Document:

EXHIBIT 10.3

                          PROLIANCE INTERNATIONAL, INC.
                     PERFORMANCE RESTRICTED STOCK AGREEMENT

     This Agreement (this "Agreement") is made as of         ,      (the "Date
of Grant"), by and between Proliance International, Inc., a Delaware corporation
(the "Company"), and [Grantee] (the "Grantee").

1. Grant of Restricted Stock. Subject to and upon the terms, conditions, and
restrictions set forth in this Agreement and in the Proliance International,
Inc. Equity Incentive Plan (the "Plan"), the Company hereby grants to the
Grantee [      ] shares of common stock of the Company. These shares are
referred to in this Agreement as "Restricted Shares" during the applicable
Restriction Period (as defined in paragraph 4(c) hereof). Acceptance of the
Restricted Shares shall be deemed to be agreement by the Grantee to the terms
and conditions set forth in this Agreement and the Plan. Certificates
representing the Restricted Shares may not be sold or otherwise transferred and
must be held by the Grantee until the end of the applicable Restriction Period.
Until such terms and conditions have lapsed with respect to any Restricted
Shares, the certificate for such shares will, at the Company's option, remain in
the physical possession of the Company or bear a legend to the effect that they
were issued or transferred subject to, and may be sold or otherwise disposed of
only in accordance with, the terms of this Agreement and the Plan.

2. Stockholder Status. Effective upon the Date of Grant, the Grantee will be a
holder of record of the Restricted Shares and will have all rights of a
stockholder with respect to such shares (including the right to vote such shares
at any meeting of stockholders of the Company and the right to receive all
dividends paid with respect to such shares), subject only to the terms and
conditions imposed by this Agreement and the Plan.

3. Effect of Changes in Capitalization. The number of Restricted Shares are
subject to adjustment as provided in Section 6 of the Plan. Any additional or
different shares or securities issued as the result of such an adjustment will
be held or delivered in accordance with this Agreement and will be deemed to be
included within the term "Restricted Shares".

4. Lapse of Restrictions.

     (a) The restrictions set forth in paragraph 5 below will lapse to the
extent of 25% of the Restricted Shares on each of the first four anniversaries
of the Date of Grant; provided that the first tranche of such shares shall not
vest prior to the final determination by the Compensation Committee as to
whether the 2006 financial thresholds to be provided separately by the
Compensation Committee have been achieved.

     (b) Notwithstanding paragraph 4(a), the restrictions set forth in paragraph
5 below will lapse on all Restricted Shares at the close of business on the date
on which a Change in Control of the Company (as defined below in this paragraph
4(b)) shall occur. For purposes of this Agreement, a "Change in Control" will
occur (a) upon the public announcement that any "person" (as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) (other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, or any
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of the stock of the
Company) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding securities, (b) if, during any period of two consecutive years,
individuals who at the beginning of such period constitute the Company's Board
of Directors (the "Board"), and any new director (other than a director
designated by a person that has entered into an agreement with the Company to
effect a transaction described in clause (a), (c) or (d) of this sentence) whose
election by the Board or nomination for election by the Company's stockholders
was approved by a vote of at least 2/3 of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least a majority thereof, (c) if the stockholders of the Company
approve a merger or consolidation of the Company with any other corporation,
other than (i) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 80% of the combined voting power
of the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or (ii) a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no "person" (as defined above) acquires more than 30% of the combined
voting power of the Company's then outstanding securities, or (d) if the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.

     (c) As soon as practicable after the restrictions with respect to any
installment of Restricted Shares lapse at the end of the period applicable to
such installment set forth in paragraphs 4(a) and 4(b) above (the "Restriction
Period"), the Company will deliver to the Grantee, or the Grantee's legal
representative in case of the Grantee's death, promptly after surrender of the
Grantee's certificate(s) for the Restricted Shares to the Treasurer of the
Company, the certificate or certificates for such shares free of any legend or
further restrictions together with, if applicable, a new certificate
representing any remaining Restricted Shares. It shall be a condition to the
obligation of the Company to issue or transfer shares of Common Stock upon the
lapse of restrictions that the Grantee (or any person entitled to act under this
paragraph 4(c)) pay to the Company, upon its demand, such amount as may be
requested by the Company for the purpose of satisfying its liability to withhold
federal,

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state or local income or other taxes by reason of such issuance or transfer. If
the amount requested is not paid, the Company may refuse to issue or transfer
shares of Common Stock.

5. Restrictions. During the Restriction Period, neither the Restricted Shares
nor any right or privilege pertaining thereto may be sold, transferred,
assigned, pledged, hypothecated or otherwise disposed of or encumbered in any
way, by operation of law or otherwise, and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of or encumber the Restricted Shares or any
right or privilege pertaining thereto, otherwise than by will or by the laws of
descent and distribution, or upon the levy of any execution, attachment or
similar process thereupon, the Restricted Shares and all rights and privileges
given hereby shall immediately terminate and the Restricted Shares shall be
forfeited to the Company pursuant to paragraph 6 hereof.

6. Forfeiture.

     (a) All the Grantee's rights to, and interest in, the Restricted Shares (or
in the case of clause (iii) below, some or all of the Grantee's rights to, and
interest in, the Restricted Shares, as the case may be) shall terminate and be
forfeited to the Company without payment of consideration if (i) the Grantee's
employment by the Company or any subsidiary thereof terminates (or, if the
Grantee is no longer employed by the Company but has become a consultant to the
Company under a post-employment consulting arrangement, such consulting
arrangement terminates) for any reason; provided, however, that the Grantee's
employment will not be deemed to have terminated for this purpose while the
Grantee is on a leave of absence which has been approved by the Company or while
the Grantee is serving as a consultant to the Company or any subsidiary thereof
under a post-employment consulting arrangement, or (ii) any action prohibited by
paragraph 5 hereof is taken, or (iii) the Company fails to meet certain
financial thresholds as provided by the Compensation Committee. For purposes of
this Agreement, a transfer of employment from the Company to a subsidiary or
from a subsidiary to the Company or between subsidiaries shall not be deemed a
termination of employment.

     (b) If Restricted Shares are forfeited for any of the reasons stated in
paragraph 6(a) hereof, such forfeiture shall be effective upon the occurrence of
the event giving rise to the forfeiture. The Grantee agrees to repay to the
Company all dividends, if any, paid after such event with respect to the
Restricted Shares which have been forfeited.

     (c) If at any time the Grantee forfeits any Restricted Shares pursuant to
this Agreement, the Grantee agrees to return the certificate or certificates for
such Restricted Shares to the Company duly endorsed in blank or accompanied by a
stock power duly executed in blank.

                                      -3-

     (d) Determination as to whether an event has occurred resulting in the
forfeiture of, or lapse of restrictions on, Restricted Shares, in accordance
with this Agreement, shall be made by the Compensation Committee, and all
determinations of the Committee shall be final and conclusive.

7. Company Right to Terminate Employment and Other Remedies. Nothing provided
herein shall be construed to affect in any way the right or power of the
Company, subject to the provisions of any other written agreement between the
Grantee and the Company relating to the subject matter, to terminate the
Grantee's employment as an employee of or a consultant to the Company at any
time for any reason with or without cause, nor to preclude the Company from
taking any action or enforcing any remedy available to it with respect to any
action or conduct on the Grantee's part.

8. Additional Documents.

     (a) It is the intention of the Company that this award of Restricted Shares
shall meet the requirements of, and result in the application of, the rules
prescribed by Section 83 of the Internal Revenue Code of 1986, as in effect at
the date hereof, and applicable regulations thereunder. Accordingly, each and
every provision shall be construed and interpreted in such manner as to conform
with such intention and the Company reserves the right to execute and to require
the Grantee to execute any further agreements or other instruments, which may be
effective as of the date of the award of the Restricted Shares covered by this
Agreement, including, but without limitation, any instrument modifying or
correcting any provision hereof, or any action taken hereunder or
contemporaneously herewith, and to take any other action, which may be effective
as of the date of the award of the Restricted Shares covered by this Agreement,
that, in the opinion of counsel for the Company, may be necessary or desirable
to carry out such intention.

     (b) If the Grantee fails, refuses or neglects to execute and deliver any
instrument or document or to take any action requested by the Company to be
executed or taken by the Grantee pursuant to the provisions of paragraph 8(a)
above for a period of 30 days after the date of such request, the Company may
require the Grantee, within ten 10 days after delivery to the Grantee of a
written demand by the Company, to forfeit all Restricted Shares then held by the
Grantee.

9. Amendments. Any amendment to the Plan will be deemed to be an amendment to
this Agreement to the extent that the amendment is applicable hereto; provided,
however, that no amendment will impair the rights of the Grantee under this
Agreement without the Grantee's consent.

10. Severability. In the event that one or more of the provisions of this
Agreement is invalidated for any reason by a court of competent jurisdiction,
any provision so invalidated will be deemed to be separable from the other
provisions hereof, and the remaining provisions hereof will continue to be valid
and fully enforceable.

                                       -4-

11. Relation to Plan. This Agreement is subject to the terms and conditions of
the Plan. In the event of any inconsistency between the provisions of this
Agreement and the Plan, the Plan as interpreted and construed by the
Compensation Committee will govern. Capitalized terms used herein without
definition will have the meanings assigned to them in the Plan. The Compensation
Committee acting pursuant to the Plan, as constituted from time to time, will,
except as expressly provided otherwise herein, have the right to determine any
questions which arise in connection with this Agreement and the Restricted
Shares.

12. Successors and Assigns. Without limiting Section 4 hereof, the provisions of
this Agreement will inure to the benefit of, and be binding upon, the
successors, administrators, heirs, legal representatives and assigns of the
Grantee, and the successors and assigns of the Company.

13. Governing Law. The interpretation, performance and enforcement of this
Agreement will be governed by the laws of the State of Delaware, without giving
effect to the principles of conflict of laws thereof. Each party to this
Agreement hereby consents and submits himself, herself or itself to the
jurisdiction of the courts of the State of Delaware for the purposes of any
legal action or proceeding arising out of this Agreement.

14. Notices. Any notice to the Company provided for herein will be in writing to
the Company and any notice to the Grantee will be addressed to the Grantee at
his or her address on file with the Company. Except as otherwise provided
herein, any written notice will be deemed to be duly given if and when delivered
personally or sent by courier service, registered mail or electronic means of
communication, and addressed as aforesaid. Any party may change the address to
which notices are to be given hereunder by notice to the other party as herein
specified (provided that for this purpose any mailed notice will be deemed given
on the third business day following deposit of the same in the mail).

                            [SIGNATURE PAGE FOLLOWS]

                                      -5-

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its duly authorized officer and Grantee has also executed this
Agreement in duplicate, as of the day and year first above written.

                                        PROLIANCE INTERNATIONAL, INC.

                                        By:
                                            ------------------------------------
                                        Name:
                                        Title:

The undersigned Grantee hereby acknowledges receipt of an executed original of
this Restricted Stock Agreement and accepts the Restricted Shares granted
hereunder, subject to the terms and conditions of the Plan and the terms and
conditions set forth herein.

                                        ----------------------------------------
                                        [Name]

                                      -6-exv10w1

 

Exhibit 10.1

TECHNOLOGY SOLUTIONS COMPANY

1996 STOCK INCENTIVE PLAN

(As Amended and Restated Effective February 6, 2006)

I. INTRODUCTION

1.1 Purposes. The purposes of the 1996 Stock Incentive Plan (the “Plan”) of Technology
Solutions Company (the “Company”) are to (i) align the interests of the Company’s
stockholders and the recipients of awards under this Plan by increasing the proprietary interest of
such recipients in the Company’s growth and success, (ii) advance the interests of the Company by
attracting and retaining directors (including Non-Employee Directors), officers, other key
employees, consultants, independent contractors and agents and (iii) motivate such persons to act
in the long-term best interests of the Company’s stockholders.

1.2 Certain Definitions.

     “Agreement” shall mean the written agreement evidencing an award hereunder between the
Company and the recipient of such award.

     “Board” shall mean the Board of Directors of the Company.

     “Bonus Stock” shall mean shares of Common Stock which are not subject to a Restriction
Period or Performance Measures.

     “Bonus Stock Award” shall mean an award of Bonus Stock under this Plan.

     “Change in Control” shall have the meaning set forth in Section 6.8(b).

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

     “Committee” shall mean the Committee designated by the Board, consisting of two or
more members of the Board, each of whom shall be (i) a “Non-Employee Director” within the meaning
of Rule 16b-3 under the Exchange Act and (ii) an “outside director” within the meaning of Section
162(m) of the Code, subject to any transition rules applicable to the definition of outside
director.

     “Common Stock” shall mean the common stock, $.01 par value, of the Company.

     “Company” has the meaning, specified in Section 1.1.

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

     “Fair-Market Value” shall mean the closing transaction price of a share of Common
Stock as reported by The Nasdaq Stock Market or the principal national securities exchange on

 

 

which the Common Stock is then traded, on the date as of which such value is being determined,
or, if there shall be no reported transactions for such date, on the next preceding date for which
transactions were reported; provided, however, that if Fair Market Value for any date cannot be so
determined, Fair Market Value shall be determined by the Committee by whatever means or method as
the Committee, in the good faith exercise of its discretion, shall at such time deem appropriate.

     “Free-Standing SAR” shall mean an SAR which is not issued in tandem with, or by
reference to an option, which entitles the holder thereof to receive, upon exercise, shares of
Common Stock (which may be Restricted Stock), cash or a combination thereof with an aggregate value
equal to the excess of the Fair Market Value of one share of Common Stock on the date of exercise
over the base price of such SAR, multiplied by the number of such SARs which are exercised.

     “Incentive Stock Option” shall mean an option to purchase shares of Common Stock that
meets the requirements of Section 422 of the Code, or any successor provision, which is intended by
the Committee to constitute an Incentive Stock Option.

     “Incumbent Board” shall have the meaning set forth in Section 6.8(b)(2) hereof.

     “Mature Shares” shall mean shares of Common Stock for which the holder thereof has
good title, free and clear of all liens and encumbrances and which such holder has held for at
least six months.

     “Non-Employee Director” shall mean any director of the Company who is not an officer
or employee of the Company or any Subsidiary.

     “Non-Statutory Stock Option” shall mean a stock option which is not an Incentive Stock
Option.

     “Performance Measures” shall mean the criteria and objectives, established by the
Committee, which shall be satisfied or met (i) as a condition to the exercisability of all or a
portion of an option or SAR, (ii) as a condition to the grant of a Stock Award or (iii) during the
applicable Restriction Period or Performance Period as a condition to the holder’s receipt, in the
case of a Restricted Stock Award, of the shares of Common Stock subject to such award, or, in the
case of a Performance Share Award, of the shares of Common Stock subject to such award and/or of
payment with respect to such award. In the sole discretion of the Committee, the Committee may
amend or adjust the Performance Measures or other terms and conditions of an outstanding award in
recognition of unusual or nonrecurring events affecting the Company or its financial statements or
changes in law or accounting principles. Such criteria and objectives may include one or more of
the following: the attainment by a share of Common Stock of a specified Fair Market Value for a
specified period of time, earnings per share, return to stockholders (including dividends),
operating income, operating income margin, return on equity, earnings of the Company, revenues,
market share, cash flow or cost reduction goals, or any combination of the foregoing. If the
Committee desires that compensation payable pursuant to any award subject to Performance Measures
be “qualified performance-based compensation” within the meaning of Section 162(m) of the Code, the
Performance Measures (i) shall be established by the

2

 

Committee no later than 90 days after the beginning of the Performance Period or Restriction
Period, as applicable (or such other time designated by the Internal Revenue Service) and (ii)
shall satisfy all other applicable requirements imposed under Treasury Regulations promulgated
under Section 162(m) of the Code, including the requirement that such Performance Measures be
stated in terms of an objective formula or standard.

     “Performance Period” shall mean any period designated by the Committee during which
the Performance Measures applicable to a Performance Share Award shall be measured.

     “Performance Share” shall mean a right, contingent upon the attainment of specified
Performance Measures within a specified Performance Period, to receive one share of Common Stock,
which may be Restricted Stock, or in lieu of all or a portion thereof, the Fair Market Value of
such Performance Share in cash.

     “Performance Share Award” shall mean an award of Performance Shares under this Plan.

     “Permanent and Total Disability” shall have the meaning set forth in Section 22(e)(3)
of the Code or any successor thereto.

     “Predecessor Plans” shall mean the Technology Solutions Company Stock Option Plan, the
Technology Solutions Company 1992 Stock Incentive Plan and the Technology Solutions Company 1993
Outside Directors Stock Option Plan.

     “Restricted Stock” shall mean shares of Common Stock which are subject to a
Restriction Period.

     “Restricted Stock Award” shall mean an award of Restricted Stock under this Plan.

     “Restricted Stock Unit” shall mean a right to receive one share of Common Stock or, in
lieu thereof, the Fair Market Value of such share of Common Stock in cash, which shall be
contingent upon the expiration of a specified Restriction Period and which may, in addition
thereto, be contingent upon the attainment of specified Performance Measures within a specified
Performance Period.

     “Restricted Stock Unit Award” shall mean an award of Restricted Stock Units under this
Plan.

     “Restriction Period” shall mean any period designated by the Committee during which
(i) the Common Stock subject to a Restricted Stock Award may not be sold, transferred, assigned,
pledged, hypothecated or otherwise encumbered or disposed of, except as provided in this Plan or
the Agreement relating to such award, or (ii) the conditions to vesting applicable to a Restricted
Stock Unit Award shall remain in effect.

     “SAR” shall mean a stock appreciation right which may be a Free-Standing SAR or a
Tandem SAR.

3

 

     “Stock Award” shall mean a Restricted Stock Award, Restricted Stock Unit Award or
Bonus Stock Award.

     “Subsidiary” shall have the meaning set forth in Section 1.4.

     “Tandem SAR” shall mean an SAR which is granted in tandem with, or by reference to, an
option (including a Non-Statutory Stock Option granted prior to the date of grant of the SAR),
which entitles the holder thereof to receive, upon exercise of such SAR and surrender for
cancellation of all or a portion of such option, shares of Common Stock (which may be Restricted
Stock), cash or a combination thereof with an aggregate value equal to the excess of the Fair
Market Value of one share of Common Stock on the date of exercise over the base price of such SAR,
multiplied by the number of shares of Common Stock subject to such option, or portion thereof,
which is surrendered.

     “Tax Date” shall have the meaning set forth in Section 6.5.

     “Ten Percent Holder” shall have the meaning set forth in Section 2.1(a).

1.3 Administration. This Plan shall be administered by the Committee. Any one or a combination of
the following awards may be made under this Plan to eligible persons: (i) options to purchase
shares of Common Stock in the form of Incentive Stock Options or Non-Statutory Stock Options, (ii)
SARs in the form of Tandem SARs or Free-Standing SARS, (iii) Stock Awards in the form of Restricted
Stock, Restricted Stock Units or Bonus Stock and (iv) Performance Shares. The Committee shall,
subject to the terms of this Plan, select eligible persons for participation in this Plan and
determine the form, amount and timing of each award to such persons and, if applicable, the number
of shares of Common Stock, the number of SARs and the number of Performance Shares subject to such
an award, the exercise price or base price associated with the award, the time and conditions of
exercise or settlement of the award and all other terms and conditions of the award, including,
without limitation, the form of the Agreement evidencing the award. The Committee may, in its sole
discretion and for any reason at any time, subject to the requirements imposed under Section 162(m)
of the Code and regulations promulgated thereunder in the case of an award intended to be qualified
performance-based compensation, take action such that (i) any or all outstanding options and SARs
shall become exercisable in part or in full, (ii) all or a portion of the Restriction Period
applicable to any outstanding Restricted Stock Award or Restricted Stock Unit Award shall lapse,
(iii) all or a portion of the Performance Period applicable to any outstanding Performance Share
Award shall lapse and (iv) the Performance Measures applicable to any outstanding Restricted Stock
Award or Restricted Stock Unit Award (if any) and to any outstanding Performance Share Award shall
be deemed to be satisfied at the maximum or any other level. The Committee shall, subject to the
terms of this Plan, interpret this Plan and the application thereof, establish rules and
regulations it deems necessary or desirable for the administration of this Plan and may impose,
incidental to the grant of an award, conditions with respect to the award, such as limiting
competitive employment or other activities. All such interpretations, rules, regulations and
conditions shall be final, binding and conclusive.

     The Committee may delegate some or all of its power and authority hereunder to the President
or other executive officer of the Company as the Committee deems appropriate;

4

 

provided, however, that the Committee may not delegate its power and authority with regard to
(i) the grant of an award to any person who is a “covered employee” within the meaning of Section
162(m) of the Code or who, in the Committee’s judgment, is likely to be a covered employee at any
time during the period an award hereunder to such employee would be outstanding or (ii) the
selection for participation in this Plan of an officer or other person subject to Section 16 of the
Exchange Act or decisions concerning the timing, pricing or amount of an award to such an officer
or other person.

     A majority of the Committee shall constitute a quorum. The acts of the Committee shall be
either (i) acts of a majority of the members of the Committee present at any meeting at which a
quorum is present or (ii) acts approved in writing by all of the members of the Committee without a
meeting.

1.4 Eligibility. Participants in this Plan shall consist of such directors, officers, other key
employees, consultants, independent contractors and agents of the Company, and its subsidiaries
(individually a “Subsidiary” and collectively the “Subsidiaries”) as the Committee
in its sole discretion may select from time to time. For purposes of this Plan, references to
employment shall also mean an agency or independent contractor relationship and references to
employment by the Company shall also mean employment by a Subsidiary or such other employer
designated in the Agreement evidencing the award. The Committee’s selection of a person to
participate in this Plan at any time shall not require the Committee to select such person to
participate in this Plan at any other time. Non-Employee Directors of the Company shall also be
eligible to participate in this Plan in accordance with Section V. Notwithstanding anything
contained herein to the contrary, no person other than an employee of the Company or a Subsidiary
may be granted an Incentive Stock Option hereunder.

1.5 Shares Available. Subject to adjustment as provided in Section 6.7, 1,000,000 shares of Common
Stock shall be available under this Plan, reduced by the sum of the aggregate number of shares of
Common Stock (i) that are issued upon the grant of a Stock Award and (ii) which become subject to
outstanding options, outstanding Free-Standing SARs and outstanding Performance Shares. In
addition, shares of Common Stock available to be granted under the Predecessor Plans on the
effective date of this Plan shall thereafter be available for grant solely under this Plan. To the
extent that shares of Common Stock subject to an outstanding option granted hereunder or under a
Predecessor Plan (except to the extent shares of Common Stock are issued or delivered by the
Company in connection with the exercise of a Tandem SAR), Free-Standing SAR, Stock Award or
Performance Share are not issued or delivered by reason of the expiration, termination,
cancellation or forfeiture of such award or by reason of the delivery or withholding of shares of
Common Stock to pay all or a portion of the exercise price of an award, if any, or to satisfy all
or a portion of the tax withholding obligations relating to an award, then such shares of Common
Stock shall again be available under this Plan.

     Shares of Common Stock shall be made available from authorized and unissued shares of Common
Stock, or authorized and issued shares of Common Stock reacquired and held as treasury shares or
otherwise or a combination thereof.

     To the extent required by Section 162(m) of the Code and the rules and regulations thereunder,
the maximum number of shares of Common Stock with respect to which options or

5

 

SARS, Stock Awards or Performance Share Awards or a combination thereof may be granted during
any fiscal year of the Company to any person shall be 150,000, subject to adjustment as provided in
Section 6.7.

II. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

2.1 Stock Options. The Committee may, in its discretion, grant options to purchase shares of
Common Stock to such eligible persons as may be selected by the Committee. Each option, or portion
thereof, that is granted to a person other than an employee of the Company or a Subsidiary or that
is otherwise not an Incentive Stock Option, shall be a Non-Statutory Stock Option. Each Incentive
Stock Option shall be granted within ten years of the effective date of this Plan. To the extent
that the aggregate Fair Market Value (determined as of the date of grant) of shares of Common Stock
with respect to which options designated as Incentive Stock Options are exercisable for the first
time by a participant during any calendar year (under this Plan or any other plan of the Company,
or any parent or subsidiary as defined in Section 424 of the Code) exceeds the amount (currently
$100,000) established by the Code, such options shall constitute Non-Statutory Stock Options.

     Options shall be subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee
shall deem advisable:

     (a) Number of Shares and Purchase Price. The number of shares of Common Stock subject
to an option and the purchase price per share of Common Stock purchasable upon exercise of the
option shall be determined by the Committee; provided, however, that the purchase price per share
of Common Stock purchasable upon exercise of an Incentive Stock Option shall be less than 100% of
the Fair Market Value of a share of Common Stock on the date of grant of such option; provided
further, that if an Incentive Stock Option shall be granted to any person who, at the time such
option is granted, owns capital stock possessing more than ten percent of the total combined voting
power of all classes of capital stock of the Company (or of any parent or subsidiary) (a “Ten
Percent Holder”), the purchase price per share of Common Stock shall be the price (currently
110% of Fair Market Value) required by the Code in order to constitute an Incentive Stock Option.

     (b) Option Period and Exercisability. The period during which an option may be
exercised shall be determined by the Committee; provided, however, that no Incentive Stock Option
shall be exercised later than ten years after its date of grant; provided further, that if an
Incentive Stock Option shall be granted to a Ten Percent Holder, such option shall not be exercised
later than five years after its date of grant. The Committee may, in its discretion, establish
Performance Measures which shall be satisfied or met as a condition to the grant of an option or to
the exercisability of all or a portion of an option. The Committee shall determine whether an
option shall become exercisable in cumulative or non-cumulative installments and in part or in full
at any time. An exercisable option, or portion thereof, may be exercised only with respect to
whole shares of Common Stock.

6

 

     (c) Method of Exercise. An option may be exercised (i) by giving written notice to
the Company specifying the number of whole shares of Common Stock to be purchased and accompanied
by payment therefor in full (or arrangement made for such payment to the Company’s satisfaction)
either (A) in cash, (B) by delivery of Mature Shares having an aggregate Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price payable by reason of
such exercise, (C) in cash by a broker-dealer acceptable to the Company to whom the optionee has
submitted an irrevocable notice of exercise or (D) a combination of (A) and (B), in each case to
the extent set forth in the Agreement relating to the option, (ii) if applicable, by surrendering
to the Company any Tandem SARs which are cancelled by reason of the exercise of the option and
(iii) by executing such documents as the Company may reasonably request. The Company shall have
sole discretion to disapprove of an election pursuant to any of clauses (B)-(D) and in the case of
an optionee who is subject to Section 16 of the Exchange Act, the Company may require that the
method of making such payment be in compliance with Section 16 and the rules and regulations
thereunder. Any fraction of a share of Common Stock which would be required to pay such purchase
price shall be disregarded and the remaining amount due shall be paid in cash by the optionee. No
certificate representing Common Stock shall be delivered until the full purchase price therefor has
been paid (or arrangement made for such payment to the Company’s satisfaction).

2.2 Stock Appreciation Rights. The Committee may, in its discretion, grant SARs to such eligible
persons as may be selected by the Committee. The Agreement relating to an SAR shall specify
whether the SAR is a tandem SAR or a Free-Standing SAR.

     SARs shall be subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem
advisable:

     (a) Number of SARs and Base Price. The number of SARs subject to an award shall be
determined by the Committee. Any Tandem SAR related to an Incentive Stock Option shall be granted
at the same time that such Incentive Stock Option is granted. The base price of a Tandem SAR
shall be the purchase price per share of Common Stock of the related option. The base price of a
Free-Standing SAR shall be determined by the Committee.

     (b) Exercise Period and Exercisability. The Agreement relating to an award of SARs
shall specify whether such award may be settled in shares of Common Stock (including shares of
Restricted Stock) or cash or a combination thereof. The period for the exercise of an SAR shall be
determined by the Committee; provided, however, that no Tandem SAR shall be exercised later than
the expiration, cancellation, forfeiture or other termination of the related option. The Committee
may, in its discretion, establish Performance Measures which shall be satisfied or met as a
condition to the grant of an SAR or to the exercisability of all or a portion of an SAR. The
Committee shall determine whether an SAR may be exercised in cumulative or non-cumulative
installments and in part or in full at any time. An exercisable SAR, or portion thereof, may be
exercised, in the case of a Tandem SAR, only with respect to a whole shares of Common Stock and, in
the case of a Free-Standing SAR, only with respect to a whole number of SARs. If an SAR is
exercised for shares of Restricted Stock, a certificate or certificates representing such
Restricted Stock shall be issued in accordance with Section 3.2(c) and the holder of such
Restricted Stock shall have such rights of a stockholder of the Company as determined pursuant

7

 

to Section 3.2(d). Prior to the exercise of an SAR for shares of Common Stock, including
Restricted Stock, the holder of such SAR shall have no rights as a stockholder of the Company with
respect to the shares of Common Stock subject to such SAR and shall have rights as a stockholder of
the Company in accordance with Section 6.10.

     (c) Method of Exercise. A Tandem SAR may be exercised (i) by giving written notice to
the Company specifying the number of whole SARs which are being exercised, (ii) by surrendering to
the Company any options which are cancelled by reason of the exercise of the Tandem SAR and (iii)
by executing such documents as the Company may reasonably request. A Free-Standing SAR may be
exercised (i) by giving written notice to the Company specifying the whole number of SARs which are
being exercised and (ii) by executing such documents as the Company may reasonably request.

2.3 Termination of Employment or Service (a) General. Subject to paragraph (b) below,
all of the terms relating to the exercise, cancellation or other disposition of an option or SAR
upon a termination of employment with or service to the Company of the holder of such option or
SAR, as the case may be, whether by reason of disability, retirement, death or other termination,
shall be determined by the Committee. Such determination shall be made at the time of the grant of
such option or SAR, as the case may be, and shall be specified in the Agreement relating to such
option or SAR.

     (b) Incentive Stock Options. Except as set forth in this paragraph (b), all of the
terms relating to the exercise, cancellation or other disposition of an Incentive Stock Option upon
a termination of employment with the Company of the holder of such option, including whether such
Incentive Stock Option shall become exercisable in full upon such termination, shall be determined
by the Committee. Such determination shall be made at the time of the grant of such Incentive
Stock Option and shall be specified in the Agreement relating to such Incentive Stock Option.

     If the employment with the Company of a holder of an Incentive Stock Option terminates by
reason of Permanent and Total Disability, each Incentive Stock Option held by such optionee may
thereafter be exercised by such optionee (or such optionee’s legal representative or similar
person) until and including the earliest to occur of (i) the date which is one year (or such
shorter period as set forth in the Agreement relating to such option) after the effective date of
such optionee’s termination of employment by reason of Permanent and Total Disability and (ii) the
expiration date of the term of such option.

     If the employment with the Company of a holder of an Incentive Stock Option terminates by
reason of death, each Incentive Stock Option held by such optionee may thereafter be exercised by
such optionee’s executor, administrator, legal representative, beneficiary or similar person until
and including the earliest to occur of (i) the date which is one year (or such other period as set
forth in the Agreement relating to such option) after the date of death and (ii) the expiration
date of the term of such option.

     If the employment with the Company of a holder of an Incentive Stock Option terminates for any
reason other than Permanent and Total Disability or death, each Incentive Stock Option held by such
optionee may thereafter be exercised by such holder (or such holder’s legal

8

 

representative or similar person) until and including the earliest to occur of (i) the date
which is three months (or such shorter period as set forth in the Agreement relating to such
option) after the effective date of such optionee’s termination of employment and (ii) the
expiration date of the term of such option.

     If the holder of an Incentive Stock Option dies during the period set forth in the second
paragraph of this Section 2.3(b) following termination of employment or service by reason of
Permanent and Total Disability (or such shorter period as set forth in the Agreement relating to
such option), or if the holder of an Incentive Stock Option dies during the period set forth in the
fourth paragraph of this Section 2.3(b) following termination of employment or service for any
reason other than Permanent and Total Disability or death, each Incentive Stock Option held by such
optionee may thereafter be exercised by the optionee’s executor, administrator, legal
representative, beneficiary or similar person until and including the earliest to occur of (i) the
date which is one year (or such other period as set forth in the Agreement relating to such option)
after the date of death and (ii) the expiration date of the term of such option.

III. STOCK AWARDS

3.1 Stock Awards. The Committee may, in its discretion, grant Stock Awards to such eligible
persons as may be selected by the Committee. The Agreement relating to a Stock Award shall specify
whether the Stock Award is a Restricted Stock Award, Restricted Stock Unit Award or Bonus Stock
Award.

3.2 Terms of Bonus Stock Awards. The number of shares of Common Stock subject to a Bonus Stock
Award shall be determined by the Committee. Bonus Stock Awards shall not be subject to any
Performance Measures or Restriction Periods. Upon the grant of a Bonus Stock Award, subject to the
Company’s right to require payment of any taxes in accordance with Section 6.5, a certificate or
certificates evidencing ownership of the requisite number of shares of Common Stock shall be
delivered to the holder of such award.

3.3 Terms of Restricted Stock Awards. Restricted Stock Awards shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not inconsistent with
the terms of this Plan, as the Committee shall deem advisable.

     (a) Number of Shares and Other Terms. The number of shares of Common Stock subject to
a Restricted Stock Award and the Performance Measures (if any) and Restriction Period applicable to
a Restricted Stock Award shall be determined by the Committee.

     (b) Vesting and Forfeiture. The Agreement relating to a Restricted Stock Award shall
provide, in the manner determined by the Committee, in its discretion, and subject to the
provisions of this Plan, for the vesting of the shares of Common Stock subject to such award (i) if
specified Performance Measures are satisfied or met during the specified Restriction Period or (ii)
if the holder of such award remains continuously in the employment of or service to the Company
during the specified Restriction Period and for the forfeiture of the shares of Common Stock
subject to such award (x) if specified Performance Measures are not satisfied or met during the
specified Restriction Period or (y) if the holder of such award does not remain

9

 

continuously in the employment of or service to the Company during the specified Restriction
Period.

     (c) Share Certificates. During the Restriction Period, a certificate or certificates
representing a Restricted Stock Award may be registered in the holder’s name and may bear a legend,
in addition to any legend which may be required pursuant to Section 6.6, indicating that the
ownership of the shares of Common Stock represented by such certificate is subject to the
restrictions, terms and conditions of this Plan and the Agreement relating to the Restricted Stock
Award. All such certificates shall be deposited with the Company, together with stock powers or
other instruments of assignment (including a power of attorney), each endorsed in blank with a
guarantee of signature if deemed necessary or appropriate by the Company, which would permit
transfer to the Company of all or a portion of the shares of Common Stock subject to the Restricted
Stock Award in the event such award is forfeited in whole or in part. Upon termination of any
applicable Restriction Period (and the satisfaction or attainment of applicable Performance
Measures), subject to the Company’s right to require payment of any taxes in accordance with
Section 6.5, a certificate or certificates evidencing ownership of the requisite number of shares
of Common Stock shall be delivered to the holder of such award.

     (d) Rights with Respect to Restricted Stock Awards. Unless otherwise set forth in the
Agreement relating to a Restricted Stock Award, and subject to the terms and conditions of a
Restricted Stock Award, the holder of such award shall have all rights as a stockholder of the
Company, including, but not limited to, voting rights, the right to receive dividends and the right
to participate in any capital adjustment applicable to all holders of Common Stock; provided,
however, that a distribution with respect to shares of Common Stock, other than a regular cash
dividend, shall be deposited with the Company and shall be subject to the same restrictions as the
shares of Common Stock with respect to which such distribution was made.

3.4 Terms of Restricted Stock Unit Awards. Restricted Stock Unit Awards shall be subject to the
following terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem advisable.

     (a) Number of Shares and Other Terms. The number of shares of Common Stock subject to
a Restricted Stock Unit Award and the Performance Measures (if any) and Restriction Period
applicable to a Restricted Stock Unit Award shall be determined by the Committee.

     (b) Vesting and Forfeiture. The Agreement relating to a Restricted Stock Unit Award
shall provide, in the manner determined by the Committee, in its discretion, and subject to the
provisions of this Plan, for the vesting of the shares of Common Stock subject to such award (i) if
specified Performance Measures are satisfied or met during the specified Restriction Period or (ii)
if the holder of such award remains continuously in the employment of or service to the Company
during the specified Restriction Period and for the forfeiture of the shares of Common Stock
subject to such award (x) if specified Performance Measures are not satisfied or met during the
specified Restriction Period or (y) if the holder of such award does not remain continuously in the
employment of or service to the Company during the specified Restriction Period.

10

 

     (c) Settlement of Vested Restricted Stock Unit Awards. The Agreement relating to a
Restricted Stock Unit Award shall specify (i) whether such award may be settled in shares of Common
Stock, including Restricted Stock, or cash or a combination thereof and (ii) whether the holder
thereof shall be entitled to receive, on a current or deferred basis, dividend equivalents and, if
determined by the Committee, interest on, or the deemed reinvestment of, any deferred dividend
equivalents, with respect to the number of shares of Common Stock subject to such award. Prior to
the settlement of a Restricted Stock Unit Award, the holder of such award shall have no rights as a
stockholder of the Company with respect to the shares of Common Stock subject to such award.

3.5 Awards to Certain Executive Officers. Notwithstanding any other provision of this Article III,
and only to the extent necessary to ensure the deductibility of the award to the Company, the Fair
Market Value of the number of shares of Common Stock subject to a Stock Award granted to a “covered
employee” within the meaning of Section 162(m) of the Code shall not exceed $250,000 (i) at the
time of grant in the case of a Stock Award granted upon the attainment of Performance Measures or
(ii) in the case of a Restricted Stock Award with Performance Measures which shall be satisfied or
met as a condition to the holder’s receipt of the shares of Common Stock subject to such award, on
the earlier of (x) the date on which the Performance Measures are satisfied or met and (y) the date
the holder makes an election under Section 83(b) of the Code.

3.6 Termination of Employment or Service. All of the terms relating to the satisfaction of
Performance Measures and the termination of the Restriction Period relating to a Restricted Stock
Award or Restricted Stock Unit Award, or any cancellation or forfeiture of such Restricted Stock
Award or Restricted Stock Unit Award upon a termination of employment with or service to the
Company of the holder of such award, whether by reason of disability, retirement, death or other
termination, shall be set forth in the Agreement relating to such Restricted Stock Award or
Restricted Stock Unit Award.

IV. PERFORMANCE SHARE AWARDS

4.1 Performance Share Awards. The Committee may, in its discretion, grant Performance Share Awards
to such eligible persons as may be selected by the Committee.

4.2 Terms of Performance Share Awards. Performance Share Awards shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not inconsistent with
the terms of this Plan, as the Committee shall deem advisable.

     (a) Number of Performance Shares and Performance Measures. The number of Performance
Shares subject to any award and the Performance Measures and Performance Period applicable to such
award shall be determined by the Committee.

     (b) Vesting and Forfeiture. The Agreement relating to a Performance Share Award shall
provide, in the manner determined by the Committee, in its discretion, and subject to the
provisions of this Plan, for the vesting of such award, if specified Performance Measures are
satisfied or met during the specified Performance Period, and for the forfeiture of such award, if

11

 

specified Performance Measures are not satisfied or met during the specified Performance
Period.

     (c) Settlement of Vested Performance Share Awards. The Agreement relating to a
Performance Share Award (i) shall specify whether such award may be settled in shares of Common
Stock (including shares of Restricted Stock) or cash or a combination thereof and (ii) may specify
whether the holder thereof shall be entitled to receive, on a current or deferred basis, dividend
equivalents, and, if determined by the Committee, interest on or the deemed reinvestment of any
deferred dividend equivalents, with respect to the number of shares of Common Stock subject to such
award. If a Performance Share Award is settled in shares of Restricted Stock, a certificate or
certificates representing such Restricted Stock shall be issued in accordance with Section 3.2(c)
and the holder of such Restricted Stock shall have such rights of a stockholder of the Company as
determined pursuant to Section 3.2(d). Prior to the settlement of a Performance Share Award in
shares of Common Stock, including Restricted Stock, the holder of such award shall have no rights
as a stockholder of the Company with respect to the shares of Common Stock subject to such award
and shall have rights as a stockholder of the Company in accordance with Section 6.10.

4.3 Termination of Employment or Service. All of the terms relating to the satisfaction of
Performance Measures and the termination of the Performance Period relating to a Performance Share
Award, or any cancellation or forfeiture of such Performance Share Award upon a termination of
employment with the Company of the holder of such Performance Share Award, whether by reason of
disability, retirement, death or other termination, shall be set forth in the Agreement relating to
such Performance Share Award.

V. PROVISIONS RELATING TO NON-EMPLOYEE DIRECTORS

5.1 Eligibility. Each Non-Employee Director shall be granted options to purchase shares of Common
Stock in accordance with this Article V. All options granted under this Article V shall constitute
Non-Statutory Stock Options.

5.2 Grants of Stock Options. Each Non-Employee Director shall be granted Non-Statutory Stock
Options as follows:

     (a) Time of Grant. On the date on which a person is first elected or begins to serve
as a Non-Employee Director (other than by reason of termination of employment), and, thereafter, if
such person is then a Non-Employee Director, on the date that an option granted to such person
pursuant to this Article V becomes exercisable in full in accordance with Section 5.2(b) hereunder,
such person shall be granted an option to purchase 40,500 shares of Common Stock at a purchase
price per share equal to the Fair Market Value of a share of Common Stock on the date of grant of
such option.

     (b) Option Period and Exercisability. Except as otherwise provided herein, each
option granted under this Article V (an “Automatic Non-Employee Director’s Option”) shall not be
exercisable until the last day of the calendar month following the calendar month in which such
option is granted (the “Initial Date of Exercisability”). Each Automatic Non-Employee
Director’s Option shall become exercisable as to 1,125 shares of Common Stock on the date of

12

 

its Initial Date of Exercisability and as to an additional 1,125 shares of Common Stock on the
last day of each of the next thirty-five calendar months following the Initial Date of
Exercisability. An exercisable option, or portion thereof, may be exercised in whole or in part
only with respect to whole shares of Common Stock. Automatic Non-Employee Director’s Options shall
be exercisable in accordance with Section 2.1(c).

5.3 Option Period and Termination of Directorship. (a) Term and Termination of Option.
The maximum term of each Automatic Non-Employee Director’s Option shall be the date which is 10
years after the date on which it was granted (the “Expiration Date”). Each Automatic Non-Employee
Director’s Option shall terminate, to the extent not exercised or earlier terminated pursuant to
the terms of this Article V, on its Expiration Date. In no event may an Automatic Non-Employee
Director’s Option be exercised, in whole or in part, after it terminates.

     (b) Termination of Directorship Other than by Death, Disability or Retirement. If
the holder of an Automatic Non-Employee Director’s Option ceases to be a director of the Company
for any reason other than death, Disability, or Retirement, the option shall remain exercisable
with respect to the number of shares subject to such option that are exercisable upon the effective
date of such holder’s ceasing to be a director and may thereafter be exercised for a period of 90
days from the effective date of such holder’s ceasing to be a director or until the Expiration
Date, whichever period is shorter, after which the Automatic Non-Employee Director’s Option shall
terminate in its entirety.

     (c) Death. If the holder of an Automatic Non-Employee Director’s Option ceases to be
a director of the Company by reason of death, the option shall become exercisable as of the date of
death with respect to any or all of the shares subject to such option and may thereafter be
exercised for a period of one year from the date of death or until the Expiration Date, whichever
period is shorter, after which the Automatic Non-Employee Director’s Option shall terminate in its
entirety.

     (d) Disability. If the holder of an Automatic Non-Employee Director’s Option ceases
to be a director of the Company by reason of Disability, the option shall become exercisable as of
the effective date of such holder’s ceasing to be a director with respect to any or all of the
shares subject to such option and may thereafter be exercised for a period of 90 days from the
effective date of such termination or until the Expiration Date, whichever period is shorter, after
which the Automatic Non-Employee Director’s Option shall terminate in its entirety. For purposes
of this Article V, “Disability” shall mean the inability of an individual to fully perform the
duties of a director of the Company for a continuous period in excess of 360 days, as determined by
the Board in its sole discretion.

     (e) Retirement. If the holder of an Automatic Non-Employee Director’s Option ceases
to be a director of the Company by reason of retirement after such holder has completed five years
of service as a director of the Company and is at least 55 years of age (“Retirement”), the option
shall remain exercisable with respect to the number of shares subject to such option that are
exercisable upon the effective date of such Retirement, and may thereafter be exercised for a
period of two years from the effective date of such Retirement or until the Expiration Date,
whichever period is shorter, after which the Automatic Non-Employee Director’s Option shall
terminate in its entirety.

13

 

     (f) Death After Termination of Directorship. If the holder of an Automatic
Non-Employee Director’s Option dies after he or she has ceased to be a director of the Company, the
option shall be exercisable only to the extent that it is exercisable on the date of such holder’s
death and may thereafter be exercised only for that period of time for which the option is
exercisable immediately prior to the holder’s death pursuant to Sections 5.3(b) through (e).

VI. GENERAL

6.1 Effective Date and Term of Plan. This Plan shall be submitted to the stockholders of the
Company for approval and, if approved by the affirmative vote of a majority of the shares of Common
Stock present in person or represented by proxy at the 1996 annual meeting of stockholders of the
Company, shall become effective on the date of such approval. This Plan shall terminate ten years
after its effective date, unless terminated earlier by the Board. Termination of this Plan shall
not affect the terms or conditions of any award granted prior to termination.

     In the event that this Plan is not approved by the stockholders of the Company at the 1996
annual meeting of stockholders of the Company, this Plan and any awards granted hereunder shall be
null and void.

6.2 Amendments. The Board may amend this Plan as it shall deem advisable, subject to any
requirement of stockholder approval required by applicable law, rule or regulation, including
Section 162(m) and Section 422 of the Code; provided, however, that no amendment shall be made
without stockholder approval if such amendment would (a) increase the maximum number of shares of
Common Stock available under this Plan (subject to Section 6.7), (b) effect any change inconsistent
with Section 422 of the Code or (c) extend the term of this Plan. No amendment may impair the
rights of a holder of an outstanding award without the consent of such holder.

6.3 Agreement. Each award under this Plan shall be evidenced by an Agreement setting forth the
terms and conditions applicable to such award. No award shall be valid until an Agreement is
executed by the Company and the recipient of such award and, upon execution by each party and
delivery of the Agreement to the Company, such award shall be effective as of the effective date
set forth in the Agreement.

6.4 Non-Transferability of Awards. Unless otherwise specified in the Agreement relating to an
award, no award shall be transferable other than by will, the laws of descent and distribution or
pursuant to beneficiary designation procedures approved by the Company. Except to the extent
permitted by the first sentence of this Section 6.4, or the Agreement relating to an award, each
award may be exercised or settled during the holder’s lifetime only by the holder or the holder’s
legal representative or similar person. Except to the extent permitted by the first sentence of
this Section 6.4 or the Agreement relating to an award, no award may be sold, transferred,
assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so
sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of any such award, other
than as permitted by the first sentence of this Section 6.4 or the Agreement

14

 

relating to an award, such award and all rights thereunder shall immediately become null and void.

6.5 Tax Withholding. The Company shall have the right to require, prior to the issuance or
delivery of any shares of Common Stock or the payment of any cash pursuant to an award made
hereunder, payment by the holder of such award of any Federal, state, local or other taxes which
may be required to be withheld or paid in connection with such award. An Agreement may provide
that (i) the Company shall withhold whole shares of Common Stock which would otherwise be delivered
to a holder, having an aggregate Fair Market Value determined as of the date the obligation to
withhold or pay taxes arises in connection with an award (the “Tax Date”), or withhold an
amount of cash which would otherwise be payable to a holder, in the amount necessary to satisfy any
such obligation or (ii) the holder may satisfy any such obligation by any of the following means:
(A) a cash payment to the Company, (B) delivery to the Company of Mature Shares having an aggregate
Fair Market Value, determined as of the Tax Date, equal to the amount necessary to satisfy any such
obligation, (C) authorizing the Company to withhold whole shares of Common Stock which would
otherwise be delivered having an aggregate Fair Market Value, determined as of the Tax Date, or
withhold an amount of cash which would otherwise be payable to a holder, equal to the amount
necessary to satisfy any such obligation, (D) in the case of the exercise of any option, a cash
payment by a broker-dealer acceptable to the Company to whom the optionee has submitted an
irrevocable notice of exercise or (E) any combination of (A), (B), and (C), in each case to the
extent set forth in the Agreement relating to the award; provided, however, that the Company shall
have sole discretion to disapprove of an election pursuant to any of clauses (B)-(E) and that in
the case of a holder who is subject to Section 16 of the Exchange Act, the Company may require that
the method of satisfying such an obligation be in compliance with Section 16 and the rules and
regulations thereunder. Any fraction of a share of Common Stock which would be required to satisfy
such an obligation shall be disregarded and the remaining amount due shall be paid in cash by the
holder.

6.6 Restrictions on Shares. Each award made hereunder shall be subject to the requirement that if
at any time the Company determines that the listing, registration or qualification of the shares of
Common Stock subject to such award upon any securities exchange or under any law, or the consent or
approval of any governmental body, or the taking of any other action is necessary or desirable as a
condition of, or in connection with, the delivery of shares thereunder, such shares shall not be
delivered unless such listing, registration, qualification, consent, approval or other action shall
have been effected or obtained, free of any conditions not acceptable to the Company. The Company
may require that certificates evidencing shares of Common Stock delivered pursuant to any award
made hereunder bear a legend indicating that the sale, transfer or other disposition thereof by the
holder is prohibited except in compliance with the Securities Act of 1933, as amended, and the
rules and regulations thereunder.

6.7 Adjustment. In the event of any stock split, stock dividend, recapitalization, reorganization,
merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar
change in capitalization or event, or any distribution to holders of Common Stock other than a
regular cash dividend, the number and class of securities available under this Plan, the number and
class of securities subject to each outstanding option and the purchase price per security, the
number of securities subject to each option to be granted to Non-Employee Directors pursuant to
Article V, the terms of each outstanding SAR, the number and class of

15

 

securities subject to each outstanding Stock Award, and the terms of each outstanding Performance
Share shall be appropriately adjusted by the Committee, such adjustments to be made in the case of
outstanding options and SARs without an increase in the aggregate purchase price or base price.
The decision of the Committee regarding any such adjustment shall be final, binding and conclusive.
If any such adjustment would result in a fractional security being (a) available under this Plan,
such fractional security shall be disregarded, or (b) subject to an award under this Plan, the
Company shall pay the holder of such award, in connection with the first the vesting, exercise or
settlement of such award in whole or in part occurring after such adjustment, an amount in cash
determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by
(ii) the excess, if any, of (A) the Fair Market Value on the vesting, exercise or settlement date
over (B) the exercise or base price, if any, of such award.

6.8 Change in Control.

     (a) (1) Notwithstanding any provision in this Plan or any Agreement, in the event of a Change
in Control, the Board of Directors may, but shall not be required to, make such adjustments to
outstanding awards hereunder as it deems appropriate, including, without limitation, electing that
each outstanding award shall be surrendered to the Company by the holder thereof, and that each
such award shall immediately be cancelled by the Company, and that the holder shall receive, within
a specified period of time from the occurrence of the Change in Control, a cash payment from the
Company in an amount equal to:

          (i) in the case of an option, the number of shares of Common Stock then subject to such
option, multiplied by the excess, if any, of the greater of (A) the highest per share price offered
to stockholders of the Company in any transaction whereby the Change in Control takes place or (B)
the Fair Market Value of a share of Common Stock on the date of occurrence of the Change in
Control, over the purchase price per share of Common Stock subject to the option,

          (ii) in the case of a Free-Standing SAR, the number of shares of Common Stock then subject to
such SAR, multiplied by the excess, if any, of the greater of (A) the highest per share price
offered to stockholders of the Company in any transaction whereby the Change in Control takes place
or (B) the Fair Market Value of a share of Common Stock on the date of occurrence of the Change in
Control, over the base price of the SAR, and

          (iii) in the case of a Restricted Stock Award, Restricted Stock Unit Award or Performance
Award, the number of shares of Common Stock or the number of Performance Shares, as the case may
be, then subject to such award, multiplied by the greater of (A) the highest per share price
offered to stockholders of the Company in any transaction whereby the Change in the Control takes
place or (B) the Fair Market Value of a share of Common Stock on the date of occurrence of the
Change in Control.

     In the event of a Change in Control in which options are cancelled, each Tandem SAR shall be
surrendered by the holder thereof and shall be cancelled simultaneously with the cancellation of
the related option. The Company may, but is not required to, cooperate with any person who is
subject to Section 16 of the Exchange Act to assure that any cash payment in accordance with the
foregoing to such person is made in compliance with Section 16 and the rules and regulations
thereunder.

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     In the event of a Chicago Control, the Board of Directors may, but shall not be required to,
substitute for each share of Common Stock available under this Plan, whether or not then subject to
an outstanding award, the number and class of shares into which each outstanding share of Common
Stock shall be converted pursuant to such Change in Control. In the event of any such
substitution, the purchase price per share in the case of an option and the base price in the case
of an SAR shall be appropriately adjusted by the Committee, such adjustments to be made in the case
of outstanding options and SARs without an increase in the aggregate purchase price or base price.

     (b) “Change in Control” shall mean:

     (1) the acquisition by any individual, entity or group (a “Person”), including any
“person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial
ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 25% or more of
either (i) the then outstanding shares of common stock of the Company (the “Outstanding Common
Stock”) or (ii) the combined voting power of the then outstanding securities of the Company
entitled to vote generally in the election of directors (the “Outstanding Voting
Securities”); excluding, however, the following: (A) any acquisition directly from the Company
(excluding any acquisition resulting from the exercise of an exercise, conversion or exchange
privilege unless the security being so exercised, converted or exchanged was acquired directly from
the Company), (B) any acquisition by the Company, (C) any acquisition by an employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation controlled by the
Company or (D) any acquisition by an corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (3) of this Section 6.8(b); provided further, that for
purposes of clause (B), if any Person (other than the Company or any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation controlled by the Company)
shall become the beneficial owner of 25% or more of the Outstanding Common Stock or 25% or more of
the Outstanding Voting Securities by reason of an acquisition by the Company, and such Person
shall, after such acquisition by the Company, become the beneficial owner of any additional shares
of the Outstanding Common Stock or any additional Outstanding Voting Securities and such beneficial
ownership is publicly announced, such additional beneficial ownership shall constitute a Change in
Control;

     (2) individuals who, as of the date this Plan is approved by the Board of Directors
constitute the Board of Directors (the “Incumbent Board”) cease for any reason to
constitute at least a majority of such Board; provided that any individual who becomes a director
of the Company subsequent to the date this Plan is approved by the Board of Directors whose
election, or nomination for election by the Company’s stockholders, was approved by the vote of at
least a majority of the directors then comprising the Incumbent Board shall be deemed a member of
the Incumbent Board; and provided further, that any individual who was initially elected as a
director of the Company as a result of an actual or threatened election contest, as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual or
threatened solicitation of proxies or consents by or on behalf of any Person other than the Board
shall not be deemed a member of the Incumbent Board;

     (3) the consummation of a reorganization, merger or consolidation of the Company or sale of
other disposition of all or substantially all of the assets of the Company (a “Corporate 

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Transaction”); excluding, however, a Corporate Transaction pursuant to which (i) all
or substantially all of the individuals or entities who are the beneficial owners, respectively, of
the Outstanding Common Stock and the Outstanding Voting Securities immediately prior to such
Corporate Transaction will beneficially own, directly or indirectly, more than 60% of,
respectively, the outstanding shares of common stock, and the combined voting power of the
outstanding securities of such corporation entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from such Corporate Transaction (including,
without limitation, a corporation which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or indirectly) in substantially the same
proportions relative to each other as their ownership, immediately prior to such Corporate
Transaction, of the Outstanding Common Stock and the Outstanding Voting Securities, as the case may
be, (ii) no Person (other than: the Company; any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the Company; the
corporation resulting from such Corporate Transaction; and any Person which beneficially owned,
immediately prior to such Corporate Transaction, directly or indirectly, 25% or more of the
Outstanding Common Stock or the Outstanding Voting Securities, as the case may be) will
beneficially own, directly or indirectly, 25% or more of, respectively, the outstanding shares of
common stock of the corporation resulting from such Corporate Transaction or the combined voting
power of the outstanding securities of such corporation entitled to vote generally in the election
of directors and (iii) individuals who were members of the Incumbent Board will constitute at least
a majority of the members of the board of directors of the corporation resulting from such
Corporate Transaction; or

     (4) the consumption of a plan of complete liquidation or dissolution of the Company.

     (c) (1) With respect to any optionee who is subject to Section 16 of the Exchange Act,
notwithstanding the exercise period contained in any Agreement to which such optionee is a party
and notwithstanding the expiration date of the term of such option (other than an Incentive Stock
Option), in the event the Company is involved in a business combination which is intended to be
treated as a pooling of interests for financial accounting purposes (a “Pooling
Transaction”) or pursuant to which such optionee receives a substitute option to purchase
securities of any entity, including an entity directly or indirectly acquiring the Company, then
each option (or option in substitution thereof) held by such optionee shall be exercisable to the
extent set forth in the Agreement evidencing such option until and including the latest of (x) the
expiration date of the term of the option, (y) the date which is six months and one day after the
consummation of such business combination and (z) the date which is ten business days after the
date of expiration of any period during which such optionee may not dispose of a security issued in
the Pooling Transaction in order for the Pooling Transaction to be accounted for as a pooling of
interests; and

     (2) With respect to any holder of an SAR (other than an SAR which may be settled only for
cash) who is subject to Section 16 of the Exchange Act, notwithstanding the exercise periods set
forth in any Agreement to which such holder is a party, and notwithstanding the expiration date of
the term of such SAR (other than a Tandem SAR which is related to an Incentive Stock Option), in
the event the Company is involved in a Pooling Transaction or pursuant to which such holder
receives a substitute SAR relating to any entity, including an entity directly or indirectly
acquiring the Company, then each such SAR (or SAR in substitution thereof) held by such holder
shall be exercisable to the extent set forth in the Agreement evidencing such SAR

18

 

until and including the latest of (x) the expiration date of the term of such SAR, (y) the
date which is six months and one day after the consummation of such business combination and (z)
the date which is ten business days after the date of expiration of any period during which such
holder many not dispose of a security issued in the Pooling Transaction in order for the Pooling
Transaction to be accounted for as a pooling of interests.

6.9 No Right of Participation or Employment. No person shall have any right to participate in this
Plan. Neither this Plan nor any award made hereunder shall confer upon any person any right to
continued employment by the Company, any Subsidiary or any affiliate of the Company or affect in
any manner the right of the Company, any Subsidiary or any affiliate of the Company to terminate
the employment of any person at any time without liability hereunder.

6.10 Rights as Stockholder. No person shall have any right as a stockholder of the Company with
respect to any shares of Common Stock or other equity security of the Company which is subject to
an award hereunder unless and until such person becomes a stockholder of record with respect to
such shares of Common Stock or equity security.

6.11 Governing Law. This Plan, each award hereunder and the related Agreement, and all
determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the
Code or the laws of the United States, shall be governed by the laws of the State of Delaware and
construed in accordance therewith without giving effect to the principles of conflicts of laws.

19

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