Document:

Ex-10.2

 

Exhibit 10.2

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made as of the Commencement Date, by
and between MEDCATH CORPORATION, a Delaware corporation (the “Company”), and PHIL MAZZUCA
(“Executive”).

R E C I T A L S

     The Company desires to employ Executive to serve as an Executive Vice President and as its
Chief Operating Officer, and Executive is willing to accept such employment and perform services
for the Company, all on the terms and conditions hereinafter set forth.

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

     1. Employment.

          1.1 Position. Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive during the term hereof as an Executive Vice President and as its Chief
Operating Officer. In such capacity, Executive shall report to the Chief Executive Officer of the
Company (the “CEO”) and shall have the customary powers, responsibilities and authorities
of such position and office for corporations of the size and character of the Company, as it exists
from time to time and as are assigned by the CEO.

          1.2 Duties. Subject to the terms and conditions of this Agreement, Executive hereby
accepts employment with the Company commencing on a date that is mutually agreeable to the Company
and Executive that is no later than March 27, 2006 (the “Commencement Date”) and agrees to
devote his full working time and efforts, to the best of his ability, experience and talent, to the
performance of services, duties and responsibilities in connection therewith. Executive shall
perform such duties and exercise such powers, commensurate with his position, as the CEO shall from
time to time delegate to him on such terms and conditions and subject to such restrictions as the
board of directors of the Company (the “Board”) may reasonably from time to time impose.

          1.3 Outside Activities. Nothing in this Agreement shall preclude Executive (i) from
engaging in charitable and community affairs, from managing any passive investment made by him in
publicly traded equity securities or other property (provided that no such investment may exceed 5%
of the equity of any entity) or (ii) subject to Section 13(b) hereof, from serving

 

 

as a member of boards of directors or as a trustee of any other corporation, association or entity,
so long as in the reasonable determination of the Board none of the activities described in clauses
(i) or (ii) interferes with his duties and responsibilities hereunder.

     2. Term of Employment. Executive’s term of employment under this Agreement shall
commence on the Commencement Date and, subject to the terms hereof, shall terminate on the third
anniversary of the Commencement Date; provided, however, that the term of this
Agreement and Executive’s employment hereunder shall be automatically renewed and extended for
additional one-year periods commencing on the third anniversary of the Commencement Date and on
each anniversary date thereafter, unless the Company or Executive provides written notice to the
other party, at least 90 days prior to the expiration of the initial term or any renewal term, of
the non-renewal of this Agreement. The Executive and Company agree that this Agreement shall have
no force or effect unless and until the Executive commences work as of the Commencement Date, in
which event, this Agreement shall become an obligation of the parties hereto as of the Commencement
Date.

     3. Compensation.

          3.1 Salary. The Company shall pay Executive a base salary (“Base Salary”) at
the rate of $400,000 per annum commencing as of the Commencement Date. Base Salary shall be
adjusted annually at the discretion of the Board but in no event shall Base Salary be reduced nor
be less than the median base salary for a comparable position at corporations of similar size and
character as the Company, as it exists from time to time, and, as increased, shall constitute “Base
Salary” hereunder. Base Salary shall be payable in accordance with the normal payroll practices of
the Company but no less frequently than monthly.

          3.2 Bonus. For each fiscal year of Executive’s employment hereunder, Executive shall
participate in the bonus plan established for the Company’s senior executives. Executive’s target
bonus with respect to each such fiscal year shall be equal to 50% of Executive’s Base Salary for
such fiscal year (the “Target Bonus”). The Board (or a committee thereof) shall have
complete authority to establish all other terms and provisions of the bonus plan, including the
performance goals for the bonus plan, the threshold performance required for the payment of any
bonus under the plan and the maximum bonus opportunity for Executive under the plan. Bonuses shall
be paid within 2-1/2 months following the fiscal year to which they relate, and Executive must be
employed by the Company on the day the bonus is payable to be

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eligible to receive the bonus. Any bonus for Fiscal Year 2006 shall be pro-rated based on
Executive’s first day of employment with the Company.

          3.3 Compensation Plans and Programs. Executive shall be eligible to participate in
any other compensation plan or program maintained by the Company from time for senior executives of
the Company on terms and conditions that are comparable to those applicable to such other senior
executives.

     4. Employee Benefits.

          4.1 Employee Benefit Programs, Plans and Practices. The Company shall provide
Executive during the term of his employment hereunder with participation in or coverage under all
employee pension and welfare benefit programs, plans and practices (commensurate with his position
in the Company from time to time and to the extent permitted under any employee benefit plan) which
the Company makes available to its senior executives.

          4.2 Vacation and Fringe Benefits. Executive shall be entitled to no less than the
number of business days paid vacation in each calendar year which have historically been provided
to the Company’s Chief Operating Officer, which shall be taken at such times as are consistent with
Executive’s responsibilities hereunder. In addition, Executive shall be entitled to the
perquisites and other fringe benefits currently made available to senior executives of the Company,
commensurate with his position with the Company.

          4.3 Relocation Expenses. Executive shall become a full-time resident of the
Charlotte, North Carolina area no later than the Commencement Date and shall relocate his family to
the Charlotte, North Carolina area as soon as practicable thereafter. The Company shall reimburse
Executive for all reasonable relocation expenses incurred by Executive and his family upon
presentation by Executive of appropriately itemized and approved (consistent with the Company’s
policy) accounts of such expenditures. In addition, the Company shall reimburse Executive for the
real estate brokerage commission on the sale of Executive’s current principal residence in
Tennessee.

     5. Expenses. Executive is authorized to incur reasonable expenses in carrying out his
duties and responsibilities under this Agreement, including, without limitation, expenses for
travel and similar items related to such duties and responsibilities. The Company will reimburse
Executive for all such expenses upon presentation by Executive from time to time of

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appropriately itemized and approved (consistent with the Company’s policy) accounts of such
expenditures.

     6. Termination of Employment.

          6.1 Termination By the Company Without Cause or By Executive for Good Reason. (a) The
Company may terminate Executive’s employment under this Agreement at any time for any reason,
provided that any such termination other than for Cause (as defined in Section 6.4 hereof)
may only be made upon 30 days prior written notice to Executive. If Executive’s employment under
this Agreement is terminated by the Company without Cause (other than as a result of Executive’s
death or Permanent Disability (as defined in Section 6.2 hereof)) or if Executive terminates his
employment for Good Reason (as defined in Section 6.1(c) hereof), Executive shall receive any
payments to which he is entitled under any applicable compensation or employee benefit plan or
program in which he participates, including but not limited to those referred to in Section 3.3
hereof. In addition, in the event of any such termination described in the immediately preceding
sentence, Executive shall be entitled to receive the following:

     (i) an amount equal to the sum of two times Executive’s Base Salary and one
times Executive’s Target Bonus (such amount, the “Severance Payment”);

     (ii) a cash lump sum payment in respect of (x) accrued but unused vacation
days (the “Vacation Payment”), (y) compensation earned but not yet paid
(including any awarded but deferred Bonus payments) (the “Compensation
Payment”), and (z) reasonable expenses incurred under Section 5 but not yet
reimbursed (the “Expense Payment”); and

     (iii) continued coverage under the Company’s group medical plan in accordance
with the terms thereof for a period ending on the earlier of (A) the second
anniversary of the date of termination under this Section 6.1(a) or (B) the date on
which Executive becomes covered under comparable benefit plans of a new employer
(the “Coverage Period”), provided that Executive shall be required
to contribute an amount toward the cost for such coverage during the Coverage
Period that is equal to the cost paid by active employees of the Company for
coverage under the Company’s group medical plan during the Coverage Period, and for
purposes of applying the group health plan coverage continuation requirements of
Section 4980B of the Internal Revenue Code of 1986 and Section 601 et
seq. of the Employee Retirement Income Security Act of 1974, as amended,
the “qualifying event” shall be the termination of the Executive’s employment with
the Company.

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          (b) The Severance Payment shall be paid by the Company to Executive over the 12 month period
following the date of termination in substantially equal installment payments and in accordance
with the normal payroll practices of the Company but no less frequently than monthly. The Vacation
Payment, the Compensation Payment and the Expense Payment shall be paid by the Company to Executive
in a cash lump sum payment within 30 days after the date of termination.

          (c) For purposes of this Agreement, “Good Reason” shall mean any of the following
(without Executive’s express prior written consent):

     (i) A substantial reduction or elimination of Executive’s management
responsibility for the operations of the Company’s hospital business, other than in
connection with the termination of Executive’s employment by the Company for Cause,
by Executive without Good Reason or as a result of Executive’s Permanent Disability
or death;

     (ii) A reduction by the Company in Executive’s Base Salary or Target Bonus; or

     (iii) A reduction or elimination of Executive’s eligibility to participate in
any of the Company’s employee benefit plans that is inconsistent with the
eligibility of similarly situated executives of the Company to participate therein.

          6.2 Permanent Disability. If Executive becomes totally and permanently disabled (as
defined in the Company’s Long-Term Disability Benefit Plan applicable to senior executive officers
as in effect on the date hereof) (“Permanent Disability”), the Company or Executive may
terminate Executive’s employment under this Agreement upon 30 days prior written notice thereof,
and Executive shall receive or commence receiving, as soon as practicable:

     (i) amounts payable pursuant to the terms of a disability insurance policy or
similar arrangement which the Company maintains during the term hereof;

     (ii) Executive’s Target Bonus in respect of the fiscal year in which his
termination occurs, prorated by a fraction, the numerator of which is the number of
days of the fiscal year until termination and the denominator of which is 365;

     (iii) the Vacation Payment, the Compensation Payment, and the Expense Payment;
and

     (iv) any payments to which he is entitled under any applicable compensation or
employee benefit plan or program in which he participates, including but not limited
to those referred to in Section 3.3 hereof.

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          6.3 Death. In the event of Executive’s death during the term of his employment
hereunder, Executive’s estate or designated beneficiaries shall receive or commence receiving, as
soon as practicable:

     (i) Executive’s Target Bonus in respect of the fiscal year in which his death
occurs, prorated by a fraction, the numerator of which is the number of days of the
fiscal year until his death and the denominator of which is 365;

     (ii) any death benefits provided under the employee benefit programs, plans and
practices referred to in Section 4.1 hereof, in accordance with their terms;

     (iii) the Vacation Payment, the Compensation Payment, and the Expense Payment;
and

     (iv) any payments to which he is entitled under any applicable compensation or
employee benefit plan or program in which he participates, including but not limited
to those referred to in Section 3.3 hereof.

          6.4 Termination By the Company for Cause or By Executive without Good Reason. (a) The
Company shall have the right to immediately terminate the employment of Executive under this
Agreement for Cause, and Executive shall have the right to terminate his employment under this
Agreement without Good Reason upon 90 days prior written notice to the Company. In the event that
Executive’s employment is terminated by the Company for Cause or by Executive without Good Reason,
notwithstanding any other provision in this Agreement, Executive shall be entitled only to the
Compensation Payment, the Vacation Payment, and the Expense Payment, and shall not be entitled to
any further compensation or benefits hereunder including, without limitation, the payment of any
bonus in respect of all or any portion of the fiscal year in which such termination occurs.

          (b) As used herein, the term “Cause” shall mean and be limited to (i) willful
misconduct by Executive which results in a demonstrable injury (which is other than de minimis or
insignificant) to the Company, (ii) willful and continued failure by Executive to perform his
material duties with respect to the Company or its subsidiaries, which failure continues beyond 10
days after a written demand for substantial performance of such duties was given to Executive by
the Company, or (iii) Executive’s conviction of, or plea of nolo contendere to, a
felony or to a misdemeanor involving moral turpitude. Termination of Executive for Cause pursuant
to Section 6.4(a) shall be made by delivery to Executive of written notice that, in the reasonable
judgment of the Board, Executive was guilty of conduct set forth in any of clauses (i) through
(iii) above and specifying the particulars thereof.

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     7. Release. Notwithstanding anything to the contrary contained herein, the Company
shall not be obligated to pay Executive the Severance Payment pursuant to Section 6.1 in the event
Executive’s employment is terminated by the Company without Cause (other than as a result of
Executive’s death or Permanent Disability) or by Executive for Good Reason and any options held by
Executive to purchase the Company’s common stock shall not be exercisable after the termination of
the Executive’s employment hereunder unless the Executive executes and delivers to the Company a
release, dated the date of his termination of employment, to the effect that: for good and valuable
consideration, the Executive unconditionally releases and covenants not to sue the Company and its
subsidiaries and affiliates and directors, officers, employees and stockholders thereof, from any
and all claims, liabilities and obligation of any nature pertaining to termination of employment
other than those explicitly provided for by this Agreement including, without limitation, any
claims arising out of alleged legal restrictions on the Company’s right to terminate its employees,
such as any implied contract of employment or termination contrary to public policy or to laws
prohibiting discrimination (including, without limitation, the Age Discrimination in Employment
Act); and containing such other provisions as the Company may request to effect the purposes of the
foregoing release.

     8. Mitigation of Damages. Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other employment or otherwise
after the termination of his employment hereunder.

     9. Notices. All notices or communications hereunder shall be in writing, addressed as
follows:

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          To the Company:

MedCath Corporation

10720 Sikes Place, Suite 300

Charlotte, North Carolina 28277

Attn: Chief Executive Officer

          with a copy to:

MedCath Corporation

c/o Kohlberg Kravis Roberts & Co.

2800 Sand Hill Road, Suite 200

Menlo Park, California 94025

(Attn: Adam H. Clammer)

          with a copy to:

Hal A. Levinson, Esq.

Moore & Van Allen, PLLC

100 N. Tryon Street, Floor 47

Charlotte, North Carolina 28202-4003

          To Executive:

Phil Mazzuca

[the most recent address

on the Company’s employment

records for Executive]

Any such notice or communication shall be delivered by hand, by telecopy (with machine
confirmation) or by courier or sent certified or registered mail, return receipt requested, postage
prepaid, addressed as above (or to such other address as such party may designate in a notice duly
delivered as described above), and the third business day after the actual date of mailing shall
constitute the time at which notice was given.

     10. Separability; Legal Fees. If any provision of this Agreement shall be declared to
be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not
affect the remaining provisions hereof which shall remain in full force and effect. Each party
shall bear the costs of any legal fees and other fees and expenses which may be incurred in respect
of enforcing its respective rights under this Agreement.

     11. Assignment. This Agreement shall be binding upon and inure to the benefit of the
heirs and representatives of Executive and the assigns and successors of the Company, but neither
this Agreement nor any rights or obligations hereunder shall be assignable or otherwise subject to
hypothecation by Executive (except by will or by operation of the laws of intestate succession) or
by the Company, except that the Company may assign this Agreement to any

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successor (whether by merger, purchase or otherwise) to all or substantially all of the stock,
assets or businesses of the Company, if such successor expressly agrees to assume the obligations
of the Company hereunder.

     12. Amendment. This Agreement may only be amended by written agreement of the parties
hereto.

     13. Nondisclosure of Confidential Information; Non-Competition; Non-Disparagement.
(a) At any time during or after Executive’s employment with the Company, Executive shall not,
without the prior written consent of the Company, use, divulge, disclose or make accessible to any
other person, firm, partnership, corporation or other entity any Confidential Information (as
hereinafter defined) pertaining to the business of the Company or any of its subsidiaries, except
(i) while employed by the Company, in the business of and for the benefit of the Company, or (ii)
when required to do so by a court of competent jurisdiction, by any governmental agency having
supervisory authority over the business of the Company, or by any administrative body or
legislative body (including a committee thereof) with jurisdiction to order Executive to divulge,
disclose or make accessible such information. For purposes of this Section 13(a),
“Confidential Information” shall mean non-public information concerning the financial data,
strategic business plans, and other non-public, proprietary and confidential information of the
Company, its subsidiaries, Kohlberg Kravis Roberts & Co., Welsh, Carson, Anderson & Stowe VII,
L.P., or their respective affiliates as in existence as of the date of Executive’s termination of
employment that, in any case, is not otherwise available to the public (other than by Executive’s
breach of the terms hereof). Confidential Information further includes without limitation customer
information, vendors, operations and operating procedures, pricing, financial information,
technology, marketing strategies, design of facilities, employment practices, contractual
agreements, and trade secrets.

          Executive agrees that both while employed by the Company and following termination of
Executive’s employment with the Company at any time in the future:

     (i) Executive will take all reasonable precautions to safeguard all
Confidential Information at all times so that it is not communicated to, exposed to,
available to, or taken by any unauthorized person and will personally use or
disclose such information; and

     (ii) Executive will exercise Executive’s best efforts to assure the safekeeping
of the Company’s Confidential Information.

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          Upon termination of Executive’s employment with the Company, Executive agrees to immediately
return to the Company all Confidential Information and other Company property, including without
limitation all originals, copies, computer data, or other records or information. It is understood
and agreed that Confidential Information and other property of the Company shall remain at all
times the property of the Company.

          (b) Recognizing the fact that Executive will be given or have access to the Confidential
Information described in this Section 13 above, and that Executive owes a duty of full loyalty to
the Company and its name, reputation and operational interests, Executive agrees that during the
period of Executive’s employment with the Company, Executive will not engage in or have an interest
in, either directly or indirectly, in any manner, whether as a shareholder, partner, owner,
investor, officer, director, advisor, employee, consultant, or in any other capacity, any
Competitive Business other than an ownership position of less than 5 percent in any company whose
shares are publicly traded.

          In addition, Executive agrees that in the event that Executive’s employment with the Company
is terminated for any reason by either party, for a period of one (1) year from the date of
termination of employment, Executive will not, either directly or indirectly, whether as a
shareholder, partner, owner, investor, officer, director, advisor, employee or consultant with
responsibilities which are the same or similar as those which Executive had with the Company,
associate with, participate in or have an interest in any Competitive Business (other than an
ownership position by Executive of less than 5% in any company whose shares are publicly traded)
which is located or which operates within 50 miles of:

     (i) any hospital, hospital cardiology or cardiovascular surgery program
or fixed site cardiac catheterization lab in each case which the Company
owns, whether all or in part, or manages or the Company’s corporate
headquarters, or

     (ii) any location with respect to which the Company was actively
developing or negotiating as of the Separation Date to own or manage a
hospital, cardiac catheterization lab or a hospital’s cardiology or
cardiovascular surgery program (for purposes of this section, the term
“actively developing or negotiating” means either definitive documents, a
letter of intent, memorandum of understanding or other comparable document
had been executed or the material terms thereof were being actively
negotiated).

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          For purposes of this Section 13, the term “Competitive Business” means any entity that
owns or manages hospitals, cardiac catheterization labs or any portion thereof and that derives,
directly or indirectly, more than 10% of its gross annual revenue from providing cardiology or
cardiovascular-related healthcare services.

          (c) Executive further agrees that in the event Executive’s employment with the Company is
terminated for any reason by either party, for a period of one year from the date of termination of
employment, Executive shall not, on his own behalf or on behalf of any person, firm or company,
directly or indirectly, solicit or offer employment to any person who has been employed by the
Company or its subsidiaries at any time during the 12 months immediately preceding such
solicitation.

          (d) Executive further agrees that in the event Executive’s employment with the Company is
terminated for any reason by either party, he will not communicate orally, in writing or
electronically (through, for example, the internet), including but not limited to, at healthcare,
financial or other conferences, seminars or meetings or at any other place or time, generally,
specifically or by implication to any person or entity any opinions or comments regarding the
prospects, competence or skills of the Company or any facts, opinions or comments that could
reasonably be expected to reflect adversely upon the other or disparage, degrade, malign or harm
the reputation of the Company.

          (e) Executive and the Company agree that the covenants in this Section 13 are reasonable
covenants under the circumstances, and further agree that if in the opinion of any court of
competent jurisdiction such restraint is not reasonable in any respect, such court shall have the
right, power and authority to excise or modify such provision or provisions of the covenants as to
the court shall appear not reasonable and to enforce the remainder of the covenants as so amended.
Executive agrees that any breach of the covenants contained in this Section 13 would irreparably
injure the Company. Accordingly, Executive agrees that the Company may, in addition to pursuing
any other remedies it may have in law or in equity, cease making any payments otherwise required by
this Agreement and obtain an injunction against Executive from any court having jurisdiction over
the matter restraining any further violation of this Agreement by Executive.

     14. Beneficiaries; References. Executive shall be entitled to select (and change, to
the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any

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compensation or benefit payable hereunder following Executive’s death, and may change such
election, in either case by giving the Company written notice thereof. In the event of Executive’s
death or a judicial determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal
representative. Any reference to the masculine gender in this Agreement shall include, where
appropriate, the feminine.

     15. Survivorship. The respective rights and obligations of the parties hereunder
shall survive any termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations, including the provisions of Section 13 herein. The
provisions of this Section 15 are in addition to the survivorship provisions of any other section
of this Agreement.

     16. Governing Law. This Agreement shall be construed, interpreted and governed in
accordance with the laws of the State of North Carolina without reference to rules relating to
conflicts of law.

     17. Withholding. The Company shall be entitled to withhold from payment any amount of
withholding required by law.

     18. Counterparts. This Agreement may be executed in two or more counterparts, each of
which will be deemed an original.

	 	 	 	 	 
	 	MEDCATH CORPORATION

 	 
	 	By:    	/s/  O. Edwin French	 
	 	Title: President and Chief Executive Officer

	 
	 	 	 
	 	                                                            /s/ Phil Mazzuca
 	 
	 	Phil Mazzuca 	 
	 	 	 
	 

12EX-10.1 FORM OF COMPOSITE STOCK OPTION AGREEMENT

 

EXHIBIT 10.1

COMPOSITE FORM

Manhattan Associates, Inc.

Stock Incentive Plan

Stock Option Agreement

Manhattan Associates, Inc., a Georgia corporation (the “Company”), hereby
grants to the optionee named below (“Optionee”) an option (this “Option”) to
purchase the total number of shares shown below of Common Stock of the Company
(“Shares”) at the exercise price per share set forth below (the “Exercise Price”),
subject to all of the terms and conditions on the reverse side of this Stock Option
Agreement and the Manhattan Associates, Inc. Stock Incentive Plan (the “Plan”).
Unless otherwise defined herein, capitalized terms used herein shall have the
meanings ascribed to them in the Plan. The terms and conditions set forth on the
reverse side hereof and the terms and conditions of the Plan are incorporated herein
by reference.

Shares Subject to Option:               

Exercise Price Per Share:               

Term of Option:    TEN (10) YEARS

Vesting:

Shares subject to issuance under this Option shall be eligible for exercise according
to the vesting schedule described in Section 10 on the reverse of this Stock Option
Agreement.

IN WITNESS WHEREOF, this Stock Option Agreement has been executed by the Company by a duly
authorized officer as of the date specified hereon.

Manhattan Associates, Inc.

	 	 	 
	By:
	 	 
	 	 	 

Grant Date:                                    

	 	 	 
	 

	 	Type of Stock Option:
	      

	 	Incentive Stock Option (ISO)
	      

	 	Non-Qualified Stock Option (NQSO)

Optionee hereby acknowledges receipt of a copy of the Plan, represents that Optionee has
read and understands the terms and provisions of the Plan, and accepts this Option subject
to all the terms and conditions of the Plan and this Stock Option Agreement. Optionee
acknowledges that there may be adverse tax consequences upon exercise of this Option or
disposition of Shares purchased by exercise of this Option, and that Optionee should
consult a tax adviser prior to such exercise or disposition.

 

[Name of Optionee]

 

 

Terms and Conditions for Stock Options

     1. Exercise Period of Option. Subject to the terms and conditions of this Option
and the Plan, and unless otherwise modified by a written modification signed by the Company and
Optionee, this Option may be exercised with respect to all of the Shares, but only according to the
vesting schedule described in Section 10 below, prior to the date which is the last day of the Term
set forth on the face hereof following the Date of Grant (the “Expiration Date”).

     2. Restrictions on Exercise. This Option may not be exercised, unless such exercise
is in compliance with the Securities Act of 1933 and all applicable state securities laws, as they
are in effect on the date of exercise, and the requirements of any stock exchange or national
market system on which the Company’s Common Stock may be listed at the time of exercise. Optionee
understands that the Company is under no obligation to register, qualify or list the Shares with
the Securities and Exchange Commission (“SEC”), any state securities commission or any stock
exchange to effect such compliance.

     3. Termination of Option. Except as provided below in this Section, this Option may
not be exercised after Optionee ceases to perform services for the Company, or any Parent or
Subsidiary. Optionee shall be considered to perform services for the Company, or any Parent or
Subsidiary, for all purposes under this Section and Section 10 hereof, if Optionee is an officer or
full-time employee of the Company, or any Parent or Subsidiary, or if the Board determines that
Optionee is rendering substantial services as a part-time employee, consultant, contractor or
advisor to the Company, or any Parent or Subsidiary. The Board shall have discretion to determine
whether Optionee has ceased to perform services for the Company, or any Parent or Subsidiary, and
the effective date on which such services cease (the “Termination Date”).

          (a) Termination of Employment. If Optionee ceases to perform services for the
Company, or any Parent or Subsidiary, for any reason other than as a result of Optionee’s death or
disability, this Option shall be terminated, along with any and all rights or subsequent rights
attached thereto, effective as of thirty (30) days following the Termination Date, but in no event
later than the Expiration Date.

          (b) Death or Disability. If Optionee ceases to perform services for the Company, or
any Parent or Subsidiary as a result of the death or disability of Optionee (within the meaning of
Code Section 22(e)(3)), this Option, to the extent (and only to the extent) that it would have been
exercisable by Optionee on the Termination Date, may be exercised by Optionee (or, in the event of
Optionee’s death, by Optionee’s legal representative) within twelve (12) months after the
Termination Date, but in no event later than the Expiration Date.

          (c) No Right to Employment. Nothing in the Plan or this Stock Option Grant shall
confer on Optionee any right to continue in the employ of, or other relationship with, the Company,
or any Parent or Subsidiary, or limit in any way the right of the Company, or any Parent or
Subsidiary, to terminate Optionee’s employment or other relationship at any time, with or without
cause.

     4. Manner of Exercise.

          (a) Exercise Agreement. This Option shall be exercisable by delivery to the Company
of an executed Exercise and Shareholder Agreement (“Exercise Agreement”) in the form of the
Exercise Agreement delivered to Optionee, if applicable, or in such other form as may be approved
or accepted by the Company, which shall set forth Optionee’s election to exercise this Option with
respect to some or all of the Shares, the number of Shares being purchased, any restrictions
imposed on the Shares, and such other representations and agreements as may be required by the
Company to comply with applicable securities laws.

          (b) Exercise Price. Such notice shall be accompanied by full payment of the Exercise
Price for the Shares being purchased. Payment for the Shares may be made in U.S. dollars in cash
(or check) or, where permitted by law and approved by the Board in its sole discretion: (i) by
surrender of shares of Common Stock of the Company that have been owned by Optionee for more than
six (6) months (and which have been paid for within the meaning of SEC Rule 144, and, if such
Shares were purchased from the Company by use of a promissory note, such note has been fully paid
with respect to such Shares), or
were obtained by Optionee in the open public market, having a Fair Market Value equal to the
Exercise Price of the Shares being purchased; (ii) by instructing the Company to withhold Shares
otherwise issuable pursuant to the exercise of the Option having a Fair Market Value equal to the
exercise price of the Shares being purchased (including the withheld Shares); or (iii) by execution
and delivery of a promissory note acceptable to the Company.

          (c) Withholding Taxes. Prior to the issuance of Shares upon exercise of this Option,
Optionee must pay, or make adequate provision for, any applicable federal or state withholding
obligations of the Company. Where approved by the Board, Optionee may provide for payment of
withholding taxes upon exercise of the Option by requesting that the Company retain Shares with a
Fair Market Value equal to the minimum amount of taxes required to be withheld. In such case, the
Company shall issue the net number of Shares to Optionee by deducting the Shares retained from the
Shares exercised.

          (d) Issuance of Shares. Pursuant to the Plan, and provided that such notice and
payment are in form and substance satisfactory to counsel for the Company, the Company shall cause
the Shares to be issued in the name of Optionee or Optionee’s legal representative.

     5. Notice of Disqualifying Disposition of ISO Shares. If this Option is an ISO, and
if Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or
before the later of: (a) the date two (2) years after the Date of Grant, or (b) the date one (1)
year after exercise of the ISO, with respect to the Shares to be sold or disposed, Optionee shall
immediately notify the Company in writing of such sale or disposition. Optionee acknowledges and
agrees that Optionee may be subject to income tax withholding by the Company on the compensation
income recognized by Optionee from any such early disposition by payment in cash or out of the
current wages or earnings payable to Optionee or otherwise.

     6. Nontransferability of Option. This Option may not be transferred in any manner,
other than by will or by the laws of descent and distribution, and may be exercised during
Optionee’s lifetime only by Optionee. The terms of this Option shall be binding upon the executor,
administrators, successors and assigns of Optionee.

     7. Tax Consequences. Optionee understands that the grant and exercise of this
Option, and the sale of Shares obtained through the exercise of this Option, may have tax
implications that could result in adverse tax consequences to Optionee. Optionee represents that
Optionee has consulted with, or will consult with, his or her tax advisor and Optionee further
acknowledges that Optionee is not relying on the Company for any tax, financial or legal
advice.

     8. Interpretation. Any dispute regarding the interpretation of this Stock Option
Grant shall be submitted by Optionee or the Company to the Board or the Committee, which shall
review such dispute at its next regular meeting. The resolution of such a dispute by the Board or
Committee shall be final and binding on the Company and Optionee.

     9. Entire Agreement. The Plan and the Exercise Agreement are incorporated herein by
this reference. Optionee acknowledges and agrees that the granting of this Option constitutes a
full accord, satisfaction and release of all obligations or commitments made to Optionee by the
Company or any of its officers, directors, shareholders or affiliates with respect to the issuance
of any securities, or rights to acquire securities, of the Company or any of its affiliates. This
Stock Option Grant, the Plan and the Exercise Agreement constitute the entire agreement of the
parties hereto, and supersede all prior undertakings and agreements with respect to the subject
matter hereof. All prior agreements, commitments and understandings between the parties hereto
regarding the subject matter hereof are merged into this Stock Option Grant, the Plan and the
Exercise Agreement.

     10. Vesting and Exercise of Shares. Subject to the terms of the Plan, this Stock
Option Grant and the Terms and Conditions for Stock Options, the issuance of Shares pursuant to
the exercise of this Option shall be subject to the aforementioned vesting requirements. For
purposes of this Section, “Continuous Service” means a period of continuous performance of services
by Optionee for the Company, a Parent, or a Subsidiary, as determined by the Board.

     Optionee may exercise this Option with respect to the number of Shares set forth on the date
opposite such number of Shares, only after Optionee has completed Continuous Service following the
Date of Grant to the relevant date.

     In the event of a Change of Control and provided Optionee is terminated other than for Cause
within two years of such change of control, the options shall vest in full as of the date of the
termination.

     “Change of Control” shall mean the earliest to occur of the following events: (i) the date
the shareholders of the Company (or the Board, if shareholder action is not required) approve a
plan or other arrangement pursuant to which the Company will be dissolved or liquidated; (ii) the
date the shareholder s of the Company (or the Board, if shareholder action is not required) approve
a definitive agreement to sell or otherwise dispose of all or substantially all of the assets of
the Company; or (iii) the date the shareholders of the Company (or the Board, if shareholder action
is not required) and the shareholders of the other constituent corporations (or their respective
boards of directors, if and to the extent that shareholder action is not required) have approved a
definitive agreement to merge or consolidate the Company with or into another corporation, other
than, in either case, a merger or consolidation of the Company in which holders of shares of the
Company’s voting capital stock immediately prior to the merger or consolidation will have at least
fifty percent (50%) of the ownership of voting capital stock of the surviving corporation
immediately after the merger or consolidation (on a fully diluted basis), which voting capital
stock is to be held by each such holder in the same or substantially similar proportion (on a fully
diluted basis) as such holder’s ownership of voting capital stock of the Company immediately before
the merger or consolidation.

     For purposes of this Option Agreement, Cause shall include but not be limited to an act or
acts or an omission to act by the Optionee involving (i) willful and continual failure to
substantially perform his duties with the Company (other than a failure resulting from the
Optionee’s disability (within the meaning of Code Section 22(e)(3)), and such failure continues
after written notice to the Optionee providing a reasonable description of the basis for the
determination that the Optionee has failed to perform his duties, (ii) indictment for a criminal
offense other than misdemeanors not disclosable under the federal securities laws, (iii) breach of
any employment or other agreement in any material respect and such breach is not susceptible to
remedy or cure or has already materially damaged the Company, or if susceptible to remedy or cure
and no such damage has occurred, is not cured or remedied reasonably promptly after written notice
to the Optionee providing a reasonable description of the breach, or (iv) conduct that the Board of
Directors of the Company has determined, in good faith, to be dishonest, fraudulent, unlawful or
grossly negligent or which is not in compliance with the Company’s Code of Conduct or similar
applicable set of standards or conduct and business practices set forth in writing and provided to
the Optionee prior to such conduct.

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