Document:

Exhibit
10.1

 

EPIQ SYSTEMS, INC.

1995 STOCK OPTION PLAN

AS AMENDED THROUGH JUNE 2, 2010

 

I. PURPOSE

 

The purposes of the EPIQ
Systems, Inc. 1995 Stock Option Plan (the “Plan”) are to: (1) closely
associate the interests of the directors, officers and all other employees of
EPIQ Systems, Inc. (the “Corporation”) with the interests of the
shareholders by reinforcing the relationship between participants’ rewards and
shareholder gains; (2) provide directors, officers and all other employees
with an equity ownership in the Corporation commensurate with corporate
performance, as reflected in increased shareholder value; (3) maintain
competitive compensation levels; and (4) provide an incentive to officers
and all other employees for continuous employment with the Corporation.

 

II. ADMINISTRATION

 

(a)           The Plan shall be
administered by the Board of Directors of the Corporation (the “Board”) or a
Stock Option Plan Committee (“Committee”) of the Board.  Unless the Committee is composed solely of
not less than two members of the Board who qualify as “Non-Employee Directors”
under Rule 16b-3 or its successors promulgated under the Securities
Exchange Act of 1934, as amended (“Rule 16b-3”), all grants of stock
options under the Plan to officers and directors of the Corporation shall be
made by the Board. (The administrator of the Plan shall be referred to herein
as the “Committee”, regardless of whether the Plan is administered by the Board
or the Committee).  In addition to its
duties with respect to the Plan stated elsewhere in the Plan, the Committee
shall have full authority, consistent with the Plan, to interpret the Plan, to
promulgate such rules and regulations with respect to the Plan as it deems
desirable, to delegate its ministerial responsibilities hereunder to appropriate
persons and to make all other determinations necessary or desirable for the
administration of the Plan.  All
decisions, determinations and interpretations of the Committee shall be binding
upon all persons.

 

(b)           Stock options
granted pursuant to the Plan (“Options”) shall be either incentive stock
options (“ISOs”) intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”), or nonqualified stock options (“NSOs”)
not intended to qualify under Section 422 of the Code.  References in this Plan to Options shall
include both ISOs and NSOs.

 

(c)           The Committee
shall administer the Plan in a manner necessary to establish and maintain the
Options intended to constitute ISOs as ISOs, and the Options intended to constitute
NSOs as NSOs.  Accordingly, only
employees of the Corporation will be eligible for grants of ISOs.  However, the Corporation makes no
representation that the Options designated as ISOs and the Options designated
as NSOs will qualify at the time of grant as ISOs and NSOs, respectively, or
will continue to qualify as ISOs and NSOs respectively.  Nor does the Corporation make any
representation concerning the tax consequences to any person upon receipt or
exercise of any Option hereunder or the subsequent sale of Common Stock
acquired thereunder.

 

III. SHARES SUBJECT TO THE PLAN

 

Shares of common stock that may be issued
under the Plan shall be the common stock, one cent ($.01) par value, of the
Corporation (“Common Stock”).  The
aggregate number of shares of Common Stock, subject to adjustment pursuant to Article XVI,
which may be delivered on exercise of the Options is 4,500,000 and such amounts
of shares of Common Stock shall be, and hereby are reserved for such
purpose.  Such shares may be previously
issues shares reacquired by the Corporation or authorized but unissued
shares.  If any Option expires,
terminates or is canceled for any reason, without having been exercised in
full, the shares 

 

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covered by the unexercised portion of such Option shall again be
available for Options, within the limit specified above.

 

IV. PARTICIPANTS

 

All members of the Board and
all employees of the Corporation, or, if applicable, its subsidiaries,
including employees who are members of the Board, shall be eligible to
participate in the Plan; provided, however, that only employees of the
Corporation shall be granted ISOs. 
Subject to the foregoing, the Committee shall, from time to time,
determine, in its discretion, the directors and employees, who shall be
eligible for participation in the Plan (the “Participants”).  (For purposes of the Plan, the term “Participant(s)”
shall, when appropriate, include any person permitted to exercise an Option in
accordance with the terms of the Plan.) 
A member of the Board who is not an employee of the Corporation shall
not be eligible to receive ISOs.

 

V. GRANTS OF OPTIONS

 

(a)           The Committee
shall in its discretion determine the time or times when Options shall be
granted and the number of shares of Common Stock to be subject to each Option,
except that no Option may be granted more than ten years after the effective
date hereof.

 

(b)           The Committee may
in its discretion grant to Participants who are employees of the Corporation
either ISOs, NSOs or a combination of both and shall at the time the Option is
granted designate whether the Option is an ISO or NSO.

 

(c)           The Committee may
only grant NSOs to Participants who are not employees of the Corporation.

 

(d)           At any given
time, a share of Common Stock may be subject to only one of the two types of
Options that may be issued under the Plan.

 

(e)           With respect to
ISOs granted under the Plan, the aggregate fair market value (determined as of
the date the Option is granted) of the Common Stock with respect to which ISOs
are exercisable for the first time by the Participant during any calendar year
under all stock option plans of the Corporation and its subsidiaries shall not
exceed $100,000.  Notwithstanding the
provisions for acceleration of the date an Option is first exercisable in Article VII
and Article VIII, in no event shall the date that an ISO is first
exercisable be accelerated under this Plan if the acceleration would cause an
ISO of a Participant to exceed the limit set forth in this paragraph.

 

(f)            No Option
intended to constitute an ISO shall be granted to an employee who, at the time
the Option is granted, owns (within the meaning of Section 422(b)(6) of
the Code) Common Stock possessing more than 10 percent of the total combined
voting power of all classes of stock of the Corporation or, if applicable, any
of its subsidiaries (hereinafter referred to as a “Ten Percent Shareholder”)
unless (1) the purchase price of the Common Stock subject to such Option
shall be, subject to adjustment pursuant to Article XVI, at least 110
percent of the fair market value of the Common Stock on the day the Option is
granted determined in accordance with Article VI which relates to the
method for determining the fair market value of the Common Stock on the date
the ISO is granted, and (2) the Option by its terms is not exercisable
after the expiration of five years from the date such Option is granted.

 

(g)           Each Option shall
be evidenced by a written Option Agreement which shall (1) state the terms
and conditions of the Option in accordance with the Plan; and (2) contain
such additional provisions as may be required under applicable laws,
regulations, and rules or otherwise consistent with the terms of the Plan
as the Committee may determine.

 

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VI. OPTION PRICE

 

(a)           The purchase
price of a share of Common Stock subject to an NSO shall be, subject to
adjustment pursuant to Article XVI, an amount equal to the fair market
value of the Common Stock on the day the NSO is granted.

 

(b)           Except as
provided in paragraph (f) of Article V relating to ISOs issued to Ten
Percent Shareholders, the purchase price of a share of Common Stock subject to
an ISO shall be, subject to adjustment pursuant to Article XVI, an amount equal
to the fair market value of the Common Stock on the day the ISO is granted.

 

(c)           The fair market
value shall be the closing price at which the Common Stock is traded on the day
the NSO or ISO is granted. For this purpose, the closing price of the Common
Stock on any business day shall be (i) if such Common Stock is listed or
admitted for trading on any United States national securities exchange, or if
actual transactions are otherwise reported on a consolidated transaction
reporting system, the last reported sale price of Common Stock on such exchange
or reporting system, as reported in any newspaper of general circulation, (ii) if
the Common Stock is quoted on the National Association of Securities Dealers
Automated Quotations System (“NASDAQ”), or any similar system of automated
dissemination of quotations of securities prices in common use, the closing bid
quotation for such day of the Common Stock on such system, or (iii) if
neither clause (i) or (ii) is applicable, the mean between the high
bid and low ask quotations for the Common Stock as reported by the National
Quotation Bureau, Incorporated if at least two securities dealers have inserted
both bid and ask quotations for the Common Stock on at least 5 of the 10
preceding days.

 

(d)           Except for adjustments pursuant to Article XVI, the
purchase price for any outstanding NSO or ISO granted under the Plan may not be
decreased after the date of grant nor may an outstanding NSO or ISO granted
under the Plan be surrendered to the Company as consideration for the grant of
a new option with a lower exercise price.

 

VII. OPTION PERIOD; EXERCISE RIGHTS

 

(a)           Except as
provided in paragraph (f) of Article V relating to ISOs issued to Ten
Percent Shareholders, each Option shall be exercisable for a term as the Committee
shall determine, but not more than 10 years from the date it is granted, and
shall be subject to earlier termination as provided in Article VIII.

 

(b)           Unless
specifically provided by the Committee in its sole discretion, an Option shall
become exercisable upon its grant.

 

VIII. EXERCISE RIGHTS UPON TERMINATION OF EMPLOYMENT

 

(a)           If a Participant
terminates employment on account of becoming disabled, the Participant may
exercise the Option in whole or in part within one year after the date of
disability, but in no event later than the date on which it would have expired
if the Participant had not become disabled.

 

For this purpose, a
Participant shall be deemed to be disabled if he or she is determined to be
disabled for purposes of meeting any insurance requirements under policies
provided by the Corporation.  If no such
policies are in effect, disability shall have the same meaning as set forth in Section 22(e) of
the Code.

 

(b)           If a Participant
dies during a period in which he or she is entitled to exercise an Option
(including the periods referred to in paragraphs (a) and (d) of this
Article), the Option may be exercised at any time within its remaining term as
shall be prescribed in the Option Agreement, but in no event later than the
date on which it would have expired if the Participant had lived, or one year
after the Participant’s death, whichever date is earlier, by the Participant’s
executor or administrator or by any person or persons who shall

 

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have acquired the Option directly from the
Participant by will or the laws of descent and distribution.  The Option may be exercised in whole or in
part.

 

(c)           If a Participant’s
employment with the Corporation or a subsidiary shall be terminated for cause,
he or she shall forfeit any and all outstanding Option rights and such rights
shall be deemed to have lapsed for purposes hereof as of the date of the
Participant’s termination of service.

 

(d)           If a Participant
ceases to be employed by the Corporation or a subsidiary for any reason other
than disability, death or termination for cause during a period in which he or
she is entitled to exercise an Option, the Participant’s Option shall terminate
three months after the date of such cessation of employment, but in no event
later than the date on which it would have expired if such cessation of
employment had not occurred.  During such
period the Option may be exercised only to the extent that the Participant was
entitled to do so at the date of cessation of employment.  The employment of a Participant shall not be
deemed to have ceased upon his or her absence from the Corporation or a
subsidiary on a leave of absence granted in accordance with the usual
procedures of the Corporation or such subsidiary.

 

(e)           No acceleration
of the exercise date of an ISO shall occur pursuant to this Article if
such earlier exercise would cause an ISO to violate paragraph (e) of Article V.

 

IX. METHOD OF EXERCISE

 

An Option shall be deemed
exercised when (i) the Corporation has received written notice of such
exercise in accordance with the terms of the Option, (ii) full payment of
the aggregate exercise price of the shares of Common Stock as to which the
Option is exercised has been made, and (iii) arrangements that are satisfactory
to the Committee in its sole discretion have been made for the Participant’s
payment to the Corporation of the amount that is necessary for the Corporation
to withhold taxes in accordance with applicable Federal, state or local tax
withholding requirements.  The exercise
price of any share of Common Stock purchased, and any required tax payment,
shall be paid in cash, by the tender of mature shares of Common Stock, or
both.  If payment is made in cash, it may
be made by certified or official bank check, personal check or money order. If
payment is made by the tender of mature shares of Common Stock, the fair market
value of each such share shall be determined as of the day the shares are
tendered for payment, in a manner consistent with the determination of fair
market value under paragraph (c) of Article VI.  Any excess of the value of the tendered
shares over the purchase price will be returned to the Participant as follows:

 

(i)            Any
whole shares remaining in excess of the purchase price will be returned to the
Participant in kind, and may be represented by one or more certificates as
determined by the Corporation in its sole discretion.

 

(ii)           Any
partial Shares remaining in excess of the purchase price will be returned to
the Participant in cash.

 

No Participant shall be deemed to be a holder
of any shares of Common Stock subject to an Option unless and until a stock
certificate or certificates for such shares are issued to such person(s) under
the terms of the Plan.  No adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights for which the
record date is prior to the date such stock certificate is issued, except as
expressly provided in Article XVI.

 

For purposes of this Article IX, “mature
shares” shall mean those shares of Common Stock held by Participant for at
least six (6) months, with the measurement of the beginning of such six (6) month
period commencing with those shares owned by Participant.

 

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X. WITHHOLDING TAXES

 

Whenever the Corporation
proposes or is required to issue or transfer shares of Common Stock under the
Plan, the Corporation shall have the right to require the Participant to remit
to the Corporation an amount sufficient to satisfy any Federal, state and/or
local withholding tax requirements prior to the delivery of any certificate or
certificates for such shares. 
Alternatively, the Corporation may issue or transfer such shares of
Common Stock net of the number of shares sufficient to satisfy the withholding
tax requirements.  For withholding tax
purposes, the shares of Common Stock shall be valued on the date the
withholding obligation is incurred.

 

XI. NONTRANSFERABILITY OF OPTIONS

 

Each Option shall be
nonassignable and nontransferable by the Participant other than by will or the
laws of descent and distribution.  Each
Option shall be exercisable during the Participant’s lifetime only by the
Participant.

 

XII. REPURCHASE OF SHARES BY CORPORATION

 

The Corporation is under no
obligation to repurchase Common Stock acquired pursuant to the exercise of an
Option hereunder.

 

XIII. USE OF PROCEEDS

 

The proceeds received by the
Corporation from the sale by it of shares of Common Stock to Participants exercising
Options pursuant to the Plan will be used for the general purposes of the
Corporation.

 

XIV. LAWS AND REGULATIONS

 

(a)           If any provision
of the Plan should be held invalid or illegal for any reason, such
determination shall not affect the remaining provisions hereof, but instead the
Plan shall be construed and enforced as if such provision had never been
included in the Plan.  Without limiting
the generality of the foregoing, transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3.  To the extent any provision of the Plan or
action by the Committee hereunder is inconsistent with the foregoing
requirements, it shall be deemed null and void.

 

(b)           The
determinations and the interpretation and construction of any provision of the
Plan by the Committee shall be final and conclusive.  This Plan shall be governed by the laws of
the State of Missouri.  Headings
contained in this Plan are for convenience only and shall in no manner be
construed as part of this Plan.  Any
reference to the masculine, feminine, or neuter gender shall be a reference to
such other gender as is appropriate.

 

XV. ISSUANCE OF SHARES OF COMMON STOCK

 

As a condition of any sale
or issuance of shares of Common Stock upon exercise of any Option, the
Committee may require such agreements or undertakings, if any, as the Committee
may deem necessary or advisable to assure compliance with any applicable law or
regulation include, but not limited to, the following:

 

(a)           a
representation and warranty by the Participant to the Corporation, at the time
any Option is exercised, that the Participant is acquiring the shares of Common
Stock to be issued for investment and not with a view to, or for sale in
connection with, the distribution of any such shares; and

 

5

 

(b)           a
representation, warranty and/or agreement to be bound by any legends that are,
in the opinion of the Committee, necessary or appropriate to comply with the
provisions of any securities law deemed by the Committee to be applicable to
the issuance of the shares of Common Stock and are endorsed upon the share
certificates.

 

XVI. ADJUSTMENT UPON CHANGES IN CAPITALIZATION

 

(a)           In the event of a
reorganization, recapitalization, stock split, stock dividend, combination of
shares, merger, consolidation, distribution of assets, or any other change in
the corporate structure or shares of the Company, the Committee, as necessary
to prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, shall appropriately and equitably make
such adjustment in the number and kind of Shares available for issuance under
this Plan (including, without limitation, the total number of Shares available
for issuance under this Plan pursuant to Section III), the number and kind
of options, and the exercise price of outstanding options; provided, in each
case, that with respect to grants of ISOs intended to qualify as ISOs after
such adjustment, no such adjustment shall be authorized to the extent such
adjustment would cause the Incentive Stock Option to violate Section 424(a) of
the Code.  Any such adjustment shall be
final, conclusive and binding for all purposes of this Plan.

 

(b)           Except as
otherwise expressly provided herein, the issuance by the Corporation of shares
of its capital stock of any class, or securities convertible into shares of
capital stock of any class, either in connection with a direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Corporation convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or exercise price of the shares of Common Stock then
subject to outstanding Options granted under the Plan.

 

(c)           Without limiting
the generality of the foregoing, the existence of outstanding Options granted
under the Plan shall not affect in any manner the right or power to the
Corporation to make, authorize or consummate (i) any or all adjustments,
recapitalizations, reorganizations or other changes in the Corporation’s
capital structure or its business; (ii) any merger or consolidation of the
Corporation; (iii) any issue by the Corporation of debt securities, or
preferred or preference stock that would rank above the shares of Common Stock
subject to outstanding Options; (iv) the dissolution or liquidation of the
Corporation; (v) any sale, transfer or assignment of all or any part of
the assets or business of the Corporation; or (vi) any other corporate act
or proceedings, whether of a similar character or otherwise.

 

XVII. NO EMPLOYMENT RIGHTS

 

Nothing in the Plan shall
confer upon any employee of the Corporation or of a subsidiary, if applicable,
any right to continued employment, or interfere with the right of the
Corporation or a subsidiary to terminate his or her employment at any time, for
any reason.

 

XVIII. TERM OF PLAN; TERMINATION; AMENDMENTS

 

(a)           This Plan is
effective as of October 17, 1995 (the “Effective Date”), the date of its
original adoption by the unanimous consent of the Board and the unanimous
consent of the Shareholders of the Corporation. 
This Plan shall continue in effect until all Options granted hereunder
have expired or been exercised, unless sooner terminated under the provisions
relating thereto.  No Option shall be
granted after 10 years from the Effective Date.

 

(b)           The Board may
from time to time amend, terminate or suspend the Plan or an Option, provided,
however that, except to the extent provided in Article XVI, no such
amendment may (i) without approval by the Corporation’s shareholders,
increase the number of shares of Common Stock reserved for Options or change
the class of persons eligible to receive Options or involve any other change or
modification requiring shareholder approval under Rule 16b-3, (ii) permit
the granting of Options that expire beyond the

 

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maximum period described in Article V, (iii) extend
the termination date of the Plan as set forth in Article V, (iv) cause
the Plan to be ineligible to issue ISOs, (v) without approval by the
Corporation’s shareholders, amend any outstanding NSO or ISO in a manner that
would be deemed to be a repricing under the rules of the New York Stock
Exchange or NASDAQ, (vi) without approval by the Corporation’s
shareholders, amend Article VI, (vii) without approval by the
Corporation’s shareholders, materially increase in any other way the benefits
accruing to Participants or (viii) except to the extent otherwise
specifically provided in the Plan, substantially impair any Option previously
granted to a Participant without the consent of such Participant.  Any termination or suspension of the Plan
shall not affect Options already granted and such Options shall remain in full
force and effect as if this Plan had not been terminated or suspended.  No Option may be granted while the Plan is
suspended or after it is terminated.

 

(c)           Except as set
forth herein, the Board or the Committee, as the case may be, may at any time
or times amend the Plan, or amend any outstanding Option or Options for the
purpose of satisfying the requirements of any changes in applicable laws or
regulations or for any other purpose which at the time may be permitted by
law.  In the event that applicable rules or
regulations are promulgated by the Internal Revenue Service which permit the
acceleration of the date an Option is first exercisable without violating the
$100,000 limit described in paragraph (e) of Article V, the Committee
is authorized to act on behalf of the Board in amending the Plan to permit
acceleration in conformity with such rules or regulations.

 

(d)           Nothing contained
in this Plan shall be construed to prevent the Corporation or any subsidiary,
if applicable, from taking any corporate action which is deemed by the
Corporation or any such subsidiary to be appropriate or in its best interest,
whether or not such action would have an adverse effect on the Plan or any
award made under the Plan.  No employee,
beneficiary, other person shall have any claim against the Corporation or any
subsidiary as a result of any such action.

 

XIX. INDEMNIFICATION OF COMMITTEE AND BOARD

 

The Corporation may,
consistent with applicable law, indemnify members of the Committee against any
liability, loss or other financial consequence suffered by them with respect to
any act or omission of the Committee or its members relating to the Plan to the
same extent and subject to the same conditions as specified in the indemnity
provisions contained in the By-Laws of the Corporation.

 

XX. INTERPRETATION

 

(a)           If any provision
of the Plan should be held invalid or illegal for any reason, such
determination shall not affect the remaining provisions hereof, but instead the
Plan shall be construed and enforced as if such provision had never been
included in the Plan.  Without limiting
the generality of the foregoing, transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors promulgated
under the Securities Exchange Act of 1934 and, in the case of ISOs, with all
applicable conditions of Section 422 of the Code or its successors and
regulations promulgated thereunder.  To
the extent any provision of the Plan or action by the Committee or Board
hereunder is inconsistent with the foregoing requirements, it shall be deemed
null and void.

 

(b)           The
determinations and the interpretation and construction of any provision of the
Plan by the Committee shall be final and conclusive.

 

7Exhibit
10.2

 

EPIQ SYSTEMS, INC.

2004 EQUITY INCENTIVE PLAN

 

(Amended and Restated, Effective June 2, 2010)

 

1.             Purpose.

 

This plan shall be known
as the Epiq Systems, Inc. Amended and Restated Equity Incentive Plan (this
“Plan”).  The purpose of this Plan shall
be to promote the long-term growth and profitability of Epiq Systems, Inc.
(the “Company”) and its Subsidiaries by (i) providing certain directors,
officers and employees of, and certain other individuals who perform services
for, or to whom an offer of employment has been extended by, the Company and
its Subsidiaries with incentives to maximize stockholder value and otherwise
contribute to the success of the Company and (ii) enabling the Company to
attract, retain and reward the best available persons for positions of
responsibility.  Grants of incentive
stock options, non-qualified stock options, stock appreciation rights (“SARs”),
either alone or in tandem with options, restricted stock, or any combination of
the foregoing may be made under this Plan.

 

2.             Definitions.

 

(a)            “Award” means any Non-Qualified
Stock Option, Incentive Stock Option, Stock Appreciation Right, Restricted
Stock, Shares, cash or Annual Incentive Award.

 

(b)           “Annual Incentive Award” means a
performance bonus determined under Section 9
of this Plan that is a Restricted Stock or cash bonus awards.

 

(c)           “Board of Directors” and “Board” mean
the board of directors of the Company.

 

(d)           “Cause,” unless otherwise defined in
a participant’s award grant agreement or in a participant’s written employment
arrangement with the Company or any of its Subsidiaries in effect on the Grant
Date (as amended from time to time thereafter), means the occurrence of one or
more of the following events:

 

(i)           Conviction of a felony or any crime
or offense lesser than a felony involving the property of the Company or a
Subsidiary; or

 

(ii)          Conduct that has caused demonstrable
and serious injury to the Company or a Subsidiary, monetary or otherwise; or

 

(iii)         Willful refusal to perform or
substantial disregard of duties properly assigned, as determined by the
Company; or

 

(iv)        Breach of duty of loyalty to the Company
or a Subsidiary or other act of fraud or dishonesty with respect to the Company
or a Subsidiary.

 

The definition of Cause set forth in a participant’s award grant
agreement shall control if such definition is different from the definition of
Cause set forth in this Plan.

 

(e)           “Change in Control” means the
occurrence of one of the following events:

 

(i)            if any “person” or “group” as those
terms are used in Sections 13(d) and 14(d) of the Exchange Act or any
successors thereto  is or becomes
the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act or
any successor thereto), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company’s then
outstanding voting securities; or

 

 

(ii)           during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board and
any new directors whose election by the Board or nomination for election by the
Company’s stockholders was approved by at least two-thirds of the directors
then still in office who either were directors at the beginning of the period
or whose election was previously so approved, cease for any reason to
constitute a majority thereof; or

 

(iii)          the stockholders of the Company
approve a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation (A) which would result in all or a
portion of 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 50% of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation or (B) by
which the corporate existence of the Company is not affected and following
which the Company’s chief executive officer and directors retain their
positions with the Company (and constitute at least a majority of the Board);
or

 

(iv)          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 the Company’s
assets.

 

(f)            “Code”  means the Internal Revenue Code of 1986, as
amended.

 

(g)           “Committee” means the Compensation
Committee of the Board or such other committee that consists solely of two or
more members of the Board, each of whom is a “Non-Employee Director” within the
meaning of SEC Rule 16b-3 and is an “outside director” within the meaning
of Treasury Regulation §1.162-27(e)(3); provided that, if for any reason the
Committee shall not have been appointed by the Board to administer this Plan,
all authority and duties of the Committee under this Plan shall be vested in
and exercised by the Board, and the term “Committee” shall be deemed to mean
the Board for all purposes herein.

 

(h)           “Common Stock” means the Common
Stock, par value $0.01 per share, of the Company, and any other shares into
which such stock may be changed by reason of a recapitalization,
reorganization, merger, consolidation or any other change in the corporate
structure or capital stock of the Company.

 

(i)            “Competition” is deemed to occur if
a person whose employment with the Company or its Subsidiaries has terminated
obtains a position as a full-time or part-time employee of, as a member of the
board of directors of, or as a consultant or advisor with or to, or acquires an
ownership interest in excess of 5% of, a corporation, partnership, firm or
other entity that engages in any of the businesses of the Company or any
Subsidiary with which the person was involved in a management role at any time
during his or her last five years of employment with or other service for the
Company or any Subsidiaries.

 

(j)            “Covered Employee” is any Eligible
Employee who (i) as of the close of the taxable year, is the chief
executive officer of the Company or is an individual acting in that capacity,
or (ii) the total compensation of the employee for the taxable year is
required to be reported to shareholders under the executive compensation
disclosure rules under the Securities Exchange Act of 1934.

 

(k)           “Disability” means a disability that
would entitle an eligible participant to payment of monthly disability payments
under any Company long-term disability plan or as otherwise determined by the
Committee.

 

(l)            “Eligible Person” means those
directors (including Non-Employee Directors), officers (including non-employee
officers) and employees of, and other individuals performing services for, or
to whom an offer of employment has been extended by, the Company and its
Subsidiaries selected by the Committee (including participants located outside
the United States).

 

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(m)          “Exchange Act” means the Securities
Exchange Act of 1934, as amended.

 

(n)           “Family Member” has the meaning given
to such term in General Instructions A.1(a)(5) to Form S-8 under the
Securities Act of 1933, as amended, and any successor thereto.

 

(o)           “Fair Market Value” of a share of
Common Stock of the Company means, as of the date in question, the
officially-quoted closing selling price of the stock (or if no selling price is
quoted, the bid price) on the principal securities exchange on which the Common
Stock is then listed for trading (including for this purpose the NASDAQ
National Market) (the “Market”) for the applicable trading day or, if the
Common Stock is not then listed or quoted in the Market, the Fair Market Value
shall be the fair value of the Common Stock determined in good faith by the
Committee; provided, however, that when shares received upon exercise of an
option are immediately sold in the open market, the net sale price received may
be used to determine the Fair Market Value of any shares used to pay the
exercise price or applicable withholding taxes and to compute the withholding
taxes.

 

(p)           “Grant Date” means the date on which
the Board or the Committee determines and approves the grant of an Award.  Such approval shall include, but not be
limited to, a final determination as to the Award recipient(s), exercise price
(if any), number of Awards or shares subject to an Award granted to each
recipient and the type of such Awards (e.g., ISO, NSO, Restricted Stock).

 

(q)           “Incentive Stock Option” means an
option conforming to the requirements of Section 422 of the Code and any
successor thereto.

 

(r)            “Non-Employee Director” has the
meaning given to such term in Rule 16b-3 under the Exchange Act and any
successor thereto.

 

(s)           “Non-qualified Stock Option” means
any stock option other than an Incentive Stock Option.

 

(t)            “Performance-Based Exception” means
the performance-based exception from the tax deductibility limitations of Code Section 162(m) contained
in Code Section 162(m)(4)(C) (including the special provision for
options thereunder).

 

(u)           “Performance Goals” means the
objective criteria determined by the Committee, the degree of attainment of
which will affect the amount of an Annual Incentive Award.  Performance Goals may contain threshold and
maximum levels of achievement and must be based upon one or more of the
Performance Measures set forth in Section 9(c)(i).

 

(v)           “Performance Period” means that period
established by the Committee at the time any Award is granted or at any time
thereafter during which the attainment of performance goals specified by the
Committee with respect to that Award are to be measured.  Except as provided in Section 9, a Performance Period may be
a year or a longer or shorter period.

 

(w)          “Retirement” means retirement as
defined under any Company pension plan or retirement program or termination of
one’s employment on retirement with the approval of the Committee.

 

(x)            “Shares” means any share of the
Common Stock of the Company.

 

(y)           “Subsidiary” means a corporation or
other entity of which outstanding shares or ownership interests representing
50% or more of the combined voting power of such corporation or other entity
entitled to elect the management thereof, or such lesser percentage as may be
approved by the Committee, are owned directly or indirectly by the Company.

 

(z)            “Year” means the fiscal year of the
Company.

 

3

 

3.             Administration.

 

The Plan shall be
administered by the Committee; provided that the Board may, in its discretion,
at any time and from time to time, resolve to administer this Plan, in which
case the term “Committee” shall be deemed to mean the Board for all purposes
herein.  Subject to the provisions of
this Plan, the Committee shall be authorized to:

 

(i)             select persons to participate in
this Plan;

 

(ii)            determine the form and substance of
grants made under this Plan to each participant, and the conditions and restrictions,
if any, subject to which such grants will be made;

 

(iii)           certify that the conditions and
restrictions applicable to any grant have been met;

 

(iv)         modify the terms of grants made under
this Plan;

 

(v)           interpret this Plan and grants made
thereunder;

 

(vi)          make any adjustments necessary or
desirable in connection with grants made under this Plan to eligible
participants located outside the United States; and

 

(vii)         adopt, amend, or rescind such rules and
regulations, and make such other determinations, for carrying out this Plan as
it may deem appropriate.

 

Decisions of the
Committee on all matters relating to this Plan shall be in the Committee’s sole
discretion and shall be conclusive and binding on all parties.  The validity, construction, and effect of
this Plan and any rules and regulations relating to this Plan shall be
determined in accordance with applicable federal and state laws and rules and
regulations promulgated pursuant thereto. 
No member of the Committee and no officer of the Company shall be liable
for any action taken  or omitted to be
taken by such member, by any other member of the Committee or by any officer of
the Company in connection with the performance of duties under this Plan, except
for such person’s own willful misconduct or as expressly provided by statute.

 

The expenses of this Plan
shall be borne by the Company.  The Plan
shall not be required to establish any special or separate fund or make any
other segregation of assets to assume the payment of any Award under this Plan,
and rights to the payment of such awards shall be no greater than the rights of
the Company’s general creditors.

 

4.             Shares Available for this Plan.

 

Subject to adjustments as
provided in Section 15, an
aggregate of 5,000,000 shares of Common Stock (the “Shares”) may be issued
pursuant to this Plan.  Such Shares may
be in whole or in part authorized and unissued or held by the Company as
treasury shares.  If any grant under this
Plan expires or terminates unexercised, becomes unexercisable or is forfeited
as to any Shares, or is tendered or withheld as to any shares in payment of the
exercise price of the grant or the taxes payable with respect to the exercise,
then such unpurchased, forfeited, tendered or withheld Shares shall thereafter
be available for further grants under this Plan unless, in the case of options
granted under this Plan, related SARs are exercised.

 

Without limiting the
generality of the foregoing provisions of this Section 4 or the generality of the provisions of Sections 3, 6 or 17 or any other section of
this Plan, the Committee may, at any time or from time to time, and on such
terms and conditions (that are consistent with and not in contravention of the
other provisions of this Plan) as the Committee may, in its sole discretion,
determine, enter into agreements (or take other actions with respect to the
options) for new options containing terms (including exercise prices) more (or
less) favorable than the outstanding options.

 

4

 

5.             Participation.

 

Participation in this
Plan shall be limited to Eligible Persons. 
Nothing in this Plan or in any grant thereunder shall confer any right
on a participant to continue in the employ as a director  or officer of or in the performance of services
for the Company or shall interfere in any way with the right of the Company to
terminate the employment or performance of services or to reduce the
compensation or responsibilities of a participant at any time.  By accepting any Award under this Plan, each
participant and each person claiming under or through him or her shall be
conclusively deemed to have indicated his or her acceptance and ratification
of, and consent to, any action taken under this Plan by the Company, the Board
or the Committee.

 

Incentive Stock Options,
Non-qualified Stock Options, SARs, alone or in tandem with options, restricted
stock awards, or any combination thereof may be granted to such persons and for
such number of Shares as the Committee shall determine subject to the terms of
this Plan (such individuals to whom grants are made being sometimes herein
called “optionees” or “grantees”). 
Determinations made by the Committee under this Plan need not be uniform
and may be made selectively among eligible individuals under this Plan, whether
or not such individuals are similarly situated. 
A grant of any type made hereunder in any one year to an eligible
participant shall neither guarantee nor preclude a further grant of that or any
other type to such participant in that year or subsequent years.

 

6.             Incentive and Non-qualified
Stock Options and SARs.

 

The Committee may from
time to time grant to eligible participants Incentive Stock Options,
Non-qualified Stock Options, or any combination thereof; provided that the
Committee may grant Incentive Stock Options only to eligible employees of the
Company or its Subsidiaries (as defined for this purpose in Section 424(f) of
the Code or any successor thereto).  In
any one calendar year, the Committee shall not grant to any one participant
Non-qualified Stock Options, Incentive Stock Options or SARs to purchase a
number of shares of Common Stock in excess of 300,000 Shares.  The options granted shall take such written
form as the Committee shall determine, subject to the following terms and
conditions.

 

It is the Company’s
intent that Non-qualified Stock Options granted under this Plan not be
classified as Incentive Stock Options, that Incentive Stock Options be
consistent with and contain or be deemed to contain all provisions required
under Section 422 of the Code and any successor thereto, and that any
ambiguities in construction be interpreted in order to effectuate such
intent.  Each award grant agreement shall
specifically indicate whether the option granted is an Incentive Stock Option
or a Non-qualified Stock Option.  If an
Incentive Stock Option granted under this Plan does not qualify as such for any
reason, then to the extent of such non-qualification, the stock option
represented thereby shall be regarded as a Non-qualified Stock Option duly
granted under this Plan, provided that such stock option otherwise meets this
Plan’s requirements for Non-qualified Stock Options.

 

(a)           Price.  The price per Share deliverable upon the
exercise of each option (“exercise price”) shall be established by the
Committee and may not be less than 100% of the Fair Market Value of a share of
Common Stock as of the Grant Date of the option, and in the case of the grant
of any Incentive Stock Option to an employee who, at the time of the grant,
owns more than 10% of the total combined voting power of all classes of stock
of the Company or any of its Subsidiaries, the exercise price may not be less
than 110% of the Fair Market Value of a share of Common Stock as of the Grant
Date of the option, in each case unless otherwise permitted by Section 422
of the Code or any successor thereto.

 

(b)           Payment.  Options may be exercised, in whole or in
part, upon payment of the exercise price of the Shares to be acquired. Unless
otherwise determined by the Committee, payment shall be made (i) in cash
(including check, bank draft, money order or wire transfer of immediately
available funds), (ii) by delivery of outstanding shares of Common Stock
with a Fair Market Value on the date of exercise equal to the aggregate exercise
price payable with respect to the options exercised, (iii) by simultaneous
sale through a broker reasonably acceptable to the Committee of Shares acquired
on exercise, as permitted under Regulation T of the Federal Reserve Board, (iv) by
authorizing the Company to withhold from issuance a number of Shares issuable
upon exercise of the options which, when multiplied by the Fair

 

5

 

Market Value of a share of Common Stock on the date of exercise, is
equal to the aggregate exercise price payable with respect to the options so
exercised or (v) by any combination of the foregoing.

 

In the event a
grantee elects to pay the exercise price payable with respect to an option
pursuant to clause (ii) above, (A) only a whole number of share(s) of
Common Stock (and not fractional shares of Common Stock) may be tendered in
payment, (B) such grantee must present evidence acceptable to the Company
that he or she has owned any such shares of Common Stock tendered in payment of
the exercise price (and that such tendered shares of Common Stock have not been
subject to any substantial risk of forfeiture) for at least six months prior to
the date of exercise, and (C) Common Stock must be delivered to the
Company.  Delivery for this purpose may,
at the election of the grantee, be made either by (1) physical delivery of
the certificate(s) for all such shares of Common Stock tendered in payment
of the price, accompanied by duly executed instruments of transfer in a form
acceptable to the Company, or (2) direction to the grantee’s broker to
transfer, by book entry, such shares of Common Stock from a brokerage account
of the grantee to a brokerage account specified by the Company.  When payment of the exercise price is made by
delivery of Common Stock, the difference, if any, between the aggregate
exercise price payable with respect to the option being exercised and the Fair
Market Value of the shares of Common Stock tendered in payment (plus any
applicable taxes) shall be paid in cash. 
No grantee may tender shares of Common Stock having a Fair Market Value
exceeding the aggregate exercise price payable with respect to the option being
exercised (plus any applicable taxes).

 

In the event a
grantee elects to pay the exercise price payable with respect to an option
pursuant to clause (iv) above, (A) only a whole number of Share(s) (and
not fractional Shares) may be withheld in payment and (B) such grantee
must present evidence acceptable to the Company that he or she has owned a
number of shares of Common Stock at least equal to the number of Shares to be
withheld in payment of the exercise price (and that such owned shares of Common
Stock have not been subject to any substantial risk of forfeiture) for at least
six months prior to the date of exercise. 
When payment of the exercise price is made by withholding of Shares, the
difference, if any, between the aggregate exercise price payable with respect
to the option being exercised and the Fair Market Value of the Shares withheld
in payment (plus any applicable taxes) shall be paid in cash.  No grantee may authorize the withholding of
Shares having a Fair Market Value exceeding the aggregate exercise price
payable with respect to the option being exercised (plus any applicable
taxes).  Any withheld Shares shall no
longer be issuable under such option.

 

(c)           Terms of Options.  The term during which each option may be
exercised shall be determined by the Committee, but no option shall be
exercisable in whole or in part more than ten years after the Grant Date, and
no Incentive Stock Option granted to an employee who at the time of the grant
owns more than 10% of the total combined voting power of all classes of stock
of the Company or any of its Subsidiaries shall be exercisable more than five years
after the Grant Date; in each case unless otherwise permitted by Section 422
of the Code or any successor thereto. 
All rights to purchase Shares pursuant to an option shall, unless sooner
terminated, expire at the date designated by the Committee.  The Committee shall determine the date on
which each option shall become exercisable and may provide that an option shall
become exercisable in installments.  The
Shares constituting each installment may be purchased in whole or in part at
any time after such installment becomes exercisable, subject to such minimum
exercise requirements as may be designated by the Committee.  Prior to the exercise of an option and
delivery of the Shares represented thereby, the optionee shall have no rights
as a stockholder with respect to any Shares covered by such outstanding option
(including any dividend or voting rights).

 

(d)           Limitations on Grants.  If required by the Code, the aggregate Fair
Market Value (determined as of the Grant Date) of Shares for which Incentive Stock
Options are exercisable for the first time by any one participant during any
calendar year under all equity incentive plans of the Company and its
Subsidiaries (as defined for this purpose in Section 424(f) of the
Code or any successor thereto) may not exceed $100,000.

 

6

 

(e)           Termination; Forfeiture.

 

(i)            Death or Disability.  If a participant ceases to be a director,
officer or employee of the Company and any Subsidiary due to death or
Disability, (A) all of the participant’s options and SARs that were
exercisable on the date of death or Disability shall remain exercisable for,
and shall otherwise terminate at the end of, a period of one year from the date
of such death or Disability, but in no event after the expiration date of the
options or SARs; provided that, in the case of Disability, the participant does
not engage in Competition during such one year period unless he or she received
written consent to do so from the Board or the Committee, and (B) all of
the participant’s options and SARs that were not exercisable on the date of
death or Disability shall be forfeited immediately upon such death or
Disability; provided, however, that such options or SARs may become fully
vested and exercisable in the discretion of the Committee.  If a participant other than a director,
officer or employee of the Company and any Subsidiary ceases to perform
services for the Company and any Subsidiary due to death or Disability, the
provisions set forth in such participant’s award grant agreement shall
control.  Notwithstanding the foregoing,
if the Disability giving rise to the termination of employment is not within
the meaning of Section 22(e)(3) of the Code or any successor thereto,
Incentive Stock Options not exercised by such participant within 3 months after
the date of termination of employment will cease to qualify as Incentive Stock
Options and will be treated as Non-qualified Stock Options under this Plan if
required to be so treated under the Code.

 

(ii)           Retirement.  If a participant ceases to be a director,
officer or employee of  the Company
and any Subsidiary upon the occurrence of his or her Retirement, (A) all
of the participant’s options and SARs that were exercisable on the date of
Retirement shall remain exercisable for, and shall otherwise terminate at the
end of, a period of 90 days after the date of Retirement, but in no event after
the expiration date of the options or SARs; provided that the participant does
not engage in Competition during such 90-day period unless he or she receives
written consent to do so from the Board or the Committee, and (B) all of
the participant’s options and SARs that were not exercisable on the date of
Retirement shall be forfeited immediately upon such Retirement; provided,
however, that such options or SARs may become fully vested and exercisable in
the discretion of the Committee.  If a
participant other than a director, officer or employee of the Company and any
Subsidiary ceases to perform services for the Company and any Subsidiary upon
the occurrence of his or her retirement, the provisions set forth in such
participant’s award grant agreement shall control.  Notwithstanding the foregoing, Incentive
Stock Options not exercised by such participant within 3 months after Retirement
will cease to qualify as Incentive Stock Options and will be treated as
Non-qualified Stock Options under this Plan if required to be so treated under
the Code.

 

(iii)          Discharge for Cause.  If a participant ceases to be a director,
officer or employee of, or to perform other services for, the Company or a
Subsidiary due to Cause, or if a participant does not become a director,
officer or employee of, or does not begin performing other services for, the
Company or a Subsidiary for any reason, all of the participant’s options and
SARs shall expire and be forfeited immediately upon such cessation or
non-commencement, whether or not then exercisable.

 

(iv)          Other Termination.  Unless otherwise determined by the Committee,
if a participant ceases to be a director, officer or employee of the Company or
a Subsidiary for any reason other than death, Disability, Retirement or Cause, (A) all
of the participant’s options and SARs that were exercisable on the date of such
cessation shall remain exercisable for, and shall otherwise terminate at the
end of, a period of 30 days after the date of such cessation, but in no event
after the expiration date of the options or SARs; provided that the participant
does not engage in Competition during such 30-day period unless he or she
receives written consent to do so from the Board or the Committee, and (B) all
of the participant’s options and SARs that were not exercisable on the date of
such cessation shall be forfeited immediately upon such cessation.  If a participant other than a director,
officer or employee of the Company and any Subsidiary ceases to perform
services for the Company and any Subsidiary for any reason other than death,
Disability

 

7

 

Retirement or Cause, the provisions set forth in such participant’s
award grant agreement shall control.

 

(v)           Change in Control.  If there is a Change in Control of the
Company, all of the participant’s options and SARs shall become fully vested
and exercisable upon such Change in Control and shall remain so until the
expiration date of the options or SARs, whether or not the grantee is
subsequently terminated.

 

7.             Stock Appreciation Rights.

 

The Committee shall have
the authority to grant SARs under this Plan, either alone or to any optionee in
tandem with options (either at the time of grant of the related option or
thereafter by amendment to an outstanding option).  SARs shall be subject to such terms and
conditions as the Committee may specify.

 

No SAR may be exercised
unless the Fair Market Value of a share of Common Stock of the Company on the
date of exercise exceeds the exercise price of the SAR or, in the case of SARs
granted in tandem with options, the exercise price of any options to which the
SARs correspond.  Prior to the exercise
of the SAR and any delivery of the related Shares represented thereby, the
participant shall have no rights as a stockholder with respect to Shares
covered by such outstanding SAR (including any dividend or voting rights).

 

SARs granted in tandem
with options shall be exercisable only when, to the extent and on the
conditions that any related option is exercisable.  The exercise of an option shall result in an
immediate forfeiture of any related SAR to the extent the option is exercised,
and the exercise of an SAR shall cause an immediate forfeiture of any related
option to the extent the SAR is exercised.

 

Upon the exercise of an
SAR, the participant shall be entitled to a distribution in an amount equal to
the difference between the Fair Market Value of a share of Common Stock on the
date of exercise and the exercise price of the SAR or, in the case of SARs
granted in tandem with options, the exercise price of any option to which the
SAR is related, multiplied by the number of Shares as to which the SAR is
exercised.  The Committee shall decide
whether such distribution shall be in cash, in Shares having a Fair Market
Value equal to such amount, or in a combination thereof.

 

All SARs will be
exercised automatically on the last day prior to the expiration date of the SAR
or, in the case of SARs granted in tandem with options, any related option, so
long as the Fair Market Value of a share of Common Stock on that date exceeds
the exercise price of the SAR or any related option, as applicable.  An SAR granted in tandem with options shall
expire at the same time as any related option expires and shall be transferable
only when, and under the same conditions as, any related option is
transferable.

 

8.             Restricted
Stock.

 

The Committee may at any time and from time to time
grant Shares of restricted stock under this Plan to such participants and in
such amounts as it determines.  Each
grant of restricted stock shall specify the applicable restrictions on such Shares,
the duration of such restrictions (which shall be at least six months except as
otherwise determined by the Committee or provided in the third paragraph of
this Section 8), and the time
or times at which such restrictions shall lapse with respect to all or a
specified number of Shares that are part of the grant.

 

The participant will be
required to pay the Company the aggregate par value of any Shares of restricted
stock (or such larger amount as the Board may determine to constitute capital
under Section 154 of the Delaware General Corporation Law, as amended, or
any successor thereto) within ten days of the Grant Date, unless such Shares of
restricted stock are treasury shares. 
Unless otherwise determined by the Committee, certificates representing
Shares of restricted stock granted under this Plan will be held in escrow by
the Company on the participant’s behalf during any period of restriction
thereon and will bear an appropriate legend specifying the applicable
restrictions thereon, and the participant will be required to execute a blank
stock power therefor.  Except as
otherwise provided by the Committee, during such period of restriction the
participant shall have all of the rights

 

8

 

of a holder of
Common Stock, including but not limited to the rights to receive dividends and
to vote, and any stock or other securities received as a distribution with
respect to such participant’s restricted stock shall be subject to the same
restrictions as then in effect for the restricted stock.

 

Unless otherwise
determined by the Committee, immediately prior to a Change in Control during
any period of restriction, all restrictions on Shares granted to such
participant shall lapse. At such time as a participant ceases to be, or in the
event a participant does not become, a director, officer or employee of, or
otherwise performing services for, the Company or its Subsidiaries for any
reason, unless otherwise determined by the Committee, all Shares of restricted
stock granted to such participant on which the restrictions have not lapsed
shall be immediately forfeited to the Company.

 

In any one calendar year,
the Committee shall not grant to any one participant Restricted Stock in excess
of 150,000 Shares.

 

9.             Annual Incentive Awards and 162(m) Compliance.

 

(a)           Section 162(m) Compliance.  If
the Committee, in its discretion, determines that it is appropriate to
establish an Annual Incentive Award for an Eligible Person, the terms of the
Annual incentive Award will comply with this Section 9.  Annual Incentive Awards are intended to
satisfy the Performance-Based Exception. 
If changes are made to Code Section 162(m) to permit
flexibility with respect to an Award or Awards available under this Plan, the
Committee may, subject to this Section 9,
make any adjustments to Annual Incentive Awards as it deems appropriate and as
permitted by the changes in Code Section 162(m).

 

(b)           Annual Incentive Award Eligibility
and Timing for Establishing Performance Goals.

 

(i)             Eligibility.  Subject to and consistent with the provisions
of this Plan, Annual Incentive Awards may be granted to an Eligible Employee
who is, or is likely to be, as of the end of the tax year in which the Company
would claim a tax deduction in connection with the Annual Incentive Award, a
Covered Employee in accordance with this Section 9.

 

(ii)            Timing.  The Committee will designate the individuals
eligible to be granted an Annual Incentive Award for a Year and establish the
objective Performance Goals for the individuals within the first 90 days of
that Year; provided, that for a
hiring or promotion after that 90-day period that makes any individual eligible
to be granted an Annual Incentive Award, the designation shall not be later
than the elapse of 25%  of the
remainder of that Year after such hiring or promotion; provided further, that if the Committee
designates a Performance Period of less than a full year, the establishment of
the Performance Goals by the Committee will be made no later than the elapse of
25% of the Performance Period.  The
opportunity to be granted an Annual Incentive Award may be evidenced by an
award grant agreement, which shall specify the individual’s bonus opportunity,
the Performance Goals, and such other terms not inconsistent with the Plan as
the Committee shall determine.

 

(c)          Performance Goals.

 

(i)             Establishment.  Within the time period prescribed in Section 9(b)(ii), the Committee shall
establish Performance Goals for the Year (which may be the same or different
for some or all Covered Employees) and shall establish the threshold and
maximum bonus opportunity for each Covered Employee for the attainment of
specified threshold and maximum Performance Goals.  Performance Goals and bonus opportunities may
be weighted for different factors and measures as the Committee determines.  Unless and until the Company’s stockholders
approve a change in the general Performance Measures set forth in this Section 9, for Annual Incentive Awards
designed to qualify for the Performance-Based Exception, objective performance
criteria

 

9

 

used to establish
Performance Goals shall be one or more of the following (each a “Performance
Measure”):

 

(A)           Earnings from continuing operations
(either in the aggregate or on a per-Share basis);

 

(B)           Growth or rate of growth in earnings
(either in the aggregate or on a per-Share basis);

 

(C)           Net income or loss (either in the
aggregate or on a per-Share basis);

 

(D)           Revenues (either operating or in
total);

 

(E)            Growth or rate of growth in revenues
(either operating or in total)

 

(F)            Net cash provided by operating
activities;

 

(G)           Growth or rate of growth in net cash
provided by operating activities;

 

(H)           Free cash flow (either in the
aggregate on a per-Share basis);

 

(I)             Earnings before interest, taxes,
depreciation, amortization, and acquisition-related expenses;

 

(J)            Growth or rate of growth in earnings
before interest, taxes, depreciation, amortization, and acquisition-related
expenses;

 

(K)           Earnings from continuing operations
(either in the aggregate or on a per-Share basis);

 

(L)            Reductions in expense levels,
determined either on a Company-wide basis or in respect of any one more
business units;

 

(M)          Expense management and employee
productivity;

 

(N)           Stockholder returns (including return
on assets, investments, equity, or sales);

 

(O)           Return measures (including return on
assets, equity, or sales);

 

(P)            Growth or rate of growth in return
measures (including return on assets, equity, or sales);

 

(Q)           Share price (including attainment of
a specified per-Share price during the Performance Period; growth measures and
total stockholder return or attainment by the Shares of a specified price for a
specified period of time);

 

(R)           Strategic business criteria,
consisting of one or more objectives based on meeting specified hiring and/or
retention of key employees, business expansion goals, objectively identified
project milestones, debt targets, and goals relating to acquisitions or
divestitures; and

 

10

 

(S)            Achievement of business or
operational goals such as market penetration, release of software upgrades,
business development and/or regulatory compliance;

 

provided that applicable Performance Measures may
be applied on a pre- or post-tax basis; and provided
further that the Committee may, on the Grant Date of an Annual
Incentive Award intended to comply with the Performance-Based Exception,
provide that the formula for such Annual Incentive Award include or exclude
items to measure specific Performance Measures such as share-based compensation
expense, acquisition related expenses, expense resulting from amortization of
debt issuance costs or other loan fees, expense resulting from amortization of
intangibles, gain or loss on extinguishment of debt, accreted interest expense,
charges or credits related to the adjustment of assets or liabilities to fair
value (for example, charges related to asset impairments or the mark-to-market
adjustment of the convertible debt embedded option),gains or losses resulting
from foreign exchange transaction or translation adjustments, restructuring
charges, gains or losses from discontinued operations, any unusual or
non-recurring charge or credit, extraordinary gains or losses, the current
period income statement effect of businesses or assets acquired or divested;
expense or income, including the cumulative effect, of any new accounting
principle adopted during the year, and, expense or income related to the
adoption of new accounting methods or principles.

 

(ii)           Flexibility
as to Timing, Weighting, Applicable Business Unit.  For
Annual Incentive Awards intended to comply with the Performance-Based
Exception, the Committee shall set the Performance Goals within the time period
prescribed by Section 162(m) of the Code.  The levels of performance required with
respect to Performance Measures may be expressed in absolute or relative levels
and may be based upon a set increase, set positive result, maintenance of the
status quo, set decrease or set negative result.  Performance Measures may differ for Annual
Incentive Awards to different grantees. 
The Committee shall specify the weighting (which may be the same or
different for multiple objectives) to be given to each performance objective
for purposes of determining the final amount payable with respect to any such
Annual Incentive Award.  Any one or more
of the Performance Measures may apply to a grantee, to the Company as a whole,
to one or more affiliates or to a department, unit, division or function within
the Company, within any one or more affiliates or any one or more joint
ventures, and may apply either alone or relative to the performance of other
businesses or individuals (including industry or general market indices).

 

(iii)          Discretion
to Adjust.  The Committee shall have the
discretion to adjust the determinations of the degree of attainment of the
pre-established Performance Goals; provided,
however, Annual Incentive Award compensation that is designed to
qualify for the Performance-Based Exception may not (unless the Committee
determines to amend the Annual Incentive Award so that it no longer qualifies
for the Performance-Based Exception) be adjusted upward.  The Committee retains the discretion to
adjust compensation under Annual Incentive Awards downward.  The Committee may not, unless the Committee
determines to amend the Annual Incentive Award so that it no longer qualifies
for the Performance-Based Exception, delegate any responsibility with respect
to Annual Incentive Awards intended qualify for the Performance-Based
Exception.  All determinations by the
Committee as to the achievement of the pre-established Performance Goals must
be certified in writing prior to payment of the Annual Incentive Award.

 

(iv)          Alteration
of Performance Measures.  If applicable laws allow an Annual
Incentive Award to qualify for the Performance-Based Exception even if the
Committee alters the governing Performance Measures without obtaining
stockholder approval, the Committee will have sole discretion to make such
changes without obtaining stockholder approval.

 

11

 

(d)          Determination of Amount of Annual
Incentive Awards.

 

(i)           Restricted Stock Award Limitation.  No grantee may be awarded Restricted Stock
Annual Incentive Awards in any one year, pursuant to this Section 9, in excess of the limitation
set forth in Section 8.

 

(ii)           Cash Award Limitation.  No grantee may be granted cash Annual
Incentive Awards, pursuant to this Section 9,
in any one Year the maximum payout for which, when added to the maximum payout
for all other cash Annual Incentive Awards granted to such grantee pursuant to
this Section 9 in the same
Year, could exceed 300% of the grantee’s annual base salary (up to a maximum of
$1,000,000 of base salary) as of the first day the Year (or, if later, as of
the date on which the grantee becomes an employee of the Company or a
Subsidiary).  If the Performance Period
is greater than one year, the 300% limitation will apply separately for each 12
month period in the Performance Period.

 

(iii)          Aggregate Maximum.  The Committee may establish guidelines as to
the maximum aggregate amount of Annual Incentive Awards payable for any Year.

 

(e)            Committee Certification and
Determination of Amount of Annual Incentive Award.  The Committee shall determine and certify in
writing the degree of attainment of Performance Goals as soon as
administratively practicable after the end of each Year but not later than 90
days after the end of that Year.  The Committee
shall determine an individual’s maximum Annual Incentive Award based on the
level of attainment of the Performance Goals (as certified by the Committee)
and the individual’s bonus opportunity. 
The Committee reserves the discretion to reduce (but not below zero) the
amount of an individual’s Annual Incentive Award below the maximum Annual
Incentive Award.  The determination of
the Committee to reduce (or not pay) an individual’s Annual Incentive Award for
a Year will not affect the maximum Annual Incentive Award payable to any other
individual.  No Annual Incentive Award
will be payable to an individual unless at least the threshold Performance Goal
is attained.

 

(f)            Payment of Annual Incentive
Awards.

 

(i)            Timing. Annual Incentive
Awards will be paid as soon as administratively practicable after the Committee
determines the amount of the Annual Incentive Award, but not later than 90 days
after the Committee certifies the degree of attainment o Performance Goals.

 

(ii)           Form.  An individual’s Annual Incentive Award for a
Year may be paid in cash or Restricted Stock as determined by the Committee at
the time of the grant.  The Committee may
provide in an award grant agreement that payment of an Annual Incentive Award
may be deferred in accordance with any rules or procedures that may be
established by the Committee from time to time, either before or after the
decision or election to defer is made.

 

(g)           Cessation of Services.  If an individual ceases to provide services
to the Company or a subsidiary in the capacity of an employee or consultant
during the Year, the Committee may authorize the payment of an Annual Incentive
Award to that individual, and in the absence of the authorization, the
individual will receive no Annual Incentive Award for that Year.

 

10.           Withholding
Taxes.

 

(a)           Participant Election.  Unless otherwise determined by the Committee,
a participant may elect to deliver shares of Common Stock (or have the Company
withhold shares acquired upon exercise of an option or SAR or deliverable upon
grant or vesting of restricted stock, as the case may be) to satisfy, in whole
or in part, the amount the Company is required to withhold for taxes in
connection with the exercise of an option or SAR or the delivery of restricted
stock upon grant or vesting, as the case may be.  Such election must be made on or before the
date the amount of tax to be withheld is determined.  Once made, the election shall be
irrevocable.  The fair market value of
the shares to be withheld or delivered will be the Fair Market Value as of the
date the amount of tax to be withheld is determined. In the event a participant

 

12

 

elects to deliver or have
the Company withhold shares of Common Stock pursuant to this Section 10(a), such delivery or
withholding must be made subject to the conditions and pursuant to the
procedures set forth in Section 6(b) with
respect to the delivery or withholding of Common Stock in payment of the
exercise price of options.

 

(b)           Company Requirement.  The Company may require, as a condition to
any grant or exercise under this Plan or to the delivery of certificates for
Shares issued hereunder, that the grantee make provision for the payment to the
Company, either pursuant to Section 10(a) or
this Section 10(b), of
federal, state or local taxes of any kind required by law to be withheld with
respect to any grant or delivery of Shares. 
The Company, to the extent permitted or required by law, shall have the
right to deduct from any payment of any kind (including salary or bonus)
otherwise due to a grantee, an amount equal to any federal, state or local
taxes of any kind required by law to be withheld with respect to any grant or
delivery of Shares under this Plan.

 

11.           Written
Agreement; Vesting.

 

Each participant to whom a grant is made under this
Plan shall enter into a written agreement with the Company that shall contain
such provisions, including, without limitation, vesting requirements,
consistent with the provisions of this Plan, as may be approved by the
Committee.  Unless the Committee determines
otherwise and except as otherwise provided in Sections
6, 7 and 8, in connection with a Change of Control or certain
occurrences of termination, no grant under this Plan may be exercised, and no
restrictions relating thereto may lapse, within six months of the date such
grant is made.

 

12.           Transferability.

 

Unless the Committee determines otherwise, no option,
SAR or restricted stock granted under this Plan 
shall be transferable by a participant other than by will or the laws of
descent and distribution or to a participant’s Family Member by gift or a
qualified domestic relations order as defined by the Code.  Unless the Committee determines otherwise, an
option  or SAR may be exercised only by
the optionee or grantee thereof; by his or her Family Member if such person has
acquired the option or SAR by gift or qualified domestic relations order; by
the executor or administrator of the estate of any of the foregoing or any
person to whom the option is transferred by will or the laws of descent and distribution;
or by the guardian or legal representative of any of the foregoing; provided
that Incentive Stock Options may be exercised by any Family Member, guardian or
legal representative only if permitted by the Code and any regulations
thereunder.  All provisions of this Plan
shall in any event continue to apply to any option, SAR or restricted stock
granted under this Plan and transferred as permitted by this Section 12, and any transferee of any
such option, SAR or restricted stock shall be bound by all provisions of this
Plan as and to the same extent as the applicable original grantee.

 

13.           Listing,
Registration and Qualification.

 

If the Committee determines that the listing,
registration or qualification upon any securities exchange or under any law of
Shares subject to any option, SAR or restricted stock is necessary or desirable
as a condition of, or in connection with, the granting of same or the issue or
purchase of Shares thereunder, no such option or SAR may be exercised in whole
or in part, and no Shares may be issued, unless such listing, registration or
qualification is effected free of any conditions not acceptable to the
Committee.

 

13

 

14.           Transfer
of Employee.

 

The transfer of an employee from the Company to a
Subsidiary, from a Subsidiary to the Company, or from one Subsidiary to
another, shall not be considered a termination of employment; nor shall it be
considered a termination of employment if an employee is placed on military or
sick leave or such other leave of absence which is considered by the Committee
as continuing intact the employment relationship.

 

15.           Adjustments.

 

In the event of a reorganization, recapitalization,
stock split, stock dividend, combination of shares, merger, consolidation,
distribution of assets, or any other change in the corporate structure or
shares of the Company, the Committee, as necessary to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, shall appropriately and equitably make such adjustment in the
number and kind of Shares available for issuance under this Plan (including,
without limitation, the total number of Shares available for issuance under
this Plan pursuant to Section 4), and in the number and kind of options,
SARs and Shares covered by grants previously made under this Plan, and in the
exercise price of outstanding options and SARs; provided, in each case, that
with respect to Awards of Incentive Stock Options intended to qualify as
Incentive Stock Options after such adjustment, no such adjustment shall be
authorized to the extent such adjustment would cause the Incentive Stock Option
to violate Section 424(a) of the Code.  Any such adjustment shall be final,
conclusive and binding for all purposes of this Plan.  In the event of any merger, consolidation or
other reorganization in which the Company is not the surviving or continuing
corporation or in which a Change in Control is to occur, all of the Company’s
obligations regarding options, SARs and restricted stock that were granted
hereunder and that are outstanding on the date of such event shall, on such
terms as may be approved by the Committee prior to such event, be assumed by
the surviving or continuing corporation or canceled in exchange for property
(including cash).  Notwithstanding the
foregoing, no amendment shall be made to any stock option that would be deemed
to be a repricing under the rules of the New York Stock Exchange or the NASDAQ
Global Select Market unless such amendment is first subject to and approved by
the Company’s shareholders.

 

Without limitation of the foregoing, in connection
with any transaction of the type specified by clause (iii) of the
definition of a Change in Control, the Committee may, in its discretion, (i) cancel
any or all outstanding options under this Plan in consideration for payment to
the holders thereof of an amount equal to the portion of the consideration that
would have been payable to such holders pursuant to such transaction if their
options had been fully exercised immediately prior to such transaction, less
the aggregate exercise price that would have been payable therefor, or (ii) if
the amount that would have been payable to the option holders pursuant to such
transaction if their options had been fully exercised immediately prior thereto
would be equal to or less than the aggregate exercise price that would have
been payable therefor, cancel any or all such options for no consideration or
payment of any kind.  Payment of any amount
payable pursuant to the preceding sentence may be made in cash or, in the event
that the consideration to be received in such transaction includes securities
or other property, in cash and/or securities or other property in the Committee’s
discretion.

 

16.           Amendment
and Termination of this Plan.

 

The Board of Directors or the Committee, without
approval of the stockholders, may amend or terminate this Plan, except that no
amendment shall become effective without prior approval of the stockholders of
the Company if stockholder approval would be required by applicable law or
regulations, including if required for continued compliance with the
performance-based compensation exception of Section 162(m) of the
Code or any successor thereto, under the provisions of Section 422 of the
Code or any successor thereto, or by any listing requirement of the principal
stock exchange or market on which the Common Stock is then listed.

 

17.           Amendment
or Substitution of Awards under this Plan.

 

The terms of any outstanding Award under this Plan may
be amended from time to time by the Committee in its discretion in any manner
that it deems appropriate (including, but not limited to, acceleration of the
date of exercise of any Award or of the date of lapse of restrictions on
Shares); provided that, (a) except as otherwise

 

14

 

provided in Section 15,
no such amendment shall adversely affect in a material manner any right of a
participant under the Award without his or her written consent, (b) that
the Committee shall not reduce the exercise price of any options or SARs
awarded under this Plan or make any amendment that would be deemed to be a
repricing under the rules of the New York Stock Exchange without approval
of the stockholders of the Company, and (c) except as otherwise provided
in Section 15 or as set forth
in the applicable stock option agreements (e.g., with respect to cancellation
of options upon termination of employment), there shall be no adjustment to the
grantees, number of shares, or exercise prices with regard to any option grant
after the Grant Date.

 

18.           Commencement
Date; Termination Date.

 

The date of commencement of this Plan shall be June 2,
2004, subject to approval by the stockholders of the Company.  Unless previously terminated upon the
adoption of a resolution of the Board terminating this Plan, this Plan shall
terminate at the close of business on June 1, 2014.   No termination of this Plan shall materially
and adversely affect any of the rights or obligations of any person, without
his or her written consent, under any grant of options or other incentives
theretofore granted under this Plan.

 

19.           Severability.

 

Whenever possible, each provision of this Plan shall
be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Plan is held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Plan.

 

20.           Governing
Law.

 

The Plan shall be governed by the corporate laws of
the State of Delaware, without giving effect to any choice of law provisions
that might otherwise refer construction or interpretation of this Plan to the
substantive law of another jurisdiction.

 

15

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