Document:

EX-10.5

Exhibit 10.5

STOCKHOLDERS AGREEMENT

          THIS STOCKHOLDERS AGREEMENT (this “Agreement”) is made as of [ • ], 2009, by and among
Cambium Holdings, Inc., a Delaware corporation (the “Company”), VSS-Cambium Holdings III,
LLC, a Delaware limited liability company, (the “Stockholder”) and Vowel Representative,
LLC, a Delaware limited liability company (the “Stockholders’ Representative”), solely in
its capacity as the Stockholders’ Representative pursuant to ARTICLE VIII of the Merger Agreement
(as defined below).

RECITALS

          WHEREAS, the Company, Voyager Learning Company, VSS-Cambium Holdings II Corp., a Delaware
corporation (“Consonant”), Vowel Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of the Company (“Vowel Merger Sub”), Consonant Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of the Company (“Consonant Merger Sub”)
and the Stockholders’ Representative, have entered into an Agreement and Plan of Mergers, dated as
of June 20, 2009 (as the same may be amended, supplemented or otherwise modified from time to time,
the “Merger Agreement”), pursuant to which, among other things, immediately prior to the
execution of this Agreement, Vowel Merger Sub merged with and into Vowel (the “Vowel
Merger”), with Vowel surviving the Vowel Merger as a wholly-owned subsidiary of the Company,
and Consonant Merger Sub merged with and into Consonant (the “Consonant Merger”), with
Consonant surviving the Consonant Merger as a wholly-owned subsidiary of the Company;

          WHEREAS, pursuant to the terms of the Merger Agreement, the Stockholder, being the former sole
stockholder of Consonant, has received shares of common stock of the Company, $0.001 par value per
share (the “Common Stock”), as well as certain other consideration described in the Merger
Agreement, in consideration of its common stock of Consonant;

          WHEREAS, the Stockholder is currently the beneficial owner of [ • ] of shares of Common Stock;

          WHEREAS, the Stockholder and the Company believe it to be in the best interests of the
Stockholder and of the Company to insure continuity of harmonious management of the Company and its
subsidiaries, and the good performance thereof, by providing for certain preemptive rights and
subscription rights and by addressing certain matters relating to the governance of the Company;
and

          WHEREAS, the Stockholder and the Company hereby agree that this Agreement shall govern certain
matters as set forth in this Agreement.

          NOW, THEREFORE, in consideration of the mutual covenants herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Stockholder do hereby agree as follows:

 

     1. Definitions. For purposes of this Agreement:

          1.1. “Affiliate” has the meaning given to it in Rule 144(a)(1) of the Securities Act
of 1933, as amended.

          1.2. “Audit Committee” means the Audit Committee of the Company’s Board of Directors.

          1.3. “Audit Committee Independent Director” means a director who is (i) independent as
defined under Rule 5605(a)(2) of the Nasdaq Marketplace Rules; (ii) meets the criteria for
independence set forth under Rule 10A-3(b) of the Exchange Act; (iii) has not participated in the
preparation of the financial statements of the Company or any of its subsidiaries during the past
three years; and (iv) is able to read and understand fundamental financial statements, including a
balance sheet, income statement and cash flow statement.

          1.4. “Board” has the meaning assigned thereto in Section 2.1(a).

          1.5. “Business Day” means a day, other than a Saturday or Sunday, or other day on
which banks in the State of New York are closed or authorized by law to close.

          1.6. “By-laws” means the by-laws of the Company.

          1.7. “Capital Stock” means (a) shares of Common Stock and Preferred Stock (whether now
outstanding or hereafter issued in any context), (b) shares of Common Stock issued or issuable upon
conversion of Preferred Stock and (c) shares of Common Stock issued or issuable upon exercise or
conversion, as applicable, of stock options, warrants or other convertible securities of the
Company, in each case now owned or subsequently acquired by any Stockholder, or their respective
successors or permitted transferees or assigns. For purposes of the number of shares of Capital
Stock held by a Stockholder (or any other calculation based thereon), all shares of Preferred Stock
shall be deemed to have been converted into Common Stock at the then-applicable conversion ratio.

          1.8. “Common Stock” has the meaning assigned thereto in the recitals to this
Agreement.

          1.9. “Company Securities” has the meaning assigned thereto in Section 3.1.

          1.10. “Contingent Value Right Agreement” means that certain Contingent Value Right
Agreement, dated as of [ • ], 2009, by and among the Stockholders’ Representative, the Company and
Wells Fargo, N.A., as Rights Agent.

          1.11. “DGCL” means the General Corporation Law of the State of Delaware.

          1.12. “Effective Time” has the meaning assigned thereto in the Merger Agreement.

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          1.13. “Escrow Agreement” means that certain Escrow Agreement, dated as of [ • ], 2009,
by and among Voyager Learning Company, the Stockholders’ Representative, the Company and Wells
Fargo, N.A., as Escrow Agent.

          1.14. “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          1.15. “Exempt Issuances” has the meaning assigned thereto in Section 3.2(a).

          1.16. “Independent Director” means a director who is independent as defined under Rule
5605(a)(2) of the Nasdaq Marketplace Rules.

          1.17. “Merger Agreement” has the meaning assigned thereto in the recitals to this
Agreement.

          1.18. “New Issuance” has the meaning assigned thereto in Section 3.1.

          1.19. “Offer Notice” has the meaning assigned thereto in Section 3.1.

          1.20. “Ownership Percentage” means the quotient of (1) the number of votes which may
be cast by a VSS Stockholder as of the date of the Offer Notice based upon the number of shares of
Voting Stock owned by such VSS Stockholder on the date of the Offer Notice divided
by (2) the total number of votes which may be cast by the holders of all outstanding shares
of Voting Stock as of the date of the Offer Notice.

          1.21. “Permitted Assignee” has the meaning assigned thereto in Section 3.1.

          1.22. “Person” means any individual, corporation, partnership, trust, limited
liability company, association or other entity.

          1.23. “Preferred Stock” means shares of the Company’s preferred stock, par value
$0.001 per share, as may be issued from time to time.

          1.24. “Purchasing Stockholder” has the meaning assigned thereto in Section
3.2(a).

          1.25. “Restated Certificate” means the Amended and Restated Certificate of
Incorporation of the Company.

          1.26. “Shares” means and includes any securities of the Company the holders of which
are entitled to vote for members of the Board, including without limitation, all shares of Common
Stock or Preferred Stock, by whatever name called, now owned or subsequently acquired by a
Stockholder, however acquired, whether through stock splits, stock dividends, reclassifications,
recapitalizations, similar events or otherwise.

          1.27. “Subscription Notice” has the meaning assigned thereto in Section 4.2.

          1.28. “Subscription Period” has the meaning assigned thereto in Section 4.1.

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          1.29. “Subscription Price Per Share” has the meaning assigned thereto in Section
4.1.

          1.30. “Subscription Shares” has the meaning assigned thereto in Section 4.2.

          1.31. Voting Stock” means shares of Common Stock and any Company Securities which vote
on an as-converted basis with the Common Stock.

          1.32. “Vowel Class II Designees” has the meaning assigned thereto in Section
2.1(d).

          1.33. “Vowel Class III Designees” has the meaning assigned thereto in Section 2.1(d).

          1.34. “VSS” means Veronis Suhler Stevenson LLC.

          1.35. “VSS Fund(s)” means the Stockholder and/or one or more other funds or entities
owned, controlled or managed by VSS.

          1.32. “VSS Stockholder” has the meaning assigned thereto in Section
3.1.

     2. Voting Provisions Regarding Board of Directors and Organizational Documents.

          2.1. Size and Composition of Board.

               (a) The Stockholder agrees to vote, or cause to be voted, all Shares owned by such
Stockholder, or over which such Stockholder has voting control, from time to time and at all times,
in whatever manner as shall be necessary to ensure that the size of the Board of Directors of the
Company (the “Board”) shall, until the third anniversary of the Effective Time (as that
term is defined in the Merger Agreement), be set and remain at nine (9) directors.

               (b) Pursuant to the terms of the Restated Certificate, the Company maintains a staggered board
with the classes and other terms set forth in the Restated Certificate and By-laws. Specifically,
among other things, the Restated Certificate provides that the Board shall be divided into three
classes, as nearly equal in number as possible, designated as Class I, Class II and Class III. The
Stockholder hereby acknowledges that the duly elected directors of the Company as of the date
hereof are the persons set forth on Exhibit A attached hereto and that each such person
serves in the class described on Exhibit A.

          2.2. Removal and Replacement of Board Members.

               (a) The Stockholder agrees that except as required by Law or rule of any national securities
exchange or self regulatory organization (based on advice of legal counsel), and until the earlier
to occur of (the “Expiration Date”): (i) the written consent of the Stockholders’
Representative (which consent may be granted or withheld in its sole and absolute discretion), (ii)
the full distribution by the Escrow Agent (as defined in the Escrow Agreement)

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of all of the CVR Escrow Funds (as defined in the Escrow Agreement) in accordance with the
terms of the Escrow Agreement, (iii) the second anniversary of the Effective Time with respect to
the Vowel Class II Designees listed below or the third anniversary of the Effective Time with
respect to the Vowel Class III Designees listed below or (iv) the VSS Funds collectively ceasing to
beneficially own (as determined in accordance with Rule 13d-3 of the Exchange Act) at least ten
percent (10%) of the issued and outstanding shares of Common Stock, the Stockholder shall not vote,
act by written consent or take any other action to remove or disqualify any of (i) the Vowel Class
II Designees, or (ii) the Vowel Class III Designees, in each case other than for cause as
determined in accordance with Section 141 of the DGCL. The Stockholder agrees to execute any
written consents and take any other actions reasonably required to perform the obligations of this
Agreement. The Expiration Date, as applicable to the Vowel Class II Designees is referred to
herein as the “Class II Expiration Date”; and the Expiration Date, as applicable to the
Vowel Class III Designees is referred to herein as the “Class III Expiration Date”.

               (b) “Vowel Class II Designees” shall initially mean the following two (2) individuals:
[ • ] and [ • ]. “Vowel Class III Designees” shall initially mean the following two (2)
individuals: [ • ] and [ • ]. The Vowel Class II Designees and the Vowel Class III Designees are
referred to collectively herein as the “Vowel Designees”. If, at any time prior to the
applicable Expiration Date, any Vowel Designee resigns, is removed for cause as contemplated in
Section 2.2(a), or a vacancy otherwise occurs with respect to the board seat occupied by
such Vowel Designee, then the Stockholder or the Company shall provide prompt written notice to the
Stockholders’ Representative of such vacancy and the Stockholders’ Representative may nominate a
replacement director to serve in the same Class as the departing director, subject to the approval
of the Stockholder (which approval shall not be unreasonably withheld, conditioned or delayed)
(each, a “Vowel Replacement Designee”). The Stockholder shall vote, act by written consent
and take any other action that is necessary or appropriate to cause the election of the Vowel
Replacement Designee to the Board whereupon the Vowel Replacement Designee shall become a Vowel
Class II Designee or a Vowel Class III Designee, as applicable, in accordance with this Agreement.

               (c) Notwithstanding the foregoing, at least two (2) of the Vowel Designees (including any
Vowel Replacement Designee) and at least one (1) of the directors nominated by the Stockholder
shall be an Audit Committee Independent Director.

          2.3. Amendment of Restated Certificate and Bylaws. The Stockholder agrees that,
until the third anniversary of the Effective Time, except as required by Law or any rule of any
national securities exchange or self regulatory organization (based on advice of legal counsel),
for so long as the VSS Funds collectively beneficially own (as determined in accordance with Rule
13d-3 of the Exchange Act) at least ten percent (10%) of the issued and outstanding shares of
Common Stock, (i) none of the VSS Funds nor the Stockholder shall vote, act by written consent or
take any other action to amend, modify or repeal the Restated Certificate or Bylaws to eliminate
the Class II or the Class III classes, to increase or decrease the size of the Board or in any
other manner that would constitute a breach of this Section 2 and (ii) the VSS Funds and
the Stockholder shall vote or act by written consent to maintain a staggered board with the classes
and other terms set forth in the Restated Certificate and the By-Laws as adopted on the Closing
Date

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          2.4. Other Agreements Relating to Board Members.

               (a) From time to time the Board may establish one or more committees of the Board consisting
of more than one director. From the date of this Agreement until the Class III Expiration Date, at
least one (1) Vowel Designee that is not an Independent Director shall be appointed by the Board to
any such committee other than the Audit Committee; provided, however, to the extent
such committee is required by applicable Law or any rule of any national securities exchange or
self regulatory organization to be comprised of at least a majority of Independent Directors, then
the Vowel Designee appointed to such committee shall be an Independent Director. From the date of
this Agreement until the Class III Expiration Date, at least (1) Vowel Designee who shall be an
Audit Committee Independent Director shall be appointed by the Board to the Audit Committee.

               (b) From the date of this Agreement until the Class III Expiration Date, the Stockholder and
the Company hereby agree that, if and to the extent the Company or any subsidiary enters into an
indemnification or similar agreement with, or purchases insurance for the benefit of, any director
nominated by the Stockholder, then such agreement or insurance shall also be provided to the Vowel
Designees on the same terms and conditions.

     3. Preemptive Rights.

          3.1. Notice of Proposed Issuance. Except with respect to Exempt Issuances (as defined
in Section 3.3), for so long as the VSS Funds beneficially own (as determined in accordance
with Rule 13d-3 of the Exchange Act) at least twenty-five percent (25%) of the issued and
outstanding shares of Common Stock, in the event that the Company proposes to issue any (i) shares
of Common Stock, (ii) warrants, options or other rights to purchase shares of Common Stock or (iii)
notes, debentures or other securities convertible into or exercisable or exchangeable for shares of
Common Stock (collectively, the “Company Securities”), the Company will deliver to each of
the VSS Funds then owning Common Stock or, if applicable, other Company Securities (a “VSS
Stockholder”) a written notice (the “Offer Notice”) prior to effecting any such
issuance (the “New Issuance”), offering to such VSS Stockholder the right, for a period of
thirty (30) days after receipt of the Offer Notice (the “Election Period”), to purchase
such number of shares of Common Stock so that its Ownership Percentage following such New Issuance
shall be equal to its Ownership Percentage prior to such New Issuance; provided,
however, to the extent the New Issuance consists of Company Securities other than Common
Stock, subject to the approval of the Audit Committee (which notice of approval shall be set forth
in the Offer Notice), any VSS Stockholder shall have the right to purchase such number of Company
Securities so that it shall maintain its same Ownership Percentage following such New Issuance.
The Offer Notice shall describe the Company Securities proposed to be issued by the Company and
specify the number, price and payment terms. Each VSS Stockholder who exercises its rights under
this Section 3.1 shall pay an amount equal to the cash and other consideration with respect
to such Company Securities being issued to it as set forth in the Offer Notice. Each of the VSS
Stockholders shall be entitled to apportion its rights to purchase the Company Securities under
this Section 3 among itself and its Affiliates in such proportions as it deems appropriate
and may assign the rights granted to it under this Section 3 to any of its Affiliates, in
each case prior to the expiration of the Election Period (a “Permitted Assignee”).

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          3.2. Right to Purchase Company Securities. 

               (a) Any of the VSS Stockholders or Permitted Assignees, as the case may be, which desires to
exercise rights under this Section 3 shall accept the Company’s offer as to the full number
of Common Stock or other Company Securities, as the case may be, offered to the applicable VSS
Stockholder in the Offer Notice or any lesser number by written notice thereof (an “Exercise
Notice”) given by the VSS Stockholder or Permitted Assignee, as the case may be, to the Company
prior to the expiration of the Election Period. A delivery of an Exercise Notice (which notice
shall specify the number (or amount) of Common Stock or other Company Securities, as the case may
be, to be purchased by such VSS Stockholder or Permitted Assignee, as the case may be, as permitted
under this Section 3) shall constitute a binding agreement of such VSS Stockholder or
Permitted Assignee, as the case may be, (a “Purchasing Stockholder”), to purchase, at the
price and on the terms specified in the Offer Notice, the number (or amount) of Common Stock or
other Company Securities specified in such Purchasing Stockholder’s Exercise Notice. If at the
termination of the Election Period a VSS Stockholder or Permitted Assignee, as the case may be,
shall not have exercised its rights to purchase Common Stock or other Company Securities, as
applicable, pursuant to this Section 3, such VSS Stockholder or Permitted Assignee, as the
case may be, shall be deemed to have waived any and all of its rights under this Section 3
with respect to that purchase of such Common Stock or other Company Securities, as applicable (such
waiver shall not apply to any subsequently offered Company Securities).

               (b) The Company shall have ninety (90) days from the date of the Offer Notice to consummate
the proposed New Issuance at the price and upon substantially the same terms specified in the Offer
Notice. At the consummation of such New Issuance, the Company shall issue in an uncertificated
book-entry form (unless a physical certificate is requested by such Purchasing Stockholder) the
Common Stock or other Company Securities to each Purchasing Stockholder, against payment by such
Purchasing Stockholder of the purchase price for such Common Stock or other Company Securities, as
the case may be, specified in such Purchasing Stockholder’s Exercise Notice. If the Company
proposes another New Issuance after such time period above, it shall again comply with the
procedures set forth in this Section 3.

               (c) The value of any non-cash consideration to be received by the Company in any New Issuance
shall be determined by the Board in good faith, and shall be specified in the Offer Notice
delivered in connection with any such New Issuance. If a Purchasing Stockholder elects to exercise
its rights under this Section 3 in connection with any New Issuance in which there is any
such non-cash consideration, then, such Purchasing Stockholder may elect in its Exercise Notice to
tender, in lieu of tendering any such non-cash consideration, an amount in cash equal to the
reasonably determined good faith value of such non-cash consideration.

               (d) The Common Stock or other Company Securities, as the case may be, when issued, sold and
delivered to the applicable Purchasing Stockholders in accordance with the terms and for the
consideration set forth in this Section 3, will be validly issued, fully paid and
nonassessable and free of restrictions on transfer other than applicable state and federal

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securities laws and liens and encumbrances created by any Purchasing Stockholder owning such
Common Stock or other Company Securities, as the case may be. The Company shall use its reasonable
best efforts to cause the Common Stock or other Company Securities, as the case may be, to be
listed on the national securities exchange where the Company’s capital stock is then listed.

          3.3. Exempt Issuances. The following shall constitute “Exempt Issuances”
under this Section 3: any issuance in which Company Securities are issued (i) pursuant to
a stock split, stock dividend, capital reorganization, recapitalization, or reclassification of the
Company’s Common Stock or other capital stock, distributable on a pro rata basis to all holders of
the same class of such Common Stock or other capital stock, (ii) to employees, officers, directors
or consultants of the Company pursuant to an equity incentive plan, stock option plan, employee
stock purchase plan, restricted stock plan or other employee benefit plans or programs in effect
from time to time, (iii) in connection with the conversion of any preferred stock or the conversion
or exercise of any options, warrants or other rights to purchase any Company Securities, (iv) in
consideration for the acquisition (by merger, consolidation, reorganization or otherwise) by the
Company or any subsidiary of the Company of the assets, business or equity interests of another
Person approved by a majority of the Board, or (v) to any of the Company’s or its subsidiaries’
lenders or other financing sources in connection with the incurrence, renewal or maintenance of any
indebtedness.

     4. Subscription Rights.

          4.1. Grant of Subscription Right. Notwithstanding the rights afforded by Section
3 hereof and subject to the terms and conditions specified in this Section 4, at any
time and from time to time, until the twenty-four month anniversary of Effective Time (as defined
in the Merger Agreement) (the “Subscription Period”), the Company hereby grants to the VSS
Funds (collectively) an option to purchase, in the aggregate and at a purchase price per share of
Common Stock equal to ninety percent (90%) of the volume weighted average price measured over the
10-trading day period immediately preceding the issuance (the “Subscription Price Per
Share”), a number of shares of Common Stock up to the lesser of (i) 7,500,000 shares of Common
Stock (subject to appropriate adjustment in the event of any dividend, stock split, combination or
similar recapitalization event) or (ii) such number of shares of Common Stock as the VSS Funds may
purchase from time to time during the Subscription Period for an aggregate purchase price of up to
$20,000,000. Each of the VSS Funds shall be entitled to apportion its subscription rights under
this Section 4.1 among itself and its Permitted Assignees in such proportions as it deems
appropriate and may assign any such rights granted to it to any of its Permitted Assignees.

          4.2. Subscription Rights Process. Any of the VSS Funds or Permitted Assignees, as the
case may be, which desires to exercise its rights under this Section 4 shall, from time to
time during the Subscription Period, deliver a written notice to the Company (the “Subscription
Notice”) stating (i) its bona fide intention to purchase shares of Common Stock (the
“Subscription Shares”), and (ii) either the number of Subscription Shares to be purchased
by such VSS Fund or the proposed aggregate purchase price to be paid by such VSS Fund for such
Subscription Shares. The Company shall have sixty (60) days following the receipt of the
Subscription Notice to consummate the issuance of such number of Subscription Shares to the

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applicable VSS Funds or Permitted Assignees, as the case may be, on the terms set forth in the
Subscription Notice. At the consummation the issuance of such Subscription Shares, the Company
shall issue in an uncertificated book-entry form (unless a physical certificate is requested by
such VSS Fund) such Subscription Shares to be purchased by the applicable VSS Fund, against payment
by such VSS Fund of the Subscription Price Per Share for such Subscription Shares. The
Subscription Shares when issued, sold and delivered in accordance with the terms and for the
consideration set forth in this Section 4, will be validly issued, fully paid and
nonassessable and free of restrictions on transfer other than applicable state and federal
securities laws and liens and encumbrances created by the VSS Fund or Permitted Assignee, as the
case may be, owning such Subscription Shares. The Company shall use its reasonable best efforts to
cause the Subscription Shares to be listed on the national securities exchange where the Company’s
capital stock is then listed.

     5. Miscellaneous.

          5.1. Covenants of the Company. The Company agrees to use commercially reasonable
efforts, within the requirements of applicable law, to ensure that the rights granted under this
Agreement are effective and that the parties enjoy the benefits of this Agreement. 

          5.2. Stock Split. All references to numbers of shares of Capital Stock in this
Agreement shall be appropriately adjusted to reflect any stock dividend, split, combination or
other recapitalization affecting the shares of Capital Stock occurring after the date of this
Agreement.

          5.3. Binding Effect; Assignability.

               (a) The terms and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and permitted assigns of the parties, including without limitation
Permitted Assignees. Nothing in this Agreement, express or implied, is intended to confer upon any
party, other than VSS, the VSS Funds and the parties hereto or their respective successors and
permitted assigns any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement. VSS shall be an express intended third
party beneficiary of this Agreement.

               (b) Any successor, permitted assignee or permitted transferee of any Stockholder, including
any Permitted Assignee who purchases securities in accordance with the terms hereof, shall deliver
to the Company, as a condition to any transfer or assignment, a counterpart signature page hereto
pursuant to which such successor, permitted assignee or permitted transferee shall confirm their
agreement to be subject to and bound by all of the provisions set forth in this Agreement that were
applicable to the predecessor or assignor of such successor or permitted assignee.

          5.4. Severability. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent jurisdiction to be illegal,
void or unenforceable, the remainder of this Agreement will continue in full force and effect and
the application of such provision to other persons or entity or circumstances will be interpreted
so as reasonably to effect the intent of the parties hereto. The parties hereto further agree to
replace

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such void or unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other purposes of such void
or unenforceable provision.

          5.5. Governing Law. This Agreement and any controversy arising out of or relating to
this Agreement shall be governed by and construed in accordance with the laws of the State of
Delaware, without regard to conflict of law principles that would result in the application of any
law other than the law of the State of Delaware.

          5.6. Counterparts. This Agreement may be executed in separate counterparts, but taken
together shall constitute one and the same instrument. Delivery of an executed counterpart by
facsimile or e-mail of a PDF file shall be effective as delivery of an original manually executed
counterpart.

          5.7. Descriptive Headings. The descriptive headings used herein are for reference
purposes only and will not affect in any way the meaning or interpretation of this Agreement.

          5.8. Notices. Any notice required or permitted by this Agreement shall be in writing
and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight
delivery service or confirmed facsimile, or two (2) business days after being deposited in the
regular mail as certified or registered mail (airmail if sent internationally) with postage
prepaid, if such notice is addressed to the party to be notified at such party’s address or
facsimile number as set forth beneath such party’s signature hereto, or as subsequently modified by
written notice. If notice is given to the Company, a copy shall also be sent to Lowenstein Sandler
PC, 1251 Avenue of the Americas, New York, NY 10020, Attention: Steven E. Siesser, Esq.; facsimile:
(973) 597-2507. If notice is given to the Stockholders’ Representative, a copy shall also be sent
to Perkins Coie LLP, 131 South Dearborn Street, Suite 1700, Chicago, Illinois 60603, Attention:
Phil Gordon, Esq.: telephone: (312) 324-8600; facsimile: (312) 324-9400; E-mail:
pgordon@perkinscoie.com.

          5.9. Amendment, Termination or Waiver. Any provision of this Agreement may be
amended, modified or terminated and the observance of any term hereof may be waived (either
generally or in a particular instance and either retroactively or prospectively) only by a written
instrument executed by (a) the Company; (b) the Stockholder; and either (c) (i) the Stockholders’
Representative or (ii) a majority of the Vowel Designees who are serving on Board at such time.

          5.10. Entire Agreement. This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior agreements,
representations and understandings (both written and oral) between the parties with respect
thereto. No addition to or modification of any provision of this Agreement shall be binding upon
any party unless made in writing and signed by the party against whom enforcement is sought.

          5.11. Delays or Omissions. No delay or omission to exercise any right, power, or
remedy accruing to any party under this Agreement, upon any breach or default of any other party
under this Agreement, shall impair any such right, power, or remedy of such

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nonbreaching or nondefaulting party, nor shall it be construed to be a waiver of or
acquiescence to any such breach or default, or to any similar breach or default thereafter
occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. All remedies, whether under this Agreement
or by law or otherwise afforded to any party, shall be cumulative and not alternative.

          5.12. Further Assurances. Each of party shall do and perform or cause to be done and
performed all such further acts and things and shall execute and deliver all such other agreements,
certificates, assignments, instruments, and documents as the other reasonably may request from time
to time for the purposes of carrying out the intent of this Agreement.

          5.13. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE AND
COVENANT THAT THEY WILL NOT ASSERT THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENT OR ACTION RELATED
HERETO OR THERETO.

          5.14. Specific Performance. In addition to all other remedies available at law and in
equity, the Stockholder or the Stockholders Representative, as the case may be, shall be entitled
to specifically enforce any provision of this Agreement, and to seek and obtain injunctive and
other equitable relief with respect to the enforcement of its rights under this Agreement, in each
case, without the need to post bond or security therefore.

[Remainder of Page Intentionally Left Blank.]

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          IN WITNESS WHEREOF, the parties have executed this Stockholders Agreement as of the date first
written above.

	 	 	 	 	 
	 	COMPANY:

CAMBIUM HOLDINGS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	 	Address: 	 	 
	 
	 	STOCKHOLDER:

VSS-CAMBIUM HOLDINGS III, LLC

 	 
	 	By:  	 	 
	 	 	Name:  		 
	 	 	Title:  	 	 
	 	 	Address:	 	 
	 
	 	STOCKHOLDERS’ REPRESENTATIVE:

VOWEL REPRESENTATIVE, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	 	Address: 	 	 
	 

[Signature Page Stockholders Agreement]

 

EXHIBIT A

BOARD OF DIRECTORS

CLASS I DIRECTORS

CLASS II DIRECTORS

CLASS III DIRECTORSEX-10.1

Exhibit 10.1

PHH CORPORATION

AMENDED AND RESTATED

2005 EQUITY AND INCENTIVE PLAN

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	Section	 	Page
	 
	 	 	 	 	 	 
	1.

	 	Purpose; Types of Awards; Construction.
	 	 	3	 
	 
	 	 	 	 	 	 
	2.

	 	Definitions.
	 	 	3	 
	 
	 	 	 	 	 	 
	3.

	 	Administration.
	 	 	8	 
	 
	 	 	 	 	 	 
	4.

	 	Eligibility.
	 	 	9	 
	 
	 	 	 	 	 	 
	5.

	 	Stock Subject to the Plan.
	 	 	9	 
	 
	 	 	 	 	 	 
	6.

	 	Specific Terms of Awards.
	 	 	10	 
	 
	 	 	 	 	 	 
	7.

	 	Change in Control Provisions.
	 	 	17	 
	 
	 	 	 	 	 	 
	8.

	 	General Provisions.
	 	 	17	 

2

 

PHH CORPORATION

AMENDED AND RESTATED

2005 EQUITY AND INCENTIVE PLAN

	1.	 	Establishment, Purpose; Types of Awards; Construction.

PHH Corporation (the “Company”) hereby establishes the PHH Corporation Amended and Restated 2005
Equity and Incentive Plan (the “Plan”), as set forth herein. The Plan is an amendment and
restatement and continuation of the PHH Corporation 2005 Equity and Incentive Plan (the “Prior
Plan”). The purposes of the Plan are to afford an incentive to non-employee directors, selected
officers and other employees, advisors and consultants of the Company, or any Parent or Subsidiary
of the Company that now exists or hereafter is organized or acquired, to continue as non-employee
directors, officers, employees, advisors or consultants, as the case may be, to increase their
efforts on behalf of the Company and its Subsidiaries and to promote the success of the Company’s
business. The Plan provides for the grant of Options (including “incentive stock options” and
“nonqualified stock options”), stock appreciation rights, restricted stock, restricted stock units
and other stock- or cash-based awards. The Plan is designed with the intention that Awards granted
hereunder will comply with the requirements for “performance-based compensation” under Section
162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and the Plan and Awards shall
be interpreted in a manner consistent with such requirements. The Company also intends that the
Plan comply with Section 409A of the Code and the Plan shall be so construed. The provisions of
the Prior Plan continue to control with respect to any Awards outstanding thereunder prior to the
date of stockholder approval of this Plan, including to the extent necessary to avoid establishment
of a new measurement date for financial accounting purposes and to preserve the status of any
options that are intended to qualify as incentive stock options within the meaning of Section 422
of the Code.

	2.	 	Definitions.

For purposes of the Plan, the following terms shall be defined as set forth below:

	 	(a)	 	“Annual Incentive Program” means the program described in Section 6(c) hereof.
	 
	 	(b)	 	“Award” means any Option, SAR, Restricted Stock, Restricted Stock Unit or Other
Stock-Based Award or Other Cash-Based Award granted under the Plan.
	 
	 	(c)	 	“Award Agreement” means any written agreement, contract, or other instrument or
document evidencing an Award.
	 
	 	(d)	 	“Board” means the Board of Directors of the Company.

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	 	(e)	 	“Change in Control” means a change in control of the Company, which will be
deemed to have occurred if:

	 	(i)	 	any “person,” as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than (A) the Company, (B) any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, and
(C) any corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of Stock), is
or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 30% or
more of the combined voting power of the Company’s then outstanding voting
securities (excluding any person who becomes such a beneficial owner in
connection with a transaction immediately following which the individuals who
comprise the Board immediately prior thereto constitute at least a majority of
the Board, the entity surviving such transaction or, if the Company or the
entity surviving the transaction is then a subsidiary, the ultimate parent
thereof);
	 
	 	(ii)	 	the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the
Effective Date, constitute the Board and any new director (other than a
director whose initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by the
Company’s stockholders was approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors on the Effective Date or whose appointment, election or nomination
for election was previously so approved or recommended;
	 
	 	(iii)	 	there is consummated a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other corporation,
other than a merger or consolidation immediately following which the
individuals who comprise the Board immediately prior thereto constitute at
least a majority of the Board, the entity surviving such merger or
consolidation or, if the Company or the entity surviving such merger is then a
subsidiary, the ultimate parent thereof; or
	 
	 	(iv)	 	the stockholders of the Company approve a plan of complete
liquidation of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets
(or any transaction having a similar effect), other than a sale or disposition
by the Company of all or substantially all of the Company’s assets to an
entity, immediately following which the individuals who comprise the Board
immediately prior thereto constitute at least a majority of the board of
directors of the entity to which such assets are sold or disposed of or, if
such entity is a subsidiary, the ultimate parent thereof.

4

 

Notwithstanding the foregoing, a Change in Control shall not be deemed to have occurred by virtue
of (x) a Public Offering or (y) the consummation of any transaction or series of integrated
transactions immediately following which the holders of the Stock immediately prior to such
transaction or series of transactions continue to have substantially the same proportionate
ownership in an entity which owns all or substantially all of the assets of the Company immediately
following such transaction or series of transactions. Solely to the extent necessary to comply with
the requirements of Section 409A of the Code, a “Change in Control” as defined herein may occur
only upon or as a result of a Change in Control that is also a “change in control event,” as
defined in accordance with Section 1.409A-3(i)(5) of the Treasury Regulations.

	 	(f)	 	“Committee” means the committee established by the Board to administer the
Plan, the composition of which shall at all times satisfy the provisions of Rule 16b-3
and Section 162(m) of the Code.
	 
	 	(g)	 	“Company” means PHH Corporation, a Maryland corporation, or any successor
corporation.
	 
	 	(h)	 	“Covered Employee” shall have the meaning set forth in Section 162(m)(3) of the
Code.
	 
	 	(i)	 	“Effective Date” means, with respect to the Prior Plan, January 14, 2005, and,
with respect to this Plan, the date of approval of the Plan by the stockholders of the
Company.
	 
	 	(j)	 	“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and the rules and regulations promulgated thereunder.
	 
	 	(k)	 	“Fair Market Value” means, with respect to Stock or other property, the fair
market value of such Stock or other property determined by such methods or procedures
as shall be established from time to time by the Committee. Unless otherwise
determined by the Committee in good faith, the per share Fair Market Value of Stock as
of a particular date shall mean (i) the closing sales price per share of Stock on the
national securities exchange on which the Stock is principally traded (or, if there was
no trading of the Stock on such date, the closing sales price for the last preceding
date on which there was trading of the Stock on such exchange), or (ii) if the shares
of Stock are then traded in an over-the-counter market, the average of the closing bid
and asked prices for the shares of Stock in such over-the-counter market for the last
preceding date on which there was a sale of such Stock in such market, or (iii) if the shares of Stock are not then listed on a national securities exchange or traded in an
over-the-counter market, such value as the Committee, in its sole discretion, shall
determine.
	 
	 	(l)	 	“Grantee” means a person who, as a non-employee director, officer or other
employee of the Company or a Parent or Subsidiary of the Company, has been granted an
Award under the Plan.

5

 

	 	(m)	 	“ISO” means any Option intended to be and designated as an incentive stock
option within the meaning of Section 422 of the Code.
	 
	 	(n)	 	“Long Term Incentive Program” means the program described in Section 6(b)
hereof.
	 
	 	(o)	 	“Non-Employee Director” means any director of the Company who is not also
employed by the Company or any of its Subsidiaries.
	 
	 	(p)	 	“NQSO” means any Option that is not designated as an ISO.
	 
	 	(q)	 	“Option” means a right, granted to a Grantee under Section 6(b)(i), to purchase shares of Stock. An Option may be either an ISO or an NQSO, provided that ISOs may be
granted only to employees of the Company or a Parent or Subsidiary of the Company.
	 
	 	(r)	 	“Other Cash-Based Award” means cash awarded under the Annual Incentive Program
or the Long Term Incentive Program, including cash awarded as a bonus or upon the
attainment of Performance Goals or otherwise as permitted under the Plan.
	 
	 	(s)	 	“Other Stock-Based Award” means a right or other interest granted to a Grantee
under the Annual Incentive Program or the Long Term Incentive Program that may be
denominated or payable in, valued in whole or in part by reference to, or otherwise
based on, or related to, Stock, including but not limited to (i) unrestricted Stock
awarded as a bonus or upon the attainment of Performance Goals or otherwise as
permitted under the Plan, and (ii) a right granted to a Grantee to acquire Stock from
the Company containing terms and conditions prescribed by the Committee.
	 
	 	(t)	 	“Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.
	 
	 	(u)	 	“Performance Goals” means performance goals based on one or more of the
following criteria, determined in accordance with generally accepted accounting
principles where applicable: (i) pre-tax income or after-tax income; (ii) income or
earnings including operating income, earnings before or after taxes, earnings before or
after interest, depreciation, amortization, or extraordinary or special items;
(iii) pre-tax income of the Company or any Subsidiary, or any division or business unit
thereof, before or after non-controlling interest; (iv) net income excluding
amortization of intangible assets, depreciation and impairment of goodwill and
intangible assets and/or excluding charges attributable to the adoption of new
accounting pronouncements; (v) earnings or book value per share (basic or diluted);
(vi) return on assets (gross or net), return on investment, return on capital, or
return on equity; (vii) return on revenues; (viii) cash flow, free cash flow, cash flow
return on investment (discounted or otherwise), net cash provided by operations, or
cash flow in excess of cost of capital; (ix) economic value created; (x) operating
margin or profit margin; (xi) stock price or total stockholder

6

 

	 	 	 	return; (xii) income or
earnings from continuing operations; (xiii) cost targets, reductions and savings,
expense management, productivity and efficiencies; and (xiv) strategic business
criteria, consisting of one or more objectives based on meeting specified market
penetration or market share, geographic business expansion, customer satisfaction,
employee satisfaction, human resources management, supervision of litigation,
information technology, and goals relating to divestitures, joint ventures and similar
transactions. Where applicable, the Performance Goals may be expressed in terms of
attaining a specified level of the particular criterion or the attainment of a
percentage increase or decrease in the particular criterion, and may be applied to one
or more of the Company or a Parent or Subsidiary of the Company, or a division or
strategic business unit of the Company, all as determined by the Committee. The
Performance Goals may include a threshold level of performance below which no payment
will be made (or no vesting will occur), levels of performance at which specified
payments will be paid (or specified vesting will occur), and a maximum level of
performance above which no additional payment will be made (or at which full vesting
will occur). Each of the foregoing Performance Goals shall be evaluated in accordance
with generally accepted accounting principles, where applicable, and shall be subject
to certification by the Committee. The Committee shall have the authority to make
equitable adjustments to the Performance Goals in recognition of unusual or
non-recurring events affecting the Company or any Parent or Subsidiary of the Company
or the financial statements of the Company or any Parent or Subsidiary of the Company,
in response to changes in applicable laws or regulations, or to account for items of
gain, loss or expense determined to be extraordinary or unusual in nature or infrequent
in occurrence or related to the disposal of a segment of a business or related to a
change in accounting principles.
	 
	 	(v)	 	“Plan” means this PHH Corporation Amended and Restated 2005 Equity and
Incentive Plan, as it may be amended from time to time.
	 
	 	(w)	 	“Plan Year” means a calendar year.
	 
	 	(x)	 	“Public Offering” means an offering of equity securities of the Company that is
registered with the Securities and Exchange Commission.
	 
	 	(y)	 	“Restricted Stock” means an Award of shares of Stock to a Grantee under
Section 6(b)(iii) that may be subject to certain restrictions and to a risk of
forfeiture.
	 
	 	(z)	 	“Restricted Stock Unit” or “RSU” means a right granted to a Grantee under
Section 6(b)(iv) to receive Stock or cash at the end of a specified period, which right
may be conditioned on the satisfaction of specified performance or other criteria. To
the extent provided in an Award Agreement or as otherwise set forth herein, RSUs may
include dividend equivalent rights.

7

 

	 	(aa)	 	“Rule 16b-3” means Rule 16b-3, as from time to time in effect promulgated by
the Securities and Exchange Commission under Section 16 of the Exchange Act, including
any successor to such Rule.
	 
	 	(bb)	 	“Securities Act” means the Securities Act of 1933, as amended from time to
time, and the rules and regulations promulgated thereunder.
	 
	 	(cc)	 	“Stock” means shares of the common stock, par value $0.01 per share, of the
Company.
	 
	 	(dd)	 	“Stock Appreciation Right” or “SAR” means the right, granted to a Grantee under
Section 6(b)(ii), to be paid an amount measured by the appreciation in the Fair Market
Value of Stock from the date of grant to the date of exercise of the right.
	 
	 	(ee)	 	“Subsidiary” means any corporation, limited partnership, limited liability
company or other entity (other than the Company) in or of which the Company owns,
directly or indirectly, at the time the relevant Award is granted, an equity interest
possessing 50 percent or more of the total combined voting power of all equity
interests of such entity; provided, however, that with respect to any Grantee
who has participated in the Plan for a period of at least one year, if such Grantee is
transferred by the Company or a Subsidiary to another entity in or of which the Company
owns, directly or indirectly, less than 50 percent of the total combined voting power
of all equity interests in or of such entity, such entity shall be treated as a
Subsidiary solely for purposes of determining whether such Grantee has incurred a
termination of employment with respect to any Awards outstanding as of the date of such
transfer; and, provided further, that for purposes of ISOs granted pursuant to
the Plan, the term ‘Subsidiary’ means a ‘subsidiary corporation,’ whether now or
hereafter existing, as defined in Section 424(f) of the Code.

	3.	 	Administration.

The Plan shall be administered by the Board or by such Committee that the Board may appoint for
this purpose. If a Committee is appointed to administer the Plan, all references herein to the
“Committee” shall be references to such Committee. If no Committee is appointed by the Board to
administer the Plan, all references herein to the “Committee” shall be references to the Board.
The Committee shall have the authority in its discretion, subject to and not inconsistent with the
express provisions of the Plan, to administer the Plan and to exercise all the powers and
authorities either specifically granted to it under the Plan or necessary or advisable in the
administration of the Plan, including, without limitation, the authority to grant Awards; to
determine the persons to whom and the time or times at which Awards shall be granted; to determine
the type and number of Awards to be granted, the number of shares of Stock to which an Award may
relate and the terms, conditions, restrictions and performance criteria relating to any Award; to
determine Performance Goals no later than such time as required to ensure that an underlying Award
which is intended to comply with the requirements of Section 162(m) of the Code so complies; and to
determine whether, to what extent, and under what circumstances an Award may be settled, cancelled,
forfeited, exchanged, or surrendered; to make adjustments in

8

 

the terms and conditions of, and the Performance Goals (if any) included in, Awards; to construe and interpret the Plan and any Award or
Loan; to prescribe, amend and rescind rules and regulations relating to the Plan; to determine the
terms and provisions of the Award Agreements (which need not be identical for each Grantee); and to
make all other determinations deemed necessary or advisable for the administration of the Plan.
Notwithstanding the foregoing, neither the Board, the Committee nor their respective delegates
shall have the authority to reprice (or cancel and regrant) any Option or, if applicable, other
Award at a lower exercise, base or purchase price without first obtaining the approval of the
Company’s stockholders.

The Committee may appoint a chairperson and a secretary and may make such rules and regulations for
the conduct of its business as it shall deem advisable, and shall keep minutes of its meetings.
All determinations of the Committee shall be made by a majority of its members either present in
person or participating by conference telephone at a meeting or by written consent. The Committee
may delegate to one or more of its members or to one or more agents such administrative duties as
it may deem advisable, and the Committee or any person to whom it has delegated duties as aforesaid
may employ one or more persons to render advice with respect to any responsibility the Committee or
such person may have under the Plan. All decisions, determinations and interpretations of the
Committee shall be final and binding on all persons, including but not limited to the Company, any
Parent or Subsidiary of the Company or any Grantee (or any person claiming any rights under the
Plan from or through any Grantee) and any stockholder.

No member of the Board or Committee shall be liable for any action taken or determination made in
good faith with respect to the Plan or any Award granted hereunder.

	4.	 	Eligibility.

Awards may be granted to selected Non-Employee Directors, officers and other employees, advisors or
consultants of the Company or any Parent or Subsidiary of the Company, in the discretion of the
Committee. In determining the persons to whom Awards shall be granted and the type of any Award
(including the number of shares to be covered by such Award), the Committee shall take into account
such factors as the Committee shall deem relevant in connection with accomplishing the purposes of
the Plan.

	5.	 	Stock Subject to the Plan.

Subject to adjustment as provided for herein, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be 3,550,000, plus the number of shares of Stock that,
immediately prior to stockholder approval of the Plan, remain authorized and available for awards
under the Prior Plan or thereafter become available under the terms of the Prior Plan; of this
number, no more than 2,250,000 shares may be issued in the form of an Award other than an Option or
SAR. Such shares shall be authorized but unissued shares of Stock. If any shares subject to an
Award are forfeited or cancelled, or if an Award terminates or expires without a distribution of
shares to the Grantee, or if an Award is paid or settled in cash, the shares of Stock with respect
to such Award shall, to the extent of any such forfeiture, cancellation, termination or expiration,
or cash payment or settlement, again be available for Awards under the Plan other than Awards that
are intended to be ISOs. Each share subject to the foregoing sentence shall be

9

 

added back to the number of shares of Stock reserved under the Plan as one share.

 Notwithstanding anything to the
contrary contained herein, all shares of Stock covered by an SAR, to the extent that it is
exercised and settled in shares of Stock, shall be considered issued or transferred pursuant to the
Plan. Upon the exercise of any Award granted in tandem with any other Award, such related Award
shall be cancelled to the extent of the number of shares of Stock as to which the Award is
exercised and such number of shares shall no longer be available for Awards under the Plan. Shares
of Stock surrendered or withheld as payment of either the exercise price of an Award and/or
withholding taxes with respect to an Award shall not again be made available for Awards under the
Plan.

No more than 1,000,000 shares of Stock may be made subject to Options or SARs to a single
individual in a single Plan Year, subject to adjustment as provided herein, and no more than
1,000,000 shares of Stock may be made subject to stock-based awards other than Options or SARs
(including Restricted Stock and Restricted Stock Units or Other Stock-Based Awards denominated in
shares of Stock) to a single individual in a single Plan Year, in either case, subject to
adjustment as provided herein. Determinations made in respect of the limitations set forth in the
immediately preceding sentence shall be made in a manner consistent with Section 162(m) of the
Code.

In the event that the Committee shall determine that any dividend or other distribution (whether in
the form of cash, Stock, or other property), recapitalization, Stock split, reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, or share exchange, or
other similar corporate transaction or event, affects the Stock such that an adjustment is
appropriate in order to prevent dilution or enlargement of the rights of Grantees under the Plan,
then the Committee shall make such equitable changes or adjustments as it deems necessary or
appropriate to any or all of (i) the number and kind of shares of Stock or other property
(including cash) that may thereafter be issued in connection with Awards, (ii) the number and kind
of shares of Stock or other property (including cash) issued or issuable in respect of outstanding
Awards, (iii) the exercise price, grant price, or purchase price relating to any Award; provided,
that, with respect to ISOs, such adjustment shall be made in accordance with Section 424(h) of the
Code; and (iv) the Performance Goals applicable to outstanding Awards.

	6.	 	Specific Terms of Awards.

	 	(a)	 	General. The term of each Award shall be for such period as may be
determined by the Committee. Subject to the terms of the Plan and any applicable Award
Agreement, payments to be made by the Company or a Parent or Subsidiary of the Company
upon the grant, vesting, maturation, or exercise of an Award may be made in such forms
as the Committee shall determine at the date of grant, including, without limitation,
cash, Stock, or other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis. The Committee may make rules relating to
installment or deferred payments with respect to Awards, including the rate of interest
to be credited with respect to such payments. In addition to the foregoing, the
Committee may impose on any Award or the exercise thereof, at the date of grant or
thereafter, such additional terms and conditions, not inconsistent with the provisions
of the Plan, as the Committee shall determine.

10

 

	 	(b)	 	Long Term Incentive Program. Under the Long Term Incentive Program,
the Committee is authorized to grant the Awards described in this Section 6(b), under
such terms and conditions as deemed by the Committee to be consistent with the
purposes of the Plan. Such Awards may be granted with value and payment contingent
upon Performance Goals. Except as otherwise set forth herein or as may be determined
by the Committee, each Award granted under the Long Term Incentive Program shall be
evidenced by an Award Agreement containing such terms and conditions applicable to
such Award as the Committee shall determine at the date of grant or thereafter.

	 	(i)	 	Options. The Committee is authorized to grant Options
to Grantees on the following terms and conditions:

	 	(A)	 	Type of Award. The Award Agreement
evidencing the grant of an Option under the Plan shall designate the
Option as an ISO or an NQSO.
	 
	 	(B)	 	Exercise Price. The exercise price per
share of Stock purchasable under an Option shall be determined by the
Committee, but in no event shall the per share exercise price of any
Option be less than the Fair Market Value of a share of Stock on the
date of grant of such Option. The exercise price for Stock subject to
an Option may be paid in cash or by an exchange of Stock previously
owned by the Grantee for at least six months (if acquired from the
Company), through a “broker cashless exercise” procedure approved by
the Committee (to the extent permitted by law), or a combination of the
above, in any case in an amount having a combined value equal to such
exercise price. An Award Agreement may provide that a Grantee may pay
all or a portion of the aggregate exercise price by having shares of
Stock with a Fair Market Value on the date of exercise equal to the
aggregate exercise price withheld by the Company.
	 
	 	(C)	 	Term and Exercisability of Options.
The date on which the Committee adopts a resolution expressly granting
an Option shall be considered the day on which such Option is granted.
Options shall be exercisable over the exercise period (which shall not
exceed ten years from the date of grant), at such times and upon such
conditions as the Committee may determine, as reflected in the Award
Agreement; provided that the Committee shall have the authority to
accelerate the exercisability of any outstanding Option at such time
and under such circumstances as it, in its sole discretion, deems
appropriate. An Option may be exercised to the extent of any or all
full shares of Stock as to which the Option has become exercisable, by
giving written notice of such exercise to the Committee or its
designated agent.

11

 

	 	(D)	 	Termination of Employment. An Option
may not be exercised unless the Grantee is then a director of, in the
employ of, or providing services to, the Company or a Parent or
Subsidiary of the Company, and unless the Grantee has remained
continuously so employed, or continuously maintained such relationship,
since the date of grant of the Option; provided, that the Award
Agreement may contain provisions extending the exercisability of
Options, in the event of specified terminations of employment or
service, to a date not later than the expiration date of such Option.
	 
	 	(E)	 	Other Provisions. Options may be
subject to such other conditions including, but not limited to,
restrictions on transferability of the shares acquired upon exercise of
such Options, as the Committee may prescribe in its discretion or as
may be required by applicable law.

	 	(ii)	 	SARs. The Committee is authorized to grant SARs to
Grantees on the following terms and conditions:

	 	(A)	 	In General. Unless the Committee
determines otherwise, a SAR (1) granted in tandem with an NQSO may be
granted at the time of grant of the related NQSO or at any time
thereafter or (2) granted in tandem with an ISO may only be granted at
the time of grant of the related ISO. A SAR granted in tandem with an
Option shall be exercisable only to the extent the underlying Option is
exercisable. Payment of a SAR may made in cash, Stock, or property as
specified in the Award or determined by the Committee at the date of
grant.
	 
	 	(B)	 	Right Conferred. A SAR shall confer on
the Grantee a right to receive an amount with respect to each share
subject thereto, upon exercise thereof, equal to the excess of (1) the
Fair Market Value of one share of Stock on the date of exercise over
(2) the grant price of the SAR (which in the case of an SAR granted in
tandem with an Option shall be equal to the exercise price of the
underlying Option, and which in the case of any other SAR shall be such
price as the Committee may determine).
	 
	 	(C)	 	Term and Exercisability of SARs. The
date on which the Committee adopts a resolution expressly granting a
SAR shall be considered the day on which such SAR is granted. SARs
shall be exercisable over the exercise period (which shall not exceed
the lesser of ten years from the date of grant or, in the case of a
tandem SAR, the expiration of its related Award), at such times and
upon such conditions as the Committee may determine, as reflected in
the Award Agreement; provided, that the Committee shall have the
authority to accelerate the exercisability of any outstanding SAR at

12

 

	 	 	 	such time and under such circumstances as it, in its sole discretion,
deems appropriate. A SAR may be exercised to the extent of any or
all full shares of Stock as to which the SAR (or, in the case of a
tandem SAR, its related Award) has become exercisable, by giving
written notice of such exercise to the Committee or its designated
agent.

	 	(D)	 	Termination of Employment. A SAR may
not be exercised unless the Grantee is then a director of, in the
employ of, or providing services to, the Company or a Parent or
Subsidiary of the Company, and unless the Grantee has remained
continuously so employed, or continuously maintained such relationship,
since the date of grant of the SAR; provided, that the Award Agreement
may contain provisions extending the exercisability of the SAR, in the
event of specified terminations of employment or service, to a date not
later than the expiration date of such SAR (or, in the case of a tandem
SAR, its related Award).
	 
	 	(E)	 	Other Provisions. SARs may be subject
to such other conditions including, but not limited to, restrictions on
transferability of the shares acquired upon exercise of such SARs, as
the Committee may prescribe in its discretion or as may be required by
applicable law.

	 	(iii)	 	Restricted Stock. The Committee is authorized to
grant Restricted Stock to Grantees on the following terms and conditions:

	 	(A)	 	Issuance and Restrictions. Restricted
Stock shall be subject to such restrictions on transferability and
other restrictions, if any, as the Committee may impose at the date of
grant or thereafter, which restrictions may lapse separately or in
combination at such times, under such circumstances, in such
installments, or otherwise, as the Committee may determine. The
Committee may place restrictions on Restricted Stock that shall lapse,
in whole or in part, only upon the attainment of Performance Goals.
Except to the extent restricted under the Award Agreement relating to
the Restricted Stock, a Grantee granted Restricted Stock shall have all
of the rights of a stockholder including, without limitation, the right
to vote Restricted Stock and the right to receive dividends thereon.

	 	(B)	 	Forfeiture. Upon termination of
employment with or service to the Company, or upon termination of the
director or independent contractor relationship, as the case may be,
during the applicable restriction period, Restricted Stock and any
accrued but unpaid dividends that are then subject to restrictions
shall be forfeited; provided, that the Committee may provide, by rule
or regulation or in any Award Agreement, or may determine in any
individual case,

13

 

	 	 	 	that restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee may in other cases
waive in whole or in part the forfeiture of Restricted Stock.

	 	(C)	 	Certificates for Stock. Restricted
Stock granted under the Plan may be evidenced in such manner as the
Committee shall determine. If certificates representing Restricted
Stock are registered in the name of the Grantee, such certificates
shall bear an appropriate legend referring to the terms, conditions,
and restrictions applicable to such Restricted Stock, and the Company
shall retain physical possession of the certificate.
	 
	 	(D)	 	Dividends. Dividends paid on
Restricted Stock shall be either paid at the dividend payment date, or
deferred for payment to such date as determined by the Committee and
specified in the applicable Award Agreement, in cash or in shares of
unrestricted Stock having a Fair Market Value equal to the amount of
such dividends. Stock distributed in connection with a stock split or
stock dividend, and other property distributed as a dividend, shall be
subject to restrictions and a risk of forfeiture to the same extent as
the Restricted Stock with respect to which such Stock or other property
has been distributed. Notwithstanding anything herein to the contrary,
dividends paid on Restricted Stock that vest based upon the attainment
of Performance Goals shall be accumulated and paid only to the extent
of the attainment of the underlying Performance Goals, as determined by
the Committee.

	 	(iv)	 	Restricted Stock Units. The Committee is authorized to
grant Restricted Stock Units to Grantees, subject to the following terms and
conditions:

	 	(A)	 	Award and Restrictions. Delivery of
Stock or cash, as determined by the Committee at the date of grant,
will occur upon expiration of the deferral period specified for
Restricted Stock Units by the Committee. The Committee may place
restrictions on Restricted Stock Units that shall lapse, in whole or in
part, only upon the attainment of Performance Goals.
	 
	 	(B)	 	Forfeiture. Upon termination of
employment with or service to the Company, or upon termination of the
director or independent contractor relationship, as the case may be,
during the applicable deferral period or portion thereof to which
forfeiture conditions apply, or upon failure to satisfy any other
conditions precedent to the delivery of Stock or cash to which such
Restricted Stock Units relate, all Restricted Stock Units and any
accrued but unpaid dividend equivalent rights that are then subject to
deferral or restriction shall be forfeited; provided, that the
Committee may

14

 

	 	 	 	provide, by rule or regulation or in any Award Agreement, or may
determine in any individual case, that restrictions or forfeiture
conditions relating to Restricted Stock Units will be waived in whole
or in part in the event of termination resulting from specified
causes, and the Committee may in other cases waive in whole or in
part the forfeiture of Restricted Stock Units. Notwithstanding
anything herein to the contrary, dividend equivalent rights paid on
Restricted Stock Units that vest based upon the attainment of
Performance Goals shall be accumulated and paid only to the extent of
the attainment of the underlying Performance Goals, as determined by
the Committee.

	 	(C)	 	Non-Employee Director Deferred Compensation
Awards. Unless the Committee or the Board determines otherwise on
a prospective basis, the Company shall issue RSUs payable in Stock
pursuant to this Section 6(b)(iv)(C) for the purpose of fulfilling the
Company’s obligations under its Non-Employee Directors Deferred
Compensation Plan (the “Deferred Compensation Plan”); provided,
however, that certain terms and conditions of the grant and payment of
such RSUs set forth in the Deferred Compensation Plan (and only to the
extent set forth in such plan) shall supercede the terms generally
applicable to RSUs granted under the Plan. RSUs granted under this
Section 6(b)(iv)(C) need not be evidenced by an Award Agreement unless
the Committee determines that such an Award Agreement is desirable for
the furtherance of the purposes of the Plan and the Deferred
Compensation Plan.
	 
	 	(D)	 	Non-Employee Director Compensatory
Awards. Unless the Committee or the Board determines otherwise on
a prospective basis, the Company shall issue RSUs payable in Stock
pursuant to this Section 6(b)(iv)(D) for the purpose of fulfilling the
Company’s obligation to compensate each Non-Employee Director, in part,
in the form of RSUs. RSUs granted under this Section 6(b)(iv)(D) need
not be evidenced by an Award Agreement unless the Committee determines
that such an Award Agreement is desirable for the furtherance of the
purposes of the Plan. Such RSUs shall be awarded at such times as the
Company shall otherwise pay to Non-Employee Directors their annual
retainer fees, and annual committee stipends as well as such other
fees, stipends and payments as determined by the Committee or the Board
(each such award date, a “Fee Payment Date”). The Company shall keep a
separate book account in the name of each Non-Employee Director. RSUs
awarded pursuant to this Section 6(b)(iv)(D) may have dividend
equivalent rights to be credited and payable in the form of additional
RSUs or cash, as determined by the Committee or the Board on a
prospective basis. The number of RSUs to be credited to each
Non-Employee Director’s account as of each Fee

15

 

	 	 	 	Payment Date shall be calculated by dividing (1) fifty percent (50%)
of the total retainer fee and committee stipends otherwise to be paid
to such Non-Employee Director on such Fee Payment Date by (2) the
Fair Market Value of a share of Stock on such date. In the event the
foregoing calculation would result in a grant of a fractional number
of RSUs, the number of RSUs to be granted to the Non-Employee
Director shall be rounded down to the nearest whole number of RSUs,
and the fractional amount shall be paid to the Non-Employee Director
in cash as part of the Non-Employee Director’s retainer fee and
committee stipends. RSUs credited pursuant to this Section
6(b)(iv)(D) shall be immediately vested and non-forfeitable and shall
become payable on the first anniversary immediately following the
date upon which a Non-Employee Director’s service as a member of the
Board terminates for any reason; no acceleration of such payment
shall be permitted, except to the extent the Committee determines
such acceleration is permitted under Code Section 409A.

	 	(v)	 	Other Stock- or Cash-Based Awards. The Committee is
authorized to grant Awards to Grantees in the form of Other Stock-Based Awards
or Other Cash-Based Awards, as deemed by the Committee to be consistent with
the purposes of the Plan. Awards granted pursuant to this Section 6(b)(v) may
be granted with value and payment contingent upon Performance Goals, so long as
such goals relate to periods of performance in excess of one calendar year.
The Committee shall determine the terms and conditions of such Awards at the
date of grant or thereafter. Performance periods under this Section 6(b)(v)
may overlap. The maximum value of the aggregate payment that any Grantee may
receive pursuant to this Section 6(b)(v) in respect of any Plan Year is $5
million. Payments earned hereunder may be decreased or, with respect to any
Grantee who is not a Covered Employee, increased in the sole discretion of the
Committee based on such factors as it deems appropriate. No such payment shall
be made to a Covered Employee prior to the certification by the Committee that
the Performance Goals have been attained. The Committee may establish such
other rules applicable to the Other Stock- or Cash-Based Awards to the extent
not inconsistent with Section 162(m) of the Code and provided that any
dividends or dividend equivalents payable with respect to such Awards that vest
based upon the attainment of Performance Goals shall be accumulated and paid
only to the extent of the attainment of the underlying Performance Goals, as
determined by the Committee.

	 	(c)	 	Annual Incentive Program. The Committee is authorized to grant Awards
to Grantees pursuant to the Annual Incentive Program, under such terms and conditions
as deemed by the Committee to be consistent with the purposes of the Plan. Grantees
will be selected by the Committee with respect to participation for a Plan Year. The
maximum value of the aggregate payment that any Grantee may

16

 

	 	 	 	receive under the Annual Incentive Program in respect of any Plan Year is $5
million. Payments earned hereunder may be decreased or, with respect to any Grantee
who is not a Covered Employee, increased, in the sole discretion of the Committee
based on such factors as it deems appropriate. No such payment shall be made to a
Covered Employee prior to the certification by the Committee that the Performance
Goals relating to Awards hereunder have been attained. The Committee may establish
such other rules applicable to the Annual Incentive Program to the extent not
inconsistent with Section 162(m) of the Code.

	7.	 	Change in Control Provisions.

Unless otherwise determined by the Committee and evidenced in an Award Agreement or set forth
herein, in the event of a Change in Control:

	 	(a)	 	any Award carrying a right to exercise that was not previously vested and
exercisable shall become fully vested and exercisable; and
	 
	 	(b)	 	the restrictions, deferral limitations, payment conditions, and forfeiture
conditions applicable to any other Award granted under the Plan shall lapse and such
Awards shall be deemed fully vested, and any performance conditions imposed with
respect to Awards shall be deemed to be fully achieved.

	8.	 	General Provisions.

	 	(a)	 	Nontransferability. Unless otherwise provided in an Award Agreement,
Awards shall not be transferable by a Grantee except by will or the laws of descent and
distribution and shall be exercisable during the lifetime of a Grantee only by such
Grantee or his guardian or legal representative.
	 
	 	(b)	 	No Right to Continued Employment, etc. Nothing in the Plan or in any
Award, any Award Agreement or other agreement entered into pursuant hereto shall confer
upon any Grantee the right to continue in the employ of, or to continue as a director
of, or to continue to provide services to, the Company or any Parent or Subsidiary of
the Company or to be entitled to any remuneration or benefits not set forth in the Plan
or such Award Agreement or other agreement or to interfere with or limit in any way the
right of the Company or any such Parent or Subsidiary to terminate such Grantee’s
employment, or director or independent contractor relationship.
	 
	 	(c)	 	Taxes. The Company or any Parent or Subsidiary of the Company is
authorized to withhold from any Award granted, any payment relating to an Award under
the Plan, including from a distribution of Stock, or any other payment to a Grantee,
amounts of withholding and other taxes due in connection with any transaction involving
an Award, and to take such other action as the Committee may deem advisable to enable
the Company and Grantees to satisfy obligations for the payment of withholding taxes
and other tax obligations relating to any Award. This authority shall include
authority to withhold or receive cash, Stock or other property in satisfaction of a
Grantee’s tax obligations, to the extent permitted

17

 

	 	 	 	under applicable law or regulation. The Committee may provide in the Award
Agreement that in the event that a Grantee is required to pay any amount to be
withheld in connection with the issuance of shares of Stock in settlement or
exercise of an Award, the Grantee may satisfy such obligation (in whole or in part)
by electing to have a portion of the shares of Stock to be received upon settlement
or exercise of such Award equal to the minimum amount required to be withheld.

	 	(d)	 	Stockholder Approval; Amendment and Termination.

	 	(i)	 	The Plan shall take effect upon its adoption by the Board but
the Plan shall be subject to the requisite approval of the stockholders of the
Company. In the event that the stockholders of the Company do not approve the
Plan at a meeting of the stockholders at which such issue is considered and
voted upon, then upon such event the Plan and all rights hereunder shall
immediately terminate and no Grantee (or any permitted transferee thereof)
shall have any remaining rights under the Plan or any Award Agreement entered
into in connection herewith.
	 
	 	(ii)	 	The Board may at any time and from time to time alter, amend,
suspend, or terminate the Plan in whole or in part; provided, however, that
unless otherwise determined by the Board, an amendment that requires
stockholder approval in order for the Plan to continue to comply with Section
162(m) or any other law, regulation or stock exchange requirement shall not be
effective unless approved by the requisite vote of stockholders.
Notwithstanding the foregoing, no amendment to or termination of the Plan shall
affect adversely any of the rights of any Grantee, without such Grantee’s
consent, under any Award theretofore granted under the Plan.

	 	(e)	 	Expiration of Plan. Unless earlier terminated by the Board pursuant to
the provisions of the Plan, the Plan shall expire on the tenth anniversary of the
Effective Date of the Prior Plan. No Awards shall be granted under the Plan after such
expiration date. The expiration of the Plan shall not affect adversely any of the
rights of any Grantee, without such Grantee’s consent, under any Award theretofore
granted.
	 
	 	(f)	 	Deferrals. The Committee shall have the authority to establish such
procedures and programs as it deems appropriate to provide Grantees with the ability to
defer receipt of cash, Stock or other property payable with respect to Awards granted
under the Plan. Such procedures and programs, if any, shall be interpreted in
accordance with the requirements of Section 409A of the Code.
	 
	 	(g)	 	No Rights to Awards; No Stockholder Rights. No Grantee shall have any
claim to be granted any Award under the Plan, and there is no obligation for uniformity
of treatment of Grantees. Except as provided specifically herein, a Grantee or a

18

 

	 	 	 	transferee of an Award shall have no rights as a stockholder with respect to any
shares covered by the Award until the date of the issuance of a stock certificate to
him for such shares.

	 	(h)	 	Unfunded Status of Awards. The Plan is intended to constitute an
“unfunded” plan for incentive and deferred compensation. With respect to any payments
not yet made to a Grantee pursuant to an Award, nothing contained in the Plan or any
Award shall give any such Grantee any rights that are greater than those of a general
creditor of the Company.
	 
	 	(i)	 	No Fractional Shares. No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall determine whether
cash, other Awards, or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.
	 
	 	(j)	 	Regulations and Other Approvals.

	 	(i)	 	The obligation of the Company to sell or deliver Stock with
respect to any Award granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
	 
	 	(ii)	 	Each Award is subject to the requirement that, if at any time
the Committee determines, in its absolute discretion, that the listing,
registration or qualification of Stock issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Award or
the issuance of Stock, no such Award shall be granted or payment made or Stock
issued, in whole or in part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions not
acceptable to the Committee.
	 
	 	(iii)	 	In the event that the disposition of Stock acquired pursuant
to the Plan is not covered by a then-current registration statement under the
Securities Act and is not otherwise exempt from such registration, such Stock
shall be restricted against transfer to the extent required by the Securities
Act or regulations thereunder, and the Committee may require a Grantee
receiving Stock pursuant to the Plan, as a condition precedent to receipt of
such Stock, to represent to the Company in writing that the Stock acquired by
such Grantee is acquired for investment only and not with a view to
distribution.
	 
	 	(iv)	 	The Committee may require a Grantee receiving Stock pursuant to
the Plan, as a condition precedent to receipt of such Stock, to enter into a

19

 

	 	 	 	stockholder agreement or “lock-up” agreement in such form as the Committee
shall determine is necessary or desirable to further the Company’s
interests.

	 	(k)	 	Governing Law. The Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Delaware without giving
effect to the conflict of laws principles thereof, except that the duties and
responsibilities of the Board and the members thereof shall be determined in accordance
with the laws of the state of Maryland without giving effect to the conflict of law
principles thereof.

20

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