Document:

Exhibit
10.1

 

	
   

  	
   

  	
  Board

  Fee

  	
   

  	
  Compensation

  Committee

  	
   

  	
  Audit

  Committee

  	
   

  	
  Nominating

  & Corporate

  Governance

  Committee

  	
   

  	
  Executive

  Committee

  	
   

  	
  Each

  Committee

  Meeting

  	
   

  	
  Telephonic

  Committee

  Meetings

  	
   

  
	
  Chairman

  	
   

  	
  $

  	
  75,000

  	
   

  	
  $

  	
  12,500

  	
   

  	
  $

  	
  17,500

  	
   

  	
  $

  	
  12,500

  	
   

  	
  $

  	
  12,500

  	
   

  	
  $

  	
  1,000

  	
   

  	
  $

  	
  500

  	
   

  
	
  Member

  	
   

  	
  $

  	
  50,000

  	
   

  	
  $

  	
  7,500

  	
   

  	
  $

  	
  7,500

  	
   

  	
  $

  	
  7,500

  	
   

  	
  $

  	
  7,500

  	
   

  	
  $

  	
  1,000

  	
   

  	
  $

  	
  500Exhibit 10.2

 

PROPOSAL TWO

APPROVAL OF 2005 STOCK INCENTIVE PLAN

 

In March 2005, the Board approved the 2005 Stock Incentive Plan
(the “2005 Plan”) for a vote by our stockholders. The purposes of the 2005 Plan
are to further our growth and development, attract new employees and create
incentives for existing employees. The following is a summary of the material
terms of the 2005 Plan which is qualified in its entirety by a copy of the 2005
Plan, attached hereto as Appendix A.

 

The 2005 Plan provides for the grant of stock options, including both
nonqualified and incentive options, and restricted stock to full and part-time
employees. An employee who at the time of the award owns 10% or more of the
combined voting power of all classes of our stock is not eligible for any award
under the 2005 Plan. Subject to certain adjustments, the 2005 Plan would permit
total equity awards over the life of the 2005 Plan of up to 4,000,000 shares of
common stock, subject to the following limits:

 

	
  •

  	
  Aggregate limit on shares designated for stock options

  	
  2,500,000 shares

  
	
  •

  	
  Aggregate limit on shares designated for restricted stock

  	
  1,500,000 shares

  

 

Options or restricted stock cannot be awarded to any employee during a
calendar year in excess of 10% of either of these limits. If any outstanding
award expires, is no longer exercisable, is forfeited or is repurchased by us,
the shares subject to the award continue to be available under the 2005 Plan.

 

The Board will administer the 2005 Plan unless and until such
administration is delegated to a committee of the Board. The Board, or the
designated committee, determines and designates from time to time (a) those
employees to whom awards are granted, (b) the size, form, terms (including
vesting) and conditions of awards under the 2005 Plan, and (c) rules with
respect to the administration of the 2005 Plan.

 

Stock Options

 

The purchase price of the stock under each option will be no less than
the fair market value of the stock at the time such option is granted, and no
options will be repriced. The Plan administrator determines the duration of any
option, except that options may not be exercised after the earlier of five
years following date such option vests or seven years from the date of grant.
An employee may pay the exercise price in cash or, upon approval of the Plan
administrator, in our common stock. A stock option will terminate and may not
be exercised 90 days after an employee ceases to be employed for any
reason other than for cause, disability, or death. If an employee ceases employment
for cause or if the employee breaches any covenant not to compete or
nondisclosure agreement, unless otherwise provided in the individual option
agreement, all options will cease vesting and terminate. If an employee ceases
employment due to death or disability, all outstanding vested options will be
exercisable for one year after such employee ceases employment or, if earlier
in the case of disability, until 30 days after the employee no longer has
a disability.

 

Restricted Stock

 

Restricted stock granted under the Plan may be subject to a vesting schedule and,
if so, the employee’s right to fully vest in a restricted stock award is
subject to continuous employment. If the employee terminates continuous service
for any reason, including disability, any unvested restricted stock as of the
date of termination of continuous service will be forfeited to us. A purchase
price may be required, at the Plan administrator’s discretion, to be paid for
the restricted stock. If a purchase price is established the restricted stock
may not be repriced.

 

 

Valuation

 

For purposes of the 2005 Plan, fair market value for stock options
shall mean the New York Stock Exchange Composite Transactions average closing
price for the stock reflected in The Wall Street Journal or another publication
selected by the Board for the ten trading days preceding the day an award is
granted. As of the close of business on March 24, 2005, the closing price
of our common stock was $34.65.

 

Change in Control

 

If a change of control event occurs, as defined in the 2005 Plan, then
the vesting of all stock options and shares of restricted stock will be
accelerated in full. In anticipation of a change in control event, the Plan
administrator may provide that all unexercised options must be exercised upon
the change in control event or within a specified number of days thereafter or
such options will terminate. Any option not exercised prior to the time frame
stated in the notice will terminate.

 

Amendment and Termination of the 2005 Plan

 

Except for early termination of the Plan, the Board cannot make any
material change or amendment to the 2005 Plan without further approval of the
stockholders.

 

The 2005 Plan terminates ten years after the effective date, but the
Board may suspend or terminate the 2005 Plan at any time. No incentive stock
options or restricted stock may be granted any time after ten years after the
effective date of the 2005 Plan.

 

Federal Income Tax Consequences

 

The rules governing the tax treatment of stock options and restricted
stock depend largely on the surrounding facts and circumstances. Generally,
under current federal income tax laws, an employee will recognize income, and
we will be entitled to a deduction as follows:

 

Stock
Options

 

If an employee does not dispose of the shares acquired pursuant to the
exercise of an incentive option within one year after the transfer of the
shares to the employee and not within two years from the grant of the option,
the employee will not realize taxable income as a result of the grant or
exercise of the option (except for purposes of the alternative minimum tax upon
the exercise of the option), and any gain or loss that is subsequently realized
may be treated as a long term capital gain or loss, depending on the
circumstances. We will not be able to deduct any amount for the grant of the
incentive stock option or the transfer of shares upon exercise. If the employee
disposes of the stock prior to one year after the transfer of the shares (or
prior to two years from the option grant date), the employee will realize
ordinary income in an amount equal to the lesser of (a) the excess of the
fair market value of the common stock acquired on the date of exercise over the
exercise price or (b) the gain recognized on such disposition. In such
event, we will be entitled to a deduction for the amount of ordinary income
(which is treated as compensation) realized by the employee. Upon the exercise
of a nonqualified stock option, the employee will generally realize ordinary
income equal to the excess of the fair market value of the shares on the date
of exercise over the exercise price. We will be able to deduct an amount equal
to the ordinary income realized by the employee.

 

Restricted
Stock

 

An employee who receives an award of restricted stock will realize
ordinary income (on a per share basis) at the time any restrictions lapse equal
to the difference between the fair market value of the common stock at the time
such restrictions lapse and the amount paid, if any, for the stock.
Alternatively, under Section 83 of the Internal Revenue Code, the employee
may elect to accelerate the tax event and

 

 

realize ordinary income (on a per share basis) equal to the difference
between the amount paid, if any, for the common stock and the fair market value
of the common stock on the date of grant upon the receipt of an award of
restricted stock. When the employee recognizes ordinary income, we will be able
to deduct an amount equal to the ordinary income recognized by the employee.

 

Section 409A

 

Section 409A, a new section added to the Code in 2004, makes
significant changes to the tax treatment of certain types of deferred
compensation. Failure to comply with the requirements of Section 409A
results in current income of amounts deferred, along with interest and a
significant tax penalty. Certain types of equity-based compensation are exempt
from Section 409A. We intend to operate the 2005 Plan so that all grants
under the 2005 Plan are exempt from Section 409A.

 

New Plan Benefits

 

As of the date of this proxy statement, no executive officer or
employee has been granted any options or restricted stock subject to
stockholder approval of the 2005 Plan. The benefits to be received by our
executive officers and other employees pursuant to the 2005 Plan are not determinable
at this time.

 

Other Equity Compensation Plan Information

 

The following table summarizes all of our existing equity compensation
plans under which securities may be issued as of December 31, 2004. The
only types of equity compensation plans that we have are plans that authorize
the granting of options to purchase shares of our common stock.

 

	
  Plan
  Category

  	
   

  	
  Number of securities to

  be issued upon exercise

  of outstanding options

  (a)

  	
   

  	
  Weighted-average per share

  exercise price of outstanding

  options

  (b)

  	
   

  	
  Number of securities remaining

  available for future issuance under

  equity compensation plans (excluding

  securities reflected in column(a))

  (c)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equity compensation plans approved by
  security holders

  	
   

  	
  3,151,055

  	
   

  	
  $

  	
  21.60

  	
   

  	
  996,044

  	
  *

  
	
  Equity compensation plans not approved by
  security holders

  	
   

  	
  606,600

  	
   

  	
  $

  	
  12.40

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  3,757,655

  	
   

  	
  $

  	
  20.12

  	
   

  	
  996,044

  	
   

  

 

*                                         Includes
options covering 745,204 shares that are available to be granted under our 1997
stock option plan. Our Board has determined that no further options will be
granted under this plan.

 

A description of the equity compensation plans that were not approved
by the security holders is as follows.

 

1999
Non-Employee Directors Stock Option Plan

 

Effective March 1999, our Board adopted a stock option plan that
authorized the granting of options to purchase 30,000 shares of our common
stock to non-employee directors. During 1999, the Board approved grants of
options covering a total of 30,000 shares of our common stock to several Board
members. The exercise price of the common stock underlying each option was the
average closing price for the ten days prior to the grant. Under this plan,
options covering up to 33 1¤3%
of the underlying shares are exercisable on each anniversary from the date of
grant and the director must exercise the option within five years of the date
each option vests. This plan terminates on the earlier of March 12, 2009
or the date on which all options granted under the plan have been exercised in
full.

 

 

Chief
Executive Officer and President’s Plan

 

Pursuant to the employment agreement, dated October 15, 2001, and
the stock option agreement, dated as of November 1, 2001, between the
Company and Peter A. Dea, our CEO and President, we granted non-qualified stock
options to Mr. Dea for the purchase of 600,000 shares of our common stock.
The exercise price of the options was equal to $2.50 below the closing price
per share on the effective date of his employment agreement. The stock options
are subject to the conditions of the agreements and vest equally over four
years and must be exercised within five years of the date on which they vest.
The difference between the closing price on the effective date and the exercise
price is being amortized over four years as compensation expense. This option
plan will terminate on the earlier of October 15, 2010 or the date on
which all options granted under the plan have been exercised in full.

 

THE BOARD RECOMMENDS THAT YOU VOTE “FOR”
PROPOSAL TWO, APPROVAL OF THE 2005 STOCK INCENTIVE PLAN

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