awards under
the Plan after the          anniversary
of the Commencement Date.  For purposes
of applying the limitations on grants and issuances set forth in this Section
4, stock options, SARs or other grants under the Plan shall be deemed to be
an outstanding grant of the maximum number of Shares that they are exercisable
for, exchangeable for, or otherwise based on.

 

6

5.             Participation.

Participation in the Plan shall be limited to those
directors (including Non-Employee Directors), officers (including non-employee
officers) and employees of, and other individuals performing services for, or
to whom an offer of employment has been extended by, the Company and its
Subsidiaries selected by the Committee (including participants located outside
the United States).  Nothing in the Plan
or in any grant thereunder shall confer any right on a participant to continue
in the service or employ as a director or officer of or in the performance of
services for the Company or a Subsidiary or shall interfere in any way with the
right of the Company or a Subsidiary to terminate the employment or performance
of services or to reduce the compensation or responsibilities of a participant
at any time.  By accepting any award
under the Plan, each participant and each person claiming under or through him
or her shall be conclusively deemed to have indicated his or her acceptance and
ratification of, and consent to, any action taken under the Plan by the
Company, the Board or the Committee.

Incentive Stock Options or Non-Qualified Stock
Options, restricted stock awards, restricted stock units, SARs, performance
awards, or any combination thereof, may be granted to such persons and for such
number of Shares as the Committee shall determine (such individuals to whom
grants are made being sometimes herein called “optionees” or “grantees,” as the
case may be).  A grant of any type made
hereunder in any one year to an eligible participant shall neither guarantee
nor preclude a further grant of that or any other type to such participant in
that year or subsequent years.

6.             Incentive
and Non-Qualified Stock Options; Expiration and Termination of Options
and SARs.

The Committee may from time to time grant to eligible
participants Incentive Stock Options, Non-Qualified Stock Options, or any
combination thereof; provided that the Committee may grant Incentive
Stock Options only to eligible employees of the Company or its subsidiaries (as
defined for this purpose in Section 424(f) of the Code or any successor
thereto).  The options granted shall take
such form as the Committee shall determine, subject to the following terms and
conditions.

It is the Company’s intent that Non-Qualified
Stock Options granted under the Plan not be classified as Incentive Stock
Options, that Non-Qualified Stock Options not give rise to plan failure income
inclusion under Section 409A(a)(1) of the Code, that Incentive Stock Options be
consistent with and contain or be deemed to contain all provisions required
under Section 422 of the Code and any successor thereto, and that any
ambiguities in construction be interpreted in order to effectuate such
intent.  If an Incentive Stock Option
granted under the Plan does not qualify as such for any reason, then to the
extent of such non-qualification, the stock option represented thereby
shall be regarded as a Non-Qualified Stock Option duly granted under the
Plan, provided that such stock option otherwise meets the Plan’s requirements
for Non-Qualified Stock Options.

(a)           Price.  The price per Share deliverable upon the
exercise of each option (“exercise price”) shall be established by the
Committee, except that the exercise price may not be less than 

 

7

100% of the Fair Market
Value of a share of Common Stock as of the date of grant of the option, and in
the case of the grant of any Incentive Stock Option to an employee who, at the
time of the grant, owns more than 10% of the total combined voting power of all
classes of stock of the Company or any of its Subsidiaries, the exercise price
may not be less than 110% of the Fair Market Value of a share of Common Stock
as of the date of grant of the option, in each case unless otherwise permitted
by Section 422 of the Code or any successor thereto.

(b)           Payment.  Options may be exercised, in whole or in
part, upon payment of the exercise price of the Shares to be acquired. Unless
otherwise determined by the Committee, payment shall be made (i) in cash
(including check, bank draft, money order or wire transfer of immediately
available funds), (ii) by delivery of outstanding shares of Common Stock
with a Fair Market Value on the date of exercise equal to the aggregate
exercise price payable with respect to the options’ exercise, (iii) by
simultaneous sale through a broker reasonably acceptable to the Committee of
Shares acquired on exercise, as permitted under Regulation T of the Federal
Reserve Board, (iv) if and to the extent approved in advance by the Committee,
by authorizing the Company to withhold from issuance a number of Shares
issuable upon exercise of the options which, when multiplied by the Fair Market
Value of a share of Common Stock on the date of exercise, is equal to the
aggregate exercise price payable with respect to the options so exercised or
(v) by any combination of the foregoing clauses (i) through (iii) and, if
authorized by the Committee, clause (iv).

In the event a grantee elects to pay the exercise
price payable with respect to an option pursuant to clause (ii) above, (A) only
a whole number of share(s) of Common Stock (and not fractional shares of Common
Stock) may be tendered in payment, (B) such grantee must present evidence
acceptable to the Company that he or she has owned any such shares of Common
Stock tendered in payment of the exercise price (and that such tendered shares
of Common Stock have not been subject to any substantial risk of forfeiture)
for at least six months prior to the date of exercise, and (C) the
tendered shares of Common Stock must be delivered to the Company.  Delivery for this purpose may, at the
election of the grantee, be made either by (1) physical delivery of the
certificate(s) for all such shares of Common Stock tendered in payment of the
price, accompanied by duly executed instruments of transfer in a form
acceptable to the Company, or (2) direction to the grantee’s broker to
transfer, by book entry, such shares of Common Stock from a brokerage account
of the grantee to a brokerage account specified by the Company.  No grantee may tender shares of Common Stock
having a Fair Market Value exceeding the aggregate exercise price payable with
respect to the option being exercised (plus any applicable taxes).

(c)           Terms of Options.  The term during which each option may be
exercised shall be determined by the Committee, but if required by the Code and
except as otherwise provided herein, no option shall be exercisable in whole or
in part more than ten years from the date it is granted, and no Incentive Stock
Option granted to an employee who at the time of the grant owns more than 10%
of the total combined voting power of all classes of stock of the Company or
any of its Subsidiaries shall be exercisable more than five years from the date
it is granted.  All rights to purchase
Shares pursuant to an option shall, unless sooner terminated, expire at the
date designated by the Committee.  The
Committee shall determine the date on which each option shall become
exercisable and may provide that an option shall become exercisable in 

 

8

installments.  The Shares constituting each installment may
be purchased in whole or in part at any time after such installment becomes
exercisable, subject to such minimum exercise requirements as may be designated
by the Committee.  Prior to the exercise
of an option and delivery of the Shares represented thereby, the optionee shall
have no rights as a stockholder with respect to any Shares covered by such
outstanding option (including any dividend or voting rights).

(d)           Other Limitations on Grants.
If required by the Code, the aggregate Fair Market Value (determined as of the
grant date) of Shares for which an Incentive Stock Option is exercisable for
the first time by any individual during any calendar year under all equity
incentive plans of the Company and its Subsidiaries (as defined in Section 422
of the Code or any successor thereto) may not exceed $100,000.

(e)           Termination.

(i)            Death or Disability.  Unless otherwise determined by the Committee,
if a participant ceases to be a director, officer or employee of, or to perform
other services for, the Company or any Subsidiary due to death or Disability,
the portion of such participant’s options and SARs that is vested and
exercisable shall expire 180 days from the date of his or her death or
Disability, but in no event after the expiration date of the options or SARs
and all of the participant’s options and SARs that were not exercisable on the
date of death or Disability shall be forfeited immediately upon such event; provided,
however, that such options and SARs may become fully vested and
exercisable in whole or in part in the sole discretion of the Committee.  Notwithstanding the foregoing, if the
Disability giving rise to the termination of employment is not within the
meaning of Section 22(e)(3) of the Code or any successor thereto,
Incentive Stock Options not exercised by such participant on or before the date
that is three months after the date on which the termination of employment
occurred will cease to qualify as Incentive Stock Options and will be treated
as Non-qualified Stock Options under the Plan if required to be so
treated under the Code.

(ii)           Retirement.  Unless otherwise determined by the Committee,
if a participant ceases to be a director,
officer or employee of, or to perform
other services for, the Company or any Subsidiary upon the occurrence of
his or her Retirement, (A) all of the participant’s options and SARs that
were exercisable on the date of Retirement shall remain exercisable for, and
shall otherwise terminate at the end of, a period of 90 days after the date of Retirement, but in no event after
the expiration date of the options or SARs; provided that the
participant does not engage in Solicitation(2) during such 90—day period unless
he or she receives written consent to do so from the Board or the Committee; provided
further that the Board or Committee may extend such exercise period (and
related non-Solicitation period) in its discretion, but in no event may such
extended exercise period extend beyond the expiration date 

(2) Due to the
statutory restrictions in California on employment based non-competes, we have
limited this provision to a non-solicit/non-hire.  For jurisdictions outside of California,
consider adding a non-compete provision in each place in the Plan where the
Solicitation restriction currently appears. 
Alternatively, a non-competition provision could be included in the
Award Agreements for jurisdictions outside of California.

 

9

of the options nor shall the Board or Committee extend
such exercise period if such extension would cause the options or SARs to be
treated as a deferral of compensation within the meaning of Section 409A of the
Code unless the Board or Committee expressly determines otherwise, and
(B) all of the participant’s options and SARs that were not exercisable on
the date of Retirement shall be forfeited immediately upon such Retirement; provided,
however, that such options and SARs may become fully vested and
exercisable in whole or in part in the discretion of the Committee.  Notwithstanding
the foregoing, Incentive Stock Options not exercised by such participant on or
before the date that is 3 months after the date on which the Retirement occurs
will cease to qualify as Incentive Stock Options and will be treated as Non-Qualified
Stock Options under the Plan if required to be so treated under the Code.

(iii)          Discharge for Cause.  If a participant ceases to be a director, officer or employee of, or to perform other services for,
the Company or a Subsidiary due to Cause, or if a participant does not become a
director, officer or employee of, or does not begin performing other services
for, the Company or a Subsidiary for any reason, all of the participant’s
options and SARs shall expire and be forfeited immediately upon such cessation
or non-commencement, whether or not then exercisable.

(iv)          Other Termination.  Unless otherwise determined by the Committee,
if a participant ceases to be a director,
officer or employee of, or to otherwise
perform services for, the Company or a Subsidiary for any reason other
than death, Disability, Retirement or Cause, (A) all of the participant’s
options  and SARs that were exercisable
on the date of such cessation shall remain exercisable for, and shall otherwise
terminate at the end of, a period of 30 days
after the date of such cessation, but in no event after the expiration date of
the options or SARs; provided that the participant does not engage in
Solicitation during such 30-day
period unless he or she receives written consent to do so from the Board or the
Committee; provided  further that the Board or Committee may
extend such exercise period (and related non-Solicitation period) in its
discretion, but in no event may such extended exercise period extend beyond the
expiration date of the options nor shall the Board or Committee extend such
exercise period if such extension would cause the options or SARs to be treated
as a deferral of compensation within the meaning of Section 409A of the Code
unless the Board or Committee expressly determines otherwise, and (B) all of
the participant’s options and SARs that were not exercisable on the date of
such cessation shall be forfeited immediately upon such cessation.  Notwithstanding
the foregoing, Incentive Stock Options not exercised by such participant on or
before the date that is 3 months after the date on which the termination of
employment occurs will cease to qualify as Incentive Stock Options and will be
treated as Non-Qualified Stock Options under the Plan if required to be
so treated under the Code.

(f)            Forfeiture.  If a participant exercises any of his or her
options and/or SARs and, within one year thereafter, either (i) is terminated
as an employee or service provider to the Company or a Subsidiary for Cause or
(ii) engages in Solicitation without having received written consent to do so
from the Board or the Committee, then the participant may, in the discretion of
the Committee, be required to pay the Company the gain represented by the
difference between the aggregate selling price of the Shares acquired upon the
exercise of the options or SARs (or, if the Shares were not then sold, their
aggregate Fair Market Value on the date of exercise) and the aggregate exercise
price of the options or SARs exercised (the “Option Gain”), 

 

10

without regard to any
subsequent increase or decrease in the Fair Market Value of the Common
Stock.  In addition, the Company may, in
its discretion, deduct from any payment of any kind (including salary or bonus)
otherwise due to any such participant an amount equal to the Option Gain.

(g)           Written Agreement.  In addition to and not in limitation of Section
12, each Incentive Stock Option and Non-Qualified Stock Option granted
hereunder to a grantee shall be embodied in a written agreement (an “Option
Agreement”) which shall be signed by the grantee and an authorized
executive officer of the Company for and in the name and on behalf of the
Company and shall be subject to the terms and conditions of the Plan prescribed
in the Option Agreement.

Without limiting the generality of the foregoing
provisions of this Section 6 or the generality of the provisions of Sections
3, 4, 5 or 22 or any other section of the Plan, the
Committee may, at any time or from time to time, and on such terms and conditions
(that are consistent with and not in contravention of the other provisions of
the Plan) as the Committee may, in its sole discretion, determine, enter into
agreements (or take other actions with respect to the options) for new options
containing terms (including exercise prices) more (or less) favorable than the
outstanding options.

7.             Stock
Appreciation Rights.

The Committee shall have the authority to grant SARs
under the Plan.  SARs shall be subject to
such terms and conditions as the Committee may specify; provided that
(1) the exercise price of the SAR may never be less than the Fair Market Value
of the Shares subject to the SAR on the date the right is granted, (2) only
Shares may be delivered in settlement of the right upon exercise (except to the
extent that the Committee determines in its discretion that cash may be
delivered in settlement), and (3) the SAR does not include any feature for the
deferral of compensation within the meaning of Section 409A of the Code other
than the deferral of recognition of income until the exercise of the SAR.

No SAR may be exercised unless the Fair Market Value
of a share of Common Stock of the Company on the date of exercise exceeds the
exercise price of the SAR.  Prior to the
exercise of the SAR and delivery of the Shares represented thereby, the grantee
shall have no rights as a stockholder with respect to Shares covered by such
outstanding SAR (including any dividend or voting rights).

Upon the exercise of a SAR, the participant shall be
entitled to receive Shares having a Fair Market Value equal to (A) the
difference between the Fair Market Value of a share of Common Stock on the date
of exercise and the exercise price of the SAR multiplied by (B) the number of
Shares as to which the SAR is exercised.

All SARs will be exercised automatically on the last
day prior to the expiration date of the SAR so long as the Fair Market Value of
a share of Common Stock on that date exceeds the exercise price of the
SAR.  All SARs shall be subject to the
provisions of Sections 6(e) and 6(f) as provided therein.

 

11

8.             Restricted
Stock.

The Committee may at any time and from time to time
grant Shares of restricted stock under the Plan to such participants and in
such amounts as it determines.  Each
grant of Shares of restricted stock shall specify the applicable restrictions
on such Shares, the duration of such restrictions (which shall be at least six
months except as otherwise determined by the Committee or provided in the third
paragraph of this Section 8), and the time or times at which such
restrictions shall lapse with respect to all or a specified number of Shares
that are part of the grant.

The participant will be required to pay the Company
the aggregate par value of any Shares of restricted stock (or such larger
amount as the Board may determine to constitute capital under Section 154 of
the Delaware General Corporation Law, as amended, or any successor thereto)
within ten days of the date of grant, unless such Shares of restricted stock
are treasury shares.  The Committee may
also require the payment by the participant of a specified purchase price in
addition to such par value in connection with any restricted stock award.

Unless otherwise determined by the Committee, Shares
of restricted stock granted under the Plan may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated during any period of
restriction thereon.  Unless otherwise
determined by the Committee, certificates representing Shares of restricted
stock granted under the Plan will be held in escrow by the Company on the
participant’s behalf during any period of restriction thereon and will bear an
appropriate legend specifying the applicable restrictions thereon, and the
participant will be required to execute a blank stock power therefor.  Except as otherwise provided by the
Committee, during such period of restriction the participant shall have all of
the rights of a holder of Common Stock, including but not limited to the rights
to receive dividends (so long as such dividends are paid by March 15 of the
year following the year in which the participant’s right to receive the
dividend vests) and to vote, and any stock or other securities received as a
distribution with respect to such participant’s restricted stock shall be
subject to the same restrictions as then in effect for the restricted
stock.  Unless otherwise provided in the
Award Agreement, any such dividends or distributions shall be deposited with
the Company and shall be subject to the same restrictions on transferability
and forfeitability as the Shares of restricted stock with respect to which they
were paid.

Except as otherwise provided by the Committee, at such
time as a participant ceases to be, or in the event a participant does not
become, a director, officer or employee of, or otherwise performing services
for, the Company or its Subsidiaries for any reason, all Shares of restricted
stock granted to such participant on which the restrictions have not lapsed
shall be immediately forfeited to the Company.

9.             Restricted
Stock Units.

The Committee may at any time and from time to time
grant restricted stock units under the Plan to such participants and in such
amounts as it determines.  Each grant of
restricted stock units shall specify the applicable restrictions on such units,
the duration of such restrictions (which shall be at least six months except as
otherwise determined by the Committee or provided 

 

12

in the third paragraph of
this Section 9), and the time or times at which such restrictions shall
lapse with respect to all or a specified number of units that are part of the
grant.

Each restricted stock unit shall be equivalent in
value to one share of Common Stock and shall entitle the participant to receive
from the Company at the end of the vesting period (the “Vesting Period”)
applicable to such unit one Share, unless the participant elects in a timely
fashion to defer the receipt of such Shares, as provided below.  Restricted stock units may be granted without
payment of cash or consideration to the Company; provided that
participants shall be required to pay to the Company the aggregate par value of
the Shares received from the Company within ten days of the issuance of such
Shares unless such Shares are treasury shares.

Except as otherwise provided by the Committee, during
the Vesting Period the participant shall not have any rights as a stockholder
of the Company; provided that the participant shall have
the right, on terms and conditions set by the Committee, to receive accumulated
dividends or distributions (so long as such dividends or distributions are paid
by March 15 of the year following the year in which the participant’s right to
receive the dividend vests) with respect to the corresponding number of shares
of Common Stock underlying each restricted stock unit at the end of the Vesting
Period, unless such restricted stock units are converted into deferred stock
units, in which case such accumulated dividends or distributions shall be paid
by the Company to the participant at such time as the deferred stock units are
converted into Shares.

Except as otherwise provided by the Committee, at such
time as a participant ceases to be a director, officer or employee of, or
otherwise performing services for, the Company or any Subsidiary for any
reason, all restricted stock units granted to such participant on which the
restrictions have not lapsed shall be immediately forfeited to the Company;
provided that a transition without any gap in service from one role as a
service provider to the Company or a Subsidiary to another role as a service
provider to the Company or a Subsidiary (e.g., a transition from being an
employee of the Company to a director of the Company without any cessation of
service) shall not be deemed to be a cessation of service for this purpose.

A participant may elect by written notice to the
Company, which notice must be made before the later of, but in any event in
accordance with Section 409A of the Code, (i) the close of the tax year
preceding the year in which the restricted stock units are granted and (ii) 30
days of first becoming eligible to participate in the Plan (or, if earlier, the
last day of the tax year in which the participant first becomes eligible to
participate in the Plan) and on or prior to the date the restricted stock units
are granted, to defer the receipt of all or a portion of the Shares due with
respect to the vesting of such restricted stock units; provided that the
Committee may impose such additional restrictions with respect to the time at
which a participant may elect to defer receipt of Shares subject to the
deferral election, and any other terms with respect to a grant of restricted
stock units to the extent the Committee deems necessary to enable the
participant to defer recognition of income with respect to such units until the
Shares underlying such units are issued or distributed to the participant.  Upon such deferral, the restricted stock
units so deferred shall be converted into deferred stock units.  Except as provided below, delivery of Shares
with respect to deferred stock units shall be made at the end of the deferral
period set forth in the 

 

13

participant’s deferral
election notice (the “Deferral Period”). 
Deferral Periods shall be no less than one year after the vesting date
of the applicable restricted stock units.

Except as otherwise provided by the Committee, during
such Deferral Period the participant shall not have any rights as a stockholder
of the Company; provided that the participant shall have
the right to receive accumulated dividends or distributions with respect to the
corresponding number of shares of Common Stock underlying each deferred stock
unit at the end of the Deferral Period when such deferred stock units are
converted into Shares.

Except as otherwise provided by the Committee, if a
participant ceases to be a director, officer or employee of, or to otherwise
perform services for, the Company or any Subsidiary such participant shall
immediately forfeit any unvested deferred stock units that are outstanding as
of such cession.

10.          Performance
Awards.

Performance awards may be granted to participants at
any time and from time to time as determined by the Committee.  The Committee shall have complete discretion
in determining the size and composition of performance awards granted to a
participant.  The period over which
performance is to be measured (a “performance cycle”) shall commence on the
date specified by the Committee and shall end on the last day of a fiscal year
specified by the Committee.  A
performance award shall be paid no later than the 15th day of the third month
following the completion of a performance cycle.  Performance awards may include (i) specific
dollar-value target awards, (ii) performance units, the value of each such unit
being determined by the Committee at the time of issuance, and/or (iii)
performance Shares, the value of each such Share being equal to the Fair Market
Value of a share of Common Stock.

The value of each performance award may be fixed or it
may be permitted to fluctuate based on a performance factor (e.g., return on
equity) selected by the Committee.

The Committee shall establish performance goals and
objectives for each performance cycle on the basis of such criteria and
objectives as the Committee may select from time to time, including, without
limitation, the performance of the participant, the Company, one or more of its
Subsidiaries or divisions or any combination of the foregoing.  During any performance cycle, the Committee
shall have the authority to adjust the performance goals and objectives for
such cycle for such reasons as it deems equitable.

The Committee shall determine the portion of each
performance award that is earned by a participant on the basis of the Company’s
performance over the performance cycle in relation to the performance goals for
such cycle. The earned portion of a performance award may be paid out in
Shares, cash, Other Company Securities, or any combination thereof, as the
Committee may determine.

A participant must be a director, officer or employee
of, or otherwise perform services for,
the Company or its Subsidiaries on the last day of the performance cycle in
order to be entitled to payment of a performance award issued in respect of
such cycle; provided, 

 

14

however, that if a participant ceases to be a director, officer or employee of, or to
otherwise perform services for, the Company and its Subsidiaries upon his or
her death, Retirement, or Disability prior to the end of the performance cycle,
the Committee may determine that the participant shall earn a proportionate (or
other) portion of the performance award based upon the elapsed portion of the
performance cycle and the Company’s performance over that portion of such
cycle, in which case the Committee shall set the manner and date of payment in
a manner that is not treated as a deferral of compensation within the meaning
of Section 409A of the Code.

11.          Withholding
Taxes.

(a)           Participant Election.  Unless otherwise determined by the Committee,
a participant may elect to deliver shares of Common Stock (or have the Company
withhold shares acquired upon exercise of an option or SAR or deliverable upon
grant or vesting of restricted stock, as the case may be) to satisfy, in whole
or in part, the amount the Company is required to withhold for taxes in
connection with the exercise of an option or SAR or the delivery of restricted
stock upon grant or vesting, as the case may be.  Such election must be made on or before the
date the amount of tax to be withheld is determined.  Once made, the election shall be
irrevocable.  The fair market value of
the shares to be withheld or delivered will be the Fair Market Value as of the
date the amount of tax to be withheld is determined. In the event a participant
elects to deliver or have the Company withhold shares of Common Stock pursuant
to this Section 11(a), such delivery or withholding must be made subject
to the conditions and pursuant to the procedures set forth in Section 6(b)
with respect to the delivery or withholding of Common Stock in payment of the
exercise price of options.

(b)           Company Requirement.  The Company may require, as a condition to
any grant or exercise under the Plan or to the delivery of certificates for
Shares issued hereunder, that the grantee make provision for the payment to the
Company, either pursuant to Section 11(a) or this Section 11(b),
of federal, state or local taxes of any kind required by law to be withheld
with respect to any grant or delivery of Shares.  The Company, to the extent permitted or
required by law, shall have the right to deduct from any payment of any kind
(including salary or bonus) otherwise due to a grantee, an amount equal to any
federal, state or local taxes of any kind required by law to be withheld with
respect to any grant or delivery of Shares under the Plan.

12.          Written
Agreement; Vesting.

Unless the Committee determines otherwise, each
participant to whom a grant is made under the Plan shall enter into a written agreement with the
Company with respect to such grant that shall contain such provisions,
including without limitation vesting requirements, consistent with the provisions
of the Plan, as may be approved by the Committee (such written agreement, an “Award
Agreement”); provided that unless the Committee determines
otherwise, no option, restricted stock grant or restricted stock unit grant may
vest in any participant more than     % of the Shares
subject to such participant’s grant in any one calendar year except in the case
of a special acceleration event, if any, as determined by the Committee.  Each Option Agreement shall also constitute
an Award Agreement.  Unless the Committee
determines otherwise and except as otherwise expressly provided in this Plan,
no grant under the Plan may 

 

15

be exercised, and no
restrictions relating thereto may lapse, within six months of the date such
grant is made.

13.          Transferability.

Unless the Committee
determines otherwise, a grant under the Plan other than an Incentive Stock
Option shall be transferable by a participant only by will or the laws of
descent and distribution or to a participant’s Family Member by gift or a
qualified domestic relations order as defined by the Code; provided, that any such Family Member
shall agree to be and shall be bound by the terms of the Plan, and by the terms
and provisions of the applicable Award Agreement and any other agreements
covering the transferred grants.  An
Incentive Stock Option shall not be transferable by a participant except by
will or the laws of descent and distribution except as otherwise permitted by
the Code.  Unless the Committee determines
otherwise, an option or SAR may be exercised only by the optionee or grantee
thereof; by his or her Family Member if
such person has acquired the option or SAR by gift or qualified domestic relations order; by the executor or
administrator of the estate of any of the foregoing or any person to
whom the option or SAR is transferred by will or the laws of descent and
distribution; or by the guardian or
legal representative of any of the foregoing; provided that Incentive
Stock Options may be exercised by any Family Member, guardian or legal
representative only if permitted by the Code and any regulations
thereunder.  All provisions of the Plan,
any Award Agreement and any other agreements covering the transferred grants
shall in any event continue to apply to any award granted under the Plan and
transferred as permitted by this Section 13, and any transferee of any
such award shall be bound by all provisions of the Plan, the Award Agreement
and such other agreements as and to the same extent as the applicable original
grantee.

14.          Prohibition
on Tax Gross Ups.  Notwithstanding
any other provision of the Plan, the Committee shall not gross up or otherwise
reimburse any participant in respect of any taxes or penalties imposed on any
grants under the Plan.

15.          Prohibition
on Loans to Participants.

The Company shall not loan funds to any grantee for
the purpose of paying the exercise or base price associated with any grant
under the Plan or for the purpose of paying any taxes associated with the
exercise or vesting of any grant under the Plan.

16.          Prohibition
on Repricing.

Notwithstanding any provision of the Plan other than
Sections 19 and 20, the Committee shall not, without prior stockholder
approval, “reprice” any option or SAR granted under the Plan if the effect of
such repricing would be to decrease the exercise price per share applicable to
such stock option or SAR.  For this
purpose, a “repricing” would include a tandem cancellation and regrant of an
option or SAR or any other amendment or action that would have substantially
the same effect as decreasing the exercise price of outstanding options or
SARs.

 

16

17.          Listing,
Registration and Qualification.

If the Committee determines that the listing, registration
or qualification upon any securities exchange or under any law of Shares
subject to any option, SAR, performance award, restricted stock unit or
restricted stock grant is necessary or desirable as a condition of, or in
connection with, the granting of same or the issue or purchase of Shares
thereunder, no such option or SAR may be exercised in whole or in part, no such
performance award may be paid out, and no Shares may be issued, unless such
listing, registration or qualification is effected free of any conditions not
acceptable to the Committee.  The
Committee may require that certificates evidencing Shares delivered pursuant to
any grant made hereunder bear a legend indicating that the sale, transfer or other
disposition thereof by the holder is prohibited except in compliance with the
Securities Act of 1933, as amended, and the rules and regulations thereunder.

18.          Transfer
of Employee.

The transfer of an employee from the Company to a
Subsidiary, from a Subsidiary to the Company, or from one Subsidiary to another
shall not be considered a termination of employment; nor shall it be considered
a termination of employment if an employee is placed on military or sick leave
or such other leave of absence which is considered by the Committee as continuing
intact the employment relationship.

19.          Adjustments.

In the event of a reorganization, recapitalization,
stock split, stock dividend, extraordinary dividend, combination of shares,
merger, consolidation, distribution of assets, or any other change in the
corporate structure or shares of the Company, the Committee shall make such
adjustment as it deems appropriate in the number and kind of Shares or other
property available for issuance under the Plan (including, without limitation,
the total number of Shares available for issuance under the Plan pursuant to Section
4), in the number and kind of options, SARs, Shares, restricted stock units
or other property covered by grants previously made under the Plan, and in the
exercise price of outstanding options and SARs; provided, however, that the
Committee shall not make any adjustment that would (i) require the inclusion of
any compensation deferred pursuant to provisions of the Plan (or an award
thereunder) in a participant’s gross income pursuant to Section 409A of the
Code and the regulations issued thereunder from time to time and/or
(ii) cause any award made pursuant to the Plan to be treated as providing
for the deferral of compensation pursuant to such Code section and regulations.  Any such adjustment shall be final,
conclusive and binding for all purposes of the Plan.

20.          Merger,
Consolidation or Other Reorganization; Change in Control.

In the event of any merger, consolidation or other
reorganization in which the Company is not the surviving or continuing
corporation or in which a Change in Control is to occur, the Committee may
provide, in its discretion, (1) that all of the Company’s obligations regarding
awards that were granted hereunder and that are outstanding on the date of such
event shall, on such terms as may be approved by the Committee prior to such
event, be, in the discretion of the Committee (a) canceled in exchange for cash
or other property (including, 

 

17

without limitation,
substitute grants or other securities, options or contractual rights) (but,
with respect to any vested amount that is subject to Section 409A of the Code,
only if such merger, consolidation, other reorganization, or Change in Control
constitutes a “change in ownership or control” of the Company or a “change in
the ownership of a substantial portion” of the Company’s assets, as determined
pursuant to regulations issued under Section 409A(a)(2)(A)(v) of the Code)
and/or (b) assumed by the surviving or continuing corporation.

Without limitation of the foregoing, in connection
with any transaction of the type specified by clause (iii) of the definition of
a Change in Control in Section 2 of the Plan that also constitutes a
“change in ownership or control” of the Company or a “change in the ownership
of a substantial portion” of the Company’s assets, as determined pursuant to
regulations issued under Section 409A(a)(2)(A)(v) of the Code, the Committee
may, in its discretion, (i) cancel any or all outstanding options and/or SARs
under the Plan in consideration for payment to the holders thereof of an amount
equal to the portion of the consideration that would have been payable to such
holders pursuant to such transaction if their options or SARs, as applicable,
had been fully exercised immediately prior to such transaction, less the
aggregate exercise price that would have been payable therefor, (ii) if the
amount that would have been payable to the option holders or SARs holders
pursuant to such transaction if their options or SARs, as applicable, had been
fully exercised immediately prior thereto would be equal to or less than the
aggregate exercise price that would have been payable therefor, cancel any or
all such options and/or SARs for no consideration or payment of any kind, (iii)
cancel any or all outstanding options and/or SARs under the Plan to the extent
not exercisable or not exercised prior to the consummation of such transaction
or other prescribed period of time for no consideration or payment of any kind,
and/or (iv) provide that a participant holding stock options and/or SARs shall
thereafter have the right, as determined by the Committee, to acquire and
receive upon the exercise thereof, rather than the Shares immediately
theretofore issuable upon the exercise of such options or SARs, as applicable,
such stock, securities or assets as would have been issued or payable with
respect to or in exchange for the Shares immediately theretofore issuable upon
the exercise of such options or SARs had such options or SARs been exercised
immediately prior to such event.

Payment of any amount payable pursuant to this Section
20 may be made in cash or, in the event that the consideration to be
received in connection with such event includes securities or other property,
in cash and/or securities or other property in the Committee’s discretion.  Any actions or determinations of the
Committee under this Section 20 need not be uniform as to all
outstanding grants, nor treat all participants identically.

21.          Amendment
and Termination of the Plan.

Subject to the Purchase Agreement, the Board or the
Committee, without approval of the stockholders, may amend or terminate the
Plan, except that no amendment shall become effective without prior approval of
the stockholders of the Company if stockholder approval would be required by
applicable law or regulations, including, without limitation, if required for
continued compliance with the performance-based compensation exception of
Section 162(m) of the Code or any successor thereto, under the provisions
of Section 422 of the Code or any 

 

18

 

successor thereto, or by
any listing requirement of the principal stock exchange on which the Common
Stock is then listed.(3)

22.          Amendment
or Substitution of Awards under the Plan.

The terms of any
outstanding award under the Plan may be amended from time to time by the
Committee in its discretion in any manner that it deems appropriate, including,
but not limited to, acceleration of the date of exercise of any award and/or
payments thereunder or of the date of lapse of restrictions on Shares; provided
that, except as otherwise provided in Section 19, no such amendment
shall adversely affect in a material manner any right of a participant under
the award without his or her written consent. 
The Committee may, in its discretion, permit holders of awards under the
Plan to surrender outstanding awards in order to exercise or realize rights
under other awards, or in exchange for the grant of new awards, or require
holders of awards to surrender outstanding awards as a condition precedent to
the grant of new awards under the Plan, but only if such surrender, exercise,
realization, exchange, or grant (a) would not constitute a distribution of
deferred compensation for purposes of Section 409A(a)(3) of the Code or (b)
constitutes a distribution of deferred compensation that is permitted under
regulations issued pursuant to Section 409A(a)(3) of the Code.

23.          Other
Tax Matters.

All grants made under this Plan are intended to avoid
the inclusion of amounts with respect to any grants as deferred compensation of
any Participant under Code § 409A. 
However, neither the Company nor any of its Affiliates makes or shall
make any representations or warranties with respect to the application of Code
§ 409A to the grants, and by the acceptance of any grant, each Participant
agrees to accept the potential application of Code § 409A to the grant and any
other tax consequences of the issuance, vesting, ownership, exercise, modification,
adjustment and disposition of the grant and agrees that the Company and its
Affiliates will have no liability to the Participant with respect thereto.

Notwithstanding any other provisions of the Plan, and
in addition to the powers of amendment set forth in Section 21 and Section
22 hereof or otherwise, the provisions hereof and the provisions of any
award made hereunder may be amended unilaterally by the Committee from time to
time to the extent necessary (and only to the extent necessary) to prevent the
implementation, application or existence (as the case may be) of any such
provision from (i) requiring the inclusion of any compensation deferred
pursuant to the provisions of the Plan (or an award thereunder) in a
participant’s gross income pursuant to Section 409A of the Code, and the
regulations issued thereunder from time to time and/or (ii) inadvertently
causing any award hereunder to be treated as providing for the deferral of
compensation pursuant to such Code section and regulations.

(3) The Amended
and Restated GTCR Unit Purchase Agreement will be amended prior to adoption of
the Plan to provide that GTCR will have the right to consent to certain
amendments of the Plan including, without limitation, amendments to Sections 4,
21, 22 and 29.

 

19

 

24.          Commencement
Date; Termination Date.

The date of commencement of the Plan shall be the date
the Company’s stockholders approved the Plan (the “Commencement Date”).  Unless previously terminated upon the adoption
of a resolution of the Board or the Committee terminating the Plan, the Plan
shall terminate at the close of business on the ten year anniversary of the
Commencement Date.  No termination of the
Plan shall materially and adversely affect any of the rights or obligations of
any person, without his or her written consent, under any grant of options or
other incentives theretofore granted under the Plan and no such termination
shall affect or diminish the authority of the Committee hereunder with respect
to any such grant or other incentives made prior to such termination.  No grant under the Plan may be granted during
any period of suspension or after termination of the Plan.

25.          Indemnification.

Each person who is or shall have been a member of the
Committee, or of the Board, shall be indemnified and held harmless by the
Company against and from (a) any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any good faith
action taken or good faith failure to act under the Plan or any Award
Agreement, and (b) from any and all amounts paid by him or her in settlement
thereof, with the Company’s approval, or paid by him or her in satisfaction of
any judgment in any such claim, action, suit, or proceeding against him or her,
provided he or she shall give the Company an opportunity, at its own expense,
to handle and defend the same before he or she undertakes to handle and defend
it on his or her own behalf. The foregoing right of indemnification shall not
be exclusive of any other rights of indemnification to which such persons may
be entitled under the Company’s Certificate of Incorporation or By-Laws, by
contract, as a matter of law, or otherwise, or under any power that the Company
may have to indemnify them or hold them harmless.

 

20

 

26.          No
Corporate Action Restriction.  The
existence of the Plan, any Award Agreement and/or the grants granted hereunder
shall not limit, affect or restrict in any way the right or power of the Board
or the stockholders of the Company to make or authorize (a) any adjustment,
recapitalization, reorganization or other change in the Company’s or any
Subsidiary’s or Affiliate’s capital structure or business, (b) any merger,
consolidation or change in the ownership of the Company or any Subsidiary or
Affiliate, (c) any issue of bonds, debentures, capital, preferred or prior
preference stocks ahead of or affecting the Company’s or any Subsidiary’s or
Affiliate’s capital stock or the rights thereof, (d) any dissolution or
liquidation of the Company or any Subsidiary or Affiliate, (e) any sale or
transfer of all or any part of the Company’s or any Subsidiary’s or Affiliate’s
assets or business, or (f) any other corporate act or proceeding by the Company
or any Subsidiary or Affiliate.  No
participant, beneficiary or any other person shall have any claim against any
member of the Board or the Committee, the Company or any Subsidiary or
Affiliate, or any employees, officers, stockholders or agents of the Company or
any Subsidiary or Affiliate, as a result of any such action.

27.          Severability.

Whenever possible, each provision of the Plan shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of the Plan is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of the Plan.

28.          Governing
Law.

The Plan shall be governed by the corporate laws of
the State of Delaware, without giving effect to any choice of law provisions that
might otherwise refer construction or interpretation of the Plan to the
substantive law of another jurisdiction. 
Any suit, action or proceeding with respect to this Plan or any award
agreement, or any judgment entered by any court of competent jurisdiction in
respect of any thereof, shall be brought in any Court in the State of Delaware,
and the Company and each participant shall submit to the exclusive jurisdiction
of such courts for the purpose of any such suit, action, proceeding or
judgment.  The Company and each
participant shall irrevocably waive any objections which he, she or it may have
to the laying of the venue of any suit, action or proceeding arising out of or
relating to this Plan or any award agreement brought in any Court in the State
of Delaware, and shall further irrevocably waive any claim that any such suit,
action or proceeding brought in any such court has been brought in any
inconvenient forum.  The Company and each
participant shall waive any right he, she or it may have to trial by jury in
respect of any litigation based on, arising out of, under or in connection with
this Plan or any award agreement or any course of conduct, course of dealing,
verbal or written statement or action of any party to any award agreement or
relating to this Plan in any way.

 

21

29.          Purchase
Agreement Restrictions. 
Notwithstanding anything to the contrary contained in the Plan, the
provisions of the Plan are subject to any applicable restrictions and/or limitations
as may be set forth in the Purchase Agreement to the extent the same remains in
effect.

30.          Effect
on Employment.  Nothing in this Plan
shall interfere with or limit in any way the right of the Company or any
Subsidiary to terminate any participant’s employment or service at any time,
for any reason and with or without cause. 
No person shall have the right to be selected to receive an award under
this Plan or, having been so selected, to be selected to receive a future
award.

 

 

22Exhibit 10.6

FORM OF

[NON-QUALIFIED] [INCENTIVE] STOCK OPTION AGREEMENT

[Solera Holdings, LLC Letterhead]

             ,      

 

	
  [Participant]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

Re:                                                                               Solera Holdings, LLC Grant of [Non-Qualified] [Incentive] Stock Option

Dear                :

Solera Holdings, Inc.
(the “Company”) is pleased to advise you that, pursuant to the Company’s 2007
Long-Term Equity Incentive Plan (the “Plan”), the Committee has granted
to you an option (the “Option”) to acquire shares of the Company’s
common stock, par value $0.01 per share (the “Common Stock”), as set
forth below (the “Option Shares”), subject to the terms and conditions
set forth herein:

	
  Number of Option Shares

  	
   

  
	
  Date of Grant

  	
   

  
	
  Exercise Price per Option Share

  	
   

  
	
  Vesting Dates of Option Shares

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Expiration Date of All Option Shares

  	
   

  

 

[The
Option is not intended to be an “incentive stock option” within the meaning of
Section 422 of the Code.] [The Option is intended to be an “incentive stock
option” within the meaning of Section 422 of the Code. If the Option does not
qualify as such for any reason, then to the extent of such non-qualification,
the Option shall be regarded as a non-qualified stock option.]

Each capitalized term not
defined herein shall have the meaning set forth for such term in the Plan.

1.             Option.

(a)           Term. Subject to the terms and
conditions set forth herein, the Company hereby grants to you (or such other
persons as permitted by paragraph 6) an Option to purchase the Option
Shares at the exercise price per Option Share set forth above in the
introductory paragraph of this letter agreement (the “Exercise Price”),
payable upon exercise as set forth in

paragraph 1(b) below. The Option shall expire at the
close of business on the date set forth above in the introductory paragraph of
this letter agreement (the “Expiration Date”), which is the tenth
anniversary of the date of grant set forth above in the introductory paragraph
of this letter agreement (the “Grant Date”), subject to earlier
expiration as provided in paragraph 2(c) below should you cease to be an
employee, officer or director of the Company or a Subsidiary. The Exercise
Price and the number and kind of shares of Common Stock or other property for
which the Option may be exercised shall be subject to adjustment as provided in
paragraph 10 below.

(b)           Payment of Option Price. Subject
to paragraph 2 below, the Option may be exercised in whole or in part upon
payment of an amount (the “Option Price”) equal to the product of
(i) the Exercise Price and (ii) the number of Option Shares to be
acquired. Payment of the Option Price shall be made by one or more of the
following means:

(i)            in cash (including
check, bank draft, money order or wire transfer of immediately available
funds);

(ii)           by delivery of
outstanding shares of Common Stock with a Fair Market Value on the date of
exercise equal to the Option Price;

(iii)          by simultaneous
sale through a broker reasonably acceptable to the Committee of Option Shares
acquired on exercise, as permitted under Regulation T of the Federal
Reserve Board;

(iv)          if and to the extent
apprived in advance by the Committee, by authorizing the Company to withhold
from issuance a number of Option Shares issuable upon exercise of the Option
which, when multiplied by the Fair Market Value of a share of Common Stock on
the date of exercise, is equal to the Option Price; or

(v)           by any combination
of the foregoing clauses (i) through (iii) and, if authorized by the Committee,
clause (iv).

2.             Exercisability/Vesting and Expiration.

(a)           Normal Vesting. The Option
granted hereunder may be exercised only to the extent it has become vested. The
Option shall vest as indicated by the Vesting Dates of Option Shares set forth
in the introductory paragraph of this letter agreement.

(b)           Normal Expiration. In no event
shall any part of the Option be exercisable after the Expiration Date.

(c)           Effect on Vesting and Expiration
of Employment Termination. Notwithstanding paragraphs 2(a) and (b) above,
the special vesting and expiration rules set forth in the Plan shall apply if
your employment or service with the Company or a Subsidiary terminates prior to
the Option becoming fully vested and/or prior to the Expiration Date.

(d)           Forfeiture. If you exercise
any portion of the Option and, within one year thereafter, either (i) are
terminated as an employee of or service provider to the Company or a

 

2

Subsidiary for Cause or (ii) engage in Soliciation
without having received written consent to do so from the Board or the Committee,
then you may, in the discretion of the Committee, be required to pay the
Company the gain represented by the difference between the aggregate selling
price of the Shares acquired upon the Option’s exercise (or, if the Shares were
not then sold, their aggregate Fair Market Value on the date of exercise) and
the aggregate exercise price of the Option exercised (the “Option Gain”),
without regard to any subsequent increase or decrease in the Fair Market Value
of the Common Stock. In addition, the Company may, in its discretion, deduct
from any payment of any kind otherwise due to you (including salary or bonus)
an amount equal to the Option Gain.

3.             Procedure for Exercise. You may exercise all or
any portion of the Option, to the extent it has vested and is outstanding, at
any time and from time to time prior to the Expiration Date, by delivering
written notice to the Company in the form attached hereto as Exhibit A,
together with payment of the Option Price in accordance with the provisions of
paragraph 1(b) above. The Option may not be exercised for a fraction of an
Option Share.

4.             Withholding of Taxes.

(a)           Participant Election. Unless
otherwise determined by the Committee, you may elect to deliver shares of
Common Stock (or have the Company withhold Option Shares acquired upon exercise
of the Option) to satisfy, in whole or in part, the amount the Company is
required to withhold for taxes in connection with the exercise of the Option. Such
election must be made on or before the date the amount of tax to be withheld is
determined. Once made, the election shall be irrevocable. The fair market value
of the shares to be withheld or delivered will be the Fair Market Value as of
the date the amount of tax to be withheld is determined.

(b)           Company Requirement. The
Company, to the extent permitted or required by law, shall have the right to
deduct from any payment of any kind (including salary or bonus) otherwise due
to you, an amount equal to any federal, state or local taxes of any kind
required by law to be withheld with respect to the delivery of Option Shares
under this Agreement.

5.             Transferability of Option. Unless the Committee
determines otherwise, you may transfer the Option granted hereunder only by
will or the laws of descent and distribution or, if this Option is not an
Incentive Stock Option, to any of your Family Members by gift or a qualified
domestic relations order as defined by the Code; provided, that any such Family
Membber shall agree to be and shall be bound by the terms of the Plan, and by the
terms and provisions herein. Unless the context requires otherwise, references
herein to you are deemed to include any permitted transferee under this
paragraph 6. Unless the Committee determines otherwise, the Option may be
exercised only by you; by your Family Member if such person has acquired the
Option by gift or qualified domestic relations order; the executor or
administrator of the estate of any of the foregoing or any person to whom the
Option is transferred by will or the laws of descent and distribution; or by
the guardian or representative of any of the foregoing; provided that Incentive
Stock Options may be exercised by any guardian or legal representative only if
permitted by the Code and any regulations thereunder.

 

3

6.             Conformity with Plan. The Option is intended to
conform in all respects with, and is subject to all applicable provisions of,
the Plan (which is incorporated herein by reference). Inconsistencies between
this Agreement and the Plan shall be resolved in accordance with the terms of
the Plan. By executing and returning the enclosed copy of this Agreement, you
acknowledge your receipt of this Agreement and the Plan and agree to be bound
by all of the terms of this Agreement and the Plan.

7.             Rights of Participants. Nothing in this Agreement
shall interfere with or limit in any way the right of the Company to terminate
your employment or other performance of services at any time (with or without
Cause), nor confer upon you any right to continue in the employ or as a
director or officer of, or in the performance of other services for, the
Company or a Subsidiary for any period of time, or to continue your present (or
any other) rate of compensation or level of responsibility, and in the event of
termination of employment or other performance of services (including, but not
limited to, termination without Cause), any portion of the Option that was not
previously vested and exercisable shall expire and be forfeited (other than, if
the Committee so provides, Retirement). Nothing in this Agreement shall confer
upon you any right to be selected again as a Plan participant.

8.             Certain Definition. For the purposes of this
Agreement, the following term shall have the meaning set forth below:

“Option Shares”
shall mean (i) all shares of Common Stock issued or issuable upon the exercise
of the Option and (ii) all shares of Common Stock issued with respect to the
Common Stock referred to in clause (i) above by way of stock dividend or stock
split or in connection with any conversion, merger, consolidation or
recapitalization or other reorganization affecting the Common Stock.

9.             Amendment or Substitution of Option. The terms of
the Option may be amended from time to time by the Committee in its discretion
in any manner that it deems appropriate (including, but not limited to,
acceleration of the date of exercise of the Option); provided that, except as
otherwise provided in the Plan, no such amendment shall adversely affect in a
material manner any of your rights under the award without your written
consent.

10.           Remedies. The parties hereto
shall be entitled to enforce their rights under this Agreement specifically, to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights existing in their favor. The parties hereto
acknowledge and agree that money damages would not be an adequate remedy for
any breach of the provisions of this Agreement and that any party hereto may,
in its sole discretion, apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief (without posting
bond or other security) in order to enforce or prevent any violation of the
provisions of this Agreement.

11.           Successors and Assigns. Except
as otherwise expressly provided herein, all covenants and agreements contained
in this Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and permitted assigns of the
parties hereto whether so expressed or not.

 

4

12.           Severability. Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.

13.           Counterparts. This Agreement may
be executed simultaneously in two or more counterparts, each of which shall
constitute an original, but all of which taken together shall constitute one
and the same Agreement.

14.           Descriptive Headings. The
descriptive headings of this Agreement are inserted for convenience only and do
not constitute a part of this Agreement.

15.           Governing Law. THE VALIDITY,
CONSTRUCTION, INTERPRETATION, ADMINISTRATION AND EFFECT OF THE PLAN, AND OF ITS
RULES AND REGULATIONS, AND RIGHTS RELATING TO THE PLAN AND TO THIS AGREEMENT,
SHALL BE GOVERNED BY THE SUBSTANTIVE LAWS, BUT NOT THE CHOICE OF LAW RULES, OF
THE STATE OF DELAWARE.

16.           Notices. All notices, demands
or other communications to be given or delivered under or by reason of the
provisions of this Agreement shall be in writing and shall be deemed to have
been given when delivered personally or mailed by certified or registered mail,
return receipt requested and postage prepaid, to the recipient. Such notices,
demands and other communications shall be sent to you at the address appearing
on the signature page to this Agreement and to the Company at 6111 Bollinger
Canyon Road, Suite 200, San Ramon, California 94583, Attn: Chief Financial
Officer, or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.

17.           Entire Agreement. This
Agreement and the terms of the Plan constitute the entire understanding between
you and the Company, and supersede all other agreements, whether written or
oral, with respect to your acquisition of the Option Shares.

*****

 

5

 

Signature Page to Stock
Option Agreement

Please execute the extra
copy of this Agreement in the space below and return it to the Company to
confirm your understanding and acceptance of the agreements contained in this
Agreement.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SOLERA
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

	
  Enclosures:

  	
  1.

  	
  Extra copy of
  this Agreement

  Copy of the Plan

  	
   

  	
   

  

 

The undersigned
hereby acknowledges having read this Agreement and the Plan and hereby agrees
to be bound by all provisions set forth herein and in the Plan.

	
  Dated as of

  	
   

  	
  OPTIONEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Address (please print)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

6

 

EXHIBIT A

Form of Letter to be Used
to Exercise Nonqualified Stock Option

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

 

	
  Attention:

  	
   

  	
   

  	
   

  

 

I wish to exercise the
stock option granted on             
and evidenced by a Stock Option Agreement dated as of             ,
to acquire             
shares of Common Stock of             ,
at an option price of $_______ per share. In accordance with the provisions of
paragraph 1 of the Stock Option Agreement, I wish to make payment of the
exercise price (please check all that apply):

	
  : o

  	
   

  	
  in cash

  
	
  : o

  	
   

  	
  by delivery of shares of Common Stock held by me

  
	
  : o

  	
   

  	
  by simultaneous sale through a broker of Option
  Shares

  
	
  : o

  	
   

  	
  by authorizing the Company to withhold Option Shares

  (subject to authorization by the compensation committee

  of the board of directors of the Company)

  

 

Please issue a
certificate for these shares in the following name:

	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Typed or Printed
  Name

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Social Security
  Number

  

 

 

7

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