Document:

exv10w5

Exhibit 10.5

PATTERSON-UTI ENERGY, INC.

2005 LONG-TERM INCENTIVE PLAN

SHARE-SETTLED

PERFORMANCE UNIT AWARD AGREEMENT

April 27, 2010

	1.	 	Performance Unit Award. The Compensation Committee (the “Committee”) of the Board of
Directors of Patterson-UTI Energy, Inc., a Delaware corporation (the “Company”),
pursuant to the Patterson-UTI Energy, Inc. 2005 Long-Term Incentive Plan, as amended from time
to time (the “Plan”), hereby awards to                      (the “Grantee”), effective as
of the Date of Award set forth above, a Performance Unit Award (the “Award”) on the
terms and conditions as set forth in this agreement (this “Agreement”).

	 	1.1	 	General Performance Criteria. The Award provides the Grantee an
opportunity to receive Shares based upon the Company’s total stockholder return for the
Performance Period (as that term is defined below) as compared with the total
stockholder returns of National-Oilwell Varco, Inc., Transocean LTD, Baker Hughes Inc.,
Weatherford International Ltd., Smith International, Inc., Cameron International Corp.,
FMC Technologies, Inc., Nabors Industries Ltd., Noble Corporation, Diamond Offshore
Drilling, Inc., ENSCO International Incorporated, Helmerich & Payne, Inc., Rowan
Companies, Inc., Pride International Inc., Key Energy Services Inc., Parker Drilling
Co., Unit Corp., Atwood Oceanics Inc., Basic Energy Services Inc., Pioneer Drilling
Co., Union Drilling Inc. and Bronco Drilling Company, Inc., as such group of companies
may be adjusted pursuant to Section 1.5 (the “Peer Index Companies”) for such
period. Total shareholder return for the Company will be measured based on $100
invested in the Company’s common stock on the first day of the Performance Period, with
dividends reinvested.
	 
	 	1.2	 	Issuance of Shares Upon Achievement of Performance Criteria as of the Final
Day of the Performance Period. If (a) the Company’s total stockholder return
(dividends during the Performance Period, if any, are assumed to be reinvested) for the
three-year period (the “Performance Period”) ending March 31, 2013 (the
“Final Day of the Performance Period”), is positive and equals or exceeds the
25th percentile of the total stockholder returns of the Peer Index Companies
for the Performance Period, (b) a Change in Control of the Company has not occurred on
or before the Final Day of the Performance Period, and (c) the Grantee remains in the
active employ of the Company through the Final Day of the Performance Period, then the
Company shall issue to the Grantee the number of Shares determined as follows:

	 	(i)	 	if the Company’s total stockholder return for the Performance
Period is equal to the 25th percentile rank of the Company’s total
stockholder return

 

 

	 	 	 	for the Performance Period as compared to the total stockholder returns of
the Peer Index Companies,                      Shares (the “Base Amount”);
	 
	 	(ii)	 	if the Company’s total stockholder return for the Performance
Period is greater than the 25th percentile rank of the Company’s
total stockholder return for the Performance Period as compared to the total
stockholder returns of the Peer Index Companies but less than the
50th percentile, two times the Base Amount multiplied by two times
the percentile rank achieved for the Performance Period (expressed as a
percentage) (i.e., (2 x Base Amount) x (2 x percentile rank (%)));

E.g., assume that the Base Amount of the Award is                     
Shares and the total stockholder return of the Company for the
Performance Period as compared to the total stockholder returns of
the Peer Index Companies ranks in the 40th percentile.
The total amount of Shares issuable to the Grantee under the Award
would be                      Shares, which is determined as follows: (2 x
                    ) x (2 x 40%) =                      x 80% =                     .

	 	(iii)	 	if the Company’s total stockholder return for the Performance Period is
equal to the 50th percentile rank of the Company’s total stockholder
return for the Performance Period as compared to the total stockholder returns
of the Peer Index Companies, two times the Base Amount;
	 
	 	(iv)	 	if the Company’s total stockholder return achieved for the
Performance Period is greater than the 50th percentile rank of the
Company’s total stockholder return for the Performance Period as compared to
the total stockholder returns of the Peer Index Companies but less than the
75th percentile, two times the Base Amount plus the product of two
times the Base Amount multiplied by the quotient obtained by dividing the
difference of the percentile rank achieved for the Performance Period
(expressed as a percentage) minus 50 percent (50%) by 25 percent (25%) (i.e.,
(2 x Base Amount) + [(2 x Base Amount) x ((percentile rank (%) – 0.50)/0.25)]);
or

E.g., assume that the same facts as the example above in
clause (ii) except that the total stockholder return of the Company
for the Performance Period as compared to the total stockholder
returns of the Peer Index Companies ranks in the 60th
percentile. The total amount of Shares issuable to the Grantee under
the Award would be                      Shares, which is determined as follows:
(2 x                     ) + [(2 x                     ) x ((60% - 50%)/25%)] =                      +
[                    
x (10%/25%)] =                      +[                     x 40%] =          
            +
                     =                     .

	 	(v)	 	if the Company’s total stockholder return for the Performance Period is
equal to or greater than the 75th percentile rank of the Company’s
total stockholder return for the Performance Period as compared to the total

 

 

	 	 	 	stockholder returns of the Peer Index Companies, four times the Base Amount.

	 	 	 	No Shares will be issued under this Section 1.2 if any Shares are issuable under
Section 1.3.
	 
	 	1.3	 	Issuance of Shares Upon Achievement of Performance Criteria Following the
Final Day of Performance Period. If (a) the Company’s total stockholder return for
the Performance Period is negative, (b) during the two-year period ending March 31,
2015, the Company’s total shareholder return for any 30 consecutive day period (the
“Secondary Performance Period”) equals or exceeds 18 percent (18%) on an
annualized basis from April 1, 2010 through the last day of such 30 consecutive day
period (the “Final Day of the Secondary Performance Period”), and (c) the
Grantee is in the active employ of the Company through the Final Day of the Secondary
Performance Period, then the Company shall issue to the Grantee the number of Shares
equal to the amount, if any, as determined under Section 1.2 based on the Company’s
total shareholder return relative to the Peer Index Companies as of March 31, 2013. No
Shares will be issuable under this Section 1.3 if an amount is issuable under
Section 1.2.
	 
	 	1.4	 	Forfeiture. Notwithstanding any other provision of this Agreement to
the contrary, the Award pursuant to this Agreement shall lapse and be forfeited on the
earlier of the following:

	 	(i)	 	the Final Day of the Performance Period if (a) the Company’s
total stockholder return for the Performance Period is less than the
25th percentile of the total stockholder returns of the Peer Index
Companies for the Performance Period and (b) a Change in Control of the Company
has not occurred on or before the Final Day of the Performance Period; and
	 
	 	(ii)	 	March 31, 2015 if (a) the Company’s total stockholder return
for the Performance Period is negative, (b) the Company’s total stockholder
return for the Performance Period is equal to or greater than the
25th percentile of the total stockholder returns of the Peer Index
Companies for the Performance Period; (c) the Final Day of the Secondary
Performance Period has not occurred on or before March 31, 2015 and (d) a
Change in Control of the Company has not occurred on or before March 31, 2015.

	 	1.5	 	Committee Determination. Pursuant to Articles 4 and 9 of the Plan, the
Committee shall have the discretion to calculate the total stockholder returns for the
Performance Period and, if applicable, the Secondary Performance Period for the Peer
Index Companies, including the Company, and to determine the formula to achieve such
calculations.
	 
	 	 	 	The Committee’s determinations with respect to the Performance Period or Secondary
Performance Period for purposes of this Agreement shall be binding upon all persons.
The Committee may not increase the Shares issuable under this

 

 

	 	 	 	Agreement. The Committee may, in its sole discretion, make such adjustments as it
deems necessary and appropriate, if any, in the composition of the group of Peer
Index Companies to address the merger or consolidation of any company in the Peer
Index Companies as of the date hereof with another company, an acquisition or
disposition of a significant portion of such company’s businesses or assets as it
exists on the date hereof, or any other extraordinary event occurring in relation to
such company during the term of this Agreement.
	 
	 	 	 	Prior to an issuance of Shares made pursuant to Section 1.2 or, if applicable,
Section 1.3 and as provided in Section 2 or Section 3.4, the Compensation Committee
of the Board of Directors of the Company shall determine if the performance criteria
for such issuance has been satisfied and, to the extent such performance criteria
has been satisfied, shall certify in writing that such performance criteria has been
satisfied.

	2.	 	TIME OF ISSUANCE OF SHARES. For purposes of this Agreement, unless otherwise provided under
the Plan or Section 3.4 of this Agreement, the Company shall cause the Shares to be issued to
the Grantee pursuant to Section 1.2 or, if applicable, Section 1.3 on or before the
75th day following the Final Day of the Performance Period or, if applicable, the
Final Day of the Secondary Performance Period. Any Shares issued pursuant to this Agreement
will be issued to the Grantee or, if issuable pursuant to Section 3.3, the Grantee’s legal
representative or the Grantee’s estate, and thereafter the Grantee or, if applicable, the
Grantee’s estate and heirs, executors, administrators and the Grantee’s legal representatives
shall have no further rights with respect to the Award or this Agreement.
	 
	3.	 	TERMINATION OF EMPLOYMENT/CHANGE IN CONTROL. The following provisions will apply in the
event the Grantee’s employment with the Company terminates, or a Change in Control (as defined
below) occurs, before the Final Day of the Performance Period or, if applicable the Final Day
of the Secondary Performance Period.

	 	3.1	 	Definitions. For purposes of this Agreement, the following terms shall
have the meanings ascribed to them under this Section:

	 	(i)	 	The Grantee will have a “Disability” if the Grantee
qualifies for long-term disability benefits under a long-term disability
program sponsored by the Company in which executive officers participate
generally or, if the Company does not sponsor such a long-term disability
program, the Grantee is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months.
	 
	 	(ii)	 	“Retirement” means the voluntary termination of the
Grantee’s employment relationship with the Company on or after the date on
which the sum of the Grantee’s age and number of full years of service total
65.

 

 

	 	(iii)	 	A “Change in Control of the Company” shall mean the
occurrence of any of the following after the Grant Date and prior to the date
on which the Performance Unit Award is forfeited in accordance with
Section 1.4:

	 	(1)	 	The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended) (a “Covered Person”) of beneficial
ownership (within the meaning of rule 13d-3 promulgated under the
Exchange Act) of 35% or more of either (A) the then outstanding shares
of the common stock of the Company (the “Outstanding Company Common
Stock”), or (B) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this
subclause (1) of this Section 3.1(iii), the following acquisitions
shall not constitute a Change in Control of the Company: (A) any
acquisition directly from the Company, (B) any acquisition by the
Company, (C) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any entity controlled
by the Company, or (D) any acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B) and (C) of subclause
(3) of this Section 3.1(iii); or
	 
	 	(2)	 	Individuals who, as of the Grant Date, constitute the Board of
Directors (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board of Directors; provided,
however, that any individual becoming a director subsequent to the
Grant Date whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or
on behalf of a Covered Person other than the Board; or
	 
	 	(3)	 	Consummation of (xx) a reorganization, merger or consolidation
or sale of the Company or any subsidiary of the Company, or (yy) a
disposition of all or substantially all of the assets of the Company (a
“Business Combination”), in each case, unless, following such
Business Combination, (A) all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such

 

 

	 	 	 	Business Combination beneficially own, direct or indirectly, more
than 65% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a
result of such transaction owns the Company or all or substantially
all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Covered Person (excluding any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 35% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from
such Business Combination or the combined voting power of the then
outstanding voting securities of such corporation, except to the
extent that such ownership existed prior to the Business Combination,
and (C) at least a majority of the members of the board of directors
of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the
initial agreement, or, if earlier, of the action of the Board of
Directors, providing for such Business Combination.

	 	3.2	 	Termination Generally. Except as specified in Section 3.3 and 3.4
below, all of the Grantee’s rights in this Agreement, including all rights to the
Performance Unit Award granted to the Grantee, will lapse and be completely forfeited
on the date the Grantee’s employment terminates if:

	 	(i)	 	the Grantee’s employment with the Company terminates on or
before the Final Day of the Performance Period for Shares issuable pursuant to
Section 1.2, if any, for any reason other than death, Disability or Retirement;
or
	 
	 	(ii)	 	the Company’s total stockholder return for the Performance
Period is negative and the Grantee’s employment with the Company terminates
after the Final Day of the Performance Period but on or before the Final Day of
the Secondary Performance Period for Shares issuable pursuant to Section 1.3,
if any, for any reason other than death, Disability or Retirement.

	 	3.3	 	Death, Disability or Retirement. Notwithstanding any other provision
of this Agreement to the contrary, if the Grantee’s employment with the Company
terminates due to the Grantee’s death, Disability, or Retirement either:

 

 

	 	(i)	 	after the completion of at least one month of the Performance
Period and on or before the Final Day of the Performance Period for Shares
issuable pursuant to Section 1.2, if any, then the Company will cause Shares to
be issued to the Grantee, at such time as provided in Section 2, an amount
equal to the product of (1) and (2) where (1) is the amount the Grantee would
have received under this Agreement if the Grantee’s employment with the Company
had not been terminated due to the Grantee’s death, Disability or Retirement
before such Final Day of the Performance Period and (2) is a fraction, the
numerator of which is the number of days from the beginning of the Performance
Period through the date of the Grantee’s death, or the Grantee’s termination of
employment with the Company due to a Disability or Retirement up to a maximum
of 1095 days and the denominator of which is 1095; or
	 
	 	(ii)	 	after the completion of at least one month of the Performance
Period and on or before the Final Day of the Secondary Performance Period for
Shares issuable pursuant to Section 1.3, if any, then the Company will cause
Shares to be issued to the Grantee, at such time as provided in Section 2, an
amount equal to the product of (1) and (2) where (1) is the amount the Grantee
would have received under this Agreement if the Grantee’s employment with the
Company had not been terminated due to the Grantee’s death, Disability or
Retirement before such Final Day of the Secondary Performance Period and (2) is
a fraction, the numerator of which is the number of days from the beginning of
the Performance Period through the date of the Grantee’s death, or the
Grantee’s termination of employment with the Company due to a Disability or
Retirement up to a maximum of 1095 days and the denominator of which is 1095.

	 	3.4	 	Change in Control. Notwithstanding anything in the Agreement to the
contrary, the Company (or its successor) will cause to be issued to the Grantee
immediately preceding a Change in Control of the Company a number of Shares in an
amount equal to two times the Base Amount, and thereafter the Company (or its
successor) will have no further obligations to the Grantee pursuant to this Agreement;
provided, however, that this Section 3.4 shall not apply if the Grantee is the Covered
Person or forms part of the Covered Person below that acquires 35% or more of either
the Outstanding Company Common Stock or Outstanding Company Voting Securities and such
acquisition constitutes a Change in Control of the Company.

	4.	 	TAX WITHHOLDING. To the extent that the grant, vesting or issuance of Shares under the
Agreement results in income to the Employee for federal, state or local income, employment,
excise or other tax purposes with respect to which the Company or any of its Subsidiaries has
a withholding obligation, the Employee shall deliver to the Company or such Subsidiary at the
time of such receipt or lapse, as the case may be, such amount of money as the Company or such
Subsidiary may require to meet its obligation under applicable tax laws or regulations. If
the Employee fails to do so, the Company or its Subsidiary is authorized to withhold from
wages or other amounts otherwise payable to

 

 

	 	 	such Employee the minimum statutory withholding taxes as may be required by law or to take
such other action as may be necessary to satisfy such withholding obligations. The
Committee may, in its sole discretion, permit the Employee to satisfy such obligation for
the payment of such taxes by tendering previously acquired Shares (either actually or by
attestation, valued at their then Fair Market Value) that have been owned for a period of at
least six months (or such other period to avoid accounting charges against the Company’s
earnings), or by directing the Company to retain Shares (up to the Employee’s minimum
required tax withholding rate or such other rate that will not trigger a negative accounting
impact) otherwise deliverable under this Agreement. The Company shall not be obligated to
issue any Shares granted hereunder until all applicable federal, state and local income,
employment, excise or other tax withholding requirements have been satisfied.

	5.	 	NONTRANSFERABILITY. The Performance Unit Award and the Grantee’s rights under this Agreement
may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred,
encumbered or disposed of. Any such attempted sale, assignment, pledge, exchange,
hypothecation, transfer, encumbrance or disposition in violation of this Agreement shall be
void and the Company shall not be bound thereby.
	 
	6.	 	CAPITAL ADJUSTMENTS AND REORGANIZATIONS. The existence of the Performance Unit Award shall
not affect in any way the right or power of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in its capital structure or its business,
engage in any merger or consolidation, issue any debt or equity securities, dissolve or
liquidate, or sell, lease, exchange or otherwise dispose of all or any part of its assets or
business, or engage in any other corporate act or proceeding.
	 
	7.	 	PERFORMANCE UNIT AWARD DOES NOT AWARD ANY RIGHTS OF A STOCKHOLDER. The Grantee shall not
have the voting rights or any of the other rights, powers or privileges of a holder of the
stock of the Company with respect to the Performance Unit Award that are awarded hereby. Only
after the Shares are issued in exchange for the Grantee’s rights under this Agreement will the
Grantee have all of the rights of a shareholder with respect to such Shares issued in exchange
for such rights.
	 
	8.	 	EMPLOYMENT RELATIONSHIP. For purposes of this Agreement, the Grantee shall be considered to
be in the employment of the Company as long as the Grantee has an employment relationship with
the Company and any of its Subsidiaries. The Committee shall determine any questions as to
whether and when there has been a termination of such employment relationship, and the cause
of such termination, under the Plan, and the Committee’s determination shall be final and
binding on all persons.
	 
	9.	 	NOT AN EMPLOYMENT AGREEMENT. This Agreement is not an employment agreement, and no provision
of this Agreement shall be construed or interpreted to create an employment relationship
between the Grantee and the Company or any Affiliate or guarantee the right to remain employed
by the Company or any Affiliate for any specified term.

 

 

	10.	 	LIMIT OF LIABILITY. Under no circumstances will the Company or an Affiliate be liable for
any indirect, incidental, consequential or special damages (including lost profits) of any
form incurred by any person, whether or not foreseeable and regardless of the form of the act
in which such a claim may be brought, with respect to the Plan.
	 
	11.	 	COMPANY LIABLE FOR ISSUANCE OF SHARES. Except as specified in Section 3.4, the Company is
liable for the issuance of any Shares that become issuable under this Agreement.
	 
	12.	 	SECURITIES ACT LEGEND. The Grantee consents to the placing on the certificate for the Shares
of an appropriate legend restricting resale or other transfer of the Shares except in
accordance with all applicable securities laws and rules thereunder, as well as any legend
under Section 13.5 of the Plan as determined by the Committee.
	 
	13.	 	NO FRACTIONAL SHARES. All provisions of this Agreement concern whole Shares.
Notwithstanding anything contained in this Agreement to the contrary, if the application of
any provision of this Agreement would yield a fractional share, such fractional share shall be
rounded down to the next whole Share.
	 
	14.	 	MISCELLANEOUS. This Agreement is awarded pursuant to and is subject to all of the provisions
of the Plan, including amendments to the Plan, if any. Capitalized terms that are not defined
herein shall have the meanings ascribed to such terms in the Plan.

[SIGNATURE PAGE TO FOLLOW]

 

 

     In accepting the Performance Unit Award set forth in this Agreement the Grantee accepts and
agree to be bound by all the terms and conditions of the Plan and this Agreement.

	 	 	 	 	 	 	 

	 	 	PATTERSON-UTI ENERGY, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	                     (“GRANTEE”)exv10w1

Exhibit 10.1

QLOGIC CORPORATION

2005 PERFORMANCE INCENTIVE PLAN

NON-EMPLOYEE DIRECTOR EQUITY AWARD PROGRAM

(Amended and Restated Effective June 9, 2010)

1. Establishment; Purpose

     This Non-Employee Director Equity Award Program (this “Program”) is adopted under, and any
shares of Common Stock issued with respect to awards granted under this Program after the date of
its adoption shall be charged against the applicable share limits of, the QLogic Corporation 2005
Performance Incentive Plan (the “Plan”). The purpose of this Program is to promote the success of
the Corporation and the interests of its stockholders by providing members of the Board who are not
officers or employees of the Corporation or one of its Subsidiaries (“Non-Employee Directors”) an
opportunity to acquire an ownership interest in the Corporation and more closely aligning the
interests of Non-Employee Directors and stockholders. This Program shall be effective as of the
date of its adoption by the Board, and certain Plan amendments were approved by the Corporation’s
stockholders at the Corporation’s 2008 annual meeting (the “2008 Annual Meeting”) (including,
without limitation, the deletion of the automatic director grant provisions of the Plan set forth
in Appendix A thereof). Except as otherwise expressly provided herein, the provisions of the Plan
shall govern all awards made pursuant to this Program. Capitalized terms are defined in the Plan
if not defined herein.

2. Participation

     Equity award grants under this Program (each such award, a “Director Award”) shall be made
only to Non-Employee Directors who have not, within three (3) years immediately preceding the
applicable date of such grant, received any stock option, stock bonus, stock appreciation right or
other similar stock award from the Corporation or any of its Subsidiaries, except as provided by
this Program or pursuant to Appendix A of the Plan prior to the 2008 Annual Meeting (an “Eligible
Director”).

3. Equity Award Grants

     3.1 Initial Award Grant. If any person who is not then an officer or employee of the
Corporation shall first become a Non-Employee Director on or after the date of the 2008 Annual
Meeting, there shall be granted automatically to such person on such date a Director Award on the
terms set forth below (the “Initial Grant”); provided that no such Initial Grant shall be made to
any Non-Employee Director who does not then qualify as an Eligible Director.

     3.2 Subsequent Annual Award Grants. Subject to Section 3.3, there shall be granted
automatically at the close of business on the date of the first annual meeting of stockholders of
the Corporation each year at which the members of the Board are elected or reelected (each such
date, an “Annual Meeting Date”), a Director Award on the terms

1

 

set forth below to each Eligible Director who is re-elected as a director of the Corporation
at such meeting (each, an “Annual Grant”).

     3.3 Proration of Annual Grants. If a period of less than twelve (12) months has elapsed
between (i) the date that a Non-Employee Director first received a Director Award pursuant to
Section 3.1 above or, prior to the date of the 2008 Annual Meeting, pursuant to Section A.2(a) of
Appendix A of the Plan (the date of grant of any such award, an “Initial Award Date”) and (ii) the
Annual Meeting Date, then the number of shares of Common Stock subject to any Annual Grant granted
to an Eligible Director pursuant to Section 3.2 shall be prorated by multiplying (x) the number of
such shares or units, as applicable, subject to such Annual Grant (as determined under Section 4
below), by (y) a fraction, the numerator of which shall be the number of days from and including
the Initial Award Date through and including the Annual Meeting Date, and the denominator of which
shall be the number of days since the last annual meeting of stockholders at which the members of
the Board were elected or reelected preceding the Annual Meeting Date through and including the
Annual Meeting Date (but in no event shall such fraction be greater than one (1)).

     3.4 Maximum Number of Shares. Notwithstanding any other provision herein or in the Plan,
Director Awards hereunder that would otherwise exceed any applicable share limit of Section 4.2 of
the Plan shall be prorated within such limitation.

4. Determination of Grant Levels

     4.1 Board or Administrator Approval. In each calendar year during the term of the Plan,
commencing in 2008, the Board or the Administrator (which, if appointed for purposes of this
Program, must be a committee of the Board) will determine, on or prior to the Annual Meeting Date
for such calendar year, the grant levels for the Director Awards to be made to Non-Employee
Directors under this Program for the period commencing on such Annual Meeting Date and ending on
the day before the next succeeding Annual Meeting Date (the “Director Grant Period”). The action
of the Board or the Administrator, as applicable, shall set forth its approval of such Annual
Grants and any Initial Grants that may be made during the Director Grant Period commencing on such
Annual Meeting Date and shall set forth each determination required to be made pursuant to Section
4.2.

     4.2 Types of Awards and Grant Levels. Each Initial Grant made pursuant to this Program shall
consist of a nonqualified stock option. Each Annual Grant made pursuant to this Program shall
consist of a nonqualified stock option and an award of restricted stock units. If a Non-Employee
Director who is serving as Chairman of the Board is entitled to an Annual Grant under Section 3.2,
the grant levels for such grant will be determined independently from the Annual Grant levels
determined for the other Non-Employee Directors as provided below in this Section 4.2. The number
of shares of Common Stock subject to each Initial Grant and Annual Grant shall be determined as
follows:

	 	•	 	The value of equity awards granted to non-employee directors of each
of a

2

 

	 	 	 	peer group of companies for the Corporation selected by the Board or the
Administrator for the applicable year (the “Peer Group”) will be determined by the
Board or Administrator (with options and similar awards granted by such companies
being valued as of the date of grant of the respective award using a Black –
Scholes or similar valuation model and with restricted stock units and similar
awards granted by such companies being valued as of the date of grant of the
respective award based on the closing market price on that date of grant of the
shares subject to the award), with separate determinations being made each year for
the value of equity awards granted to non-employee directors generally, the value
of equity awards granted to non-employee directors serving as Chairman of the Board
(or equivalent title), and the value of equity awards granted to newly elected or
appointed non-employee directors. The Board or the Administrator will determine
each year (i) a target amount (expressed in dollars) for the Corporation’s
Non-Employee Directors not serving as Chairman of the Board (or equivalent title)
at the 65th percentile of non-employee directors for the Peer Group;
(ii) if a Non-Employee Director is then serving as Chairman of the Board (or
equivalent title), a target amount (expressed in dollars) for the Corporation’s
Chairman of the Board at the 65th percentile of non-employee directors
serving as Chairman of the Board (or equivalent title) for the Peer Group; and
(iii) a target amount (expressed in dollars) for any newly elected or appointed
Non-Employee Director at the 65th percentile of newly elected or
appointed non-employee directors for the Peer Group (each, a “Target Amount”). The
Target Amount determined for new Non-Employee Directors under clause (iii) above
shall apply to any Non-Employee Director newly elected or appointed to the Board
during the applicable Director Grant Period identified in Section 4.1. The Board
or the Administrator, as applicable, will have discretion to make appropriate
adjustments in the data for the Peer Group and/or the Target Amounts as necessary
to carry out the intent of these provisions (which may include, without limitation,
adjustments to mitigate the effects of extraordinary one-time grants made by Peer
Group members, extraordinary changes in the time commitments of directors,
differences in the timing or frequency of grants, unusual grant terms or types of
awards not contemplated, or similar circumstances).

	 	•	 	In the case of an Initial Grant, 100% of the Target Amount for any
newly elected or appointed Non – Employee Director will be delivered in the form
of a nonqualified stock option. In the case of an Annual Grant, the Target Amount
so determined will be allocated so that 35% of the applicable Target Amount will
be delivered in the form of an award of restricted stock units and 65% of the
applicable Target Amount will be delivered in the form of a nonqualified stock
option. The number of shares of Common Stock that will be subject to any such
restricted stock unit award will equal (i) the dollar value of the portion of the
applicable

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	 	 	 	Target Amount to be granted in the form of such restricted stock unit award,
divided by (ii) the fair market value of a share of Common Stock on the applicable
Annual Meeting Date. The number of shares of Common Stock that will be subject to
any such nonqualified stock option will equal (x) the dollar value of the portion
of the applicable Target Amount to be granted in the form of such nonqualified
stock option, divided by (y) the per-share fair value of the option on the
applicable Annual Meeting Date (based on the Black – Scholes or similar valuation
method and assumptions then generally used by the Corporation in valuing its
options for financial statement purposes).

5. Terms of Options

     The purchase price per share of the Common Stock covered by each stock option granted pursuant
to this Program shall be 100% of the fair market value (as that term is defined in Section 5.6 of
the Plan) of the Common Stock on the date of grant of the option. The exercise price of any stock
option granted under this Program shall be paid in full at the time of each purchase in any of the
following methods (or combination thereof): (i) cash, check payable to the order of the
Corporation, or electronic funds transfer, (ii) subject to compliance with all applicable laws,
rules and regulations, and subject to such procedures as the Administrator may adopt, the delivery
of previously owned shares of Common Stock or pursuant to a “cashless exercise” with a third party
who provides financing for the purposes of (or who otherwise facilitates) the purchase or exercise
of awards. Shares of Common Stock used to satisfy the exercise price of an option shall be valued
at their fair market value on the date of exercise. Each stock option granted under this Program
and all rights or obligations thereunder shall commence on the date of grant of the award and
expire no later than ten years thereafter, subject to earlier termination as provided in Section 8
below.

6. Payment of Restricted Stock Units

     Restricted stock units granted pursuant to this Program shall be payable in an equivalent
number of shares of Common Stock as soon as practicable after (and in all events within two and
one-half months after) such units vest in accordance with Section 7.

7. Vesting of Equity Awards

     Subject to earlier termination as provided in Section 8 below, each nonqualified stock option
and each award of restricted stock units granted under this Program shall become vested in the
following manner:

	 	•	 	Each Initial Grant granted under this Program shall become vested as to
one-third (1/3) of the total number of shares of Common Stock subject to the
option on each of the first, second and third anniversaries of the date of grant;
and

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	 	•	 	Each Annual Grant granted under this Program shall become vested as to the
total number of shares of Common Stock subject to the option or restricted stock
unit award, as applicable, on the earlier of (i) the day prior to the annual
meeting of the Corporation’s stockholders that occurs in the calendar year
following the calendar year in which the award is granted or (ii) the first
anniversary of the date of grant.

8. Termination of Directorship

     If an Eligible Director’s services as a member of the Board terminate for any reason, (a) any
portion of a stock option granted pursuant to this Program which is not then vested and exercisable
shall immediately terminate, and any portion of such option which is then vested and exercisable
may be exercised within a period of one (1) year after the date of such termination, or until the
expiration of the option or termination of the option pursuant to Section 7.4 of the Plan,
whichever first occurs, and (b) any portion of a restricted stock unit award granted pursuant to
this Program which is not then vested shall terminate as of the date of such Eligible Director’s
termination of service.

9. Plan Provisions; Award Agreement; Amendments; Administration

     Each equity award granted under this Program shall otherwise be subject to the terms of the
Plan (including, without limitation, the provisions of Section 7.1 of the Plan respecting
adjustments to awards that are outstanding as of the date of an event contemplated therein and
Section 7.4 of the Plan respecting early termination of outstanding awards). Each award granted
hereunder shall be evidenced by a written award agreement in the form approved by the Board or the
Compensation Committee of the Board for use in evidencing equity award grants made pursuant to this
Program. The Board may from time to time amend this Program without stockholder approval; provided
that no such amendment shall materially and adversely affect the rights of a Non-Employee Director
as to an option granted under this Program before the adoption of such amendment. This Program
does not limit the Board’s authority to make other, discretionary award grants to Non-Employee
Directors pursuant to the Plan. The Plan Administrator’s power and authority to construe and
interpret the Plan and awards thereunder pursuant to Section 3.2 of the Plan shall extend to this
Program and awards granted hereunder. As provided in Section 3.3 of the Plan, any action taken by,
or inaction of, the Administrator relating or pursuant to this Program and within its authority or
under applicable law shall be within the absolute discretion of that entity or body and shall be
conclusive and binding upon all persons.

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