Document:

exv4w6

 

EXHIBIT 4.6

SECOND SUPPLEMENTAL INDENTURE

     Second Supplemental Indenture (this “Second Supplemental Indenture”), dated as
of April 27, 2005, among Holly Energy Partners, L.P., a Delaware limited partnership (“Holly Energy
Partners”), Holly Energy Finance Corp., a Delaware corporation (“Finance Corp.” and, together with
Holly Energy Partners, the “Issuers”), the Guarantors (as defined in the Indenture referred to
below) and U.S. Bank National Association, as trustee under the Indenture referred to below (the
“Trustee”).

W I T N E S S E T H

     WHEREAS, the Issuers have heretofore executed and delivered to the Trustee an indenture
(the “Indenture”), dated as of February 28,
2005, providing for the issuance of 6 1/4% Senior Notes
due 2015 (the “Notes”), and a First Supplemental Indenture, dated as of March 10, 2005, providing
for the addition of HEP Fin-Tex/Trust River, L.P., a Texas limited partnership, as a Guarantor
under the Indenture;

     WHEREAS, Section 9.01(1) of the Indenture authorizes the Issuers, the Guarantors and the
Trustee to amend or supplement the Indenture or the Notes or the Note Guarantees, without the
consent of any Holder of the Notes, to cure any ambiguity, defect or inconsistency;

     WHEREAS, Section 9.01(6) of the Indenture authorizes the Issuers, the Guarantors and the
Trustee to amend or supplement the Indenture or the Notes or the Note Guarantees, without the
consent of any Holder of the Notes, to conform the text of the Indenture or the Note Guarantees to
the Issuers’ Offering Memorandum to the extent that such provision was intended to be a verbatim
recitation of a provision of the Indenture or the Note Guarantees;

     WHEREAS, the reference to “102.833%” in the redemption prices table in Section 3.07(c) of the
Indenture and Paragraph 5(a) of the form of Note with respect to the twelve-month period beginning
March 1, 2011 is defective;

     WHEREAS, the reference to “102.083%” in the redemption prices table under the section
captioned “Optional Redemption” in the Offering Memorandum with respect to the twelve-month period
beginning March 1, 2011 is correct;

     WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and
deliver this Second Supplemental Indenture; and

     WHEREAS, all conditions and requirements necessary to make this Second Supplemental Indenture
a valid, legal, binding and enforceable instrument in accordance with its terms have been performed
and fulfilled by the parties hereto, and the execution and delivery thereof have been in all
respects duly authorized by the parties hereto.

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, each party hereby agrees, for the
benefit of the others and for the equal and ratable benefit of the Holders of the Notes as follows:

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     1. Capitalized Terms. Capitalized terms used herein without definition shall have
the meanings assigned to them in the Indenture.

     2. Amendments to Indenture.

     a. Section 3.07(c) of the Indenture is hereby amended by changing the reference to
“102.833%” in the redemption prices table with respect to the twelve-month period beginning
March 1, 2011 to “102.083%”.

     b. Paragraph 5(a) of the form of Note included as Exhibit A to the Indenture is hereby
amended by changing the reference to “102.833%” in the redemption prices table with respect
to the twelve-month period beginning March 1, 2011 to “102.083%”.

     3. Ratification. This Second Supplemental Indenture is executed and shall be
construed as a supplement to the Indenture and, as provided in the Indenture, this Second
Supplemental Indenture forms a part of the Indenture. Except to the extent amended by or
supplemented by this Second Supplemental Indenture, the Issuers, the Guarantors and the Trustee
hereby ratify, confirm and reaffirm the Indenture in all respects.

     4. NEW YORK LAW TO GOVERN. THE LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS SECOND SUPPLEMENTAL INDENTURE.

     5. Counterparts. The parties may sign any number of copies of this Second
Supplemental Indenture. Each signed copy shall be an original, but all of them together represent
the same agreement.

     6. Effect of Headings. The Section headings herein are for convenience only and
shall not affect the construction hereof.

     7. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or
in respect of the validity or sufficiency of this Second Supplemental Indenture or for or in
respect of the recitals contained herein, all of which recitals are made solely by the Issuers.

[Signature Pages Follow]

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     IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be
duly executed and attested, all as of the date first above written.

	 	 	 	 	 	 	 	 	 
	 	 	ISSUERS:
	 
	 	 	 	 	 	 	 	 
	 	 	HOLLY ENERGY PARTNERS, L.P., a Delaware limited
partnership
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	HEP Logistics Holdings, L.P.,

a Delaware limited partnership,

its general partner
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Holly Logistic Services, L.L.C.,

a Delaware limited liability company,

its general partner
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	By:
	 	/s/ Stephen J. McDonnell
	

	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	Stephen J. McDonnell
	

	 	 	 	 	 	 	 	Vice President and Chief Financial Officer
	 
	 	 	 	 	 	 	 	 
	 	 	HOLLY ENERGY FINANCE CORP., a Delaware corporation
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Stephen J. McDonnell
	 	 	 	 	 
	 	 	 	 	Stephen J. McDonnell
	 	 	 	 	Vice President and Chief Financial Officer

S-1

 

	 	 	 	 	 	 	 	 	 
	 	 	GUARANTORS:
	 
	 	 	 	 	 	 	 	 
	 	 	HEP LOGISTICS GP, L.L.C., a Delaware limited liability
company
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Holly Energy Partners, L.P., a Delaware limited
partnership, its Sole Member
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	HEP Logistics Holdings, L.P., a Delaware
limited partnership, its General Partner
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Holly Logistic Services, L.L.C., a Delaware
limited liability company, its General Partner
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	By:
	 	/s/ Stephen J. McDonnell
	

	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	Stephen J. McDonnell
	

	 	 	 	 	 	 	 	Vice President and Chief Financial
Officer
	 
	 	 	 	 	 	 	 	 
	 	 	HOLLY ENERGY PARTNERS-OPERATING, L.P., a Delaware limited
partnership
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	HEP Logistics GP, L.L.C., a Delaware limited liability
company, its General Partner
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Holly Energy Partners, L.P., a Delaware
limited partnership, its Sole Member
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	HEP Logistics Holdings, L.P., a Delaware
limited partnership, its General Partner
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Holly Logistic Services, L.L.C., a Delaware
limited liability company, its General Partner
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	By:
	 	/s/ Stephen J. McDonnell
	

	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	Stephen J. McDonnell
	

	 	 	 	 	 	 	 	Vice President and Chief Financial Officer

S-2

 

	 	 	 	 	 	 	 	 	 
	 	 	HEP PIPELINE GP, L.L.C., a Delaware limited liability
company
	 
	 	 	 	 	 	 	 	 
	 	 	HEP REFINING GP, L.L.C., a Delaware limited liability
company
	 
	 	 	 	 	 	 	 	 
	 	 	HEP MOUNTAIN HOME, L.L.C., a Delaware limited liability
company
	 
	 	 	 	 	 	 	 	 
	 	 	HEP PIPELINE, L.L.C., a Delaware limited liability
company
	 
	 	 	 	 	 	 	 	 
	 	 	HEP REFINING, L.L.C., a Delaware limited liability
company
	 
	 	 	 	 	 	 	 	 
	 	 	HEP WOODS CROSS, L.L.C., a Delaware limited liability
company
	 
	 	 	 	 	 	 	 	 
	 	 	Each by:	 	Holly Energy Partners—Operating, L.P., a Delaware limited
partnership and its Sole Member
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	HEP Logistics GP, L.L.C., a Delaware
limited liability company, its General
Partner
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Holly Energy Partners, L.P., a Delaware
limited partnership, its Sole Member
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	HEP Logistics Holdings, L.P., a Delaware
limited partnership, its General Partner
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Holly Logistic Services, L.L.C., a
Delaware limited liability company, its
General Partner
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	By:
	 	/s/ Stephen J. McDonnell
	

	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	Stephen J. McDonnell
	

	 	 	 	 	 	 	 	Vice President and Chief Financial Officer

S-3

 

	 	 	 	 	 	 	 	 	 
	 	 	HEP FIN-TEX/TRUST-RIVER, L.P., a Texas limited
partnership
	 
	 	 	 	 	 	 	 	 
	 	 	HEP NAVAJO SOUTHERN, L.P., a Delaware limited
partnership
	 
	 	 	 	 	 	 	 	 
	 	 	HEP PIPELINE ASSETS, LIMITED PARTNERSHIP, a Delaware

limited partnership
	 
	 	 	 	 	 	 	 	 
	 	 	Each by:	 	HEP Pipeline GP, L.L.C., a Delaware limited liability
company and its General Partner
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Holly Energy Partners—Operating, L.P., a
Delaware limited partnership, its Sole
Member
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	HEP Logistics GP, L.L.C., a Delaware
limited liability company, its General
Partner
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Holly Energy Partners, L.P., a Delaware
limited partnership, its Sole Member
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	HEP Logistics Holdings, L.P., a Delaware
limited partnership, its General Partner
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Holly Logistic Services, L.L.C., a
Delaware limited liability company, its
General Partner
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	By:
	 	/s/ Stephen J. McDonnell
	

	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	Stephen J. McDonnell
Vice President and Chief Financial
Officer

S-4

 

	 	 	 	 	 	 	 	 	 
	 	 	HEP REFINING ASSETS, L.P., a Delaware limited partnership
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	HEP Refining GP, L.L.C., a Delaware limited liability
company and its General Partner
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Holly Energy Partners—Operating, L.P., a
Delaware limited partnership, its Sole Member
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	HEP Logistics GP, L.L.C., a Delaware limited
liability company, its General Partner
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Holly Energy Partners, L.P., a Delaware
limited partnership, its Sole Member
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	HEP Logistics Holdings, L.P., a Delaware
limited partnership, its General Partner
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Holly Logistic Services, L.L.C., a Delaware
limited liability company, its General Partner
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	By:
	 	/s/ Stephen J. McDonnell
	

	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	Stephen J. McDonnell
	

	 	 	 	 	 	 	 	Vice President and Chief Financial Officer

S-5

 

	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION,

as Trustee

 	 
	 	By:  	/s/ Adam M. Dalmy
 	 
	 	 	Adam M. Dalmy 	 
	 	 	Vice President 	 
	 

S-6exv10w1

 

Exhibit 10.1

NOVELLUS SYSTEMS, INC.

2001 STOCK INCENTIVE PLAN

(amended and restated March 11, 2005)

     1. Purposes of the Plan. The purposes of this Stock Incentive Plan are to attract and
retain the best available personnel, to provide additional incentive to Employees, Directors and
Consultants and to promote the success of the Company’s business.

     2. Definitions. As used herein, the following definitions shall apply:

          (a) “Administrator” means the Board or any of the Committees appointed to administer
the Plan.

          (b) “Affiliate” and “Associate” shall have the respective meanings ascribed to
such terms in Rule 12b-2 promulgated under the Exchange Act.

          (c) “Applicable Laws” means the legal requirements relating to the administration of
stock incentive plans, if any, under applicable provisions of federal securities laws, state
corporate and securities laws, the Code, the rules of any applicable stock exchange or national
market system, and the rules of any foreign jurisdiction applicable to Awards granted to residents
therein.

          (d) “Award” means the grant of an Option or Restricted Stock under the Plan.

          (e) “Award Agreement” means the written agreement evidencing the grant of an Award
executed by the Company and the Grantee, including any amendments thereto.

          (f) “Board” means the Board of Directors of the Company.

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

          (h) “Committee” means any committee appointed by the Board to administer the Plan.

          (i) “Common Stock” means the common stock of the Company.

          (j) “Company” means Novellus Systems, Inc., a California corporation.

          (k) “Consultant” means any person (other than an Employee or a Director, solely with
respect to rendering services in such person’s capacity as a Director) who is engaged by the
Company or any Related Entity to render consulting or advisory services to the Company or such
Related Entity.

          (l) “Continuous Service” means that the provision of services to the Company or a
Related Entity in any capacity of Employee, Director or Consultant, is not interrupted or

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terminated. Continuous Service shall not be considered interrupted in the case of (i) any
approved leave of absence, (ii) transfers among the Company, any Related Entity, or any successor,
in any capacity of Employee, Director or Consultant, or (iii) any change in status as long as the
individual remains in the service of the Company or a Related Entity in any capacity of Employee,
Director or Consultant (except as otherwise provided in the Award Agreement). An approved leave of
absence shall include sick leave, military leave, or any other authorized personal leave. For
purposes of each Incentive Stock Option granted under the Plan, if such leave exceeds ninety (90)
days, and reemployment upon expiration of such leave is not guaranteed by statute or contract, then
the Incentive Stock Option shall be treated as a Nonstatutory Stock Option on the day three (3)
months and one (1) day following the expiration of such ninety (90) day period.

          (m) “Corporate Transaction” means any of the following transactions:

               (i) a merger or consolidation in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the Company is
incorporated;

               (ii) the sale, transfer or other disposition of all or substantially all of the assets of the
Company (including the capital stock of the Company’s subsidiary corporations);

               (iii) approval by the Company’s shareholders of any plan or proposal for the complete
liquidation or dissolution of the Company; or

               (iv) any reverse merger in which the Company is the surviving entity but in which securities
possessing more than fifty percent (50%) of the total combined voting power of the Company’s
outstanding securities are transferred to a person or persons different from those who held such
securities immediately prior to such merger.

          (n) “Covered Employee” means an Employee who is a “covered employee” under Section
162(m)(3) of the Code.

          (o) “Director” means a member of the Board or the board of directors of any Related
Entity.

          (p) “Disability” means a Grantee would qualify for benefit payments under the
long-term disability policy of the Company or the Related Entity to which the Grantee provides
services regardless of whether the Grantee is covered by such policy. If the Company or the
Related Entity to which the Grantee provides service does not have a long-term disability plan in
place, “Disability” means that a Grantee is permanently unable to carry out the responsibilities
and functions of the position held by the Grantee by reason of any medically determinable physical
or mental impairment. A Grantee will not be considered to have incurred a Disability unless he or
she furnishes proof of such impairment sufficient to satisfy the Administrator in its discretion.

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          (q) “Employee” means any person, including an Officer or Director, who is an employee
of the Company or any Related Entity. The payment of a director’s fee by the Company or a Related
Entity shall not be sufficient to constitute “employment” by the Company.

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

          (s) “Fair Market Value” means, that as of any date, the value of Common Stock shall be
the closing price for a Share for the market trading day on such date (or, if no closing price was
reported on that date, on the last trading date on which a closing price was reported) on the stock
exchange determined by the Administrator to be the primary market for the Common Stock or the
Nasdaq National Market, whichever is applicable, or if the Common Stock is not traded on any
exchange or national market system, the average of the closing bid and ask prices of a Share on the
Nasdaq Small Cap Market on such date (or, if no closing prices were reported on that date, on the
last trading date on which closing prices were reported), in each case, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable.

          (t) “Grantee” means an Employee, Director or Consultant who receives an Award pursuant
to an Award Agreement under the Plan.

          (u) “Immediate Family” means any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in
law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any
person sharing the Grantee’s household (other than a tenant or employee), a trust in which these
persons have more than fifty percent (50%) of the beneficial interest, a foundation in which these
persons (or the Grantee) control the management of assets, and any other entity in which these
persons (or the Grantee) own more than fifty percent (50%) of the voting interests.

          (v) “Incentive Stock Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code.

          (w) “Nonstatutory Stock Option” means an Option not intended to qualify as an
Incentive Stock Option.

          (x) “Officer” means a person who is an officer of the Company or a Related Entity
within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.

          (y) “Option” means an option to purchase Shares pursuant to an Award Agreement granted
under the Plan.

          (z) “Outside Director” means a Director who is not an Employee.

          (aa) “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.

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          (bb) “Performance — Based Compensation” means compensation qualifying as
“performance-based compensation” under Section 162(m) of the Code.

          (cc) “Plan” means this 2001 Stock Incentive Plan.

          (dd) “Related Entity” means any Parent, Subsidiary and any business, corporation,
partnership, limited liability company or other entity in which the Company, a Parent or a
Subsidiary holds a substantial ownership interest, directly or indirectly.

          (ee) “Related Entity Disposition” means the sale, distribution or other disposition by
the Company, a Parent or a Subsidiary of all or substantially all of the interests of the Company,
a Parent or a Subsidiary in any Related Entity effected by a sale, merger or consolidation or other
transaction involving that Related Entity or the sale of all or substantially all of the assets of
that Related Entity, other than any Related Entity Disposition to the Company, a Parent or a
Subsidiary.

          (ff) “Restricted Stock” means Shares issued under the Plan to the Grantee for such
consideration, if any, and subject to such restrictions on transfer, rights of first refusal,
repurchase provisions, forfeiture provisions, and other terms and conditions as established by the
Administrator.

          (gg) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor
thereto.

          (hh) “Share” means a share of the Common Stock.

          (ii) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing,
as defined in Section 424(f) of the Code.

     3. Stock Subject to the Plan.

          (a) Subject to the provisions of Section 10, below, the maximum aggregate number of Shares
which may be issued pursuant to all Awards (including Incentive Stock Options) is 10,860,000
Shares. Notwithstanding the foregoing and subject to the provisions of Section 10 below, the
maximum number of Shares which may be issued pursuant to all Awards of Restricted Stock is
2,136,000 Shares. The Shares to be issued pursuant to Awards may be authorized, but unissued, or
reacquired Common Stock.

          (b) Any Shares covered by an Award (or portion of an Award) which is forfeited or canceled,
expires or is settled in cash, shall be deemed not to have been issued for purposes of determining
the maximum aggregate number of Shares which may be issued under the Plan. Shares that actually
have been issued under the Plan pursuant to an Award shall not be returned to the Plan and shall
not become available for future issuance under the Plan, except that if unvested Shares are forfeited, or repurchased by the Company at their original purchase
price, such Shares shall become available for future grant under the Plan.

     4. Administration of the Plan.

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          (a) Plan Administrator.

               (i) Administration with Respect to Directors and Officers. With respect to grants of
Awards to Directors or Employees who are also Officers or Directors of the Company, the Plan shall
be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the Applicable Laws and to permit such grants and
related transactions under the Plan to be exempt from Section 16(b) of the Exchange Act in
accordance with Rule 16b-3. Once appointed, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board.

               (ii) Administration With Respect to Consultants and Other Employees.  With
respect to grants of Awards to Employees or Consultants who are neither Directors nor Officers of
the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the
Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws.
Once appointed, such Committee shall continue to serve in its designated capacity until otherwise
directed by the Board.

               (iii) Administration With Respect to Covered Employees. Notwithstanding the
foregoing, grants of Awards to any Covered Employee intended to qualify as Performance-Based
Compensation shall be made only by a Committee (or subcommittee of a Committee) which is comprised
solely of two or more Directors eligible to serve on a committee making Awards qualifying as
Performance-Based Compensation. In the case of such Awards granted to Covered Employees,
references to the “Administrator” or to a “Committee” shall be deemed to be references to such
Committee or subcommittee.

               (iv) Administration Errors. In the event an Award is granted in a manner inconsistent
with the provisions of this subsection (a), such Award shall be presumptively valid as of its grant
date to the extent permitted by the Applicable Laws.

          (b) Powers of the Administrator. Subject to Applicable Laws and the provisions of the
Plan (including any other powers given to the Administrator hereunder), and except as otherwise
provided by the Board, the Administrator shall have the authority, in its discretion:

               (i) to select the Employees, Directors (excluding Outside Directors) and Consultants to whom
Awards may be granted from time to time hereunder;

               (ii) to determine whether and to what extent Awards are granted hereunder;

               (iii) to determine the number of Shares or the amount of other consideration to be covered by
each Award granted hereunder;

               (iv) to approve forms of Award Agreements for use under the Plan;

               (v) to determine the terms and conditions of any Award granted hereunder;

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               (vi) to amend the terms of any outstanding Award granted under the Plan, provided that any
amendment that would adversely affect the Grantee’s rights under an outstanding Award shall not be
made without the Grantee’s written consent and the reduction of the exercise price of any Option
awarded under the Plan shall be subject to shareholder approval;

               (vii) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan,
including without limitation, any notice of Award or Award Agreement, granted pursuant to the Plan;

               (viii) to establish additional terms, conditions, rules or procedures to accommodate the rules
or laws of applicable foreign jurisdictions and to afford Grantees favorable treatment under such
laws; provided, however, that no Award shall be granted under any such additional terms,
conditions, rules or procedures with terms or conditions which are inconsistent with the provisions
of the Plan; and

               (ix) to take such other action, not inconsistent with the terms of the Plan, as the
Administrator deems appropriate.

     5. Eligibility. Awards other than Incentive Stock Options may be granted to
Employees, Directors and Consultants. Incentive Stock Options may be granted only to Employees of
the Company, a Parent or a Subsidiary. An Employee, Director or Consultant who has been granted an
Award may, if otherwise eligible, be granted additional Awards. Awards may be granted to such
Employees, Directors or Consultants who are residing in foreign jurisdictions as the Administrator
may determine from time to time.

     6. Terms and Conditions of Awards.

          (a) Type of Awards. The Administrator is authorized under the Plan to award Options
and Restricted Stock with a fixed or variable price related to the Fair Market Value of the Shares
and with an exercise or conversion privilege related to the passage of time, the occurrence of one
or more events, or the satisfaction of performance criteria or other conditions.

          (b) Designation of Award. Each Award shall be designated in the Award Agreement. In
the case of an Option, the Option shall be designated as either an Incentive Stock Option or a
Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as Incentive Stock Options
which become exercisable for the first time by a Grantee during any calendar year (under all plans
of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options, to the extent of the Shares covered thereby in excess of the foregoing limitation,
shall be treated as Nonstatutory Stock Options. For this purpose, Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market Value of the Shares
shall be determined as of the date the Option with respect to such Shares is granted.

          (c) Conditions of Award. Subject to the terms of the Plan, the Administrator shall
determine the provisions, terms, and conditions of each Award including, but not limited to, the
Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions,

6

 

form of payment (cash, Shares, or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria. The performance criteria established
by the Administrator may be based on any one of, or combination of, increase in Share price,
earnings per Share, total shareholder return, return on equity, return on assets, return on
investment, net operating income, cash flow, revenue, economic value added, personal management
objectives, or other measure of performance selected by the Administrator. Partial achievement of
the specified criteria may result in a payment or vesting corresponding to the degree of achievement as specified in the Award Agreement.

          (d) Acquisitions and Other Transactions. The Administrator may issue Awards under the
Plan in settlement, assumption or substitution for, outstanding awards or obligations to grant
future awards in connection with the Company or a Related Entity acquiring another entity, an
interest in another entity or an additional interest in a Related Entity whether by merger, stock
purchase, asset purchase or other form of transaction.

          (e) Individual Option Limit. The maximum number of Shares with respect to which
Options may be granted to any Grantee in any fiscal year of the Company shall be 600,000 Shares.
In connection with a Grantee’s commencement of Continuous Service, a Grantee may be granted Options
for up to an additional 1,200,000 Shares which shall not count against the limit set forth in the
previous sentence. The foregoing limitations shall be adjusted proportionately in connection with
any change in the Company’s capitalization pursuant to Section 10, below. To the extent required
by Section 162(m) of the Code or the regulations thereunder, in applying the foregoing limitations
with respect to a Grantee, if any Option is canceled, the canceled Option shall continue to count
against the maximum number of Shares with respect to which Options may be granted to the Grantee.
For this purpose, the repricing of an Option shall be treated as the cancellation of the existing
Option and the grant of a new Option (if approved by shareholders).

          (f) Term of Award. The term of each Award shall be the term stated in the Award
Agreement provided, however, that the term shall be no more than ten (10) years from the date of
grant thereof. However, in the case of an Incentive Stock Option granted to a Grantee who, at the
time the Option is granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock
Option shall be five (5) years from the date of grant thereof or such shorter term as may be
provided in the Award Agreement.

          (g) Transferability of Awards. Incentive Stock Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the
Grantee, only by the Grantee; provided, however, that the Grantee may designate a beneficiary of
the Grantee’s Incentive Stock Option in the event of the Grantee’s death on a beneficiary
designation form provided by the Administrator. Other Awards may be transferred by gift or through
a domestic relations order to members of the Grantee’s Immediate Family to the extent provided in
the Award Agreement or in the manner and to the extent determined by the Administrator.

          (h) Time of Granting Awards. The date of grant of an Award shall for all purposes be
the date on which the Administrator makes the determination to grant such Award,

7

 

or such other date as is determined by the Administrator. Notice of the grant determination shall be given to each
Employee, Director or Consultant to whom an Award is so granted within a reasonable time after the date of such grant.

     7. Award Exercise or Purchase Price, Consideration and Taxes.

          (a) Exercise or Purchase Price. The exercise or purchase price, if any, for an Award
shall be as follows:

               (i) In the case of an Incentive Stock Option granted to an Employee who, at the time of the
grant of such Incentive Stock Option owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price shall be not less than one hundred ten percent (110%) of the Fair Market Value per
Share on the date of grant.

               (ii) In cases other than the case described in the preceding paragraph, the per Share exercise
price of an Option shall be not less than one hundred percent (100%) of the Fair Market Value per
Share on the date of grant.

               (iii) In the case of a Restricted Stock grant, such price, if any, shall be determined by the
Administrator.

               (iv) Notwithstanding the foregoing provisions of this Section 7(a), in the case of an Award
issued pursuant to Section 6(d), above, the exercise or purchase price for the Award shall be
determined in accordance with the principles of Section 424(a) of the Code.

          (b) Consideration. Subject to Applicable Laws, the consideration to be paid for the
Shares to be issued upon exercise or purchase of an Award including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined
at the time of grant). In addition to any other types of consideration the Administrator may
determine, the Administrator is authorized to accept as consideration for Shares issued under the
Plan the following:

               (i) cash;

               (ii) check;

               (iii) surrender of Shares or delivery of a properly executed form of attestation of ownership
of Shares as the Administrator may require (including withholding of Shares otherwise deliverable
upon exercise of the Award) which have a Fair Market Value on the date of surrender or attestation
equal to the aggregate exercise price of the Shares as to which said Award shall be exercised (but
only to the extent that such exercise of the Award would not result in an accounting compensation
charge with respect to the Shares used to pay the exercise price unless otherwise determined by the
Administrator);

               (iv) with respect to Options, payment through a broker-dealer sale and remittance procedure
pursuant to which the Grantee (A) shall provide written instructions to a

8

 

Company designated brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the
Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased Shares and (B) shall provide written directives to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm
in order to complete the sale transaction; or

               (v) any combination of the foregoing methods of payment.

          (c) Taxes. No Shares shall be delivered under the Plan to any Grantee or other person
until such Grantee or other person has made arrangements acceptable to the Administrator for the
satisfaction of any foreign, federal, state, or local income and employment tax withholding
obligations, including, without limitation, obligations incident to the receipt of Shares or the
disqualifying disposition of Shares received on exercise of an Incentive Stock Option. Upon
exercise of an Award, the Company shall withhold or collect from Grantee an amount sufficient to
satisfy such tax obligations.

     8. Exercise of Award.

          (a) Procedure for Exercise; Rights as a Shareholder.

               (i) Any Award granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator under the terms of the Plan and specified in the Award
Agreement.

               (ii) An Award shall be deemed to be exercised when written notice of such exercise has been
given to the Company in accordance with the terms of the Award by the person entitled to exercise
the Award and full payment for the Shares with respect to which the Award is exercised, including,
to the extent selected, use of the broker-dealer sale and remittance procedure to pay the purchase
price as provided in Section 7(b)(v). Until the issuance (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to Shares subject to an Award, notwithstanding the exercise of
an Option or other Award. The Company shall issue (or cause to be issued) such stock certificate
promptly upon exercise of the Award. No adjustment will be made for a dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in the Award Agreement or Section 10, below.

          (b) Exercise of Award Following Termination of Continuous Service.

               (i) An Award may not be exercised after the termination date of such Award set forth in the
Award Agreement and may be exercised following the termination of a Grantee’s Continuous Service
only to the extent provided in the Award Agreement.

               (ii) Where the Award Agreement permits a Grantee to exercise an Award following the
termination of the Grantee’s Continuous Service for a specified period, the Award shall terminate
to the extent not exercised on the last day of the specified period or the last day of the original
term of the Award, whichever occurs first.

9

 

               (iii) Any Award designated as an Incentive Stock Option to the extent not exercised within the
time permitted by law for the exercise of Incentive Stock Options following the termination of a
Grantee’s Continuous Service shall convert automatically to a Nonstatutory Stock Option and
thereafter shall be exercisable as such to the extent exercisable by its terms for the period
specified in the Award Agreement.

     9. Conditions Upon Issuance of Shares.

          (a) Shares shall not be issued pursuant to the exercise of an Award unless the exercise of
such Award and the issuance and delivery of such Shares pursuant thereto shall comply with all
Applicable Laws, and shall be further subject to the approval of counsel for the Company with
respect to such compliance.

          (b) As a condition to the exercise of an Award, the Company may require the person exercising
such Award to represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is required by any Applicable
Laws.

     10. Adjustments Upon Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of Shares covered by each outstanding Award, and the number
of Shares which have been authorized for issuance under the Plan but as to which no Awards have yet
been granted or which have been returned to the Plan, the exercise or purchase price of each such
outstanding Award, the maximum number of Shares with respect to which Options may be granted to any
Grantee in any fiscal year of the Company, the total number of Shares with respect to which
Restricted Stock can be granted under the Plan, as well as any other terms that the Administrator
determines require adjustment shall be proportionately adjusted for (i) any increase or decrease in
the number of issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Shares, or similar event affecting the Shares, (ii) any
other increase or decrease in the number of issued Shares effected without receipt of consideration
by the Company, or (iii) as the Administrator may determine in its discretion, any other
transaction with respect to Common Stock including a corporate merger, consolidation, acquisition of property or stock, separation (including a spin-off or other
distribution of stock or property), reorganization, liquidation (whether partial or complete) or
any similar transaction; provided, however that conversion of any convertible securities of the
Company shall not be deemed to have been “effected without receipt of consideration.” In the event
of any distribution of cash or other assets to shareholders other than a normal cash dividend, the
Administrator may also, in its discretion, make adjustments described in (i)-(iii) of this Section
10 or substitute, exchange or grant Awards with respect to the shares of a Related Entity
(collectively “adjustments”). In determining adjustments to be made under this Section 10, the
Administrator may take into account such factors as it deems appropriate, including (x) the
restrictions of Applicable Law, (y) the potential tax, accounting or other consequences of an
adjustment and (z) the possibility that some Grantees might receive an adjustment and a
distribution or other unintended benefit, and in light of such factors or circumstances may make
adjustments that are not uniform or proportionate among outstanding Awards, modify vesting dates,
defer the delivery of stock certificates or make other equitable

10

 

adjustments. Any such adjustments to outstanding Awards will be effected in a manner that precludes the material enlargement of
rights and benefits under such Awards. Adjustments, if any, and any determinations or
interpretations, including any determination of whether a distribution is other than a normal cash
dividend, shall be made by the Administrator and its determination shall be final, binding and
conclusive. In connection with the foregoing adjustments, the Administrator may, in its
discretion, prohibit the exercise of Awards during certain periods of time. Except as the
Administrator determines, no issuance by the Company of shares of any class, or securities
convertible into shares of any class, shall affect, and no adjustment by reason hereof shall be
made with respect to, the number or price of Shares subject to an Award.

     11. Corporate Transactions and Related Entity Dispositions. Except as may be provided
in an Award Agreement:

          (a) The Administrator shall have the authority, exercisable either in advance of any actual or
anticipated Corporate Transaction or Related Entity Disposition or at the time of an actual
Corporate Transaction or Related Entity Disposition and exercisable at the time of the grant of an
Award under the Plan or any time while an Award remains outstanding, to provide for the full or
partial automatic vesting and exercisability of one or more outstanding unvested Awards under the
Plan and the full or partial release from restrictions on transfer and repurchase or forfeiture
rights of such Awards in connection with a Corporate Transaction or Related Entity Disposition, on
such terms and conditions as the Administrator may specify. The Administrator also shall have the
authority to condition any such Award vesting and exercisability or release from such limitations
upon the subsequent termination of the Continuous Service of the Grantee within a specified period
following the effective date of the Corporate Transaction or Related Entity Disposition. The
Administrator may provide that any Awards so vested or released from such limitations in connection
with a Related Entity Disposition, shall remain fully exercisable until the expiration or sooner
termination of the Award. Effective upon the consummation of a Corporate Transaction, all
outstanding Awards under the Plan shall terminate unless assumed by the successor company or its
parent.

          (e) The portion of any Incentive Stock Option accelerated under this Section 11 in connection
with a Corporate Transaction or Related Entity Disposition shall remain exercisable as an Incentive
Stock Option under the Code only to the extent the $100,000 dollar limitation of Section 422(d) of
the Code is not exceeded. To the extent such dollar limitation is exceeded, the accelerated excess
portion of such Option shall be exercisable as a Nonstatutory Stock Option.

     12. Effective Date and Term of Plan. The Plan shall become effective upon the earlier
to occur of its adoption by the Board or its approval by the shareholders of the Company. It shall
continue in effect for a term of ten (10) years unless sooner terminated. Subject to Section 17,
below, and Applicable Laws, Awards may be granted under the Plan upon its becoming effective.

     13. Amendment, Suspension or Termination of the Plan.

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          (a) The Board may at any time amend, suspend or terminate the Plan; provided, however, that no
such amendment shall be made without the approval of the Company’s shareholders to the extent such
approval is required by Applicable Laws, or if such amendment would:

               (i) expand the classes of persons to whom Awards may be issued under Section 5 of the Plan;

               (ii) increase the number of Shares authorized for issuance under Section 3(a) of the Plan
excluding such increases pursuant to Section 10 of the Plan;

               (iii) increase the number of Shares with respect to which Options may be granted to any
Grantee under Section 6(e) of the Plan excluding such increases pursuant to Section 10 of the Plan;

               (iv) increase the number of Shares available for Awards of Restricted Stock under Section 3(a)
of the Plan;

               (v) permit unrestricted Shares to be granted other than in lieu of cash payments under other
incentive plans and programs of the Company and its Related Entities excluding any such incentive
plan or program that is a “Retirement Plan” or “Welfare Plan” under the Employee Retirement Income
Security Act of 1974, as amended;

               (vi) allow the creation of additional types of Awards;

               (vii) permit decreasing the exercise price of any Option outstanding under the Plan; or

               (viii) change any of the provisions of this Section 13(a).

          (b) The Administrator may amend the terms of any outstanding Award, prospectively or
retroactively, but no such amendment (i) shall cause Performance-Based Compensation to cease to qualify as Performance-Based Compensation, (ii) impair the rights of
any Grantee without the Grantee’s consent except such an amendment made to cause the Plan or Award
to qualify for any exemption provided by Rule 16b-3 or (iii) modify the terms of any Award in a
manner inconsistent with the provisions of the Plan. Subject to the above provisions, the Board
shall have authority to amend the Plan to take into account changes in Applicable Laws and
accounting rules as well as other developments, and to grant Awards which qualify for beneficial
treatment under such rules without shareholder approval.

          (c) No Award may be granted during any suspension of the Plan or after termination of the
Plan.

          (d) Any amendment, suspension or termination of the Plan (including termination of the Plan
under Section 12, above) shall not affect Awards already granted, and such Awards shall remain in
full force and effect as if the Plan had not been amended, suspended

12

 

or terminated, unless mutually agreed otherwise between the Grantee and the Administrator, which agreement must be in writing and
signed by the Grantee and the Company.

     14. Reservation of Shares.

          (a) The Company, during the term of the Plan, will at all times reserve and keep available
such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

          (b) The inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of
the failure to issue or sell such Shares as to which such requisite authority shall not have been
obtained.

     15. No Effect on Terms of Employment/Consulting Relationship. The Plan shall not
confer upon any Grantee any right with respect to the Grantee’s Continuous Service, nor shall it
interfere in any way with his or her right or the Company’s right to terminate the Grantee’s
Continuous Service at any time, with or without cause.

     16. No Effect on Retirement and Other Benefit Plans. Except as specifically provided
in a retirement or other benefit plan of the Company or a Related Entity, Awards shall not be
deemed compensation for purposes of computing benefits or contributions under any retirement plan
of the Company or a Related Entity, and shall not affect any benefits under any other benefit plan
of any kind or any benefit plan subsequently instituted under which the availability or amount of
benefits is related to level of compensation. The Plan is not a “Retirement Plan” or “Welfare
Plan” under the Employee Retirement Income Security Act of 1974, as amended.

     17. Shareholder Approval. The grant of Incentive Stock Options under the Plan shall
be subject to approval by the shareholders of the Company within twelve (12) months before or after
the date the Plan is adopted excluding Incentive Stock Options issued in substitution for
outstanding Incentive Stock Options pursuant to Section 424(a) of the Code. Such shareholder approval shall be obtained in the degree and manner required under Applicable Laws. The
Administrator may grant Incentive Stock Options under the Plan prior to approval by the
shareholders, but until such approval is obtained, no such Incentive Stock Option shall be
exercisable. In the event that shareholder approval is not obtained within the twelve (12) month
period provided above, all Incentive Stock Options previously granted under the Plan shall be
exercisable as Nonstatutory Stock Options.

     18. Plan History. The Plan was initially approved by the Board and shareholders of
the Company in 2001. In February 2003, the Board approved an amendment to the Plan to increase the
automatic option grant to Outside Directors under Section 6(e) of the Plan from 10,000 shares to
18,000 shares, which amendment was not subject to shareholder approval. In March 2005, subject to
shareholder approval, the Board approved an amendment to the Plan in order to (i) increase the
number of shares available for issuance thereunder by 4,500,000 shares from 6,360,000 shares to
10,860,00 shares, (ii) provide that the maximum number of Shares which may

13

 

be issued pursuant to all Awards of Restricted Stock is 2,136,000 Shares, (iii) remove the automatic option grant program
for Outside Directors under Section 6(e) in order to permit greater flexibility in the granting of
awards to Outside Directors under the Plan and (iv) amend certain other administrative provisions
of the Plan.

14

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