Document:

exv10w267

 

EXHIBIT 10.267

LIGAND PHARMACEUTICALS INCORPORATED

2002 STOCK INCENTIVE PLAN

MAY 16, 2002

(as amended through March 9, 2006)

ARTICLE ONE

GENERAL PROVISIONS

     I. PURPOSE OF THE PLAN

          This 2002 Stock Incentive Plan is intended to promote the interests of Ligand Pharmaceuticals
Incorporated, a Delaware corporation, by providing eligible persons in the Corporation’s service
with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Corporation as an incentive for them to remain in such service.

          Capitalized terms shall have the meanings assigned to such terms in the attached Appendix.

     II. STRUCTURE OF THE PLAN

          A. The Plan shall be divided into four separate equity incentives programs:

	 	•	 	the Discretionary Option Grant Program under which eligible persons
may, at the discretion of the Plan Administrator, be granted options to
purchase shares of Common Stock,
	 
	 	•	 	the Stock Issuance Program under which eligible persons may, at the
discretion of the Plan Administrator, be issued shares of Common Stock
directly, either through the immediate purchase of such shares or as a
bonus for services rendered the Corporation (or any Parent or
Subsidiary),
	 
	 	•	 	the Director Fee Stock Issuance Program under which non-employee Board
members may elect to have all or any portion of their annual retainer fee
otherwise payable in cash applied to the purchase of shares of Common
Stock,
	 
	 	•	 	the Automatic Option Grant Program under which eligible non-employee
Board members shall automatically receive option grants at designated
intervals over their period of continued Board service, and
	 
	 	•	 	the Director Fee Option Grant Program under which non-employee Board
members may elect to have all or any portion of their annual retainer fee
otherwise payable in cash applied to a special stock option grant.

          B. The provisions of Articles One and Six shall apply to all equity programs under the Plan
and shall govern the interests of all persons under the Plan.

     III. ADMINISTRATION OF THE PLAN

          A. The Primary Committee shall have sole and exclusive authority to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to Section 16 Insiders.
Administration of the Discretionary Option Grant and Stock Issuance Programs with respect to all
other persons eligible to participate in

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 those programs may, at the Board’s discretion, be vested in the Primary Committee or a
Secondary Committee, or the Board may retain the power to administer those programs with respect to
all such persons. However, any discretionary option grants or stock issuances for members of the
Primary Committee must be authorized by a disinterested majority of the Board.

          B. Members of the Primary Committee or any Secondary Committee shall serve for such period of
time as the Board may determine and may be removed by the Board at any time. The Board may also at
any time terminate the functions of any Secondary Committee and reassume all powers and authority
previously delegated to such committee.

          C. Each Plan Administrator shall, within the scope of its administrative functions under the
Plan, have full power and authority (subject to the provisions of the Plan) to establish such rules
and regulations as it may deem appropriate for proper administration of the Discretionary Option
Grant and Stock Issuance Programs and to make such determinations under, and issue such
interpretations of, the provisions of those programs and any outstanding options or stock issuances
thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator within the
scope of its administrative functions under the Plan shall be final and binding on all parties who
have an interest in the Discretionary Option Grant and Stock Issuance Programs under its
jurisdiction or any stock option or stock issuance thereunder.

          D. Service on the Primary Committee or the Secondary Committee shall constitute service as a
Board member, and members of each such committee shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service on such committee. No member
of the Primary Committee or the Secondary Committee shall be liable for any act or omission made in
good faith with respect to the Plan or any option grants or stock issuances under the Plan.

          E. Administration of the Automatic Option Grant, Director Fee Stock Issuance and Director Fee
Option Grant Programs shall be self-executing in accordance with the terms of those programs, and
no Plan Administrator shall exercise any discretionary functions with respect to any option grants
or stock issuances made under those programs.

     IV. ELIGIBILITY

          A. The persons eligible to participate in the Discretionary Option Grant and Stock Issuance
Programs are as follows:

                    (i) Employees,

                    (ii) non-employee members of the Board or the board of directors of any Parent or
Subsidiary, and

                    (iii) consultants and other independent advisors who provide services to the
Corporation (or any Parent or Subsidiary).

          B. Each Plan Administrator shall, within the scope of its administrative jurisdiction under
the Plan, have full authority to determine, (i) with respect to the option grants under the
Discretionary Option Grant Program, which eligible persons are to receive such grants, the time or
times when those grants are to be made, the number of shares to be covered by each such grant, the
status of the granted option as either an Incentive Option or a Non-Statutory Option, the time or
times when each option is to become exercisable, the vesting schedule (if any) applicable to the
option shares and the maximum term for which the option is to remain outstanding and (ii) with
respect to stock issuances under the Stock Issuance Program, which eligible persons are to receive
such issuances, the time or times when the issuances are to be made, the number of shares to be
issued to each Participant, the vesting schedule (if any) applicable to the issued shares and the
consideration for such shares.

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          C. The Plan Administrator shall have the absolute discretion either to grant options in
accordance with the Discretionary Option Grant Program or to effect stock issuances in accordance
with the Stock Issuance Program.

          D. The individuals who shall be eligible to participate in the Automatic Option Grant Program
shall be limited to (i) those individuals who first become non-employee Board members on or after
the Effective Date, whether through appointment by the Board or election by the Corporation’s
stockholders, and (ii) those individuals who continue to serve as non-employee Board members at one
or more Annual Stockholders Meetings held after the Effective Date. A non-employee Board member
who has previously been in the employ of the Corporation (or any Parent or Subsidiary) shall not be
eligible to receive an option grant under the Automatic Option Grant Program at the time he or she
first becomes a non-employee Board member, but shall be eligible to receive periodic option grants
under the Automatic Option Grant Program while he or she continues to serve as a non-employee Board
member.

          E. All non-employee Board members shall be eligible to participate in the Director Fee Option
Grant Program and the Director Fee Stock Issuance Program.

     V. STOCK SUBJECT TO THE PLAN

          A. The stock issuable under the Plan shall be shares of authorized but unissued or reacquired
Common Stock, including shares repurchased by the Corporation on the open market. The number of
shares of Common Stock reserved for issuance over the term of the Plan shall be 9,075,529 shares
consisting of (i) the 6,075,529 shares that remained available for issuance, as of the Plan
Effective Date, under the Predecessor Plan as last approved by the Corporation’s stockholders,
including the shares subject to outstanding options under the Predecessor Plan, plus (ii) an
additional increase of 750,000 shares that was approved by the Corporation’s stockholders in
connection with the adoption of the Plan in 2002, plus (iii) an aggregate of 2,250,000 additional
shares approved by the Board and the Corporation’s stockholders since the adoption of the Plan.

          B. No one person participating in the Plan may receive stock options, separately exercisable
stock appreciation rights and direct stock issuances for more than 1,000,000 shares of Common Stock
in the aggregate per calendar year.

          C. Shares of Common Stock subject to outstanding options (including options transferred to
this Plan from the Predecessor Plan) shall be available for subsequent issuance under the Plan to
the extent those options expire or terminate for any reason prior to exercise in full. Unvested
shares issued under the Plan and subsequently cancelled or repurchased by the Corporation, at a
price per share not greater than the original issue price paid per share, pursuant to the
Corporation’s repurchase rights under the Plan shall be added back to the number of shares of
Common Stock reserved for issuance under the Plan and shall accordingly be available for reissuance
through one or more subsequent option grants or direct stock issuances under the Plan. However,
should the exercise price of an option under the Plan be paid with shares of Common Stock or should
shares of Common Stock otherwise issuable under the Plan be withheld by the Corporation in
satisfaction of the withholding taxes incurred in connection with the exercise of an option or the
vesting of a stock issuance under the Plan, then the number of shares of Common Stock available for
issuance under the Plan shall be reduced by the gross number of shares for which the option is
exercised or which vest under the stock issuance, and not by the net number of shares of Common
Stock issued to the holder of such option or stock issuance. Shares of Common Stock underlying one
or more stock appreciation rights exercised under Section V of Article Two, Section II of Article
Four or Section III of Article Five of the Plan shall not be available for subsequent issuance
under the Plan.

          D. If any change is made to the Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate
adjustments shall be made by the Plan Administrator to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the maximum number and/or class of securities for which
any one person may be granted stock options, separately exercisable stock appreciation rights and
direct stock issuances under the Plan per calendar year, (iii) the number and/or class of
securities for which grants are subsequently to be made under the Automatic Option Grant Program to
new and

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 continuing non-employee Board members, (iv) the number and/or class of securities and the
exercise price per share in effect under each outstanding option under the Plan and (v) the number
and/or class of securities and exercise price per share in effect under each outstanding option
transferred to this Plan from the Predecessor Plan. Such adjustments to the outstanding options
are to be effected in a manner which shall preclude the enlargement or dilution of rights and
benefits under such options. The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.

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ARTICLE TWO

DISCRETIONARY OPTION GRANT PROGRAM

     I. OPTION TERMS

          Each option shall be evidenced by one or more documents in the form approved by the Plan
Administrator; provided, however, that each such document shall comply with the terms
specified below. Each document evidencing an Incentive Option shall, in addition, be subject to
the provisions of the Plan applicable to such options.

          A. Exercise Price.

               1. The exercise price per share shall be fixed by the Plan Administrator but shall not be less
than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option
grant date.

               2. The exercise price shall become immediately due upon exercise of the option and shall,
subject to the provisions of Section I of Article Six and the documents evidencing the option, be
payable in one or more of the forms specified below:

                    (i) cash or check made payable to the Corporation,

                    (ii) shares of Common Stock held by the Optionee or otherwise issuable upon exercise of
the option and valued at Fair Market Value on the Exercise Date, or

                    (iii) to the extent the option is exercised for vested shares, through a special sale
and remittance procedure pursuant to which the Optionee shall concurrently provide
irrevocable instructions to (a) a Corporation-designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover the aggregate exercise
price payable for the purchased shares plus all applicable income and employment taxes
required to be withheld by the Corporation by reason of such exercise and (b) the
Corporation to deliver the certificates for the purchased shares directly to such brokerage
firm in order to complete the sale.

          Except to the extent such sale and remittance procedure is utilized, payment of the exercise
price for the purchased shares must be made on the Exercise Date.

          B. Exercise and Term of Options. Each option shall be exercisable at such time or
times, during such period and for such number of shares as shall be determined by the Plan
Administrator and set forth in the documents evidencing the option. However, no option shall have
a term in excess of ten (10) years measured from the option grant date.

          C. Effect of Termination of Service.

               1. The following provisions shall govern the exercise of any options held by the Optionee at
the time of cessation of Service or death:

                    (i) Any option outstanding at the time of the Optionee’s cessation of Service for any
reason shall remain exercisable for such period of time thereafter as shall be determined by
the Plan Administrator and set forth in the documents evidencing the option, but no such
option shall be exercisable after the expiration of the option term.

                    (ii) Any option held by the Optionee at the time of death and exercisable in whole or
in part at that time may be subsequently exercised by the personal representative of the
Optionee’s

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estate or by the person or persons to whom the option is transferred pursuant to the
Optionee’s will or the laws of inheritance or by the Optionee’s designated beneficiary or
beneficiaries of that option.

                    (iii) During the applicable post-Service exercise period, the option may not be
exercised in the aggregate for more than the number of vested shares for which the option is
exercisable on the date of the Optionee’s cessation of Service. Upon the expiration of the
applicable exercise period or (if earlier) upon the expiration of the option term, the
option shall terminate and cease to be outstanding for any vested shares for which the
option has not been exercised. However, the option shall, immediately upon the Optionee’s
cessation of Service, terminate and cease to be outstanding to the extent the option is not
otherwise at that time exercisable for vested shares.

               2. The Plan Administrator shall have complete discretion, exercisable either at the time an
option is granted or at any time while the option remains outstanding, to:

                    (i) extend the period of time for which the option is to remain exercisable following
the Optionee’s cessation of Service from the limited exercise period otherwise in effect for
that option to such greater period of time as the Plan Administrator shall deem appropriate,
but in no event beyond the expiration of the option term, and/or

                    (ii) permit the option to be exercised, during the applicable post-Service exercise
period, not only with respect to the number of vested shares of Common Stock for which such
option is exercisable at the time of the Optionee’s cessation of Service but also with
respect to one or more additional installments in which the Optionee would have vested had
the Optionee continued in Service.

          D. Stockholder Rights. The holder of an option shall have no stockholder rights with
respect to the shares subject to the option until such person shall have exercised the option, paid
the exercise price and become a holder of record of the purchased shares.

          E. Repurchase Rights. The Plan Administrator shall have the discretion to grant
options which are exercisable for unvested shares of Common Stock. Should the Optionee cease
Service while holding such unvested shares, the Corporation shall have the right to repurchase any
or all of those unvested shares at a price per share equal to the lower of (i) the exercise price
paid per share or (ii) the Fair Market Value per share of Common Stock at the time of repurchase.
The terms upon which such repurchase right shall be exercisable (including the period and procedure
for exercise and the appropriate vesting schedule for the purchased shares) shall be established by
the Plan Administrator and set forth in the document evidencing such repurchase right.

          F. Limited Transferability of Options. During the lifetime of the Optionee, Incentive
Options shall be exercisable only by the Optionee and shall not be assignable or transferable other
than by will or the laws of inheritance following the Optionee’s death. Non-Statutory Options
shall be subject to the same restriction, except that a Non-Statutory Option may be assigned in
whole or in part during the Optionee’s lifetime to one or more members of the Optionee’s family or
to a trust established exclusively for one or more such family members or to Optionee’s former
spouse, to the extent such assignment is in connection with the Optionee’s estate plan or pursuant
to a domestic relations order. The assigned portion may only be exercised by the person or persons
who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable
to the assigned portion shall be the same as those in effect for the option immediately prior to
such assignment and shall be set forth in such documents issued to the assignee as the Plan
Administrator may deem appropriate. Notwithstanding the foregoing, the Optionee may also designate
one or more persons as the beneficiary or beneficiaries of his or her outstanding options under
this Article Two, and those options shall, in accordance with such designation, automatically be
transferred to such beneficiary or beneficiaries upon the Optionee’s death while holding those
options. Such beneficiary or beneficiaries shall take the transferred options subject to all the
terms and conditions of the applicable agreement evidencing each such transferred option, including
(without limitation) the limited time period during which the option may be exercised following the
Optionee’s death.

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     II. INCENTIVE OPTIONS

          The terms specified below shall be applicable to all Incentive Options. Except as modified by
the provisions of this Section II, all the provisions of Articles One, Two and Six shall be
applicable to Incentive Options. Options which are specifically designated as Non-Statutory
Options when issued under the Plan shall not be subject to the terms of this Section II.

          A. Eligibility. Incentive Options may only be granted to Employees.

          B. Dollar Limitation. The aggregate Fair Market Value of the shares of Common Stock
(determined as of the respective date or dates of grant) for which one or more options granted to
any Employee under the Plan (or any other option plan of the Corporation or any Parent or
Subsidiary) may for the first time become exercisable as Incentive Options during any one calendar
year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two (2) or more such options which become exercisable for the first time in the same
calendar year, the foregoing limitation on the exercisability of such options as Incentive Options
shall be applied on the basis of the order in which such options are granted.

          C. 10% Stockholder. If any Employee to whom an Incentive Option is granted is a 10%
Stockholder, then the exercise price per share shall not be less than one hundred ten percent
(110%) of the Fair Market Value per share of Common Stock on the option grant date, and the option
term shall not exceed five (5) years measured from the option grant date.

     III. CHANGE IN CONTROL/HOSTILE TAKE-OVER

          A. In the event of a Change in Control, each outstanding option under the Discretionary Option
Grant Program shall automatically accelerate so that each such option shall, immediately prior to
the effective date of that Change in Control, become exercisable for all the shares of Common Stock
at the time subject to such option and may be exercised for any or all of those shares as fully
vested shares of Common Stock. However, an outstanding option shall not become exercisable on such
an accelerated basis if and to the extent: (i) such option is to be assumed by the successor
corporation (or parent thereof) or is otherwise to continue in full force and effect pursuant to
the terms of the Change in Control transaction or (ii) such option is to be replaced with a cash
incentive program of the successor corporation which preserves the spread existing at the time of
the Change in Control on any shares for which the option is not otherwise at that time exercisable
and provides for subsequent payout of that spread in accordance with the same exercise/vesting
schedule applicable to those option shares or (iii) the acceleration of such option is subject to
other limitations imposed by the Plan Administrator at the time of the option grant.

          B. All outstanding repurchase rights under the Discretionary Option Grant Program shall
automatically terminate, and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of a Change in Control, except to the extent: (i) those
repurchase rights are to be assigned to the successor corporation (or parent thereof) or are
otherwise to continue in full force and effect pursuant to the terms of the Change in Control
transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan
Administrator at the time the repurchase right is issued.

          C. Immediately following the consummation of the Change in Control, all outstanding options
under the Discretionary Option Grant Program shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation (or parent thereof) or otherwise continued in full
force and effect pursuant to the terms of the Change in Control transaction.

          D. Each option which is assumed in connection with a Change in Control or otherwise continued
in effect shall be appropriately adjusted, immediately after such Change in Control, to apply to
the number and class of securities which would have been issuable to the Optionee in consummation
of such Change in Control had the option been exercised immediately prior to such Change in
Control. Appropriate adjustments to reflect such Change in Control shall also be made to (i) the
exercise price payable per share under each outstanding option, provided the

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 aggregate exercise price payable for such securities shall remain the same, (ii) the maximum
number and/or class of securities available for issuance over the remaining term of the Plan and
(iii) the maximum number and/or class of securities for which any one person may be granted stock
options, separately exercisable stock appreciation rights and direct stock issuances under the Plan
per calendar year and (iv) the maximum number and/or class of securities by which the share reserve
is to increase automatically each calendar year. To the extent the actual holders of the
Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in
consummation of the Change in Control, the successor corporation may, in connection with the
assumption of the outstanding options under the Discretionary Option Grant Program, substitute one
or more shares of its own common stock with a fair market value equivalent to the cash
consideration paid per share of Common Stock in such Change in Control transaction.

          E. The Plan Administrator shall have the discretionary authority to structure one or more
outstanding options under the Discretionary Option Grant Program so that those options shall,
immediately prior to the effective date of a Change in Control, become exercisable for all the
shares of Common Stock at the time subject to those options and may be exercised for any or all of
those shares as fully vested shares of Common Stock, whether or not those options are to be assumed
in the Change in Control transaction or otherwise continued in effect. In addition, the Plan
Administrator shall have the discretionary authority to structure one or more of the Corporation’s
repurchase rights under the Discretionary Option Grant Program so that those rights shall
immediately terminate upon the consummation of the Change in Control transaction, and the shares
subject to those terminated rights shall thereupon vest in full.

          F. The Plan Administrator shall have full power and authority to structure one or more
outstanding options under the Discretionary Option Grant Program so that those options shall become
exercisable for all the shares of Common Stock at the time subject to those options in the event
the Optionee’s Service is subsequently terminated by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective date of any Change
in Control transaction in which those options do not otherwise accelerate. In addition, the Plan
Administrator may structure one or more of the Corporation’s repurchase rights so that those rights
shall immediately terminate with respect to any shares held by the Optionee at the time of such
Involuntary Termination, and the shares subject to those terminated repurchase rights shall
accordingly vest in full at that time.

          G. The Plan Administrator shall have the discretionary authority to structure one or more
outstanding options under the Discretionary Option Grant Program so that those options shall,
immediately prior to the effective date of a Hostile Take-Over, become exercisable for all the
shares of Common Stock at the time subject to those options and may be exercised for any or all of
those shares as fully vested shares of Common Stock. In addition, the Plan Administrator shall
have the discretionary authority to structure one or more of the Corporation’s repurchase rights
under the Discretionary Option Grant Program so that those rights shall terminate automatically
upon the consummation of such Hostile Take-Over, and the shares subject to those terminated rights
shall thereupon vest in full. Alternatively, the Plan Administrator may condition the automatic
acceleration of one or more outstanding options under the Discretionary Option Grant Program and
the termination of one or more of the Corporation’s outstanding repurchase rights under such
program upon the subsequent termination of the Optionee’s Service by reason of an Involuntary
Termination within a designated period (not to exceed eighteen (18) months) following the effective
date of such Hostile Take-Over.

          H. The portion of any Incentive Option accelerated in connection with a Change in Control or
Hostile Take-Over shall remain exercisable as an Incentive Option only to the extent the applicable
One Hundred Thousand Dollar ($100,000) limitation is not exceeded. To the extent such dollar
limitation is exceeded, the accelerated portion of such option shall be exercisable as a
Nonstatutory Option under the Federal tax laws.

          I. The outstanding options shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

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     IV. CANCELLATION AND REGRANT OF OPTIONS

          [omitted]

     V. STOCK APPRECIATION RIGHTS

          A. The Plan Administrator shall have full power and authority to grant to selected Optionees
tandem stock appreciation rights.

          B. The following terms shall govern the grant and exercise of tandem stock appreciation
rights:

                    (i) One or more Optionees may be granted the right, exercisable upon such terms as the
Plan Administrator may establish, to elect between the exercise of the underlying option for
shares of Common Stock and the surrender of that option in exchange for a distribution from
the Corporation in an amount equal to the excess of (a) the Fair Market Value (on the option
surrender date) of the number of shares in which the Optionee is at the time vested under
the surrendered option (or surrendered portion thereof) over (b) the aggregate exercise
price payable for such shares.

                    (ii) No such option surrender shall be effective unless it is approved by the Plan
Administrator, either at the time of the actual option surrender or at any earlier time. If
the surrender is so approved, then the distribution to which the Optionee shall be entitled
may be made in shares of Common Stock valued at Fair Market Value on the option surrender
date, in cash, or partly in shares and partly in cash, as the Plan Administrator shall in
its sole discretion deem appropriate.

                    (iii) If the surrender of an option is not approved by the Plan Administrator, then the
Optionee shall retain whatever rights the Optionee had under the surrendered option (or
surrendered portion thereof) on the option surrender date and may exercise such rights at
any time prior to the later of (a) five (5) business days after the receipt of the
rejection notice or (b) the last day on which the option is otherwise exercisable in
accordance with the terms of the documents evidencing such option, but in no event may such
rights be exercised more than ten (10) years after the option grant date.

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ARTICLE THREE

STOCK ISSUANCE PROGRAM

     I. STOCK ISSUANCE TERMS

          Shares of Common Stock may be issued under the Stock Issuance Program through direct and
immediate issuances without any intervening option grants. Each such stock issuance shall be
evidenced by a Stock Issuance Agreement which complies with the terms specified below. Shares of
Common Stock may also be issued under the Stock Issuance Program pursuant to share right awards
which entitle the recipients to receive those shares upon the attainment of designated performance
goals or the satisfaction of specified Service requirements.

          A. Purchase Price.

               1. The purchase price per share shall be fixed by the Plan Administrator, but shall not be
less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the
issuance date.

               2. Subject to the provisions of Section I of Article Six, shares of Common Stock may be issued
under the Stock Issuance Program for any of the following items of consideration which the Plan
Administrator may deem appropriate in each individual instance:

                    (i) cash or check made payable to the Corporation, or

                    (ii) past services rendered to the Corporation (or any Parent or Subsidiary), or

                    (iii) future services to be rendered to the Corporation.

          B. Vesting Provisions.

               1. Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of
the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more
installments over the Participant’s period of Service or upon attainment of specified performance
objectives. The elements of the vesting schedule applicable to any unvested shares of Common Stock
issued under the Stock Issuance Program shall be determined by the Plan Administrator and
incorporated into the Stock Issuance Agreement. Shares of Common Stock may also be issued under
the Stock Issuance Program pursuant to share right awards which entitle the recipients to receive
those shares upon the attainment of designated performance goals or the satisfaction of specified
Service requirements.

               2. Any new, substituted or additional securities or other property (including money paid other
than as a regular cash dividend) which the Participant may have the right to receive with respect
to the Participant’s unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation’s receipt of consideration shall be
issued subject to (i) the same vesting requirements applicable to the Participant’s unvested shares
of Common Stock and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate.

               3. The Participant shall have full stockholder rights with respect to any shares of Common
Stock issued to the Participant under the Stock Issuance Program, whether or not the Participant’s
interest in those shares is vested. Accordingly, the Participant shall have the right to vote such
shares and to receive any regular cash dividends paid on such shares.

               4. Should the Participant cease to remain in Service while holding one or more unvested shares
of Common Stock issued under the Stock Issuance Program or should the performance objectives not be
attained with respect to one or more such unvested shares of Common Stock, then those shares shall
be

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immediately surrendered to the Corporation for cancellation, and the Participant shall have no
further stockholder rights with respect to those shares. To the extent the surrendered shares were
previously issued to the Participant for consideration paid in cash or cash equivalent, the
Corporation shall repay to the Participant the lower of (i) the cash consideration paid for the
surrendered shares or (ii) the Fair Market Value of those shares at the time of cancellation.

               5. The Plan Administrator may in its discretion waive the surrender and cancellation of one or
more unvested shares of Common Stock which would otherwise occur upon the cessation of the
Participant’s Service or the non-attainment of the performance objectives applicable to those
shares. Such waiver shall result in the immediate vesting of the Participant’s interest in the
shares of Common Stock as to which the waiver applies. Such waiver may be effected at any time,
whether before or after the Participant’s cessation of Service or the attainment or non-attainment
of the applicable performance objectives.

               6. Outstanding share right awards under the Stock Issuance Program shall automatically
terminate, and no shares of Common Stock shall actually be issued in satisfaction of those awards,
if the performance goals or Service requirements established for such awards are not attained or
satisfied. The Plan Administrator, however, shall have the discretionary authority to issue shares
of Common Stock under one or more outstanding share right awards as to which the designated
performance goals or Service requirements have not been attained or satisfied.

     II. CHANGE IN CONTROL/HOSTILE TAKE-OVER

          A. All of the Corporation’s outstanding repurchase rights under the Stock Issuance Program
shall terminate automatically, and all the shares of Common Stock subject to those terminated
rights shall immediately vest in full, in the event of any Change in Control, except to the extent
(i) those repurchase rights are to be assigned to the successor corporation (or parent thereof) or
are otherwise to continue in full force and effect pursuant to the terms of the Change in Control
transaction or (ii) such accelerated vesting is precluded by other limitations imposed in the Stock
Issuance Agreement.

          B. The Plan Administrator shall have the discretionary authority to structure one or more of
the Corporation’s repurchase rights under the Stock Issuance Program so that those rights shall
automatically terminate in whole or in part, and the shares of Common Stock subject to those
terminated rights shall immediately vest, in the event the Participant’s Service should
subsequently terminate by reason of an Involuntary Termination within a designated period (not to
exceed eighteen (18) months) following the effective date of any Change in Control transaction in
which those repurchase rights are assigned to the successor corporation (or parent thereof) or are
otherwise continued in effect.

          C. The Plan Administrator shall also have the discretionary authority to structure one or more
of the Corporation’s repurchase rights under the Stock Issuance Program so that those rights shall
automatically terminate in whole or in part, and the shares of Common Stock subject to those
terminated rights shall immediately vest, either upon the occurrence of a Hostile Take-Over or upon
the subsequent termination of the Participant’s Service by reason of an Involuntary Termination
within a designated period (not to exceed eighteen (18) months) following the effective date of
that Hostile Take-Over.

     III. SHARE ESCROW/LEGENDS

          Unvested shares may, in the Plan Administrator’s discretion, be held in escrow by the
Corporation until the Participant’s interest in such shares vests or may be issued directly to the
Participant with restrictive legends on the certificates evidencing those unvested shares.

     IV. DIRECTOR FEE STOCK ISSUANCE PROGRAM

          A. The Primary Committee shall have the sole and exclusive authority to determine the calendar
year or years for which the Director Fee Stock Issuance Program is to be in effect. For each such
calendar year the program is in effect, each non-employee Board member may irrevocably elect to
apply all or any portion of

11

 

 the annual fee otherwise payable in cash for his or her service on the Board for that year to
the acquisition of shares of Common Stock under this Director Fee Stock Issuance Program. Such
election must be filed with the Corporation’s Chief Financial Officer prior to the first day of the
calendar year for which the annual fee which is the subject of that election is otherwise payable.
Each non-employee Board member who files such a timely election shall automatically be granted the
shares of Common Stock under this Director Fee Stock Issuance Program on the first trading day in
January in the calendar year for which the fee election is in effect, or, if later, the first date
on which such grant is permitted under applicable law. The dollar amount of the fee subject to the
Board member’s election each year shall be equal to the number of regularly scheduled Board
meetings remaining for that year multiplied by the per Board meeting fee in effect for such year,
plus any unpaid and unearned annual retainer fee(s) in effect for such year.

          B. The purchase price per share shall be the Fair Market Value per share of Common Stock on
the grant date.

          C. The number of shares of Common Stock to be issued to a non-employee member of the Board
pursuant to this Director Fee Stock Issuance Program shall be determined pursuant to the following
formula (rounded down to the nearest whole number):

                    X = A ÷ B, where

                    X is the number of shares of Common Stock to be issued to the non-employee
Board member,

          A is the portion of the annual retainer fee subject to
the non-employee Board member’s election under this
Section III, and

          B is the Fair Market Value per share of Common Stock
on the grant date.

          D. The shares of Common Stock issued pursuant to this Director Fee Stock Issuance Program
shall vest in a series of twelve (12) equal monthly installments upon the non-employee Board
member’s completion of each calendar month of Board service during the calendar year for which the
retainer fee election is in effect.

          E. Should the Participant’s service as a Board member cease by reason of death or Permanent
Disability, then all shares of Common Stock issued to such Participant under this Section III shall
immediately become vested.

          F. In the event of a Change in Control or Hostile Take-Over while the Participant remains a
Board member, the shares of Common Stock at the time held by such Participant and issued to such
Participant under this Director Fee Stock Issuance Program but not otherwise vested shall
automatically vest in full immediately prior to the effective date of such Change in Control or
Hostile Take-Over, as applicable.

          G. The remaining terms applicable to shares of Common Stock granted under this Director Fee
Stock Issuance Program shall be the same as the terms in effect for issuances of Common Stock made
under the Stock Issuance Program generally.

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ARTICLE FOUR

AUTOMATIC OPTION GRANT PROGRAM

     I. OPTION TERMS

          A. Grant Dates. Option grants shall be made on the dates specified below:

               1. Each individual who is first elected or appointed as a non-employee Board member at any
time on or after the Effective Date shall automatically be granted, on the date of such initial
election or appointment, a Non-Statutory Option to purchase 20,000 shares of Common Stock, provided
that individual has not previously been in the employ of the Corporation or any Parent or
Subsidiary.

               2. On the date of each Annual Stockholders Meeting held after the Effective Date, each
individual who is to continue to serve as a non-employee Board member, whether or not that
individual is standing for re-election to the Board at that particular Annual Meeting, shall
automatically be granted a Non-Statutory Option to purchase 10,000 shares of Common Stock, provided
such individual has served as a non-employee Board member for at least six (6) months. There shall
be no limit on the number of such 10,000-share option grants any one non-employee Board member may
receive over his or her period of Board service, and non-employee Board members who have previously
been in the employ of the Corporation (or any Parent or Subsidiary) or who have otherwise received
one or more stock option grants from the Corporation prior to the Effective Date shall be eligible
to receive one or more such annual option grants over their period of continued Board service.

          B. Exercise Price.

               1. The exercise price per share shall be equal to one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the option grant date.

               2. The exercise price shall be payable in one or more of the alternative forms authorized
under the Discretionary Option Grant Program. Except to the extent the sale and remittance
procedure specified thereunder is utilized, payment of the exercise price for the purchased shares
must be made on the Exercise Date.

          C. Option Term. Each option shall have a term of ten (10) years measured from the
option grant date.

          D. Exercisability and Vesting of Options. Each automatic grant shall become fully
vested and exercisable upon the Optionee’s completion of the one (1)-year period of continued Board
service measured from the grant date.

          E. Limited Transferability of Options. Each option under this Article Four may be
assigned in whole or in part during the Optionee’s lifetime to one or more members of the
Optionee’s family or to a trust established exclusively for one or more such family members or to
Optionee’s former spouse, to the extent such assignment is in connection with the Optionee’s estate
plan or pursuant to a domestic relations order. The assigned portion may only be exercised by the
person or persons who acquire a proprietary interest in the option pursuant to the assignment. The
terms applicable to the assigned portion shall be the same as those in effect for the option
immediately prior to such assignment and shall be set forth in such documents issued to the
assignee as the Plan Administrator may deem appropriate. The Optionee may also designate one or
more persons as the beneficiary or beneficiaries of his or her outstanding options under this
Article Four, and those options shall, in accordance with such designation, automatically be
transferred to such beneficiary or beneficiaries upon the Optionee’s death while holding those
options. Such beneficiary or beneficiaries shall take the transferred options subject to all the
terms and conditions of the applicable agreement evidencing each such transferred option, including
(without limitation) the limited time period during which the option may be exercised following the
Optionee’s death.

13

 

          F. Termination of Board Service. The following provisions shall govern the exercise
of any options held by the Optionee at the time the Optionee ceases to serve as a Board member:

                    (i) The Optionee shall have a three (3)-year period following the date of such
cessation of Board service in which to exercise each such option.

                    (ii) During the three (3)-year exercise period, the option may not be exercised in the
aggregate for more than the number of vested shares of Common Stock for which the option is
exercisable at the time of the Optionee’s cessation of Board service.

                    (iii) Should the Optionee cease to serve as a Board member by reason of death or
Permanent Disability, then all shares at the time subject to the option shall immediately
vest so that such option may, during the three (3)-year exercise period following such
cessation of Board service, be exercised for any or all of those shares as fully vested
shares of Common Stock.

                    (iv) In no event shall the option remain exercisable after the expiration of the option
term. Upon the expiration of the exercise period or (if earlier) upon the expiration of the
option term, the option shall terminate and cease to be outstanding for any vested shares
for which the option has not been exercised. However, the option shall, immediately upon
the Optionee’s cessation of Board service for any reason other than death or Permanent
Disability, terminate and cease to be outstanding to the extent the option is not otherwise
at that time exercisable for vested shares.

     II. CHANGE IN CONTROL/HOSTILE TAKE-OVER/HOSTILE TENDER-OFFER

          A. In the event of a Change in Control while the Optionee remains a Board member, the shares
of Common Stock at the time subject to each outstanding option held by such Optionee under this
Automatic Option Grant Program but not otherwise vested shall automatically vest in full so that
each such option shall, immediately prior to the effective date of the Change in Control, become
exercisable for all the option shares as fully vested shares of Common Stock and may be exercised
for any or all of those vested shares. Immediately following the consummation of the Change in
Control, each automatic option grant shall terminate and cease to be outstanding, except to the
extent assumed by the successor corporation (or parent thereof) or otherwise continued in effect
pursuant to the terms of the Change in Control transaction.

          B. In the event of a Hostile Take-Over while the Optionee remains a Board member, the shares
of Common Stock at the time subject to each outstanding option held by such Optionee under this
Automatic Option Grant Program but not otherwise vested shall automatically vest in full so that
each such option shall, immediately prior to the effective date of the Hostile Take-Over, become
exercisable for all the option shares as fully vested shares of Common Stock and may be exercised
for any or all of those vested shares. Each such option shall remain exercisable for such fully
vested option shares until the expiration or sooner termination of the option term or the surrender
of the option in connection with a Hostile Tender-Offer.

          C. All outstanding repurchase rights under this under this Automatic Option Grant Program
shall automatically terminate, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Change in Control or Hostile Take-Over.

          D. Each option which is assumed in connection with a Change in Control or otherwise continued
in effect shall be appropriately adjusted, immediately after such Change in Control, to apply to
the number and class of securities which would have been issuable to the Optionee in consummation
of such Change in Control had the option been exercised immediately prior to such Change in
Control. Appropriate adjustments shall also be made to the exercise price payable per share under
each outstanding option, provided the aggregate exercise price payable for such securities shall
remain the same. To the extent the actual holders of the Corporation’s outstanding Common Stock
receive cash consideration for their Common Stock in consummation of the Change in Control, the
successor corporation may, in connection with the assumption of the outstanding options under the
Automatic Option Grant Program, substitute one or more shares of its own common stock with a fair
market value equivalent to the cash consideration paid per share of Common Stock in such Change in
Control transaction.

14

 

          E. The grant of options under the Automatic Option Grant Program shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any
part of its business or assets.

     III. REMAINING TERMS

          The remaining terms of each option granted under the Automatic Option Grant Program shall be
the same as the terms in effect for option grants made under the Discretionary Option Grant
Program.

15

 

ARTICLE FIVE

DIRECTOR FEE OPTION GRANT PROGRAM

     I. OPTION GRANTS

          The Primary Committee shall have the sole and exclusive authority to determine the calendar
year or years for which the Director Fee Option Grant Program is to be in effect. For each such
calendar year the program is in effect, each non-employee Board member may irrevocably elect to
apply all or any portion of the annual fee otherwise payable in cash for his or her service on the
Board for that year to the acquisition of a special option grant under this Director Fee Option
Grant Program. Such election must be filed with the Corporation’s Chief Financial Officer prior to
the first day of the calendar year for which the annual fee which is the subject of that election
is otherwise payable. Each non-employee Board member who files such a timely election shall
automatically be granted an option under this Director Fee Option Grant Program on the first
trading day in January in the calendar year for which the fee election is in effect, or such later
date on which the Director Fee Option Grant Program is effective for such calendar year. The
dollar amount of the fee subject to the Board member’s election each year shall be equal to the
number of regularly scheduled Board meetings remaining for that year multiplied by the per Board
meeting fee in effect for such year, plus any unpaid and unearned annual retainer fee(s) in effect
for such year.

     II. OPTION TERMS

          Each option shall be a Non-Statutory Option governed by the terms and conditions specified
below.

          A. Exercise Price.

               1. The exercise price per share shall be thirty-three and one-third percent (33-1/3%) of the
Fair Market Value per share of Common Stock on the option grant date.

               2. The exercise price shall become immediately due upon exercise of the option and shall be
payable in one or more of the alternative forms authorized under the Discretionary Option Grant
Program. Except to the extent the sale and remittance procedure specified thereunder is utilized,
payment of the exercise price for the purchased shares must be made on the Exercise Date.

          B. Number of Option Shares. The number of shares of Common Stock subject to the
option shall be determined pursuant to the following formula (rounded down to the nearest whole
number):

                    X = A ÷ (B x 66-2/3%), where

                    X is the number of option shares,

          A is the portion of the annual retainer fee subject to
the non-employee Board member’s election under this
Director Fee Option Grant Program, and

          B is the Fair Market Value per share of Common Stock
on the option grant date.

          C. Exercise and Term of Options. The option shall become exercisable in a series of
twelve (12) equal monthly installments upon the Optionee’s completion of each calendar month of
Board service during the calendar year for which the retainer fee election is in effect. Each
option shall have a maximum term of ten (10) years measured from the option grant date.

          D. Limited Transferability of Options. Each option under this Article Five may be
assigned in whole or in part during the Optionee’s lifetime to one or more members of the
Optionee’s family or to a trust

16

 

established exclusively for one or more such family members or to Optionee’s former spouse, to
the extent such assignment is in connection with Optionee’s estate plan or pursuant to a domestic
relations order. The assigned portion may only be exercised by the person or persons who acquire a
proprietary interest in the option pursuant to the assignment. The terms applicable to the
assigned portion shall be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as the Plan
Administrator may deem appropriate. The Optionee may also designate one or more persons as the
beneficiary or beneficiaries of his or her outstanding options under this Article Five, and those
options shall, in accordance with such designation, automatically be transferred to such
beneficiary or beneficiaries upon the Optionee’s death while holding those options. Such
beneficiary or beneficiaries shall take the transferred options subject to all the terms and
conditions of the applicable agreement evidencing each such transferred option, including (without
limitation) the limited time period during which the option may be exercised following the
Optionee’s death.

          E. Death or Permanent Disability. Should the Optionee’s service as a Board member
cease by reason of death or Permanent Disability, then each option held by such Optionee under this
Director Fee Option Grant Program shall immediately become exercisable for all the shares of Common
Stock at the time subject to that option. To the extent such option is held by the Optionee at
the time of his or her death, that option may be exercised by the personal representative of the
Optionee’s estate or by the person or persons to whom the option is transferred pursuant to the
Optionee’s will or the laws of inheritance or by the designated beneficiary or beneficiaries of
such option.

     III. CHANGE IN CONTROL/HOSTILE TAKE-OVER/HOSTILE TENDER-OFFER

          A. In the event of any Change in Control while the Optionee remains a Board member, each
outstanding option held by such Optionee under this Director Fee Option Grant Program shall
automatically accelerate so that each such option shall, immediately prior to the effective date of
the Change in Control, become exercisable for all the shares of Common Stock at the time subject to
such option and may be exercised for any or all of those shares as fully vested shares of Common
Stock.

          B. In the event of a Hostile Take-Over while the Optionee remains a Board member, each
outstanding option held by such Optionee under this Director Fee Option Grant Program shall
automatically accelerate so that each such option shall, immediately prior to the effective date of
the Hostile Take-Over, become exercisable for all the shares of Common Stock at the time subject to
such option and may be exercised for any or all of those shares as fully vested shares of Common
Stock.

          C. Each option which is assumed in connection with a Change in Control or otherwise continued
in effect shall be appropriately adjusted, immediately after such Change in Control, to apply to
the number and class of securities which would have been issuable to the Optionee in consummation
of such Change in Control had the option been exercised immediately prior to such Change in
Control. Appropriate adjustments shall also be made to the exercise price payable per share under
each outstanding option, provided the aggregate exercise price payable for such securities
shall remain the same. To the extent the actual holders of the Corporation’s outstanding Common
Stock receive cash consideration for their Common Stock in consummation of the Change in Control,
the successor corporation may, in connection with the assumption of the outstanding options under
the Director Fee Option Grant Program, substitute one or more shares of its own common stock with a
fair market value equivalent to the cash consideration paid per share of Common Stock in such
Change in Control transaction.

          D. The grant of options under the Director Fee Option Grant Program shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any
part of its business or assets.

     IV. COMPLIANCE WITH SECTION 409A OF THE CODE

          A. Each option granted under the Director Fee Option Grant Program that constitutes, or
provides for, a deferral of compensation subject to Section 409A of the Code (a “Section 409A
Award”) shall satisfy the requirements of Section 409A of the Code and this Section IV, to the
extent applicable. The stock option

17

 

agreement with respect to a Section 409A Award shall incorporate the terms and conditions required
by Section 409A of the Code and this Section IV.

          B.1. Subject to subsection B.2, any shares of Common Stock to be paid or distributed upon
the exercise of a Section 409A Award shall be distributed in accordance with the requirements of
Section 409A(a)(2) of the Code, and shall not be distributed earlier than:

                    (a) the Board member’s separation from service, as determined by the Secretary of the
Treasury;

                    (b) the date the Board member becomes disabled, , as determined by the Secretary of the
Treasury;

                    (c) the Board member’s death;

                    (d) a specified time (or pursuant to a fixed schedule) specified under the Board
members election with respect to a calendar year; or

                    (e) to the extent provided by the Secretary of the Treasury, a change in the ownership
or effective control of the Company or a Parent or Subsidiary, or in the ownership of a
substantial portion of the assets of the Company or a Parent or Subsidiary.

               2. Notwithstanding the foregoing, a Section 409A Award shall be exercisable, and shares of
Common Stock shall be issuable with respect to such option, at such times and upon such events as
are specified in this Plan or the stock option agreement pursuant to which such option is granted
only to the extent issuance under such terms will not cause the option or the shares of Common
Stock issuable with respect to the option to be includible in the gross income of the Board member
under Section 409A of the Code prior to such times or the occurrence of such events, as permitted
by the Code and the Treasury regulations and other guidance thereunder.

               3. For purposes of this Section, the terms specified therein shall have the respective
meanings ascribed thereto under Section 409A of the Code and the Treasury regulations thereunder.

          C. The time or schedule of any distribution or payment of any shares of Common Stock or other
property or amounts under a Section 409A Award shall not be accelerated, except as otherwise
permitted under Section 409A(a)(3) of the Code and the Treasury regulations thereunder.

          D.1. Any deferral election provided under or with respect to an option granted under the
Director Fee Option Grant Program that is a Section 409A Award shall satisfy the requirements of
Section 409A(a)(4)(B) of the Code, to the extent applicable, and any such deferral election with
respect to compensation for services performed during a taxable year shall be made not later than
the close of the preceding taxable year, or at such other time as provided in Treasury regulations.

               2. In the event that a Section 409A Award permits, under a subsequent election by the
Participant holding such Section 409A Award, a delay in the exercise of the date or dates on which
the Section 409A Award may be exercised, or a change in the form of distribution or payment, such
subsequent election shall satisfy the requirements of Section 409A(a)(4)(C) of the Code, and:

                    (a) such subsequent election may not take effect until at least twelve (12) months
after the date on which the election is made;

                    (b) the first payment with respect to such election may be deferred for a period of not
less than five years from the date such distribution or payment otherwise would have been
made; and

18

 

                    (c) such election may not be made less than twelve months prior to the date of the
first scheduled distribution or payment under Section 10.2(a)(iv).

          E. A Section 409A Award, and any election under or with respect to such Section 409A Award,
shall comply in form and operation with the requirements of Section 409A of the Code and the
Treasury regulations thereunder.

     V. REMAINING TERMS

          The remaining terms of each option granted under this Director Fee Option Grant Program shall
be the same as the terms in effect for option grants made under the Discretionary Option Grant
Program.

19

 

ARTICLE SIX

MISCELLANEOUS

     I. FINANCING

          [omitted]

     II. TAX WITHHOLDING

          A. The Corporation’s obligation to deliver shares of Common Stock upon the exercise of options
or the issuance or vesting of such shares under the Plan shall be subject to the satisfaction of
all applicable income and employment tax withholding requirements.

          B. The Plan Administrator may, in its discretion, provide any or all holders of Non-Statutory
Options or unvested shares of Common Stock under the Plan (other than the options granted or the
shares issued under the Automatic Option Grant or Director Fee Option Grant Program) with the right
to use shares of Common Stock in satisfaction of all or part of the Withholding Taxes to which such
holders may become subject in connection with the exercise of their options or the vesting of their
shares. Such right may be provided to any such holder in either or both of the following formats:

               Stock Withholding: The election to have the Corporation withhold, from the shares of
Common Stock otherwise issuable upon the exercise of such Non-Statutory Option or the vesting of
such shares, a portion of those shares with an aggregate Fair Market Value equal to the percentage
of the Withholding Taxes (not to exceed one hundred percent (100%)) designated by the holder.

               Stock Delivery: The election to deliver to the Corporation, at the time the
Non-Statutory Option is exercised or the shares vest, one or more shares of Common Stock previously
acquired by such holder (other than in connection with the option exercise or share vesting
triggering the Withholding Taxes) with an aggregate Fair Market Value equal to the percentage of
the Withholding Taxes (not to exceed one hundred percent (100%)) designated by the holder.

     III. EFFECTIVE DATE AND TERM OF THE PLAN

          A. The Plan was adopted by the Board on March 7, 2002, and shall become effective on the Plan
Effective Date. However, the Director Fee Stock Issuance and the Director Fee Option Grant
Programs shall not be implemented until such time as the Primary Committee may deem appropriate.
Options may be granted under the Discretionary Option Grant Program at any time on or after the
Plan Effective Date. However, no options granted under the Plan may be exercised, and no shares
shall be issued under the Plan, until the Plan is approved by the Corporation’s stockholders. If
such stockholder approval is not obtained within twelve (12) months after the Plan Effective Date,
then all options previously granted under this Plan shall terminate and cease to be outstanding,
and no further options shall be granted and no shares shall be issued under the Plan.

          B. The Plan shall serve as the successor to the Predecessor Plan, and no further option grants
or direct stock issuances shall be made under the Predecessor Plan after the Plan Effective Date.
All options outstanding under the Predecessor Plan on the Plan Effective Date shall be transferred
to the Plan at that time and shall be treated as outstanding options under the Plan. However, each
outstanding option so transferred shall continue to be governed solely by the terms of the
documents evidencing such option, and no provision of the Plan shall be deemed to affect or
otherwise modify the rights or obligations of the holders of such transferred options with respect
to their acquisition of shares of Common Stock.

          C. One or more provisions of the Plan, including (without limitation) the option/vesting
acceleration provisions of Article Two relating to Changes in Control and Hostile Take-Overs, may,
in the Plan Administrator’s discretion, be extended to one or more options incorporated from the
Predecessor Plan which do not otherwise contain such provisions.

20

 

          D. The Plan shall terminate upon the earliest to occur of (i) March 7, 2012, or (ii) the
termination of all outstanding options in connection with a Change in Control. Should the Plan
terminate on March 7, 2012, then all option grants and unvested stock issuances outstanding at that
time shall continue to have force and effect in accordance with the provisions of the documents
evidencing such grants or issuances.

     IV. AMENDMENT OF THE PLAN

          A. The Board shall have complete and exclusive power and authority to amend or modify the Plan
in any or all respects. However, no such amendment or modification shall adversely affect the
rights and obligations with respect to stock options or unvested stock issuances at the time
outstanding under the Plan unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval pursuant to
applicable laws or regulations.

          B. Options to purchase shares of Common Stock may be granted under the Discretionary Option
Grant Program and shares of Common Stock may be issued under the Stock Issuance Program that are in
each instance in excess of the number of shares then available for issuance under the Plan,
provided any excess shares actually issued under those programs shall be held in escrow until there
is obtained stockholder approval of an amendment sufficiently increasing the number of shares of
Common Stock available for issuance under the Plan. If such stockholder approval is not obtained
within twelve (12) months after the date the first such excess issuances are made, then (i) any
unexercised options granted on the basis of such excess shares shall terminate and cease to be
outstanding and (ii) the Corporation shall promptly refund to the Optionees and the Participants
the exercise or purchase price paid for any excess shares issued under the Plan and held in escrow,
together with interest (at the applicable Short Term Federal Rate) for the period the shares were
held in escrow, and such shares shall thereupon be automatically cancelled and cease to be
outstanding.

     V. USE OF PROCEEDS

          Any cash proceeds received by the Corporation from the sale of shares of Common Stock under
the Plan shall be used for general corporate purposes.

     VI. REGULATORY APPROVALS

          A. The implementation of the Plan, the granting of any stock option under the Plan and the
issuance of any shares of Common Stock (i) upon the exercise of any granted option or (ii) under
the Stock Issuance Program shall be subject to the Corporation’s procurement of all approvals and
permits required by regulatory authorities having jurisdiction over the Plan, the stock options
granted under it and the shares of Common Stock issued pursuant to it.

          B. No shares of Common Stock or other assets shall be issued or delivered under the Plan
unless and until there shall have been compliance with all applicable requirements of applicable
securities laws, including the filing and effectiveness of the Form S-8 registration statement for
the shares of Common Stock issuable under the Plan, and all applicable listing requirements of any
stock exchange (or the Nasdaq National Market, if applicable) on which Common Stock is then listed
for trading.

     VII. NO EMPLOYMENT/SERVICE RIGHTS

          Nothing in the Plan shall confer upon the Optionee or the Participant any right to continue in
Service for any period of specific duration or interfere with or otherwise restrict in any way the
rights of the Corporation (or any Parent or Subsidiary employing or retaining such person) or of
the Optionee or the Participant, which rights are hereby expressly reserved by each, to terminate
such person’s Service at any time for any reason, with or without cause.

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APPENDIX

          The following definitions shall be in effect under the Plan:

          A. Automatic Option Grant Program shall mean the automatic option grant program in
effect under Article Four of the Plan.

          B. Board shall mean the Corporation’s Board of Directors.

          C. Change in Control shall mean a change in ownership or control of the Corporation
effected through any of the following transactions:

                    (i) a merger, consolidation or other reorganization approved by the Corporation’s
stockholders, unless securities representing more than fifty percent (50%) of the total
combined voting power of the voting securities of the successor corporation are immediately
thereafter beneficially owned, directly or indirectly and in substantially the same
proportion, by the persons who beneficially owned the Corporation’s outstanding voting
securities immediately prior to such transaction, or

                    (ii) the sale, transfer or other disposition of all or substantially all of the
Corporation’s assets in complete liquidation or dissolution of the Corporation, or

                    (iii) the acquisition, directly or indirectly by any person or related group of persons
(other than the Corporation or a person that directly or indirectly controls, is controlled
by, or is under common control with, the Corporation), of beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent
(50%) of the total combined voting power of the Corporation’s outstanding securities
pursuant to a tender or exchange offer made directly to the Corporation’s stockholders.

          D. Code shall mean the Internal Revenue Code of 1986, as amended.

          E. Common Stock shall mean the Corporation’s common stock.

          F. Corporation shall mean Ligand Pharmaceuticals Incorporated, a Delaware corporation,
and any corporate successor to all or substantially all of the assets or voting stock of Ligand
Pharmaceuticals Incorporated which shall by appropriate action adopt the Plan.

          G. Director Fee Option Grant Program shall mean the special stock option grant in
effect for non-employee Board members under Article Five of the Plan.

          H. Director Fee Stock Issuance Program shall mean the special issuances of Common
Stock under Section III of Article Three of the Plan.

          I. Discretionary Option Grant Program shall mean the discretionary option grant
program in effect under Article Two of the Plan.

          J. Employee shall mean an individual who is in the employ of the Corporation (or any
Parent or Subsidiary), subject to the control and direction of the employer entity as to both the
work to be performed and the manner and method of performance.

          K. Exercise Date shall mean the date on which the Corporation shall have received
written notice of the option exercise.

          L. Fair Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:

A-1

 

                    (i) If the Common Stock is at the time traded on the Nasdaq National Market, then the
Fair Market Value shall be the closing selling price per share of Common Stock on the date
in question, as such price is reported by the National Association of Securities Dealers on
the Nasdaq National Market and published in The Wall Street Journal. If there is no
closing selling price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for which such quotation
exists.

                    (ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair
Market Value shall be the closing selling price per share of Common Stock on the date in
question on the Stock Exchange determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange and published in The Wall Street Journal. If there is
no closing selling price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for which such quotation
exists.

          M. Hostile Take-Over shall mean a change in ownership or control of the Corporation
effected through either of the following transactions:

                    (i) a change in the composition of the Board over a period of thirty-six (36)
consecutive months or less such that a majority of the Board members ceases, by reason of
one or more contested elections for Board membership, to be comprised of individuals who
either (A) have been Board members continuously since the beginning of such period or (B)
have been elected or nominated for election as Board members during such period by at least
a majority of the Board members described in clause (A) who were still in office at the time
the Board approved such election or nomination, or

                    (ii) a Hostile Tender-Offer.

          N. Hostile Tender-Offer shall mean the acquisition, directly or indirectly, by any
person or related group of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with, the Corporation) of
beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing
more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding
securities pursuant to a tender or exchange offer made directly to the Corporation’s stockholders
which the Board does not recommend such stockholders to accept.

          O. Incentive Option shall mean an option which satisfies the requirements of Code
Section 422.

          P. Involuntary Termination shall mean the termination of the Service of any individual
which occurs by reason of:

                    (i) such individual’s involuntary dismissal or discharge by the Corporation for reasons
other than Misconduct, or

                    (ii) such individual’s voluntary resignation following (A) a change in his or her
position with the Corporation which materially reduces his or her duties and
responsibilities or the level of management to which he or she reports, (B) a reduction in
his or her level of compensation (including base salary, fringe benefits and target bonus
under any corporate-performance based bonus or incentive programs) by more than fifteen
percent (15%) or (C) a relocation of such individual’s place of employment by more than
fifty (50) miles, provided and only if such change, reduction or relocation is effected by
the Corporation without the individual’s consent.

          Q. Misconduct shall mean the commission of any act of fraud, embezzlement or
dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of
confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any
other intentional misconduct by such person

A-2

 

           adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary)
in a material manner. The foregoing definition shall not in any way preclude or restrict the right
of the Corporation (or any Parent or Subsidiary) to discharge or dismiss any Optionee, Participant
or other person in the Service of the Corporation (or any Parent or Subsidiary) for any other acts
or omissions, but such other acts or omissions shall not be deemed, for purposes of the Plan, to
constitute grounds for termination for Misconduct.

          R.1934 Act shall mean the Securities Exchange Act of 1934, as amended.

          S. Non-Statutory Option shall mean an option not intended to satisfy the requirements
of Code Section 422.

          T. Optionee shall mean any person to whom an option is granted under the Discretionary
Option Grant, Automatic Option Grant or Director Fee Option Grant Program.

          U. Parent shall mean any corporation (other than the Corporation) in an unbroken chain
of corporations ending with the Corporation, provided each corporation in the unbroken chain (other
than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the other corporations
in such chain.

          V. Participant shall mean any person who is issued shares of Common Stock under the
Stock Issuance Program (including the Director Fee Stock Issuance Program thereunder).

          W. Permanent Disability or Permanently Disabled shall mean the inability of the
Optionee or the Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment expected to result in death or to be of
continuous duration of twelve (12) months or more. However, solely for purposes of the Automatic
Option Grant, Director Fee Stock Issuance and Director Fee Option Grant Programs, Permanent
Disability or Permanently Disabled shall mean the inability of the non-employee Board member to
perform his or her usual duties as a Board member by reason of any medically determinable physical
or mental impairment expected to result in death or to be of continuous duration of twelve (12)
months or more.

          X. Plan shall mean the Corporation’s 2002 Stock Incentive Plan, as set forth in this
document.

          Y. Plan Administrator shall mean the particular entity, whether the Primary Committee,
the Board or the Secondary Committee, which is authorized to administer the Discretionary Option
Grant and Stock Issuance Programs with respect to one or more classes of eligible persons, to the
extent such entity is carrying out its administrative functions under those programs with respect
to the persons under its jurisdiction.

          Z. Plan Effective Date shall mean the date the Plan shall become effective and shall
be coincident with the first business day following the 2002 Annual Meeting of Stockholders
scheduled to take place on May 15, 2002.

          AA. Predecessor Plan shall mean the Corporation’s 1992 Stock Incentive Plan in effect
immediately prior to the Plan Effective Date hereunder.

          BB. Primary Committee shall mean the committee of two (2) or more non-employee Board
members appointed by the Board to administer the Discretionary Option Grant and Stock Issuance
Programs with respect to Section 16 Insiders.

          CC. Secondary Committee shall mean a committee of one or more Board members appointed
by the Board to administer the Discretionary Option Grant and Stock Issuance Programs with respect
to eligible persons other than Section 16 Insiders.

A-3

 

          DD. Section 16 Insider shall mean an officer or director of the Corporation subject to
the short-swing profit liabilities of Section 16 of the 1934 Act.

          EE. Service shall mean the performance of services for the Corporation (or any Parent
or Subsidiary) by a person in the capacity of an Employee, a non-employee member of the board of
directors or a consultant or independent advisor, except to the extent otherwise specifically
provided in the documents evidencing the option grant or stock issuance.

          FF. Stock Exchange shall mean either the American Stock Exchange or the New York Stock
Exchange.

          GG. Stock Issuance Agreement shall mean the agreement entered into by the Corporation
and the Participant at the time of issuance of shares of Common Stock under the Stock Issuance
Program.

          HH. Stock Issuance Program shall mean the stock issuance program in effect under
Article Three of the Plan.

          II. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation, provided each corporation (other than the
last corporation) in the unbroken chain owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.

          JJ.10% Stockholder shall mean the owner of stock (as determined under Code Section
424(d)) possessing more than ten percent (10%) of the total combined voting power of all classes of
stock of the Corporation (or any Parent or Subsidiary).

          KK. Withholding Taxes shall mean the applicable income and employment withholding
taxes to which the holder of Non-Statutory Options or unvested shares of Common Stock may become
subject in connection with the exercise of those options or the vesting of those shares.

A-4exv10w5

 

EXHIBIT 10.5

LOAN AGREEMENT

     LOAN AGREEMENT, dated as of March 31, 2006, among Furmanite International Finance Limited, a
company organized under the laws of England (registered number 5764823) (the “Borrower”),
and BoS (USA) Inc. (the “Lender”).

WITNESSETH:

     WHEREAS, Borrower has requested that the Lender make available to the Borrower the Revolving
Credit Loans herein described in an aggregate principal amount not exceeding $15,000,000; and

     WHEREAS, the Lender is willing to make such Revolving Credit Loans available to the Borrower
on the terms and conditions herein provided;

     NOW, THEREFORE, it is agreed:

     Section 1. DEFINITIONS.

     Terms used in this Agreement which are defined in Annex I hereto shall have the meanings
specified in such Annex I (unless otherwise defined herein) and shall include in the singular
number the plural and in the plural number the singular. Unless otherwise specified, each
reference in this Agreement or in any other Loan Document to a Loan Document shall mean such Loan
Document as the same may from time to time be amended, restated, supplemented or otherwise
modified. All references to Sections in this Agreement or in Annex I hereto shall be deemed
references to Sections in this Agreement unless otherwise specified. As used in this Agreement and
the other Loan Documents, the terms “including” and “such as” are illustrative and not limitative.

     Section 2. THE LOAN FACILITY.

     2.1 The Loans. Subject to the terms and conditions set forth herein, the Lender
agrees at any time and from time to time during the Commitment Period to make loans to the Borrower
(each a “Revolving Credit Loan” and collectively, the “Revolving Credit Loans”) up
to the Revolving Credit Loan Commitment; provided that, on the date of the making
of any Revolving Credit Loan (and after giving effect thereto), the aggregate principal amount of
Revolving Credit Loans outstanding on such date shall not exceed the Revolving Credit Loan
Commitment then in effect. During the Commitment Period, the Borrower may utilize the Revolving
Credit Loan Commitment by borrowing, prepaying the Revolving Credit Loans in whole or in part
without premium or penalty (except as otherwise provided by Section 3.11), and reborrowing, all in
accordance with the terms and conditions hereof.

 

 

     2.2 Notice of Borrowing.

     (a) The Borrower shall give at least four Business Days’ prior written notice (a “Notice
of Borrowing”) to the Lender of the date (which shall be a Business Day during the Commitment
Period) of each proposed borrowing hereunder (the “Borrowing Date”). Such notice shall
specify (subject to the provisions of this Agreement) (i) the Borrowing Date, (ii) the total amount
of the proposed borrowing, which shall be in a minimum amount of $500,000 if a Base Rate (US) Loan
and $500,000 if a Libor Loan (or, if greater, in integral multiples of $100,000 in each case)
provided that the aggregate principal amount of such borrowing must equal or be
less than the Unutilized Revolving Commitment at such time (after giving effect to all other
Notices of Borrowings for Revolving Credit Loans pending at such time) and (iii) the Type of Loan
which such borrowing will initially be, (iv) whether such Loan will be a Libor Loan or a Base Rate
(US) Loan and, if a Libor Loan, the requested Interest Period therefor. Notwithstanding the
foregoing, however, Base Rate (US) Loans may be made upon two Business Days’ telephone notice,
Closing Office Time, by the Borrower to the Lender (confirmed as soon as possible thereafter in
writing). Unless otherwise agreed to by the Lender and the Borrower, the Notice of Borrowing for
all Loans shall be substantially in the form of Exhibit A hereto. The Borrower may not have more
than ten (10) Loans outstanding at any time.

     (b) The Borrower may not designate more than one Interest Period for Libor Loans or (unless
otherwise consented to by the Lender) more than one Type of Loan in the same Notice of Borrowing.
Without the Lender’s consent, no Libor Loan shall be made or maintained if the principal amount
thereof is less than $500,000. Without the consent of the Lender, the Borrower shall not be
entitled to make borrowings under the Revolving Credit Loan Commitment more than twice in any
calendar week.

     (c) [intentionally deleted]

     (d) Each Loan requested in a Notice of Borrowing shall be made in Dollars. If, with respect
to any requested Libor Loan, the Lender does not expect to be able to fund such Loan for the
Interest Period applicable thereto by obtaining a matching deposit in the London inter-bank market
at the relevant time or (ii) it would be impossible, unlawful or contrary to any regulation,
interpretation, order, directive or request (whether or not having the force of law) applicable to
the Lender of any court or governmental authority, or any fiscal, monetary, central bank or other
authority having jurisdiction over the Lender for the Lender to make the Libor Loan available to
the Borrower, the Lender shall promptly notify the Borrower and the requested Loan shall instead be
made as a Base Rate (US) Rate Loan.

     2.3 The Note.

     (a) The Borrower’s obligation to pay the principal of, and interest on, the Revolving Credit
Loans of the Lender shall be evidenced by a promissory note of the Borrower payable to the
order of the Lender substantially in the form of Exhibit B hereto (as such note may be from
time to time be amended, supplemented, restated or otherwise modified, a “Revolving Credit
Note”.

2

 

     (b) The Revolving Credit Note is entitled to the benefits of this Agreement and shall be
secured by the FIFL LC.

     (c) The principal amount of all Revolving Credit Loans of the Lender outstanding from time to
time, and interest accrued thereon, shall be recorded on the records of the Lender and, prior to
any transfer of, or any action to collect, its Revolving Credit Note, the unpaid principal amount
of the Revolving Credit Loans evidenced thereby shall be endorsed on the reverse side of such
Revolving Credit Note, together with the date of such endorsement and the date to which interest
has been paid; any failure to make such endorsement and provide such other information, however,
shall not affect the Borrower’s obligations hereunder or under the Note.

     2.4 [intentionally deleted]

     2.5 Mandatory Prepayments of Revolving Credit Loans.

     (a) The Borrower shall prepay the Revolving Credit Loans on any day and on the effective date
of any reduction or termination in the Revolving Credit Loan Commitment hereunder to the extent
that the aggregate principal amount of such Loans on such date shall exceed the Revolving Credit
Loan Commitment in effect on such date; if the Revolving Credit Loan Commitment is terminated in
full, then the Borrower shall immediately prepay in full the aggregate outstanding principal amount
of all Revolving Credit Loans. Repayments pursuant to this Section shall first be made against (to
the extent available) outstanding Revolving Credit Loans which are Libor Loans having an Interest
Period ending on the date of such repayment, then to Base Rate (US) Loans, as directed by the
Borrower by written (or telephonic, promptly confirmed in writing) notice to the Lender or, in the
absence of such direction, by the Lender.

     (b) The then-unpaid principal amount of the Revolving Credit Loans shall be payable in full on
the first Business Day of January, 2010.

     2.6 [intentionally deleted]

     2.7 Voluntary Repayment of Revolving Credit Loans. The Borrower shall have the right,
at any time and from time to time, by four Business Days’ prior written notice to the Lender to
prepay the Revolving Credit Loans, in whole, or in part in integral multiples of $500,000 and
without premium, provided that at the time of any such prepayment of the Revolving
Credit Loans in full, the Borrower shall pay all interest accrued on the amount of such prepayment
and all other amounts owing to the Lender in respect thereof including, without limitation, any
compensation payable under Section 3.11 hereof. Subject to the terms and conditions of this
Agreement, amounts prepaid under this Section 2.7 may be reborrowed.

     Section 3. INTEREST.

3

 

     3.1 Rate of Interest. The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Loan from time to time outstanding from the date the proceeds thereof are
made available to the Borrower until maturity (whether by acceleration or otherwise) at the
following interest rates: (i) each Libor Loan, at a rate per annum for each Interest Period
applicable thereto equal to (x) LIBOR for such Interest Period plus (y) the Eurocurrency
Differential, and (ii) each Base Rate (US) Loan, at a rate per annum equal to (x) the Base Rate
(US), such rate to change as and when such Base Rate (US) changes, plus (y) the Base Rate (US)
Differential. Interest shall be computed for the actual number of days elapsed on the basis of a
360 day year.

     3.2 Interest Payment Dates. Interest on and prior to maturity in respect of each Loan
shall be payable in arrears (i) if such Loan is (x) a Libor Loan, on the last day of each Interest
Period applicable thereto and, if such Interest Period is longer than three months, at the end of
each three-month interval within such Interest Period or (y) a Base Rate (US) Loan, on the last
Business Day of each calendar quarter after the making thereof and on the last day of any Interest
Period applicable thereto, (ii) upon any prepayment or repayment of such Loan in full (to the
extent accrued on the amount prepaid or repaid) and (iii) at maturity (whether by acceleration or
otherwise). The Lender shall endeavor to notify the Borrower prior to each such interest payment
date of the amount to be paid by the Borrower on such date, but no failure by the Lender to do so
shall in any way affect the Borrower’s obligations hereunder to timely pay the full amount of
interest due when due; however, no such amount paid in reliance on such a notice, or paid in
accordance with the Borrower’s good faith calculations in the absence of such a notice, shall
constitute an Event of Default under Section 9.1 unless the Borrower shall fail to timely pay the
full amount of any further adjustment as may be appropriate pursuant to notice to the Borrower from
the Lender.

     3.3 Overdue Payment of Principal and Interest. Overdue principal of, and overdue
interest in respect of, each Loan shall bear interest for each day, payable on demand, at a rate
per annum (the “Past-Due Rate”) equal to 2% per annum in excess of the interest rate
otherwise applicable to such Loan (up to the end of the then-current Interest Period therefor, or
any subsequent interest period therefor selected by the Lender, that is applicable to such Loan).

     3.4 Interest Periods. For purposes of this Agreement the term “Interest
Period” shall mean:

     (a) with respect to any Libor Loan:

	 	(i)	 	initially, the period commencing on the borrowing or conversion date, as the
case may be, with respect to such Loan and ending one, three, six or nine months
thereafter, as selected by the Borrower in its Notice of Borrowing or Notice of
Conversion, as the case may be, given with respect thereto; and
	 
	 	(ii)	 	thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Loan and ending one, three, six or nine months
thereafter, as selected by the Borrower by irrevocable notice (each an “Interest
Period Notice”) to the Lender not later than 10:00 a.m., Closing Office Time, four
Business Days 

4

 

	 	 	 	prior to the last day of the then current Interest Period with respect
thereto;

provided that, all of the foregoing provisions relating to Interest Periods for
Libor Loans are subject to the following:

	 	(1)	 	if any Interest Period pertaining to a Libor Loan would
otherwise end on a day that is not a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless the result of such
extension would be to carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately preceding
Business Day;
	 
	 	(2)	 	any Interest Period that would otherwise extend beyond the date
final payment is due on the Libor Loan shall end on such date of final payment;
	 
	 	(3)	 	any Interest Period pertaining to a Libor Loan that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month;
	 
	 	(4)	 	the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Libor Loan during an Interest Period for
such Loan;
	 
	 	(5)	 	in the absence of timely selection by the Borrower of an
Interest Period for a Libor Loan, the Interest Period shall be one month
(subject to the other terms of this proviso); and
	 
	 	(6)	 	the Borrower shall select Interest Periods in order to comply
with the provisions of Section 2.2(b); and

     (b) with respect to any Base Rate (US) Loan, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Loan and ending on the first to occur of
the maturity date (whether by acceleration or otherwise) of such Loan or the conversion date with
respect to such Loan.

     3.5 Conversion.

     (a) The Borrower shall have the option to convert (i) at any time, all or a portion of any
Base Rate (US) Loan into a Libor Loan or (ii) on the last day of an Interest Period applicable
thereto, a Libor Loan into a Base Rate (US) Loan; provided, however, (x) without
the consent of the Lender,
no portion of the outstanding principal amount of any Base Rate (US) Loan may be converted into a
Libor Loan during the continuance of any Default or Event of Default and (y) no Loan may be
converted under this Section 3.5(a) unless the provisions of the next-to-last sentence of Section
2.2(b) are complied with after giving effect to such conversion.

5

 

     (b) The Borrower shall exercise the option granted pursuant to Section 3.5(a) by giving, no
later than 10:00 a.m., Closing Office Time, on the fourth Business Day prior to the proposed
conversion date, written or telephonic notice (confirmed in writing) thereof (a “Notice of
Conversion”) to the Lender. Each Notice of Conversion shall state (i) the option to be
exercised pursuant to Section 3.5(a), the requested conversion date which shall be a Business Day
and which in the case of the conversion of any Base Rate (US) Loan shall be deemed the last day of
the Interest Period applicable thereto and (ii) in the case of a conversion into a Libor Loan, the
requested Interest Period therefor. Unless otherwise agreed to by the Lender and the Borrower, the
Notice of Conversion shall be substantially in the form of Exhibit C hereto.

     (c) Any Libor Loan may be continued as such upon the expiration of the then current Interest
Period with respect thereto by the Borrower giving an Interest Period Notice to the Lender, in
accordance with Section 3.4, setting forth the length of the next Interest Period to be applicable
to such Loan, provided that no Libor Loan may be continued as such (i) when any
Default or Event of Default has occurred and is continuing and the Lender has determined that such
a continuation is not appropriate, (ii) if, after giving effect thereto, Section 2.2(b) would be
contravened or (iii) after the date that is one month prior to the end of the Commitment period and
provided, further, that if such continuation is not permitted pursuant to the
preceding proviso such Loans shall be automatically converted to Base Rate (US) Loans on the last
day of such then expiring Interest Period.

     3.6 Automatic Conversion. If, on or prior to a Eurocurrency Interest Determination
Date for a Libor Loan (and no Notice of Conversion shall have been received with respect to such
Loan to be effective at the end of the current Interest Period therefor), the Lender shall have
determined that one of the events described in Section 2.2(d) has occurred which would make it
impossible, unlawful or impracticable to continue such Loan for another Interest Period, the Lender
shall promptly notify (in writing or by telephone, promptly confirmed in writing) the Borrower
thereof and such Loan shall at the end of the current Interest Period therefor be converted into a
Base Rate (US) Loan (if permitted by the other provisions of the Agreement).

     3.7 Capital Adequacy; Qualification Requirements.

     (a) If the Lender shall have determined that the applicability after the date hereof of any
law, rule, regulation or guideline adopted pursuant to or arising out of the July 1988 report of
the Basle Committee on Banking Regulations and Supervisory Practices entitled “International
Convergence of Capital Measurement and Capital Standards”, or the adoption after the date hereof of
any other law, rule, regulation or guideline regarding capital adequacy, or any change in any of
the foregoing or in the enforcement or interpretation or administration of any of the foregoing by
any court or any governmental authority, central bank or comparable agency charged with the
enforcement or interpretation or administration thereof, or compliance by the Lender (or any
lending
office of the Lender) or any holding company of the Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return on the Lender’s
capital or on the capital of the Lender’s holding company, if any, as a consequence of its
obligations hereunder to a level below that which the Lender or the Lender’s holding company could
have

6

 

achieved but for such applicability, adoption, change or compliance (taking into consideration
the Lender’s policies and the policies of the Lender’s holding company with respect to capital
adequacy) by an amount reasonably deemed by the Lender to be material, then, upon demand by
the Lender, the Borrower shall pay to the Lender from time to time such additional amount or
amounts as will compensate the Lender or the Lender’s holding company (as determined by the Lender
in good faith) for any such reduction suffered as a consequence of the Lender’s obligations
hereunder, together with interest on each such amount (commencing three Business Days from the date
demanded) until payment in full thereof at the Base Rate (US). A certificate of the Lender
submitted to the Borrower as to any such additional amount or amounts (including calculations
thereof in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on
the Borrower. In determining such amount or amounts, the Lender may use any reasonable method of
averaging and attribution as it shall deem applicable.

     (b) If the Lender shall have determined that the applicability of any Qualification
Requirement, or any Regulatory Change or change in any Qualification Requirement or in the
enforcement or interpretation or administration of any Qualification Requirement by any
Governmental Authority charged with the enforcement or interpretation or administration thereof,
has or would have the effect of reducing the rate of return on the Lender’s capital or on the
capital of the Lender’s holding company, if any, as a consequence of its obligations hereunder to a
level below that which the Lender or the Lender’s holding company could have achieved but for such
applicability, adoption, change or compliance by an amount reasonably deemed by the Lender to be
material, then, upon demand by the Lender, the Borrower shall pay to the Lender from time
to time such additional amount or amounts as will compensate the Lender or the Lender’s holding
company (as determined by the Lender in good faith) for any such reduction suffered as a
consequence of the Lender’s obligations hereunder, together with interest on each such amount
(commencing three Business Days from the date demanded) until payment in full thereof at the Base
Rate (US). A certificate of the Lender submitted to the Borrower as to any such additional amount
or amounts (including calculations thereof in reasonable detail) shall, in the absence of manifest
error, be conclusive and binding on the Borrower. In determining such amount or amounts, the
Lender may use any reasonable method of averaging and attribution as it shall deem applicable.
“Qualification Requirement” shall mean any legal requirement that solely by reason of (and
without regard to any other activities of the Lender in any jurisdiction in which collateral is
located) the entering into, performance and enforcement of this Agreement and the other Loan
Documents by the Lender constitutes “doing business” by the Lender in any jurisdiction, imposes on
the Lender any liability for taxes or other governmental charges, requires qualification by the
Lender to do business in any jurisdiction or requires a “business activity,” “doing business” or
similar report or notice to be filed by the Lender in any jurisdiction.

     (c) No demand for compensation under this Section 3.7 shall be made by the Lender
unless the Lender is making similar demands upon similarly situated borrowers.

     3.8 Determination of Rate of Borrowing

     (a) As soon as practicable after 11:00 a.m., Closing Office Time, on each Eurocurrency

7

 

Interest Determination Date for a Libor Loan, the Lender shall determine (which determination
shall, absent manifest error, be final, conclusive and binding upon all parties) LIBOR to be
applicable to such Libor Loan for the next succeeding Interest Period therefor and shall promptly
give notice thereof in writing or by telephone (confirmed in writing) to the Borrower.

     (b) Notwithstanding the foregoing, in the event that prior to the first day of any Interest
Period for a Libor Loan:

     (i) the Lender shall have determined (which determination shall be conclusive and
binding upon the Borrower) that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the LIBOR for such Interest
Period, or

     (ii) the Lender shall have determined (which determination shall be conclusive and
binding upon the Borrower) that LIBOR determined or to be determined for such Interest
Period will not adequately and fairly reflect the cost to the Lender of making or
maintaining the affected Loans during such Interest Period,

the Lender shall give written or telephonic (promptly confirmed in writing) notice thereof to the
Borrower as soon as practicable thereafter. If such notice is given (x) any Libor Loans requested
to be made on the first day of such Interest Period shall be made as Base Rate (US) Loans, (y) any
Loans that were to have been converted on the first day of such Interest Period to Libor Loans
shall be converted to or continued as Base Rate (US) Loans, and (z) any outstanding Libor Loans
shall be converted, on the first day of such Interest Period, to Base Rate (US) Loans. No further
Libor Loans shall be made or continued as such, nor shall the Borrower have the right to convert
Base Rate (US) Loans to Libor Loans until the circumstances causing such suspension no longer
exists.

     3.9 Requirements of Law.

     (a) If the Lender shall have reasonably determined (which determination shall be final and
conclusive and binding upon all parties) that by reason of (x) the requirements of Regulation D of
the Board of the Governors of the Federal Reserve System or (y) any Regulatory Change after the
date hereof or (z) other circumstances affecting the Lender (such as for example but not limited to
a change in official reserve requirements or increased capital reserves required or imposed by any
regulatory authority or entity (domestic or foreign) having jurisdiction over or with respect to
the Lender or any change in the basis of taxation of payments to the Lender of principal or
interest on any Libor Loan (other than taxes covered by Section 5.2 or taxes on the Lender’s
overall income by the jurisdiction where the Lender’s principal or lending office or offices are
located) to the extent not
provided for in clause (x) above), the Lender shall incur increased costs or reductions in the
amounts received or receivable hereunder in respect of any Libor Loan, then, and in any
such event, the Lender shall promptly give notice in writing or by telephone (confirmed in writing)
to the Borrower of such determination. Thereafter, the Borrower shall pay to the Lender, upon
written demand therefor, such additional amounts (which may be in the form of an increased rate of,
or a different method of calculating, interest if the Borrower and the Lender so agree) as shall be
sufficient to

8

 

compensate the Lender for such increased cost or reduction in amounts received or
receivable, provided that in the case of any such determination pursuant to clause
(x) with respect to any Libor Loan, the written notice from the Lender to the Borrower shall
specify the additional amount required to be paid with respect to such Loan (with such amount so
stated to be final with respect to each Interest Period therefor until notice is received by the
Borrower from the Lender that the condition giving rise to such determination is no longer
applicable) and such additional amount shall be paid at the same time, and together with, the
interest otherwise payable in respect of such Libor Loans for such affected Interest Periods. Each
such notice or demand shall, absent manifest error, be final and conclusive and binding upon all of
the parties hereto; provided that before giving any such notice or making any such
demand, the Lender agrees to use reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions and so long as such efforts would not be disadvantageous to it, in its
reasonable discretion, in any legal, economic or regulatory manner) to designate a different
lending office if the making of such designation would avoid the need for, or materially reduce the
amount of, such increased cost.

     (b) In the case of the Lender affected by subsection 3.9(a), other than clause (x) thereof,
the Borrower may (subject to the other provisions of this Agreement) exercise any one of the
following options if the exercise of such option shall eliminate the need to pay compensation to
the Lender pursuant to Section 3.9(a):

     (i) If such determination by the Lender relates only to Libor Loans then being
requested by the Borrower pursuant to a Notice of Borrowing or a Notice of Conversion, the
Borrower may, prior to the date on which such Libor Loans are to be made or converted, by
giving notice in writing or by telephone (confirmed in writing) to the Lender, withdraw such
Notice of Borrowing or such Notice of Conversion.

     (ii) Upon written notice to the Lender, the Borrower may terminate the obligation of
the Lender to make or maintain Loans as, or convert Loans into, Libor Loans and, in such
event, the Borrower shall on the first day of the next occurring Interest Period applicable
thereto convert all Libor Loans into Base Rate (US) Loans in the manner contemplated by
Section 3.5 but without satisfying the notice requirements therein.

     (iii) The Borrower may, by giving notice in writing or by telephone (confirmed in
writing) to the Lender, require the Lender to make the Libor Loan then being requested as a
Base Rate (US) Loan, or to continue to maintain its outstanding Base Rate (US) Loan then the
subject of a Notice of Conversion as a Base Rate (US) Loan, as the case may be, or to
convert each Libor Loan then outstanding that is so affected into a Base Rate (US) Loan on
the first day of the next occurring Interest Period applicable thereto, or within such
earlier period, as is required by law.

     3.10 Required Termination and Prepayment. In the event that at any time the Lender
shall have reasonably determined (which determination shall be final and conclusive and binding
upon all parties) that the making or continuation of any of its Libor Loans has become unlawful by
compliance by the Lender in good faith with any law, governmental rule, regulation, guideline or

9

 

order (whether or not having the force of law and whether or not failure to comply therewith would
be unlawful), the Lender shall promptly give notice in writing or by telephone (confirmed in
writing) to the Borrower of such determination; provided that before giving any
such notice, the Lender agrees to use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions and so long as such efforts would not be disadvantageous to it,
in its reasonable discretion, in any legal, economic or regulatory manner) to designate a different
lending office if the making of such a designation would allow the Lender to continue to perform
its obligations to make Libor Loans affected by such determination. Upon receiving such
notification, the Borrower shall (subject to the other provisions of this Agreement) forthwith take
one of the actions specified in Section 3.9(b) (to the extent required to cure such condition). If
the Borrower has not exercised one of the options specified in Section 3.9(b) within the time
periods therein prescribed, the Borrower shall be deemed to have exercised the option set forth in
clause (iii) of Section 3.9(b) (requiring the making, continuance or conversion into Base Rate (US)
Loans) and to have given the notice specified therein. If any such conversion of a Libor Loan
occurs on a day which is not the last day of the then current Interest Period with respect thereto,
the Borrower shall pay to the Lender such amounts, if any, as may be required pursuant to Section
3.11. If circumstances subsequently change so that the Lender shall determine that it is no longer
so affected, the Lender will promptly notify the Borrower and the Lender, and upon receipt of such
notice, the obligations of the Lender to make or continue such Libor Loans or to convert Loans into
such Libor Loans shall be reinstated.

     3.11 Compensation. The Borrower shall compensate the Lender, upon written request by
the Lender (which request shall, absent manifest error, be final and conclusive and binding upon
all parties), for all reasonable losses, expenses and liabilities (including, without limitation,
any interest paid by the Lender to lenders of funds borrowed by it to make or carry its Libor Loans
and any reasonable loss (including any loss of margin) sustained by the Lender in connection with
the liquidation or re-employment of such funds), which the Lender may sustain: (i) if for any
reason (other than a default by the Lender) a borrowing or conversion of any Libor Loan does not
occur on a date specified therefor in a Notice of Borrowing or a Notice of Conversion (whether or
not withdrawn), (ii) if any prepayment, repayment or conversion of any of its Libor Loans occurs on
a date which is not the last day of the Interest Period applicable thereto, (iii) if any prepayment
of any of its Libor Loans is not made on any date specified in a notice of prepayment given by the
Borrower, or (iv) as a consequence of any default by the Borrower hereunder.

     Section 4. FACILITY FEE. The Borrower agrees to pay to the Lender a non-refundable
upfront fee of $25,000 (the “Facility Fee”). The Facility Fee shall be deemed earned in
full on the
Closing Date and shall be payable in full on the Closing Date.

     Section 5. PAYMENTS, ETC.

     5.1 Currency, Payments on Non-Business Days; Calculations. (a) Dollars are the
currency of account for each and every sum due from the Borrower hereunder and under the other Loan
Documents.

10

 

     (b) Whenever any payment to be made hereunder or otherwise in connection with any Loan shall
be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to
the next succeeding Business Day and interest shall be payable at the applicable rate during such
extension. Interest hereunder (including, without limitation, interest on the Loans) and under the
Loan Documents shall be calculated on the basis of a 360 day year and the actual number of days
elapsed; if for any reason a Loan is repaid on the same day on which it is made, one day’s interest
(subject to the other provisions of this Agreement) shall be paid on that Loan.

     5.2 Net Payments; Application.

     (a) All payments hereunder and under the other Loan Documents (including, without limitation,
prepayments and repayments pursuant to Section 2) shall be made by the Borrower to the Lender in
immediately available, freely transferable, freely convertible same day Dollars (except if and to
the extent provided otherwise by this Agreement) at the Closing Office without setoff or
counterclaim and in such amounts as may be necessary in order that all such payments (after (i)
withholding for or on account of any present or future taxes, levies, imposts, duties or other
similar charges of whatsoever nature imposed on the amounts described above by any government or
any political subdivision or taxing authority thereof, other than any tax (other than such taxes
referred to in clause (ii) below) imposed on the Lender pursuant to the income tax laws of the
jurisdiction where the Lender’s principal or lending office or offices are located (collectively,
the “Taxes”) and (ii) deduction of an amount equal to any taxes on or measured by the net
income payable to the Lender with respect to the amount by which the payments required to be made
by this Section 5.2 exceed the amount otherwise specified to be paid under this Agreement and the
Note) shall not be less than the amounts otherwise specified to be paid under this Agreement and
the Note. With respect to each such deduction or withholding, the Borrower shall promptly (and in
no event later than 30 days thereafter) furnish to the Lender such certificates, receipts and other
documents as may be required to establish any tax credit, exemption or reduction in rate to which
the Lender or holder of a Note may be entitled. The Lender agrees to furnish the Borrower, as soon
as practicable after any written request of the Borrower to such effect, any executed form
reasonably requested by the Borrower such as Internal Revenue Service Form W-8BEN or Form W-8ECI,
and any other applicable US or UK form as to the Lender’s entitlement, if any, to exemption from,
or a reduced rate of, or its subjection to US or UK withholding tax on amounts payable to it
hereunder or under the Note and the Lender undertakes to use its best efforts promptly to notify
the Borrower of any material change in any information, statement or form so furnished to the
Borrower; provided, however, that any failure on
the part of the Lender to furnish any such information, statements or forms shall in no way affect
the terms of this Agreement or of the Note. Notwithstanding the foregoing, in the event the Lender
fails to furnish any such information, statements or forms, the Borrower shall only pay to the
Lender such amounts under this Agreement and the Note as are due without those additions described
in clauses (i) and (ii) above that would not have been required had such information, statements or
forms been provided in a timely fashion. As promptly as practicable after the Lender becomes aware
of the existence or occurrence of an event giving rise to the imposition of US or UK withholding
tax upon amounts payable to it hereunder or under the Note, the Lender shall use its best efforts
to transfer its Loans or Revolving Credit Loan Commitment to another office of the

11

 

Lender with a
view to avoiding or mitigating the consequences of such tax. If the Lender determines that it is
unable to effect such transfer on or before the thirtieth day after the date the Lender becomes
aware of the existence or occurrence of an event giving rise to the imposition of US or UK
withholding tax, the Lender shall promptly give notice of such determination to the Borrower. If
the Borrower receives notice of such determination from the Lender, the Borrower may, by notice to
the Lender, indicate its intention to prepay the affected Loan in full (but with all premiums, if
any, provided for in this Agreement and with interest accrued to the date of prepayment on such
Loan and all other amounts then payable to the Lender hereunder) on the tenth Business Day after
the date of such notice of intention. On or before the tenth day after receipt of any such notice
of intention, the Lender may, by notice to the Borrower, irrevocably elect to receive payments
hereunder reduced by the amount of such withholding. If such an election is so made, the Borrower
(i) shall cease to be under any further obligation to pay any such additional amount in respect of
such withholding and (ii) shall cease to be entitled so to prepay the Loan by virtue of being
required to make such withholding. Any Lender which is or becomes subject to such withholding tax
agrees to use its best efforts to provide the Borrower with an affidavit, within 30 days after the
Lender files its tax return, setting forth the amount of any tax credit it received with respect
thereto.

     (b) Unless otherwise specifically provided herein, all payments under or pursuant to, or in
satisfaction of any of the Borrower’s obligations under this Agreement or under the Note will be
applied in the following order of priority: (i) to any amounts not otherwise listed in this
Section 5.2(b) then due and payable under this Agreement, the Note or the other Loan Documents,
(ii) to any interest on the Loans then due and payable, (iii) to any principal amount then due on
the Loans, and (iv) to reduce the unpaid principal amount of the Revolving Credit Loans.

     (c) [intentionally deleted]

     (d) [intentionally deleted]

     Section 6. CONDITIONS PRECEDENT TO INITIAL LOANS.

     The Lender shall not be obligated to make any Loan on the Closing Date unless at the time of
making such Loan the following conditions have been satisfied to the satisfaction of the Lender:

     6.1 Default, etc. On the date of such Loan (and after giving effect to the Loans made
on such date), there shall exist no Default or Event of Default and all representations and
warranties made by the Borrower herein or in the other Loan Documents or otherwise by the Borrower
in writing in connection herewith or therewith shall be true and correct in all material respects
with the same effect as though such representations and warranties have been made at and as of such
time.

     6.2 Note. The Lender shall have received the Revolving Credit Note duly executed and
completed by the Borrower.

     6.3 Supporting Documents. There shall have been delivered to the Lender such

12

 

information and copies of documents, approvals (if any) and records (certified where appropriate)
of corporate and legal proceedings as the Lender may have reasonably requested relating to the
Borrower’s entering into, issuance and performance of the Loan Documents and the other agreements
and documents related thereto to which it is a party. Such documents shall, in any event, include:

     (a) certified copies of the Charter Documents of the Borrower and certificates of existence
and good standing for the Borrower;

     (b) a certificate of an authorized officer of the Borrower certifying the corporate
resolutions of the Borrower relating to the entering into and performance of the aforesaid
documents to which it is a party and the transactions contemplated thereby; and

     (c) a certificate of an authorized officer of the Borrower certifying with respect to the
incumbency and specimen signatures of its officers or representatives authorized to execute such
documents and any other documents and papers, and to take any other action, in connection
therewith.

     6.4 FIFL LC. There shall have been delivered to the Lender the FIFL LC.

     6.5 Approvals and Consents. All orders, permissions, consents, approvals, licenses,
authorizations and validations of, and filings, recordings and registrations with, and exemptions
by, any Government Authority, or any other Person, required to authorize or required in connection
with the execution, delivery and performance of this Agreement, the other Loan Documents and the
transactions contemplated hereby and thereby by the Borrower shall have been obtained (and, if so
requested, furnished to the Lender).

     6.6 Opinion of Counsel. The Lender shall have received an opinion of counsel to the
Borrower, in form and substance satisfactory to the Lender, covering such matters as the Lender
may reasonably request.

     6.7 Change in Law. On the date of such Loans no change shall have occurred in
applicable law, or in applicable regulations thereunder or in interpretations thereof by any
Government Authority or other Person which, in the opinion of the Lender, would make it illegal for
the Lender to make the Loan required to be made on such date.

     6.8 All Proceedings to be Satisfactory. All material corporate, partnership and legal
proceedings and all material instruments in connection with the transactions contemplated by this
Agreement and the other documents referred to herein shall be satisfactory in form and substance to
the Lender, and the Lender shall have received information and copies of all documents which the
Lender may reasonably have requested in connection herewith, such documents where appropriate to be
certified by proper corporate officials or Government Authorities.

     6.9 No Opposition. No suit, action or proceeding shall be pending or threatened on
the

13

 

Closing Date before or by any Government Authority or other Person seeking to restrain or
prohibit the consummation of the transactions contemplated by this Agreement.

     6.10 Information pursuant to Terrorism Laws. The Borrower shall have supplied the
Lender with all information required under the Lender’s Customer Identification Program (as defined
in the Terrorism Laws) as stipulated by the Terrorism Laws. “Terrorism Laws” means any of
the following:

          (a) Executive Order 13224 issued by the President of the United States of America;

          (b) the Terrorism Sanctions Regulations (Title 31 Part 595 of the U.S. Code of Federal
Regulations);

          (c) the Terrorism List Governments Sanctions Regulations (Title 31 Part 596 of the U.S.
Code of Federal Regulations);

          (d) the Foreign Terrorist Organizations Sanctions Regulations (Title 31 Part 597 of the
U.S. Code of Federal Regulations);

          (e) all other present and future legal requirements of any Governmental Instrumentality
addressing, relating to, or attempting to eliminate, terrorist acts and acts of war;

          (f) any regulations promulgated pursuant thereto or pursuant to any legal requirement
governing terrorist acts and acts of war; and

          (g) the Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001 (as it may be subsequently
codified).

All documents and papers required by this Section 6 shall be in form and substance satisfactory to
the Lender and delivered to the Lender at its Closing Office or as the Lender may otherwise direct.

     Section 6A. CONDITIONS PRECEDENT TO SUBSEQUENT LOANS.

     The Lender shall not be obligated to make any Loans after the Closing Date unless, at the time
of the making of such Loan the following conditions (unless waived in writing by the Lender) have
been satisfied:

     6A.1 Certain Conditions. At the time of the making of such Loan, and immediately
after giving effect thereto, (a) all deficiencies, if any, with respect to conditions precedent to
any prior Loan shall have been corrected, (b) all of the conditions specified in Section 6 shall be
satisfied in full (with any reference in any of such Sections to the Loans made on the Closing Date
to be deemed

14

 

a reference to the Loan then requested to be made), (c) each of the documents
specified in Sections 6 shall be in full force and effect and the Borrower shall not have failed to
perform in any material respect any of its obligations thereunder, and (d) no issuer thereof shall
have rescinded or qualified any of the statements, certificates, letters, reports or opinions
referred to in Section 6.

     6A.2 Subsequent Opinions of Counsel. If reasonably requested by the Lender, the
Lender shall have received from counsel satisfactory to the Lender such favorable legal opinions
addressed to the Lender covering such matters incidental to the transactions contemplated by this
Agreement as the Lender shall reasonably request, each of which opinions shall be in form and
substance satisfactory to the Lender.

     6A.3 Officer’s Certificate.

     (a) If reasonably requested by the Lender, the Lender shall have received a certificate of
authorized officers of the Borrower certifying, as of the date of the Loan then being made
compliance with the provisions of Section 6.1 (with the reference therein to Loan being deemed a
reference to the Loan being made on the date of said certificate) and further to the effect that
the conditions specified in Section 6A.1 are satisfied at such time. Any such certificate shall be
given “to the best of such officers’ knowledge, based upon due and adequate investigation” or as
otherwise agreed by the Borrower and the Lender.

     (b) The making of each Loan subsequent to the Closing Date shall constitute a representation
and warranty by the Borrower to the Lender that, at the time of said subsequent Loan (and after
giving effect thereto), (i) all representations and warranties contained herein or in the other
Loan Documents or otherwise made by the Borrower in connection herewith or therewith are true and
correct in all material respects with the same effect as though such representations and warranties
were being made at and as of such time, (ii) no Default or Event of Default exists and (iii) the
conditions specified in Section 6A.1 are satisfied at such time.

     6A.4. Fees and Expenses. To the extent demand therefor shall have been made, all
reasonable legal fees and expenses (through the date of the immediately preceding Loan) of the
Lender’s counsel and (if any) local or special counsel in connection with the transactions
contemplated by this Agreement shall have been paid in full.

All of the documents and papers referred to in this Section 6A shall be in form and substance
satisfactory to the Lender and shall be delivered to the Lender at its Closing Office or at such
other office as the Lender may from time to time specify to the Borrower.

     Section 7. [intentionally deleted]

     Section 8. [intentionally deleted]

15

 

     Section 9. EVENTS OF DEFAULT.

     Upon the occurrence of any of the following specified events (each an “Event of
Default”):

     9.1 Principal and Interest. The Borrower shall default in the due and punctual
payment of (i) any principal due on any Loan or (ii) any interest on any Loan or the Note or in the
due and punctual payment of other amounts due hereunder; provided that failure to
duly and punctually make an interest payment shall not be an Event of Default under this Section
9.1 if such interest payment is paid within five days after the date it is due and the Borrower has
not been late in making an interest payment on the Note or in respect of the Loans more than once
in the preceding 12 months; or

     9.2 Representations and Warranties. Any representation, warranty or statement made by
the Borrower in any Loan Document or otherwise in writing by the Borrower in connection with any of
the foregoing, or in any certificate or statement furnished pursuant to or in connection with any
of the foregoing, shall be breached in a manner that could reasonably be expected to have an
adverse effect on the validity, payment, performance or enforceability of the Loan Agreement or any
of the other Loan Documents or any obligation of the Borrower hereunder or thereunder or shall
prove to be untrue in any material and adverse respect on the date as of which made; or

     9.3 Furmanite Limited Loan Agreement. There is a “Default” or an “Event of Default”
as defined in the Furmanite Limited Loan Agreement; or

     9.4 FIFL LC. The Obligations of the Borrower under this Agreement and the other Loan
Documents are not secured by the FIFL LC; or

     9.5 Covenants. The Borrower shall default in the due performance or observance of any
term, covenant or agreement on its part to be performed or observed pursuant to any of the
provisions of this Agreement (other than those referred to in Sections 9.1, 9.2, 9.3 or 9.4) and
such default (which shall be capable of cure) shall continue unremedied for a period of 30 days
after the earlier of the date on which the Lender gives the Borrower notice of such default or on
the date an
officer of the Borrower becomes aware thereof;

then, and in any such event, and at any time thereafter, if any Event of Default shall then be
continuing the Lender may by written notice to the Borrower: (i) declare the principal of and
accrued interest on the Loans to be, whereupon the same shall forthwith become, due and payable
without presentment, demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower; and/or (ii) declare the commitment of the Lender to make the Loans hereunder
terminated, whereupon such commitment of the Lender shall forthwith terminate immediately;
provided that if any Event of Default described in Section 9.7 of the Furmanite
Limited Loan Agreement shall occur with respect to the Borrower, the result which would otherwise
occur only upon the giving of written notice by the Lender to the Borrower as herein described
shall occur automatically, without the giving of any such notice.

16

 

     Section 10. REPRESENTATIONS AND WARRANTIES.

     In order to induce the Lender to enter into this Agreement and to make the Loans, the Borrower
makes the following representations, covenants and warranties, which representations, covenants and
warranties shall survive the execution and delivery of this Agreement and the other documents and
instruments referred to herein:

     10.1 Status; Validity.

     (a) The Borrower is a duly organized and validly existing corporation in good standing under
the laws of the jurisdiction of its incorporation and has the corporate power and authority to own
or hold under lease its property and assets, to transact the business in which it is engaged, to
enter into and perform this Agreement and the other Loan Documents to which it is party, and, as to
the Borrower, to borrow hereunder. Each member of the Consolidated Group is duly qualified or
licensed as a foreign corporation in good standing in (or taken such comparable action as is
required under the laws of) each jurisdiction where failure to so qualify would have a Material
Adverse Effect on the Borrower or the Consolidated Group.

     (b) The execution, delivery and performance by the Borrower of this Agreement, the other Loan
Documents to which it is party, and the other documents, agreements or instruments provided for
therein to which it is party, the consummation of the transactions contemplated thereunder and the
use of the proceeds of the Loans have been duly authorized by all necessary corporate and
stockholder action. This Agreement, the other Loan Documents and the other documents, agreements
or instruments provided for therein to which the Borrower is party are the legal, valid and binding
obligations of the Borrower, enforceable in accordance with their respective terms subject, as to
enforceability, to applicable bankruptcy, insolvency, reorganization and similar laws affecting the
enforcement of creditors’ rights generally and to general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law).

     10.2 Compliance with Other Instruments. Neither the execution, delivery or
performance of this Agreement and the other Loan Documents, nor the consummation of the
transactions herein or therein contemplated, nor compliance with the terms and provisions hereof or
thereof, will contravene any provision of law, statute, rule or regulation to which the Borrower or
any member of the Consolidated Group is subject or any judgment, decree, franchise, order or permit
applicable to the Borrower or any member of the Consolidated Group or will conflict or will be
inconsistent with or will result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or assets of any member of the
Consolidated Group pursuant to the terms of any indenture, mortgage, deed of trust or material
agreement to which the Borrower or any member of the Consolidated Group is a signatory or by which
the Borrower or any member of the Consolidated Group is bound or to which the Borrower or any
member of the Consolidated Group may be subject or violate any provision of the certificate of any
Charter Document of the Borrower

17

 

or any member of the Consolidated Group.

     10.3 Governmental Approvals. No order, permission, consent, approval, license,
authorization, registration or validation of, or filing with, or exemption by, any Government
Authority, or any stock exchange or other governmental or non-governmental regulatory authority or
any other Person, is required to authorize, or is required in connection with the execution,
delivery and performance of this Agreement and the other Loan Documents by the Borrower or the
taking of any action hereby or thereby contemplated.

     10.4 Proceeds; Assets and Liabilities; Business. The proceeds of the Revolving Credit
Loans shall be used solely to provided intercompany financing to Affiliates of the Borrower. The
Borrower shall have no assets or liabilities other than intercompany loans made to or received from
Affiliates of the Borrower. The Borrower shall not engage in any business other than providing
intercompany financing to Affiliates of the Borrower.

     10.5 Financial Condition. At the time of, and after giving effect to, the making of
each Loan, the Borrower is Solvent, and (y) possesses, in the opinion of the Borrower, sufficient
capital to conduct the business in which it is engaged or presently proposes to engage.

     10.6 Disclosure. Neither this Agreement nor any Loan Document nor any statement,
list, certificate or other document or information, nor any Schedules to this Agreement, delivered
or to be delivered to the Lender contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary to make statements contained herein or
therein, in light of the circumstances in which they are made, not misleading.

Lender

     10.7 Qualification. Solely by reason of (and without regard to any other activities
of the Lender in any State in which collateral is located) the entering into, performance and
enforcement of this Agreement, the Loans, the Note and the other Loan Documents by the Lender will
not constitute doing business by the Lender the Lender in Texas or result in any liability of the
Lender or the Lender for taxes or other governmental charges; and qualification by the Lender or
the Lender to do
business in such jurisdiction is not necessary in connection with, and the failure to so qualify
will not affect, the enforcement of, or exercise of any rights or remedies under, any of such
documents.

     Section 11. [intentionally deleted]

     Section 12. MISCELLANEOUS.

     12.1 [intentionally deleted]

     12.2 Amendment and Waiver.

     (a) Except as otherwise provided, no provision of any of the Loan Documents may be

18

 

changed,
waived, discharged or terminated orally, but only by an instrument in writing signed by the Lender
and the Borrower, except that waivers of provisions relating to the Borrower’s performance or
non-performance of its obligations hereunder or thereunder need not be signed by the Borrower.

     (b) THIS WRITTEN AGREEMENT (AND THE OTHER LOAN DOCUMENTS) REPRESENTS THE FINAL AGREEMENT AMONG
THE PARTIES HERETO WITH RESPECT TO THE MATTERS COVERED HEREBY AND THEREBY AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

     (c) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

     12.3 Expenses.

     (a) Whether or not the transactions hereby contemplated shall be consummated, the Borrower
shall upon demand of the Lender pay all reasonable out-of-pocket costs and expenses of (x) the
Lender incurred in connection with the preparation, execution, delivery, administration, filing and
recording of, and (y) of the Lender incurred in connection with the amendment (including any waiver
or consent), modification and enforcement of or preservation of any rights under, this Agreement,
the Loan Documents, the making and repayment of the Loans, and the payment of all interest and
fees, including, without limitation, (A) the reasonable fees and expenses of Cowles & Thompson,
counsel for the Lender, and any special or local counsel retained by the Lender, and with respect
to enforcement, the reasonable fees and expenses of counsel for the Lender, (B) the reasonable fees
and expenses of consultants and appraisers retained by the Lender in connection with the
transactions contemplated hereunder, and (C) printing, travel, title insurance, recording, filing,
communication and signing taxes and costs.

     (b) The Borrower agrees to pay, and to save the Lender harmless from (x) all present and
future stamp, filing and other similar taxes, fees or charges (including interest and penalties, if
any), which may be payable in connection with the Loan Documents or the issuance of any Note or
any modification of any of the foregoing, and (y) all finder’s and broker’s fees (other than any
that may have been contracted for by the Lender) in connection with the transactions contemplated
by this Agreement and the other Loan Documents.

     (c) Without limiting any of the rights or obligations as set forth in this Agreement on the
part of the Lender, the Borrower agrees to indemnify, pay and hold harmless the Lender, the Lender
Assignee and each holder of the Note and their respective present and future officers, directors,
employees and agents (collectively, the “Indemnified Parties”) from and against all
liability, losses, damages and expenses (including, without limitation, legal fees and expenses)
arising out of, or in any way connected with, or as a result of (i) the execution and delivery of
this Agreement and the other Loan Documents or the documents or transactions contemplated hereby
and thereby or the performance by the parties hereto or thereto of their respective obligations
hereunder and thereunder or relating thereto; or (ii) any claim, action, suit, investigation or
proceeding (in each case,

19

 

regardless of whether or not the Indemnified Party is a party thereto or
target thereof) in any way relating to the Borrower, any member of the Consolidated Group or any
Affiliate of any of the foregoing; provided that the Borrower shall not be liable to any
Indemnified Party for any portion of such liabilities, liabilities, losses, damages and expenses
sustained or incurred as a direct result of the gross negligence or willful misconduct of the
Lender if such gross negligence or willful misconduct is determined to have occurred by a final and
non-appealable decision of a court of competent jurisdiction.

     (d) All obligations provided for in this Section 12.3 and any other Section of this Agreement
shall survive any termination of this Agreement and the payment in full of the Loans.

     12.4 Benefits of Agreement; Descriptive Headings.

     (a) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the
parties hereto and their respective successors and assigns, and, in particular, shall inure to the
benefit of the holders from time to time of the Note; provided, however, that the
Borrower may not assign or transfer any of its rights or obligations hereunder without the prior
written consent of the Lender and any such purported assignment or transfer shall be void. In
furtherance of the foregoing, the Lender shall be entitled at any time to grant participations in
or assign, sell or otherwise transfer the whole or any part of its rights and obligations under
this Agreement, the Loan Documents or any Loan or Note to any Person subject to obtaining the prior
written consent of the Borrower, such consent not to be unreasonably withheld. No such
participation, assignment, sale or other transfer pursuant to this Section 12.4(a) shall relieve
the Lender from its obligations hereunder and the Borrower need deal solely with the Lender with
respect to waivers, modifications and consents to this Agreement, the Loan Documents or the Note.
Any such participant, assignee, purchaser or transferee is referred to in this Agreement as a
“Lender Assignee”. The Borrower agrees that the provisions of Sections 3.7, 3.9, 3.10,
3.11, 5.2 and 12.3 shall run to the benefit of the Lender Assignee and its participations or
interests herein, and the Lender may enforce such provisions on
behalf of any such Lender Assignee; provided, however, that if the Lender or any
Lender Assignee assigns, sells, or otherwise transfers or grants participations in or otherwise
disposes of all or any part of the Borrower’s indebtedness under this Agreement to any party
pursuant to this Section 12.4(a), then the amounts that the Borrower is required to pay pursuant to
this Agreement (including, without limitation, additional amounts made pursuant to Section 5.2)
shall not exceed the amounts that the Borrower would have been required to pay to the Lender
pursuant to this Agreement had the Lender not made such assignment, sale, transfer, grant,
participation or other disposition of the Borrower’s indebtedness under this Agreement. The
Borrower hereby further agrees that any such Lender Assignee may, to the fullest extent permitted
by applicable law, exercise the right of setoff with respect to such participation (and in an
amount up to the amount of such participation) as fully as if such Lender Assignee were the direct
creditor of the Borrower. Upon a participation, assignment, sale or transfer in accordance with
the foregoing, the Borrower shall execute such documents and do such acts as the Lender may
reasonably request to effect such assignment, provided that such documents and acts are
consistent with the terms and conditions of the Loan Documents. The Lender may furnish any
information concerning the Borrower or Subsidiary in its possession from time to time to Lender
Assignees (including prospective Lender Assignees). The

20

 

Lender shall notify the Borrower of any
participation, assignment, sale or transfer granted by it pursuant to this Section 12.4(a). The
Borrower shall not be responsible for any due diligence costs or legal expenses of any party
(including the Lender or the Lender Assignee) in connection with their entering into such
participation, assignment, sale or transfer.

     (b) The descriptive headings of the various provisions of this Agreement are inserted for
convenience of reference only and shall not be deemed to affect the meaning or construction of any
of the provisions hereof.

     (c) Notwithstanding anything to the contrary contained herein or in any of the Loan Documents,
the exhibits to this Agreement shall not be required to be attached to the execution or any other
copy of this Agreement, and any references in this Agreement or the other Loan Documents to such
exhibits as “Exhibits hereto” or “Exhibits to this Agreement” or words of similar effect shall be
deemed to refer to such document as executed by the parties thereto and delivered on the Closing
Date (or such other date on which they were executed and delivered).

     12.5 Notices, Requests, Demands, etc. Except as otherwise expressly provided herein,
all notices, requests, demands or other communications to or upon the respective parties hereto
shall be deemed to have been duly given or made when delivered (if sent by Federal Express or other
similar overnight delivery service), or 3 days after mailing (when mailed, postage prepaid, by
registered or certified mail, return receipt requested), or (in the case of telex, telegraphic,
telecopier or cable notice) when delivered to the telex, telegraph, telecopier or cable company, or
(in the case of telex or telecopier notice sent over a telex or telecopier owned or operated by a
party hereto) when sent; in each case, addressed as follows, except that notices and communications
to the Lender pursuant to Sections 2 and 9 shall not be effective until received by the Lender:
(i) if to the Lender, at the address specified with its signature below, and (ii) if to the
Borrower, at its address specified with its signature below (Attention: President), or to such
other addresses as any of the parties hereto may
hereafter specify to the others in writing, provided that communications with respect to a change
of address shall be deemed to be effective when actually received.

     12.6 Governing Law. THIS AGREEMENT AND THE LOANS AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED WHOLLY WITHIN THE STATE OF NEW YORK
(REGARDLESS OF THE PLACE WHERE THIS AGREEMENT IS EXECUTED).

     12.7 Counterparts. This Agreement may be executed in any number of counterparts, and
by the different parties hereto on the same or separate counterparts, each of which shall be deemed
to be an original and all of which taken together shall constitute one and the same agreement.
Complete sets of counterparts of this Agreement shall be lodged with the Borrower and the Lender.

     12.8 Waiver. No failure or delay on the part of the Lender in exercising any right,
power or privilege under this Agreement or any other Loan Document, and no course of dealing
between the Borrower and the Lender shall operate as a waiver thereof; nor shall any single or
partial

21

 

exercise of any right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and remedies herein
expressly provided are cumulative and not exclusive of any rights or remedies which the Lender
would otherwise have pursuant to such documents or at law or equity. No notice to or demand on the
Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the right of the Lender to any other or further
action in any circumstances without notice or demand.

     12.9 [intentionally deleted]

     12.10 JURISDICTION. THE PARTIES HERETO AGREE THAT ANY LEGAL ACTION OR PROCEEDING
AGAINST ANY OTHER PARTY HERETO WITH RESPECT TO THIS AGREEMENT, THE LOANS OR ANY OF THE LOAN
DOCUMENTS OR THE DOCUMENTS DELIVERED IN CONNECTION THEREWITH MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK LOCATED IN NEW YORK CITY OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK AS SUCH PARTY MAY ELECT, AND, BY EXECUTION AND DELIVERY HEREOF, EACH OF THE
PARTIES HERETO ACCEPTS AND CONSENTS FOR ITSELF AND IN RESPECT TO ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF THE PARTIES HERETO AGREE THAT
SUCH JURISDICTION SHALL BE EXCLUSIVE, UNLESS WAIVED BY THE BANK (WITH RESPECT TO ACTIONS OR
PROCEEDINGS BROUGHT BY THE BORROWER) OR BY THE BORROWER (WITH RESPECT TO ACTIONS OR PROCEEDINGS
BROUGHT BY THE BANK) IN WRITING, AND WITH RESPECT TO ANY QUESTIONS RELATING TO USURY EXCEPT THAT
WITHOUT SUCH WRITTEN CONSENT THE BANK MAY BRING ACTIONS AND PROCEEDINGS IN ANY OTHER JURISDICTION
WHERE THE BORROWER HAS PROPERTY OR DOES
BUSINESS. EACH OF THE PARTIES HERETO AGREES THAT SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO THE LOAN DOCUMENTS AND WAIVES ANY RIGHT TO
STAY OR TO DISMISS ANY ACTION OR PROCEEDING BROUGHT BEFORE SAID NEW YORK COURTS ON THE BASIS OF
FORUM NON CONVENIENS. IN FURTHERANCE OF THE FOREGOING, THE BORROWER HEREBY
IRREVOCABLY DESIGNATES AND APPOINTS CT CORPORATION SYSTEM AT 1633 BROADWAY, NEW YORK, NEW YORK
10019, AS ITS AGENT TO RECEIVE SERVICE OF ALL PROCESS BROUGHT AGAINST THE BORROWER WITH RESPECT TO
ANY SUCH PROCEEDING IN ANY SUCH COURT IN NEW YORK, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY THE
BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. COPIES OF ANY SUCH PROCESS SO
SERVED SHALL ALSO BE SENT BY REGISTERED MAIL TO THE BORROWER AT ITS ADDRESS SET FORTH NEXT TO ITS
SIGNATURE BELOW, BUT THE FAILURE OF THE BORROWER TO RECEIVE SUCH COPIES SHALL NOT AFFECT IN ANY WAY
THE SERVICE OF SUCH PROCESS AS AFORESAID. THE BORROWER SHALL FURNISH TO THE BANK A CONSENT OF CT
CORPORATION SYSTEM AGREEING TO ACT HEREUNDER PRIOR TO THE CLOSING DATE. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF THE BANK TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY

22

 

LAW. IF FOR ANY
REASON CT CORPORATION SYSTEM SHALL RESIGN OR OTHERWISE CEASE TO ACT AS AGENT, EACH THE BORROWER
HEREBY IRREVOCABLY AGREES TO (I) IMMEDIATELY DESIGNATE AND APPOINT A NEW AGENT ACCEPTABLE TO THE
BANK TO SERVE IN SUCH CAPACITY AND, IN SUCH EVENT, SUCH NEW AGENT SHALL BE DEEMED TO BE SUBSTITUTED
FOR CT CORPORATION SYSTEM, INC. FOR ALL PURPOSES HEREOF AND (II) PROMPTLY DELIVER TO THE BANK THE
WRITTEN CONSENT (IN FORM AND SUBSTANCE SATISFACTORY TO THE BANK) OF SUCH NEW AGENT AGREEING TO
SERVE IN SUCH CAPACITY.

     12.11 Severability. If any provision of this Agreement shall be held or deemed to be
or shall, in fact, be illegal, inoperative or unenforceable, the same shall not affect any other
provision or provisions herein contained or render the same invalid, inoperative or unenforceable
to any extent whatever.

     12.12 Right of Set-off. In addition to any rights now or hereafter granted under
applicable law or otherwise and not by way of limitation of any such rights, upon the occurrence of
an Event of Default the Lender is hereby authorized at any time or from time to time, without
notice to the Borrower or to any other Person, any such notice being hereby expressly waived, to
set-off and to appropriate and apply any and all deposits (general or special, time or demand,
provisional or final) and any other indebtedness at any time held or owing by the Lender to or for
the credit or the account of the Borrower against and on account of the obligations and liabilities
of the Borrower now or hereafter existing under any of the Loan Documents irrespective of whether
or not any demand shall have been made thereunder and although said obligations, liabilities or
claims, or any of them, shall be contingent or unmatured. The Lender shall notify the Borrower of
the exercise of any rights
granted under this Section 12.12; provided that the failure to give such notice
shall not affect the validity of such set-off and application.

     12.13 No Third Party Beneficiaries. This Agreement is solely for the benefit of the
Lender, the Borrower, and their respective successors and assigns (except as otherwise expressly
provided herein), nothing contained herein shall be deemed to confer upon anyone other than the
Lender and the Borrower and their respective successors and assigns any right to insist on or to
enforce the performance or observance of any of the obligations contained herein and a Person who
is not a party to this Agreement the Borrower, the Lender or a Lender Assignee and their respective
successors and assigns has no rights under the Contracts (Rights of Third Parties) Act 1999 to
enforce or enjoy the benefits of any terms of this Agreement. All conditions to the obligations of
the Lender to make the are imposed solely and exclusively for the benefit of the Lender and its
successors and assigns and no other Person shall have standing to require satisfaction of such
conditions in accordance with their terms and no other Person shall under any circumstances be
deemed to be beneficiary of such conditions.

     12.14 Effectiveness. This Agreement shall become effective when and as of the date
the Borrower and the Lender shall have executed a copy hereof (whether the same or different
counterparts) and delivered the same to the Lender at 565 Fifth Avenue, New York, New York

23

 

10017
(Attention: Norman Scott). Complete sets of counterparts of this Agreement shall be lodged with
the Borrower and the Lender. Telecopied signatures hereto shall be of the same force and effect as
an original of a manually signed copy.

     12.15 Survival. Each of the representations, warranties, terms, covenants, agreements
and conditions contained in this Agreement shall specifically survive the execution and delivery of
this Agreement and the other Loan Documents and the making of the Loans and shall, unless otherwise
expressly provided, continue in full force and effect until the Commitment have been terminated and
the Loans together with interest thereon, the fees and compensation of the Lender, and all other
sums payable hereunder or thereunder have been indefeasibly paid in full.

     12.16 Domicile of Loans. The Lender may make, maintain or transfer any of its Loans
hereunder to, or for the account of, any branch office and (subject to the prior consent of the
Borrower, such consent not to be unreasonably withheld) to any subsidiary or affiliate of the
Lender.

     12.17 [intentionally deleted]

     12.18 Waiver of Jury Trial. EACH OF THE BORROWER AND THE BANK HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY AND ALL RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN), OR ACTIONS OF THE BORROWER OR THE BANK. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
BANK
ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

     12.19. Securities Act. The Lender agrees that it will not transfer the Note in a
manner that would subject the Note or transfer to the registration requirements of the Securities
Act of 1933.

[rest of page intentionally left blank]

24

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their respective duly authorized officers as of the date first above written.

	 	 	 	 	 
	 	 	FURMANITE INTERNATIONAL FINANCE LIMITED
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	Howard C. Wadsworth
	 

	 	Title:
	 	Director
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	Joseph Milliron
	 

	 	Title:
	 	Director
	 
	 	 	 	 
	 	 	2435 N. Central Expressway
	 	 	Richardson, Texas 75080
	 	 	Telecopier No.: 214-699-4025
	 
	 	 	 	 
	 	 	BoS (USA) Inc.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	565 Fifth Avenue
	 	 	New York, New York 10017
	 	 	Telecopier No.: 212-883-6610

 

 

ANNEX I

DEFINITIONS

     As used in the Loan Agreement to which this Annex I is annexed, the following terms shall have
the meanings herein specified or as specified in the Section of such Loan Agreement or in such
other document herein referenced:

     “Affiliate”, as to any Person, shall mean any other Person directly or indirectly
controlling, controlled by or under common control with, such Person.

     “Agreement” or “Loan Agreement” shall mean this Loan Agreement as it may from
time to time be amended, extended, restated, supplemented or otherwise modified.

     “Base Rate (US)” shall mean, for any day, the higher of (x) the fluctuating interest
rate per annum, as in effect from time to time, established by the Lender in New York from time to
time as the Lender’s base, prime or reference rate for U.S. domestic commercial loans in Dollars,
or (y) the Federal Funds Effective Rate in effect on such day plus 0.50%. Any change in the
interest rate resulting from a change in such Base Rate (US) shall be effective as of the opening
of business on the day on which such change becomes effective; it is understood and agreed that all
the aforesaid rates and the Base Rate (US) are reference rates only and do not necessarily
represent the lowest or best rate actually charged to any customer.

     “Base Rate (US) Differential” shall mean 0.00%.

     “Base Rate (US) Loans” shall mean a Loan made in Dollars during any period that it
bears interest determined by reference to the Base Rate (US).

     “Borrower” — introductory paragraph.

     “Borrowing Date” — Section 2.2(a).

     “Business Day” means

     (a) any day which is neither a Saturday or Sunday nor a legal holiday or any other day on
which banks are authorized or required to be closed in New York, New York and which is also a day
on which banks and foreign exchange markets are open for business in London; and

     (b) relative to the date of

	 	(i)	 	making or continuing any Loans as, or converting any Loans from
or into, Libor Loans,
	 
	 	(ii)	 	making any payment or prepayment of principal of, or payment of
interest on,
any portion of the principal amount of any Loan being maintained as a

 

 

	 	 	 	Libor
Loan, or

	 	(iii)	 	the Borrower’s giving any notice (or the number of Business
Days to elapse prior to the effectiveness thereof) in connection with any
matter referred to in clause (b)(i) or (b)(ii) above,

which is a Business Day pursuant to clause (a) above and which also is a day on which dealings in
Dollars are carried on in the London interbank Eurocurrency market.

     “Capitalized Lease Obligations” shall mean all rental obligations which, under GAAP,
are or would be required to be capitalized on the books of a Person, in each case taken at the
amount thereof accounted for as indebtedness (net of interest expense) in accordance with such
principles.

     “Charter Document” shall mean (i) with respect to a corporation: its certificate or
articles of incorporation or association and its by-laws or comparable documents under non-US laws;
(ii) with respect to a partnership: its partnership agreement and certificate of partnership or
comparable documents under non-US laws; (iii) with respect to a trust, its trust agreement or
declaration of trust or comparable documents under non-US laws; and (iv) with respect to a limited
liability company, its certificate of formation and limited liability company agreement or
analogous documents or comparable documents under non-US laws.

     “Closing Date” shall mean the date of this Agreement.

     “Closing Office” shall mean the office of the Lender at 565 Fifth Avenue, New York,
New York or such other office as may be designated in writing to the Borrower by the Lender.

     “Closing Office Time” shall mean the local time in effect at the Closing Office.

     “Commitment” shall mean each Revolving Credit Loan Commitment.

     “Commitment Period” shall mean the period from the Closing Date to and including the
first Business Day of January, 2010, or such earlier date as the Revolving Credit Loan Commitment
shall terminate as provided in the Loan Agreement or such later date as may hereafter be agreed to
by the Lender.

     “Consolidated Group” shall mean the Borrower and its Subsidiaries.

     “Conversion Date” shall mean the Business Day on which a Loan is to be converted
pursuant to Section 3.5, 3.6, 3.9 or 3.10.

     “Default” shall mean any event which with notice or lapse of time, or both, would
become an Event of Default.

     “Designated Office” shall mean the Closing Office or, at the Lender’s option, such
other
office of the Lender in the US as the Lender shall from time to time specify.

 

 

     “Dollars”, “U.S. $”, “$” and “U.S. dollars” shall mean the
lawful currency of the United States of America.

     “Eurocurrency Differential” shall mean 0.50%.

     “Eurocurrency Interest Determination Date” shall mean the date as of which LIBOR is
determined for a Libor Loan which shall be two Business Days prior to the commencement of each
Interest Period.

     “Event of Default” shall mean each of the Events of Default defined in Section 9.

     “Federal Funds Effective Rate” shall mean the rate of interest charged by banks with
excess reserves at a Federal Reserve district bank to banks needing overnight loans to meet reserve
requirements.

     “FIFL LC” shall mean a letter of credit substantially in the form of Exhibit C hereto.

     “Financial Statements” shall mean, with respect to any Person, the statement of
financial position (balance sheet) and the statement of earnings, cash flow and stockholders’ (or
partners’) equity of such Person.

     “Fiscal Year” shall mean each January 1 — December 31 period.

     “Furmanite Limited Loan Agreement” shall mean the Amended and Restated Loan Agreement
dated as of August 13, 2002, by and among FURMANITE LIMITED (formerly named FURMANITE PLC formerly
named KANEB UK PLC), FURMANITE WORLDWIDE, INC., the financial institutions party thereto from time
to time and BANK OF SCOTLAND, as agent for the financial institutions party thereto from time to
time, as such agreement may from time to time be amended, extended, restated, renewed or modified.

     “GAAP” shall mean generally accepted accounting principles (as promulgated by the
Financial Accounting Standards Board or any successor entity).

     “Government Authority” shall mean any nation or government, any state or political
subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

     “Guarantee” or “Guaranty” shall mean by any Person, any obligation, contingent
or otherwise, of such Person directly or indirectly guaranteeing any Indebtedness for Borrowed
Money or other obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness for
Borrowed Money or other obligation (whether arising by virtue of partnership arrangements, by
agreement to keep-well,
to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for the purpose of assuring in any other
manner the obligee of such Indebtedness for Borrowed Money or other obligation of the payment
thereof or to

 

 

protect such obligee against loss in respect thereof (in whole or in part), provided
that the term “Guarantee” shall not include endorsements for collection or deposits in the ordinary
course of business. The term “Guarantee” used as a verb has a corresponding meaning.

     “Indebtedness for Borrowed Money” shall mean (i) all indebtedness of (including,
without limitation, all indebtedness assumed by) a Person in respect of money borrowed (including,
without limitation, the unpaid amount of the purchase price of any property, incurred for such
purpose in lieu of borrowing money or using available funds to pay said amount, and not
constituting an account payable or expense accrual incurred or assumed in the ordinary course of
business), or evidenced by a promissory note, bond, debenture or other like obligation to pay
money, and including indebtedness under banker’s acceptances and with respect to letters of credit,
and (ii) all obligations of (including, without limitation, all obligations assumed by) a Person
(x) constituting a Capitalized Lease Obligation of such Person, or (y) constituting a Guarantee by
such Person.

     “Indemnified Party” — Section 12.3.

     “Inland Revenue” shall mean the UK Inland Revenue.

     “Interest Period” — Section 3.4.

     “Interest Period Notice” — Section 3.4.

     “Lender” — introductory paragraph.

     “Lender Assignee” — Section 12.4.

     “LIBOR” shall mean the rate for any Interest Period with respect to a LIBOR Loan, the
rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by
Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by
the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the
first day of such Interest Period) with a term equivalent to such Interest Period.

     “Libor Loan” shall mean a Loan during any period that it bears interest determined by
reference to LIBOR.

     “Lien” shall mean any mortgage, deed of trust, security deed, pledge, security
interest, assignment, encumbrance, lien or other charge of any kind or any other agreement or
arrangement having the effect of conferring security (including any agreement to give any of the
foregoing, any lease in the nature thereof, and any conditional sale or other title retention
agreement), any lien arising by operation of law, and the filing of or agreement to give any
financing statement under the
Uniform Commercial Code of any jurisdiction.

     “Loan(s)” shall mean, individually and collectively, each Revolving Credit Loan.

 

 

     “Loan Agreement” shall mean this Agreement as it may from time to time be amended,
extended, restated, supplemented or otherwise modified.

     “Loan Documents” shall mean, individually and collectively, this Agreement, the Note,
the FIFL LC and all other instruments and agreements executed in connection herewith and therewith,
in each case as amended, supplemented or otherwise modified from time to time. Without limiting
the generality of the foregoing, each amendment to the Loan Agreement or to any other Loan
Document, each waiver of any provision of the Loan Agreement any other Loan Document, and each
instrument and agreement executed in connection herewith or therewith shall be deemed to be a Loan
Document for all purposes of the Agreement and the other Loan Documents.

     “Local Office Time”, when referring to the time of day when funds are to be made
available to the Lender or the Borrower, shall mean the applicable time in the city where such
funds are to be made available.

     “Note” shall mean the Revolving Credit Note.

     “Notice” shall mean a Notice of Borrowing or a Notice of Conversion, as the context
may indicate.

     “Notice of Borrowing” — Section 2.2(a).

     “Notice of Conversion” — Section 3.5(b).

     “Obligations” shall mean all obligations of the Borrower with respect to the repayment
or performance of any obligations (monetary or otherwise) arising under or in connection with this
Agreement and each other Loan Document.

     “Past-Due Rate” — Section 3.3.

     “Person” shall mean and include an individual, a partnership, a corporation (including
a business trust), a joint stock company, a trust, an unincorporated association, a joint venture
or other entity or a government or an agency or political subdivision thereof.

     “Qualification Requirement” – Section 3.7(b).

     “Regulatory Change” means, relative to the Lender or any Lender Assignee, any change
after the Closing Date in any (or the adoption after the Closing Date of any new):

	 	(a)	 	United States Federal, state or local law or foreign law applicable to the
Lender or Lender Assignee; or
	 
	 	(b)	 	regulation, interpretation, directive, or request (whether or not having the
force of law) applying to the Lender or Lender Assignee of any court or governmental
authority charged with the interpretation or administration of any law referred to in
clause (a) or of any fiscal, monetary, central bank or other authority having

 

 

	 	 	 	jurisdiction over the Lender or Lender Assignee.

     “Revolving Credit Loan” — Section 2.1(b).

     “Revolving Credit Loan Commitment” shall mean, as the same may from time to time be
terminated pursuant to Section 9 or any other section of the Agreement, an amount equal to
$15,000,000.

     “Revolving Credit Note” – Section 2.3(a).

     “Solvent” shall mean, with respect to any Person, that the fair saleable value of the
tangible and intangible property (including goodwill) of such Person is, on the date of
determination, greater than the total amount of liabilities of such Person as of such date
(including contingent liabilities of such Person to the extent such Person considers it probable
that it shall actually be liable thereon) and that, as of such date, such Person is able to pay all
Indebtedness for Borrowed Money of such Person as such Indebtedness for Borrowed Money matures.

     “Subsidiary” of any Person shall mean any other firm, corporation, partnership, trust
or other unincorporated organization or association or other enterprise, 50% or more of the indicia
of equity rights (whether capital stock or otherwise) of which is at the time owned, directly or
indirectly, by such Person and/or by one or more of such Person’s Subsidiaries.

     “Taxes” — Section 5.2.

     “Type” shall mean either a Base Rate (US) Loan or a Libor Loan.

     “UK” shall mean the United Kingdom.

     “UK Statutes” — Section 10.15.

     “Unutilized Revolving Commitment” shall mean the amount by which the Revolving Credit
Loan Commitment at any time exceeds the aggregate principal amount of Revolving Credit Loans then
outstanding.

     “US” shall mean the United States.

     “Written” or “in writing” shall mean any form of written communication or a
communication by means of telex, telecopier device, telegraph or cable.

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