Document:

exv10w24

EXHIBIT 10.24

Capella Healthcare, Inc.

Two Corporate Centre, Suite 200

501 Corporate Centre Drive

Franklin, TN 37067-2662

May 27, 2011

Mr. Howard T. Wall, III

1507 Starlight Lane

Franklin, TN 37069

RE: Confirmation of Departure Terms

Dear Howard:

     We appreciate your service to Capella Healthcare, Inc, a Delaware corporation, and its
affiliates (the “Employer”). Accordingly, this letter confirms the terms of your departure, as well
as certain other items, including with respect to certain matters set forth in the Senior
Management Agreement dated as of November 7, 2005, between you, Capella Holdings, Inc., a Delaware
corporation (the “Parent Company”), and Employer (the “Senior Management Agreement”).

     Employer and the Parent Company are sometimes collectively referred to herein as “Capella,”
and we may use the term “you” and “Executive” interchangeably to refer to Howard T. Wall, III.

     You agree that, when you sign and indicate your acknowledgement and acceptance at the bottom
of the last page of this letter, this letter shall constitute a binding agreement among Capella,
you, and your heirs, assigns, personal representatives, and all persons claiming under or through
you or on your behalf, and that your obligations set forth in this letter agreement are binding on
you, your heirs, assigns, personal representatives, and all persons claiming under or through you
or on your behalf.

     You and Capella agree as follows:

     1. Resignation. You and we acknowledge and agree that the last day of your active
employment with Employer will be June 10, 2011, and Employer acknowledges and accepts your
resignation as senior vice president and general counsel of Employer. Your resignation from all
such positions shall be effective as of June 10, 2011. The parties acknowledge the discussions
among the parties (prior to signing this letter agreement) with respect to Executive’s expected new
employment with RegionalCare Hospital Partners. Accordingly, Capella hereby waives Section 8(a) of
the Senior Management Agreement and releases Executive from compliance therewith in order for
Executive to accept employment with RegionalCare Hospital Partners.

     2. Other Payments and Reimbursements. Employer shall pay to Executive all remaining
unpaid obligations (if any) for unpaid salary on and as of Executive’s last day of employment. All
accrued and unused vacation pay or other fringe benefits to which Executive may be entitled shall
be paid to Executive in accordance with Employer’s policies with respect thereto, and a copy of
Employer’s vacation policy is attached hereto as Exhibit A. The parties hereto acknowledge
that Capella will withhold from such payments all applicable federal, state, and/or local taxes.
Executive will submit to Cappella

 

 

Mr. Howard T. Wall, III

May 27, 2011

Page 2

evidence of all unreimbursed fiscal year 2011 expenses (if any) on or before Executive’s last
day of employment, and Capella will reimburse Executive in accordance with company policy.

     3. Mutual Releases.

     (a) By Executive. As a material inducement to Employer to enter into this
letter agreement and to make the payment described in this letter agreement, the Executive
(for yourself, your heirs, assigns, personal representatives and all other persons or
individuals claiming under or through you or on your behalf) do knowingly and voluntarily,
and irrevocably and unconditionally, release and forever discharge Capella, our officers,
directors, employees, agents, representatives, successors and assigns, of and from any and
all charges, claims, demands, actions, and causes of action that you may have of whatever
kind and nature, known and unknown, statutory or otherwise, including without limitation
claims for wrongful discharge, claims under the Age Discrimination in Employment Act, Title
VII of the Civil Rights Act of 1964 and the Tennessee Human Rights Act, the Equal Pay Act,
the Americans With Disabilities Act, 42 U.S.C. §§ 1981 and 1985, or claims under any other
federal, state or local laws or regulations applicable to employment and termination
thereof, arising out of or in connection with your employment with and at, the termination
of your employment with and at, and your own relationship in any respect with, Capella, up
through the date that this letter agreement is signed and delivered. We acknowledge and
agree that you are not releasing any claims arising after the date you sign this letter
agreement. You acknowledge and agree that the release above will not become effective
until the expiration of seven days from the date you sign this release (which is the date
shown next to your signature below). You acknowledge that you have been given a period of 21
days to review and consider the release above before signing this letter agreement, and may
use as much or as little of the 21 day period as you wish prior to signing. You may revoke
the release within 7 days of signing it by delivering a written notice of revocation, no
later than the close of business on the seventh day after you sign this release, to Kenneth
Weber at Baker Donelson Bearman Caldwell & Berkowitz at its notice address below.

     (b) By Capella. As a material inducement to Executive to enter into this letter
agreement, Capella (for itself and its successors and assigns) does knowingly and
voluntarily, and irrevocably and unconditionally, release and forever discharge Executive
from any and all charges, claims, demands, actions, and causes of action that Capella may
have of whatever kind and nature, known and unknown, statutory or otherwise arising out of
or in connection with Executive’s employment with Capella and Capella’s relationship in any
respect with Executive up through the date that this letter agreement is signed and
delivered. You acknowledge and agree that Capella is not releasing any claims arising
after the date that you sign this letter agreement. Capella’s release hereunder shall
take effect on the date that Executive’s release of Capella takes effect pursuant to
paragraph 3(a) above.

     4. Additional Covenants.

     (a) Nondisparagement. You and Capella hereby agree that neither shall at any
time make or publish any statements (orally, in writing, or by electronic means) that
libels, slanders, disparages or reflects negatively upon the goodwill or reputation (whether
or not such disparagement legally constitutes libel or slander) of Executive, Capella or any
of its subsidiaries,

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Mr. Howard T. Wall, III

May 27, 2011

Page 3

officers, directors, partners, employees, or direct or indirect shareholders. Capella
will provide to Executive a copy of any public announcements with respect to Executive’s
departure and transition in advance of Capella’s release of any such announcements.

     (b) No-Hire Covenant. Solely for the purpose of this subparagraph, RegionalCare
Hospital Partners joins in this letter agreement and covenants with Capella not to hire any
person employed by Capella (who is employed as of the date hereof) for a period of 24 months
from the date hereof. The parties acknowledge that RegionalCare Hospital Partners makes this
covenant in reliance on Capella’s covenants and obligations herein and in exchange for
Capella’s agreement to waive Section 8(a) of the Senior Management Agreement to permit
Executive to accept employment with RegionalCare Hospital Partners. (For avoidance of doubt,
references in this letter agreement to “the parties hereto” or similar references shall not
include RegionalCare Hospital Partners unless the reference is expressly with respect to
this Paragraph 4(b).)

     (c) Executive Securities. Reference is hereby made to the provisions relating
to the Executive Securities in (and as “Executive Securities” is defined in) the Senior
Management Agreement. For avoidance of doubt, the parties hereto acknowledge and agree that,
as of the date hereof, Executive holds 631,880 shares of Capella’s common stock, all of
which are 100% vested pursuant to the terms of the Senior Management Agreement.

     (i) On Executive’s last day of employment, Capella shall repurchase that
certain number of Executive Securities, at a price of $3.80 per share, in an amount
equivalent to offset and repay in full the unpaid principal and accrued interest to
those certain Executive Notes dated as of 5/12/06 and as of 11/07/05 in the
aggregate principal amount of $215,940.00. The accrued interest balance to be
repaid thereunder shall be calculated as of Executive’s last day of employment. This
letter agreement shall constitute a “Repurchase Notice” under the Senior Management
Agreement solely for the purpose of this paragraph, but shall not limit Capella’s
right in any respect to exercise the “Repurchase Option” defined in the Senior
Management Agreement.

     (ii) Capella hereby agrees and affirms that if Capella exercises its right to
repurchase the Executive Securities pursuant to the “Repurchase Option” (defined in
the Senior Management Agreement), the purchase price for the Executive Securities
will, in accordance with Section 3(b)(ii) of the Senior Management Agreement, be the
greater of (A) Executive’s “Original Cost” (as defined in the Senior Management
Agreement) for each such share of the Executive Securities and (B) the “Fair Market
Value” (as defined in the Senior Management Agreement) of each such share as of the
date of the Repurchase Notice delivered to Executive pursuant to Section 3 of the
Senior Management Agreement.

     (iii) Capella further covenants with Executive that it shall not take any
action that would result in a change in the Executive Securities that is not
applicable to all shares of the same class held by Executive and the other members
of Capella’s senior management.

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Mr. Howard T. Wall, III

May 27, 2011

Page 4

     5. Representations, Warranties and Acknowledgments. In connection with the
transactions contemplated by this letter agreement, each party hereto represents that:

     (a) this letter agreement has been duly executed and delivered and constitutes a valid
and binding obligation, enforceable in accordance with its terms;

     (b) such party is not party to any agreements which would prohibit or otherwise
adversely affect your ability to execute this letter agreement or consummate the
transactions contemplated by this letter agreement; and

     (c) each party has consulted with independent legal counsel before signing this letter
agreement.

By signing this letter agreement, each party acknowledges that it has carefully read and fully
understands its contents.

     6. Confidentiality. The contents of this letter agreement are strictly confidential.
By signing below you agree that you will maintain the confidential nature of this letter agreement,
except (1) to legal counsel and tax and financial planners, (2) as necessary to enforce this letter
agreement, and (3) as otherwise required by law, in which such case you shall notify Employer in
writing in advance of any disclosure.

     7. Indemnification, Defend and Hold Harmless. Capella agrees, in the event a claim is
made against the Executive, via suit, administrative claim or otherwise, for any act or event
arising out of the course and scope of his employment to defend, indemnify and hold the Executive
harmless from any loss, cost or expense that may result from any claim, suit, administrative action
or otherwise.

     8. Group Benefit Plans. To the extent that Employer provides and the Executive
participates in any group benefit plans or agreements and to the extent that any such “plan” is
portable pursuant to applicable law, Employer agrees to assist the Executive in “porting” said
“plan,” provided that Executive pays the entire cost or premium thereafter.

     9. No Modification of Senior Management Agreement. Except as expressly provided
herein this letter agreement does not purport to amend or modify the Senior Management Agreement
and the obligations of Capella or Executive thereunder, and the Senior Management Agreement remains
in full force and effect as to the parties thereto except as expressly modified by this letter
agreement.

     10. Parties in Interest. All provisions of this letter agreement will bind and inure
to the benefit of the parties to this letter agreement and their respective heirs, personal
representatives, successors and assigns, whether so expressed or not.

     11. Governing Law. This letter agreement will be governed by and construed in
accordance with the laws of the State of Tennessee, without giving effect to its conflict of laws.

     12. Notices. All notices, requests, consents and other communications under this
letter agreement must be in writing and must be [i] mailed by first class certified mail, [ii] sent
by Federal

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Mr. Howard T. Wall, III

May 27, 2011

Page 5

Express, United States Express Mail or similar overnight delivery or courier service, or [iii]
delivered (in person, or by a facsimile transmission, telex or similar telecommunications
equipment) against receipt, as follows:

	 	 	 	 

	 	If to Employer
or Parent Company:

	 	Capella Healthcare, Inc.

Capella Holdings, Inc.

Attention: Mr. Daniel Slipkovich

Two Corporate Centre, Suite 200

501 Corporate Centre Drive

Franklin, Tennessee 37067-2662

Facsimile:                                          

Telephone:                                        
	 	 
	 	 
	 	With a copy to:

	 	Baker, Donelson, Bearman, Caldwell
& Berkowitz PC 

Attention: Kenneth Weber, Esq.

211 Commerce Street, Suite 800

Nashville, Tennessee 37201

Facsimile: (615) 726-0464

Telephone: (615) 726-7369
	 	 
	 	 
	 	If to Executive:

	 	Howard T. Wall, III

1507 Starlight Lane

Franklin, TN 37069

Telephone: (615) 972-8962
	 	 
	 	 
	 	With a copy to:

	 	Bone McAllester Norton PLLC

Attention: Trace Blankenship, Esq.

511 Union Street, Suite 1600

Nashville, Tennessee 37219

Facsimile: (615) 238-6301

Telephone: (615) 238-6331

or to another address of which the addressee has notified the sender in writing in accordance with
this Section. Notices given by certified mail will be deemed given at the time of certification,
and notices given by any other permitted means will be deemed given at the time of receipt of the
notice.

     13. Counterparts. This letter agreement may be executed by each party upon a separate
copy or separate signature pages, and any combination of separate copies executed by all parties or
including signature pages so executed will constitute a single counterpart of this letter
agreement. This letter agreement may be executed in any number of counterparts, each of which will
be deemed to be an original, but all of which together will constitute one and the same agreement.
It will not be necessary, in proving this letter agreement in any proceeding, to produce or account
for more than one counterpart of this letter agreement.

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Mr. Howard T. Wall, III

May 27, 2011

Page 6

* * *

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Mr. Howard T. Wall, III

May 27, 2011

Page 7

     If you agree with the terms of this letter agreement, please indicate your acceptance and
agreement by signing below. Please sign one copy for yourself and one for Employer, and return one
signed original to me.

	 	 	 	 	 	 	 

	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	CAPELLA HEALTHCARE, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Daniel S. Slipkovich 	 	 
	 

	 	 	 	 

Daniel S. Slipkovich,

 Chairman and Chief
Executive Officer
	 	 
	 
	 	 	 	 	 	 
	 	 	CAPELLA HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Daniel S. Slipkovich 	 	 
	 

	 	 	 	 

Daniel S. Slipkovich,
	 	 
	 

	 	 	 	Chief Executive Officer	 	 

	 	 	 

	ACKNOWLEDGED, ACCEPTED AND AGREED:
	 	 
	 	 	 
	/s/ Howard T. Wall, III 	 	 
	 

Howard T. Wall, III
                       Date

	 	 
	 	 	 
	SOLELY FOR THE PURPOSE STATED IN PARAGRAPH
4(b),

 REGIONALCARE HOSPITAL PARTNERS JOINS IN 

THIS LETTER AGREEMENT:
	 	 
	 	 	 
	RegionalCare Hospital Partners
	 	 

	 	 	 	 	 

	By:
	 	/s/ Martin S. Rash 	 	 
	 

	 	 

Martin S. Rash,            Date
 Chairman
and Chief Executive Officer
	 	 

7exv10w25

EXHIBIT
10.25

CAPELLA HOLDINGS, INC.

2006 STOCK OPTION PLAN

ARTICLE I

Purpose of Plan

          The 2006 Stock Option Plan (the “Plan”) of Capella Holdings, Inc., a Delaware
corporation (the “Company”), adopted by the Board of Directors of the Company on May 24,
2006 (the “Approval Date”), for directors, executive and other key employees of and key
service providers to the Company and its Subsidiaries, is intended to advance the best interests of
the Company and its Subsidiaries by providing those persons who have a substantial responsibility
for its management and growth with additional incentives by allowing them to acquire an ownership
interest in the Company and thereby encouraging them to contribute to the success of the Company
and its Subsidiaries and to remain in their employ or to continue to provide services. The
availability and offering of stock options under the Plan also increases the Company’s and its
Subsidiaries’ ability to attract and retain individuals of exceptional managerial talent upon whom,
in large measure, the sustained progress, growth and profitability of the Company and its
Subsidiaries depends. By adopting the Plan, the Board wishes to create, during the ten-year term
of the Plan, an equity-oriented compensation plan for and to reward the founding and future
directors, officers, key employees and other key service providers, as provided herein, who will
contribute to the growth of the Company. The stock options granted pursuant to this Plan will
enable those directors, officers, key employees, key service providers and others to share in the
resulting increase in the equity value of the Company.

          This Plan is intended to be a “compensatory benefit plan” within the meaning of such term
under Rule 701 of the Securities Act of 1933, as amended (the “Act”) and all options
granted under the Plan and the issuance of any Shares upon the exercise of options are intended to
qualify for an exemption (the “Exemption”) from the registration requirements under the
Act, pursuant to Rule 701 thereof, and under applicable state securities laws. In the event that
any provision of the Plan would cause any options granted under the Plan to not qualify for the
Exemption, the Plan shall be deemed automatically amended to the extent necessary to cause all
options granted under the Plan to qualify for the Exemption.

ARTICLE II

Definitions

          For purposes of the Plan, except where the context clearly indicates otherwise, the following
terms shall have the meanings set forth below:

          “Affiliate” shall mean, with respect to any Person, any other Person which, directly
or indirectly, controls, is controlled by or under common control with such Person.

          “Board” shall mean the board of directors of the Company.

- 1 -

 

          “Cause” shall have the meaning assigned to such term in any Participant’s written
employment agreement or senior management agreement or, in the absence of any written employment
agreement or senior management agreement, (i) the commission of, or entry of a plea of guilty or
nolo contendere, to a felony or a crime involving moral turpitude or any act or any
other act or omission involving dishonesty or fraud with respect to the Company or any of its
Subsidiaries or any of their customers or suppliers or stockholders, (ii) conduct tending to bring
the Company or any of its Subsidiaries into public disgrace or disrepute, (iii) a Participant’s
failure to carry out effectively his or her duties and obligations to the Company or to participate
effectively and actively in the management of the Company, as determined in the reasonable judgment
of senior management of the Company or the Board, (iv) a breach of Participant’s duty of loyalty to
the Company or any of its Subsidiaries or Affiliates or any act of fraud, material dishonesty,
gross negligence or willful misconduct with respect to the Company or any of its Subsidiaries, or
(v) any material breach of the Participant’s employment agreement, if any, with the Company or any
Subsidiary or any other agreement between a such Participant and the Company or any of its
Subsidiaries or Affiliates.

          “Code” shall mean the Internal Revenue Code of 1986, as amended, and any successor
statute.

          “Committee” shall mean the Board or a committee of the Board which may be designated
by the Board to administer the Plan. If a committee of the Board has been designated by the Board
to administer the Plan, the Committee shall be composed of two or more directors as appointed from
time to time to serve by the Board.

          “Common Shares” shall mean the Company’s common stock, par value $0.01 per share, and
any other shares into which such stock may be changed or converted by reason of a recapitalization,
reorganization, merger, consolidation, or any other change in the corporate structure or capital
stock of the Company.

          “Company” shall mean Capella Holdings, Inc., a Delaware corporation, and (except to
the extent the context requires otherwise) any subsidiary corporation of Capella Holdings, Inc. as
such term is defined in Section 424(f) of the Code.

          “Date of Termination” shall mean, with respect to any Participant, (i) if such
Participant’s employment is terminated by the Company or any Subsidiary, the effective date of
termination as specified in the written notice from the Company or such Subsidiary to such
Participant terminating his or her employment, (ii) if such Participant terminates his or her
employment, the date the Company or any Subsidiary receives notice from such Participant
terminating his or her employment or (iii) if such Participant’s employment is terminated other
than pursuant to (i) or (ii), then the date determined in good faith by the Board.

          “Disability” shall have the meaning assigned to such term in any Participant’s written
employment agreement or, in the absence of any written employment agreement, shall mean the
inability, due to illness, accident, injury, physical or mental incapacity or other disability, of
any Participant to carry out effectively such Participant’s duties and obligations to the Company
or any of its Subsidiaries or to participate effectively and actively in the management of the
Company or any of its Subsidiaries for a period of at least 90 consecutive

- 2 -

 

days or for shorter periods aggregating at least 120 days (whether or not consecutive) during
any twelve-month period, as determined in the reasonable judgment of the Board.

          “Expiration Date” shall have the meaning set forth in Article VI.

          “Fair Market Value” of any property shall be determined in good faith by the
Committee.

          “Independent Third Party” means any Person who, immediately prior to the contemplated
transaction, does not own in excess of 5% of the Company’s Common Stock on a fully-diluted basis (a
“5% Owner”), who is not controlling, controlled by or under common control with any such 5%
Owner and who is not the spouse or descendant (by birth or adoption) of any such 5% Owner or a
trust for the benefit of such 5% Owner and/or such other Persons.

          “Investors” shall mean GTCR Fund VIII, L.P., a Delaware limited partnership, GTCR Fund
VIII/B, L.P., a Delaware limited partnership, GTCR Co-Invest II, L.P., a Delaware limited
partnership, and any other investment fund managed by GTCR Golder Rauner II, L.L.C.

          “Nonqualified Stock Option” shall have the meaning set forth in Article V.

          “Option Agreement” shall have the meaning set forth in Article VI.

          “Options” shall have the meaning set forth in Article IV.

          “Participant” shall mean any director, executive or other key employee of or key
service providers to the Company or any of its Subsidiaries who has been selected to participate in
the Plan by the Committee or the Board.

          “Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political subdivision thereof.

          “Plan” shall have the meaning set forth in Article I.

          “Plan Year” shall mean any 12-month period beginning on the Approval Date or any
anniversary thereof.

          “Public Offering” shall mean an initial public offering and sale, registered under the
Act, of equity securities of the Company, as approved by the Board.

          “Sale of the Company” means the sale of the Company to an Independent Third Party or
group of Independent Third Parties pursuant to which such party or parties acquire (i) capital
stock of the Company possessing the voting power under normal circumstances to elect directors
possessing a majority of the voting power of the Company’s board of directors (whether by merger,
consolidation or sale or transfer of the Company’s capital stock) or (ii) all or substantially all
of the Company’s assets determined on a consolidated basis; provided that a Public
Offering shall not constitute a Sale of the Company.

- 3 -

 

          “Subsidiary” means, with respect to any Person, any corporation, limited liability
company, partnership, association, or business entity of which (i) if a corporation, a majority of
the total voting power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers, or trustees thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company,
partnership, association, or other business entity (other than a corporation), a majority of
partnership or other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination
thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership
interest in a limited liability company, partnership, association, or other business entity (other
than a corporation) if such Person or Persons shall be allocated a majority of limited liability
company, partnership, association, or other business entity gains or losses or shall be or control
any managing director or general partner of such limited liability company, partnership,
association, or other business entity. For purposes hereof, references to a “Subsidiary”
of any Person shall be given effect only at such times that such Person has one or more
Subsidiaries, and, unless otherwise indicated, the term “Subsidiary” refers to a Subsidiary
of the Company.

ARTICLE III

Administration

          The Plan shall be administered by the Committee; provided that if for any
reason the Committee shall not have been appointed by the Board, all authority and duties of the
Committee under the Plan shall be vested in and exercised by the Board. Subject to the limitations
of the Plan, the Committee shall have the sole and complete authority to: (i) select Participants,
(ii) grant Options to Participants in such forms and amounts as it shall determine, (iii) impose
such limitations, restrictions and conditions upon such Options as it shall deem appropriate, (iv)
interpret the Plan and adopt, amend and rescind administrative guidelines and other rules and
regulations relating to the Plan, (v) correct any defect or omission or reconcile any inconsistency
in the Plan or in any Option granted hereunder and (vi) make all other determinations and take all
other actions necessary or advisable for the implementation and administration of the Plan, subject
to such limitations as may be imposed by applicable law. The Committee’s determinations on matters
within its authority shall be conclusive and binding upon the Participants, the Company and all
other Persons. The validity, 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. No member of 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. All expenses associated with the administration of the Plan shall be borne by the
Company. The Committee may, as approved by the Board and to the extent permissible by law,
delegate any of its authority hereunder to such persons as it deems appropriate.

- 4 -

 

ARTICLE IV

Limitation on Aggregate Shares

          The number of Common Shares with respect to which options may be granted under the Plan (the
“Options”) and which may be issued upon the exercise thereof shall not exceed, in the
aggregate, the amount of shares (the “Shares”) equal to 1,253,000 shares minus the
number of Common Shares issued pursuant to a restricted stock purchase agreement with an employee
of or consultant to the Company on or after the date hereof; provided that the type and the
aggregate number of shares which may be subject to Options shall be subject to adjustment in
accordance with the provisions of Section 6.9 below, and further provided that to the
extent any Options expire unexercised or are canceled, terminated or forfeited in any manner
without the issuance of Common Shares thereunder, or if any Options are exercised and the Common
Shares issued thereunder are repurchased by the Company, such shares shall again be available under
the Plan. The Common Shares available under the Plan may be either authorized and unissued shares,
treasury shares or a combination thereof, as the Committee shall determine.

ARTICLE V

Awards

          5.1 Options. The Committee may grant Options to Participants in accordance with this
Article V.

          5.2 Form of Option. Options granted under this Plan shall be nonqualified stock
options and are not intended to be “incentive stock options” within the meaning of Section 422 of
the Code or any successor provision.

          5.3 Exercise Price. The option exercise price per Common Share shall be fixed by the
Committee at not less than 100% of the Fair Market Value of a Common Share on the date of grant,
unless otherwise approved by the Board.

          5.4 Exercisability. Options granted hereunder shall be exercisable at such times and
under such circumstances as determined by the Committee and as shall be permissible under the terms
of the Plan, and as specified in the Participant’s Option Agreement.

          5.5 Payment of Exercise Price. Options shall be exercised in whole or in part by
written notice to the Company (to the attention of the Company’s Secretary) accompanied by payment
in full of the option exercise price. Payment of the option exercise price shall be made in cash
(including check, bank draft or money order).

          5.6 Terms of Options. The Committee shall determine the term of each Option, which
term shall in no event exceed ten years from the date of grant. All rights to purchase Shares
pursuant to an Option shall, unless sooner terminated, expire at the date designated by the
Committee. 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. Unless otherwise provided herein or in the terms of the
related grant, a Participant may exercise an Option only if such

- 5 -

 

Participant is, and has continuously since the date the Option was granted, been a director,
officer, or employee of or performed other services for the Company or a Subsidiary. Prior to the
exercise of an Option and delivery of the Shares represented thereby, the Participant shall have no
rights as a stockholder with respect to any Shares covered by such outstanding Option (including
any dividend or voting rights).

          5.7 Limitation on Grants. The Committee shall not grant any Option if, as a result of
such grant or the exercise of such Option (assuming that all other Options have been fully
exercised), the Company would be required to register any of its equity securities under the Act.

ARTICLE VI

General Provisions

          6.1 Conditions and Limitations on Exercise. Except as otherwise provided in this
Plan, Options may be made exercisable in one or more installments, upon the happening of certain
events, upon the passage of a specified period of time, upon the fulfillment of certain conditions
or upon the achievement by the Company or any of its Subsidiaries of certain performance goals, as
the Committee shall decide in each case when the Options are granted.

          6.2 Sale of the Company. In the event of a Sale of the Company, the Committee may, in
its sole discretion, terminate (i) any vested Options without payment of any kind provided that
each Participant shall first be given notice of such termination and at least 15 days to exercise
all vested Options that are to be so terminated or (ii) any vested Options for a payment of (x)
cash, (y) consideration in the form of a note issued by the Company to the Participant and/or (z)
consideration in the same form as that received by the holders of the Company’s Common Shares in
connection with such Sale of the Company, equal to the excess of the Fair Market Value per Common
Share (measured as of the date of such Sale of the Company) over such Option’s exercise price
multiplied by the number of Options to be terminated or (iii) any Option without payment of any
kind that on the date of such Sale of the Company (x) is not vested or (y) has a Fair Market Value
less than or equal to the aggregate exercise price of such Option. In the event of a Sale of the
Company, any unvested Options shall not become immediately or automatically exercisable;
provided that the Committee may, in its sole discretion, cause any unvested Options to become
immediately exercisable upon the occurrence of a Sale of the Company, and in such case such Options
may only be deemed exercisable if a Participant is employed by the Company or any of its
Subsidiaries as of the date of such Sale of the Company.

          6.3 Organic Change. Except as otherwise provided in this Plan, any recapitalization,
reorganization, reclassification, consolidation, merger, sale of all or substantially all of the
Company’s assets, or other transaction which is effected in such a way that holders of Common
Shares are entitled to receive (either directly or upon subsequent liquidation) stock, securities,
or assets with respect to or in exchange for Common Shares is referred to herein as an “Organic
Change.” Except as otherwise provided in this Plan, and unless such Options are terminated in
accordance with Section 6.2 above, after the consummation of any Organic Change, each
Participant holding Options shall thereafter have the right to acquire and receive upon exercise
thereof, rather than the Common Shares immediately theretofore acquirable and

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receivable upon exercise of such Participant’s Options, such shares of stock, securities, or
assets as may be issued or payable with respect to or in exchange for the number of Common Shares
immediately theretofore acquirable and receivable upon exercise of such Participant’s Options had
such Organic Change not taken place. Except as otherwise provided in this Plan, in any such case,
the Company shall make appropriate provision with respect to such Participant’s rights and
interests to insure that the provisions hereof (including this Section 6.3) shall
thereafter be applicable to the Options (including, in the case of any such Organic Change in which
the successor entity or purchasing entity is other than the Company, an immediate adjustment of the
exercise price to the value for the Common Shares reflected by the terms of such Organic Change and
a corresponding immediate adjustment in the number of Common Shares acquirable and receivable upon
exercise of the Options, if the value so reflected is less than the Fair Market Value of the Common
Shares in effect immediately before such Organic Change).

          6.4 Written Agreement. Each Option granted hereunder to a Participant shall be
embodied in a written agreement (an “Option Agreement”) which shall be signed by the
Participant and by an authorized 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 (including, but not limited to, (i) the right of the Company and such other Persons as
the Committee shall designate (“Designees”) to repurchase from each Participant, and such
Participant’s transferees, all shares of Common Stock issued or issuable to such Participant on the
exercise of an Option in the event of such Participant’s Date of Termination, (ii) rights of first
refusal granted to the Company and Designees, (iii) holdback and other registration right
restrictions in the event of a public registration of any equity securities of the Company and (iv)
any other terms and conditions which the Committee shall deem necessary and desirable).

          6.5 Listing, Registration and Compliance with Laws and Regulations. Options shall be
subject to the requirement that if at any time the Committee shall determine, in its discretion,
that the listing, registration or qualification of the shares subject to the Options upon any
securities exchange or under any state or federal securities or other law or regulation, or the
consent or approval of any governmental regulatory body, is necessary or desirable as a condition
to or in connection with the granting of the Options or the issuance or purchase of shares
thereunder, no Options may be granted or exercised, in whole or in part, unless such listing,
registration, qualification, consent or approval shall have been effected or obtained free of any
conditions not acceptable to the Committee. The holders of such Options shall supply the Company
with such certificates, representations and information as the Company shall request and shall
otherwise cooperate with the Company in obtaining such listing, registration, qualification,
consent or approval. In the case of officers and other Persons subject to Section 16(b) of the
Securities Exchange Act of 1934, as amended, the Committee may at any time impose any limitations
upon the exercise of an Option that, in the Committee’s discretion, are necessary or desirable in
order to comply with such Section 16(b) and the rules and regulations thereunder. If the Company,
as part of an offering of securities or otherwise, finds it desirable because of federal or state
regulatory requirements to reduce the period during which any Options may be exercised, the
Committee may, in its discretion and without the Participant’s consent, so reduce such period on
not less than 15 days written notice to the holders thereof.

          6.6 Nontransferability. Options may not be transferred other than by will or the laws
of descent and distribution and, during the lifetime of the Participant, may be exercised

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only by such Participant (or such Participant’s legal guardian or legal representative). In
the event of the death of a Participant, exercise of Options granted hereunder shall be made only:

          (i) by the executor or administrator of the estate of the deceased Participant or the
Person or Persons to whom the deceased Participant’s rights under the Option shall pass by
will or the laws of descent and distribution; and

          (ii) to the extent that the deceased Participant was entitled to exercise such Options
at the date of his death, unless otherwise provided by the Committee in such Participant’s
Option Agreement.

          6.7 Expiration of Options.

          (a) Normal Expiration. In no event shall any part of any Option be exercisable after
the date of expiration thereof (the “Expiration Date”), as determined by the Committee
pursuant to Section 5.6 above.

          (b) Early Expiration Upon Termination of Employment. Except as otherwise provided by
the Committee in the Option Agreement, any portion of a Participant’s Option that was not vested
and exercisable on such Participant’s Date of Termination shall expire and be forfeited as of such
date, and any portion of a Participant’s Option that was vested and exercisable on such
Participant’s Date of Termination shall expire and be forfeited as of such date, except that: (i)
if a Participant’s employment terminates because such Participant dies or becomes subject to any
Disability, such Participant’s Option shall expire 180 days after his or her Date of Termination,
but in no event after the Expiration Date, (ii) if a Participant’s employment terminates because
such Participant retires (with the approval of the Board), such Participant’s Option shall expire
60 days after his or her Date of Termination, but in no event after the Expiration Date, and (iii)
if any Participant is discharged other than for Cause, such Participant’s Option shall expire 30
days after his or her Date of Termination or such later date as may be expressly determined by the
Committee in its sole and absolute discretion, but in no event after the Expiration Date.

          6.8 Withholding of Taxes.

          (a) The Company shall be entitled, if necessary or desirable, to withhold from any
Participant, from any amounts due and payable by the Company to such Participant (or secure payment
from such Participant in lieu of withholding), the amount of any withholding or other tax due from
the Company with respect to any shares issuable under the Options, and the Company may defer the
exercise of the Options or the issuance of the Shares thereunder unless such taxes are paid or the
Company is indemnified to its satisfaction.

          (b) Notwithstanding any provision of this Plan to the contrary, in connection with the
transfer of an Option to a transferee pursuant to Section 6.6 of the Plan, the grantee
shall remain liable for any withholding taxes required to be withheld upon exercise of such Option
by the transferee.

          6.9 Adjustments. In the event of a reorganization, recapitalization, stock dividend,
or stock split, combination or other reclassification affecting the Common Shares, the

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Board or the Committee shall, in order to prevent the dilution or enlargement of rights under
outstanding Options, make such adjustments in the number and type of shares authorized by the Plan,
the number and type of shares covered by outstanding Options, and the exercise prices specified
therein as may be determined to be appropriate and equitable.

          6.10 No Right to Employment or to Provide Services. Nothing in this Plan or in any
Option Agreement shall interfere with or limit in any way the right of the Company or any of its
Subsidiaries to terminate any Participant’s employment or services at any time (with or without
Cause), nor confer upon any Participant any right to continue in the employ of or provide services
to the Company or any of its Subsidiaries for any period of time or to continue such Participant’s
present (or any other) rate of compensation, and except as otherwise provided under this Plan or by
the Committee in the Option Agreement, in the event of any Participant’s termination of employment
or services (including, but not limited to, the termination by the Company or any of its
Subsidiaries without Cause) any portion of such Participant’s Option that was not previously vested
and exercisable shall expire and be forfeited as of the date of such termination. No Person shall
have a right to be selected as a Participant or, having been so selected, to be selected again as a
Participant.

          6.11 Amendment, Suspension and Termination of Plan. The Board or the Committee may
suspend or terminate the Plan or any portion thereof at any time and may amend it from time to time
in such respects as the Board or the Committee may deem advisable; provided that no such amendment
shall be made without stockholder approval to the extent such approval is required by law,
agreement or the rules of any exchange upon which the Common Shares is listed, and no such
amendment, suspension or termination shall impair the rights of Participants under outstanding
Options without the consent of the Participants affected thereby; provided, further, that no
amendment that increases the maximum number of Common Shares with respect to which Options may be
granted and which may be issued upon the exercise thereof shall be effective without the approval
of GTCR Fund VIII, L.P., a Delaware limited partnership. No Option shall be granted after the
tenth anniversary of the adoption of the Plan.

          6.12 Amendment, Modification and Cancellation of Outstanding Options. The Committee
may amend or modify any Option in any manner to the extent that the Committee would have had the
authority under the Plan initially to grant such Option; provided that no such amendment or
modification shall impair the rights of any Participant under any outstanding Option in a manner
not contemplated hereby without the consent of such Participant adversely affected thereby. With
the Participant’s consent or as otherwise contemplated hereby, the Committee may cancel any Option
and issue a new Option to such Participant.

          6.13 Indemnification. In addition to such other rights of indemnification as they may
have as members of the Board or the Committee, the members of the Board and the Committee and any
other Persons designated by the Committee to administer the Plan shall be indemnified by the
Company against all costs and expenses reasonably incurred by them in connection with any action,
suit or proceeding to which they or any of them may be party by reason of any action taken or
failure to act under or in connection with the Plan or any Option granted hereunder, and against
all amounts paid by them in settlement thereof (provided such settlement is approved by independent
legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such
action, suit or proceeding; provided that any such Board or Committee member shall be entitled to
the indemnification rights set forth in this Section 6.13

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only if such member has acted in good faith and in a manner that such member reasonably
believed to be in or not opposed to the best interests of the Company and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that such conduct was unlawful,
and further provided that upon the institution of any such action, suit or proceeding a Board or
Committee member shall give the Company written notice thereof and an opportunity, at its own
expense, to handle and defend the same before such Board or Committee member undertakes to handle
and defend it on his own behalf.

Adopted by the Board of Directors as of May 24, 2006.

* * * *

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