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RESOURCES CONNECTION, INC.
1999 LONG-TERM INCENTIVE PLAN
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TABLE OF CONTENTS
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1. The Plan................................................................................................... 1
1.1 Purpose.............................................................................................. 1
1.2 Administration and Authorization; Power and Procedure................................................ 1
1.3 Participation........................................................................................ 2
1.4 Shares Available for Awards; Share Limits............................................................ 2
1.5 Grant of Awards...................................................................................... 3
1.6 Award Period......................................................................................... 3
1.7 Limitations on Exercise and Vesting of Awards........................................................ 3
1.8 No Transferability; Limited Exception to Transfer Restrictions....................................... 4
2. Options.................................................................................................... 4
2.1 Grants............................................................................................... 4
2.2 Option Price......................................................................................... 4
2.3 Vesting; Limits on Exercise; Other Limitations....................................................... 5
2.4 Limitations on Grant and Terms of Incentive Stock Options............................................ 6
2.5 Limits on 10% Holders................................................................................ 7
2.6 Option Repricing/Cancellation and Regrant/Waiver of Restrictions..................................... 7
2.7 Options and Rights in Substitution for Stock Options Granted by Other Corporations................... 7
3. Stock Appreciation Rights (Including Limited Stock Appreciation Rights).................................... 7
3.1 Grants............................................................................................... 7
3.2 Exercise of Stock Appreciation Rights................................................................ 7
3.3 Payment.............................................................................................. 8
3.4 Limited Stock Appreciation Rights.................................................................... 8
4. Restricted Stock Awards.................................................................................... 9
4.1 Grants............................................................................................... 9
4.2 Restrictions......................................................................................... 9
4.3 Return to the Corporation............................................................................ 9
5. Performance Share Awards and Stock Bonuses................................................................. 10
5.1 Grants of Performance Share Awards................................................................... 10
5.2 Special Performance-Based Share Awards............................................................... 10
5.3 Grants of Stock Bonuses.............................................................................. 11
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TABLE OF CONTENTS
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5.4 Deferred Payments................................................................................... 11
6. Other Provisions.......................................................................................... 12
6.1 Rights of Eligible Persons, Participants and Beneficiaries......................................... 12
6.2 Effects of Termination of Employment; Termination of Subsidiary Status; Discretionary Provisions... 13
6.3 Adjustments; Acceleration.......................................................................... 14
6.4 Compliance with Laws............................................................................... 16
6.5 Tax Withholding.................................................................................... 18
6.6 Plan Amendment, Termination and Suspension......................................................... 19
6.7 Privileges of Stock Ownership...................................................................... 20
6.8 Effective Date of the Plan......................................................................... 20
6.9 Term of the Plan................................................................................... 20
6.10 Governing Law/Construction/Severability............................................................ 20
6.11 Captions........................................................................................... 21
6.12 Non-Exclusivity of Plan............................................................................ 21
6.13 No Restriction on Corporate Powers................................................................. 21
6.14 Effect on Other Benefits........................................................................... 21
7. Definitions.............................................................................................. 22
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RESOURCES CONNECTION, INC.
1999 LONG-TERM INCENTIVE PLAN
1. The Plan.
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1.1 Purpose. The purpose of this Plan is to promote the success of the Company
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and the interests of its stockholders by attracting, motivating, retaining
and rewarding directors, officers, employees and other eligible persons
with awards and incentives for high levels of individual performance and
improved financial performance of the Company. Capitalized terms used
herein are defined in Section 7.
1.2 Administration and Authorization; Power and Procedure.
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1.2.1 Committee. This Plan will be administered by and all Awards will be
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authorized by the Committee. Action of the Committee with respect to the
administration of this Plan will be taken pursuant to a majority vote or by
written consent of its members.
1.2.2 Plan Awards; Interpretation; Powers of Committee. Subject to the
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express provisions of this Plan and any express limitations on the
delegated authority of a Committee, the Committee will have the
authority to:
(a) determine eligibility and the particular Eligible Persons who
will receive Awards;
(b) grant Awards to Eligible Persons, determine the price at which
securities will be offered or awarded and the amount of
securities to be offered or awarded to any of such persons, and
determine the other specific terms and conditions of Awards
consistent with the express limits of this Plan, establish the
installments (if any) in which such Awards will become
exercisable or will vest, or determine that no delayed
exercisability or vesting is required, and establish the events
of termination or reversion of such Awards;
(c) approve the forms of Award Agreements, which need not be
identical either as to type of Award or among Participants;
(d) construe and interpret this Plan and any Award or other
agreements defining the rights and obligations of the Company
and Participants under this Plan, further define the terms used
in this Plan, and prescribe, amend and rescind rules and
regulations relating to the administration of this Plan;
(e) cancel, modify, or waive the Corporation's rights with respect
to, or modify, discontinue, suspend, or terminate any or all
outstanding Awards held by Eligible Persons, subject to any
required consent under Section 6.6;
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(f) accelerate or extend the exercisability or extend the term of
any or all outstanding Awards within the maximum ten-year term
of Awards under Section 1.6; and
(g) make all other determinations and take such other action as
contemplated by this Plan or as may be necessary or advisable
for the administration of this Plan and the effectuation of its
purposes.
1.2.3 Binding Determinations. Any action taken by, or inaction of, the
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Corporation, any Subsidiary, the Board or the Committee relating or
pursuant to this Plan will be within the absolute discretion of that
entity or body and will be conclusive and binding upon all persons.
Subject only to compliance with the express provisions hereof, the
Board and Committee may act in their absolute discretion in matters
within their authority related to this Plan.
1.2.4 Reliance on Experts. In making any determination or in taking or
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not taking any action under this Plan, the Committee or the Board,
as the case may be, may obtain and may rely upon the advice of
experts, including employees of and professional advisors to the
Corporation.
1.2.5 Bifurcation of Plan Administration; Delegation. The Committee may
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delegate ministerial, non-discretionary functions to individuals who
are officers or employees of the Company.
1.2.6 No Liability. No director, officer or agent of the Company will be
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liable for any action, omission or decision under the Plan taken,
made or omitted in good faith.
1.3 Participation. Awards may be granted by the Committee only to those persons
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that the Committee determines to be Eligible Persons. An Eligible Person
who has been granted an Award may, if otherwise eligible, be granted
additional Awards if the Committee so determines.
1.4 Shares Available for Awards; Share Limits.
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1.4.1 Shares Available. Subject to the provisions of Section 6.3, the
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capital stock that may be delivered under this Plan will be shares
of the Corporation's authorized but unissued Common Stock and any
shares of its Common Stock held as treasury shares. The shares may
be delivered for any lawful consideration.
1.4.2 Share Limits. The maximum number of shares of Common Stock that may
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be delivered pursuant to Awards granted under this Plan will not
exceed 5,040,000 shares (the "Share Limit"). The maximum number of
shares subject to those Options and Stock Appreciation Rights that
are granted during any calendar year to any one individual will be
limited to 200,000 shares and the maximum individual limit on the
number of shares in the aggregate subject to all Awards that during
any calendar year are granted under this Plan to any one individual
will be 200,000 shares. Each of the foregoing numerical limits will
be subject to adjustment as contemplated by this Section 1.4 and
Section 6.3.
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1.4.3 Share Reservation; Replenishment and Reissue of Unvested
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Awards. No Award may be granted under this Plan unless, on
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the date of grant, the sum of (i) the maximum number of
shares of Common Stock issuable at any time pursuant to such
Award, plus (ii) the number of shares of Common Stock that
have previously been issued pursuant to Awards granted under
this Plan, other than reacquired shares available for reissue
consistent with any applicable legal limitations, plus (iii)
the maximum number of shares of Common Stock that may be
issued at any time after such date of grant pursuant to
Awards that are outstanding on such date, does not exceed the
Share Limit. Shares of Common Stock that are subject to or
underlie Awards that expire or for any reason are canceled or
terminated, are forfeited, fail to vest, or for any other
reason are not paid or delivered under this Plan, as well as
reacquired shares, will again, except to the extent
prohibited by law or the terms of this Plan, be available for
subsequent Awards under this Plan. Shares of Common Stock
issued pursuant to the terms hereof (including shares of
Common Stock offset in satisfaction of applicable withholding
taxes or the exercise price of an Award) shall reduce on a
share-for-share basis the number of shares of Common Stock
remaining available under this Plan. Except as limited by
law, if an Award is or may be settled only in cash, such
Award need not be counted against any of the limits under
this Section 1.4.
1.5 Grant of Awards. Subject to the express provisions of this Plan,
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the Committee will determine the number of shares of Common Stock
subject to each Award, the price (if any) to be paid for the shares
or the Award and, in the case of performance share awards, in
addition to matters addressed in Section 1.2.2, the specific
objectives, goals and "business criteria" as such term is used in
Section 5.2 that further define the terms of the performance share
award. Each Award will be evidenced by an Award Agreement signed by
the Corporation and, if required by the Committee, by the
Participant.
1.6 Award Period. Any Option, SAR, warrant or similar right shall
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expire and any other Award shall either vest or be forfeited not
more than 10 years after the date of grant; provided, however, that
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any payment of cash or delivery of stock pursuant to an Award may be
delayed until a future date if specifically authorized by the
Committee in writing; provided further that each Award will be
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subject to earlier termination as provided in or pursuant to
Sections 6.2 and 6.3 of this Plan.
1.7 Limitations on Exercise and Vesting of Awards.
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1.7.1 Provisions for Exercise. Unless the Committee otherwise
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expressly provides, no Award will be exercisable or will vest
until at least six months after the initial Award Date, and
once exercisable an Award will remain exercisable until the
expiration or earlier termination of the Award.
1.7.2 Procedure. Any exercisable Award will be deemed to be
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exercised when the Corporation receives written notice of
such exercise from the Participant (on a form and in such
manner as may be required by the Committee), together with
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any required payment made in accordance with Section 2.2.2 and
Section 6.5 and any written statement required pursuant to Section
3.4 of this Plan.
1.7.3 Fractional Shares/Minimum Issue. Fractional share interests will be
disregarded, but may be accumulated. The Committee, however, may
determine in the case of Eligible Persons that cash, other
securities, or other property will be paid or transferred in lieu of
any fractional share interests.
1.8 No Transferability; Limited Exception to Transfer Restrictions.
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1.8.1 Limit On Exercise and Transfer. Unless otherwise expressly provided
------------------------------
in (or pursuant to) this Section 1.8, by applicable law and by the
Award Agreement, as the same may be amended: (i) all Awards are non-
transferable and will not be subject in any manner to sale,
transfer, anticipation, alienation, assignment, pledge, encumbrance
or charge; (ii) Awards will be exercised only by the Participant;
and (iii) amounts payable or shares issuable pursuant to an Award
will be delivered only to (or for the account of) the Participant.
1.8.2 Further Exceptions to Limits On Transfer. The exercise and transfer
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restrictions in Section 1.8.1 will not apply to:
(a) transfers to the Corporation;
(b) the designation of a beneficiary to receive benefits if the
Participant dies or, if the Participant has died, transfers to
or exercises by the Participant's beneficiary, or, in the
absence of a validly designated beneficiary, transfers by will
or the laws of descent and distribution;
(c) if the Participant has suffered a disability, permitted
transfers or exercises on behalf of the Participant by the
Participant's legal representative; or
(d) the authorization by the Committee of "cashless exercise"
procedures with third parties who provide financing for the
purpose of (or who otherwise facilitate) the exercise of Awards
consistent with applicable laws and the express authorization
of the Committee.
2. Options.
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2.1 Grants. One or more Options may be granted under this Plan to any Eligible
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Person. Each Option granted will be designated in the applicable Award
Agreement, by the Committee, as either an Incentive Stock Option, subject
to Section 2.4, or a Nonqualified Stock Option.
2.2 Option Price.
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2.2.1 Pricing Limits. The purchase price per share of the Common Stock
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covered by each Option will be determined by the Committee at the
time of grant of the Award (and in no case will such purchase price
be less than the par value of the
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Common Stock), but in the case of Incentive Stock Options the
exercise price shall not be less than 100% and, in the case of an
Option granted to a Participant described in Section 2.5, not less
than 110% of the Fair Market Value of the Common Stock on the date
of grant.
2.2.2 Payment Provisions. The purchase price of any shares of Common
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Stock purchased on exercise of an Option granted under this Plan
will be paid in full at the time of each purchase in one or a
combination of the following methods:
(a) in cash or by electronic funds transfer;
(b) by certified or cashier's check payable to the order of the
Corporation;
(c) by notice and third party payment in such manner as may be
authorized by the Committee; or
(d) subject to the proviso below, by the delivery of shares of
Common Stock already owned by the Participant, provided the
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Committee may in its absolute discretion limit the
Participant's ability to exercise an Option by delivering
previously owned shares, and any shares of Common Stock
delivered that were initially acquired from the Corporation
upon exercise of a stock option must have been owned by the
Participant at least six (6) months as of the date of delivery.
Shares of Common Stock used to satisfy the exercise price of an
Option will be valued at their Fair Market Value on the date of
exercise. Without limiting the generality of the foregoing, the
Committee may provide that the Option can be exercised and
payment made by delivering a properly executed exercise notice
together with irrevocable instructions to a broker to promptly
deliver to the Corporation the amount of sale proceeds
necessary to pay the exercise price and, unless otherwise
prohibited by the Committee or applicable law, any applicable
tax withholding under Section 6.5. The Corporation will not be
obligated to deliver certificates for the shares unless and
until it receives full payment of the exercise price therefor,
and all related withholding obligations under Section 6.5 and
other conditions to exercise have been satisfied.
2.3 Vesting; Limits on Exercise; Other Limitations.
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2.3.1 Vesting. Unless the Committee or this Plan otherwise expressly
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provides, no Option will be exercisable or will vest until at least
six months after the initial Award Date. Unless otherwise provided
by the Committee in the applicable Award Agreement, each Option
shall become vested and exercisable as to 25% of the total number of
shares subject thereto on or after the first anniversary of the
applicable Award Date and thereafter shall become vested and
exercisable as to an additional 25% of the total number of shares
subject thereto on or after each of the second, third and fourth
anniversaries of the applicable Award Date, in each
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case subject to adjustment under Section 3.3 of this Plan. Unless
otherwise provided by the Committee in the applicable Award
Agreement, to the extent that an Option is vested and exercisable,
if the Participant does not in any year purchase all or any part of
the shares to which the Participant is entitled, the Participant has
the right cumulatively thereafter to purchase, subject to Section
2.2.3, any shares not so purchased and such right shall continue
until the expiration or earlier termination of the Option under this
Plan or the Award Agreement.
Notwithstanding anything to the contrary in the foregoing paragraph,
and only to the extent required to satisfy Section 260.140.41 of the
Regulations adopted under the California Corporate Securities Law if
such section is then applicable, no Option (except an Option granted
to an officer or director of the Corporation) shall become vested at
a rate of less than 20% per year over five years after the date the
option is granted.
2.4 Limitations on Grant and Terms of Incentive Stock Options.
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2.4.1 $100,000 Limit. To the extent that the aggregate "Fair Market
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Value" of stock with respect to which incentive stock options first
become exercisable by a Participant in any calendar year exceeds
$100,000, taking into account both Common Stock subject to Incentive
Stock Options under this Plan and stock subject to incentive stock
options under all other plans of the Company or any parent
corporation, options in excess of the $100,000 limit will be treated
as Nonqualified Stock Options. For this purpose, the "Fair Market
Value" of the stock subject to options will be determined as of the
date the options were awarded. In reducing the number of options
treated as incentive stock options to meet the $100,000 limit, the
most recently granted options will be treated as Nonqualified Stock
Options first. To the extent a reduction of simultaneously granted
options is necessary to meet the $100,000 limit, the Committee may,
in the manner and to the extent permitted by law, designate which
shares of Common Stock are to be treated as shares acquired pursuant
to the exercise of an Incentive Stock Option.
2.4.2 Other Code Limits. Incentive Stock Options may only be granted to
-----------------
employees of the Corporation or a Subsidiary that satisfies the
other eligibility requirements of the Code. There will be imposed in
any Award Agreement relating to Incentive Stock Options such other
terms and conditions as from time to time are required in order that
the Option be an "incentive stock option" as that term is defined in
Section 422 of the Code.
2.4.3 ISO Notice of Sale Requirement. Any Participant who exercises an
------------------------------
Incentive Stock Option shall give prompt written notice to the
Corporation of any sale or other transfer of the shares of Common
Stock acquired within one year after the exercise date or two years
after the Award Date.
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2.5 Limits on 10% Holders. No Option may be granted to any person who, at the
---------------------
time the Option is granted, owns (or is deemed to own under Section 424(d)
of the Code) shares of outstanding stock of the Corporation (or a parent or
subsidiary of the Corporation) possessing more than 10% of the total
combined voting power of all classes of stock of the Corporation (or a
parent or subsidiary of the Corporation), unless the exercise price of such
Option is at least 110% of the Fair Market Value of the stock subject to
the Option and, in the case of an Incentive Stock Option granted to such a
person, such Option by its terms is not exercisable after the expiration of
five years from the date such Option is granted.
2.6 Option Repricing/Cancellation and Regrant/Waiver of Restrictions. Subject
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to Section 1.4 and Section 6.6 and the specific limitations on Awards
contained in this Plan, the Committee from time to time may authorize,
generally or in specific cases only, for the benefit of any Eligible Person
any adjustment in the exercise or purchase price, the vesting schedule, the
number of shares subject to, or the restrictions upon or the term of, an
Award granted under this Plan by amendment, by substitution of an
outstanding Award, by waiver or by other legally valid means. Such
amendment or other action may result among other changes in an exercise or
purchase price that is higher or lower than the exercise or purchase price
of the original or prior Award, provide for a greater or lesser number of
shares of Common Stock subject to the Award, or provide for a longer or
shorter vesting or exercise period.
2.7 Options and Rights in Substitution for Stock Options Granted by Other
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Corporations. Options and Stock Appreciation Rights may be granted to
------------
Eligible Persons under this Plan in substitution for employee stock options
granted by other entities, in connection with a distribution, merger or
reorganization by or with the granting entity or an affiliated entity, or
the acquisition by the Company, directly or indirectly, of all or a
substantial part of the stock or assets of the employing entity.
3. Stock Appreciation Rights (Including Limited Stock Appreciation Rights).
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3.1 Grants. The Committee may grant to any Eligible Person Stock Appreciation
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Rights either concurrently with the grant of another Award or in respect of
an outstanding Award, in whole or in part, or independently of any other
Award. Any Stock Appreciation Right granted in connection with an Incentive
Stock Option will contain such terms as may be required to comply with the
provisions of Section 422 of the Code and the regulations promulgated
thereunder, unless the holder otherwise agrees.
3.2 Exercise of Stock Appreciation Rights.
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3.2.1 Exercisability. Unless the Award Agreement or the Committee
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otherwise provides, a Stock Appreciation Right related to another
Award will be exercisable at such time or times, and to the extent,
that the related Award will be exercisable.
3.2.2 Effect on Available Shares. To the extent that a Stock Appreciation
--------------------------
Right is exercised, only the actual number of delivered shares of
Common Stock will be charged against the maximum amount of Common
Stock that may be delivered
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pursuant to Awards under this Plan. The number of shares subject to
the Stock Appreciation Right and the related Option of the
Participant will, however, be reduced by the number of underlying
shares as to which the exercise related, unless the Award Agreement
otherwise provides.
3.2.3 Stand-Alone SARs. A Stock Appreciation Right granted independently
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of any other Award will be exercisable pursuant to the terms of the
Award Agreement but in no event earlier than six months after the
Award Date, except in the case of death or Total Disability.
3.2.4 Proportionate Reduction If an SAR extends to less than all the
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shares covered by the related Award and if a portion of the related
Award is thereafter exercised, the number of shares subject to the
unexercised SAR shall be reduced only if and to the extent that the
remaining number of shares covered by such related Award is less
than the remaining number of shares subject to such SAR.
3.3 Payment.
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3.3.1 Amount. Unless the Committee otherwise provides, upon exercise of a
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Stock Appreciation Right and the attendant surrender of an
exercisable portion of any related Award, the Participant will be
entitled to receive, subject to Section 6.5, payment of an amount
determined by multiplying:
(a) the difference (which shall not be less than zero) obtained by
subtracting the exercise price per share of Common Stock under
the related Award (if applicable) or the initial share value
specified in the Award from the Fair Market Value of a share of
Common Stock on the date of exercise of the Stock Appreciation
Right, by
(b) the number of shares with respect to which the Stock
Appreciation Right has been exercised.
3.3.2 Form of Payment. The Committee, in its sole discretion, will
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determine the form in which payment will be made of the amount
determined under Section 3.3.1 above, either solely in cash, solely
in shares of Common Stock (valued at Fair Market Value on the date
of exercise of the Stock Appreciation Right), or partly in such
shares and partly in cash, but the Committee will have determined
that such exercise and payment are consistent with applicable law.
If the Committee permits the Participant to elect to receive cash or
shares (or a combination thereof) on such exercise, any such
election will be subject to such conditions as the Committee may
impose.
3.4 Limited Stock Appreciation Rights. The Committee may grant to any Eligible
---------------------------------
Person Stock Appreciation Rights exercisable only upon or in respect of a
change in control or any other specified event ("Limited SARs") and such
Limited SARs may relate to or operate in tandem or combination with, or
substitution for, Options, other SARs or other Awards (or any combination
thereof), and may be payable in cash or shares based on the spread between
the base price of the SAR and a price based upon or equal to the Fair
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Market Value of the Common Stock during a specified period or at a
specified time within a specified period before, after or including the
date of such event.
4. Restricted Stock Awards.
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4.1 Grants. The Committee may grant one or more Restricted Stock Awards to any
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Eligible Person. Each Restricted Stock Award Agreement will specify the
number of shares of Common Stock to be issued to the Participant, the date
of such issuance, the consideration for such shares (but not less than the
minimum lawful consideration under applicable state law) to be paid by the
Participant, the extent (if any) to which and the time (if ever) at which
the Participant will be entitled to dividends, voting and other rights in
respect of the shares prior to vesting, and the restrictions (which may be
based on performance criteria, passage of time or other factors or any
combination thereof) imposed on such shares and the conditions of release
or lapse of such restrictions. Such restrictions will not lapse earlier
than six months after the Award Date, except to the extent the Committee
may otherwise provide. Stock certificates evidencing shares of Restricted
Stock pending the lapse of the restrictions ("Restricted Shares") will bear
a legend making appropriate reference to the restrictions imposed hereunder
and will be held by the Corporation or by a third party designated by the
Committee until the restrictions on such shares have lapsed and the shares
have vested in accordance with the provisions of the Award and Section 1.7.
Upon issuance of the Restricted Stock Award, the Participant may be
required to provide such further assurances and documents as the Committee
may require to enforce the restrictions.
4.2 Restrictions.
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4.2.1 Pre-Vesting Restraints. Except as provided in Sections 4.1 and 1.8,
----------------------
restricted shares comprising any Restricted Stock Award may not be
sold, assigned, transferred, pledged or otherwise disposed of or
encumbered, either voluntarily or involuntarily, until the
restrictions on such shares have lapsed and the shares have become
vested.
4.2.2 Dividend and Voting Rights. Unless otherwise provided in the
--------------------------
applicable Award Agreement, a Participant receiving a Restricted
Stock Award will be entitled to cash dividend and voting rights for
all shares issued even though they are not vested, but such rights
will terminate immediately as to any Restricted Shares which cease
to be eligible for vesting.
4.2.3 Cash Payments. If the Participant has paid cash in connection with
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the grant of the Restricted Stock Award, the Award Agreement will
specify whether and to what extent such cash will be returned (with
or without an earnings factor) as to any restricted shares that
cease to be eligible for vesting.
4.3 Return to the Corporation. Unless the Committee otherwise expressly
-------------------------
provides, Restricted Shares that remain subject to restrictions at the time
of termination of employment, or are subject to other conditions to vesting
that have not been satisfied by
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the time specified in the applicable Award Agreement, will not vest and
will be returned to the Corporation in such manner and on such terms as the
Committee provides.
5. Performance Share Awards and Stock Bonuses.
------------------------------------------
5.1 Grants of Performance Share Awards. The Committee may grant Performance
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Share Awards to Eligible Employees based upon such factors as the Committee
deems relevant in light of the specific type and terms of the award. An
Award Agreement will specify the maximum number of shares of Common Stock
(if any) subject to the Performance Share Award, the consideration (but not
less than the minimum lawful consideration) to be paid for any such shares
as may be issuable to the Participant, the duration of the Award and the
conditions upon which delivery of any shares or cash to the Participant
will be based. The amount of shares or other property that may be
deliverable pursuant to such Award will be based upon the degree of
attainment over a specified period of not more than 10 years (a
"performance cycle") as may be established by the Committee of such
measure(s) of the performance of the Company (or any part thereof) or the
Participant as may be established by the Committee. The Committee may
provide for full or partial credit, prior to completion of such performance
cycle or the attainment of the performance achievement specified in the
Award, in the event of the Participant's death, Retirement, or Total
Disability, a Change in Control Event or in such other circumstances as the
Committee (consistent with Section 6.10.3(b), if applicable) may determine.
5.2 Special Performance-Based Share Awards. Options or SAR's granted with an
--------------------------------------
exercise price not less than Fair Market Value at the applicable date of
grant for Section 162(m) purposes to Eligible Employees which otherwise
satisfy the conditions to deductibility under Section 162(m) are deemed
"Qualifying Awards." Without limiting the generality of the foregoing, and
in addition to Qualifying Awards granted under other provisions of this
Plan, other performance-based awards within the meaning of Section 162(m)
("Performance-Based Awards"), whether in the form of restricted stock,
performance stock, phantom stock or other rights, the vesting of which
depends on the performance of the Company on a consolidated, segment,
subsidiary, or division basis, with reference to revenue growth, net
earnings (before or after taxes, interest, depreciation, and/or
amortization), cash flow, return on equity or on assets or on net
investment, stock appreciation, total stockholder return, or cost
containment or reduction, or any combination thereof (the "business
criteria") relative to preestablished performance goals, may be granted
under this Plan. To the extent so defined, these terms are used as applied
under generally accepted accounting principles and in the Company's
financial reporting. The applicable business criterion or criteria and the
specific performance goals must be approved by the Committee in advance of
applicable deadlines under the Code and while the performance relating to
such goals remains substantially uncertain. The applicable performance
measurement period may not be less than one (except as provided in Section
1.6) nor more than 10 years. Other types of performance and non-performance
awards may also be granted under the other provisions of this Plan. The
following provisions relate to all Performance-Based Awards (other than
Qualifying Awards) granted under this Plan:
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5.2.1 Eligible Class. The eligible class of persons for Awards under this
--------------
Section 5.2 is executive officers of the Corporation.
5.2.2 Maximum Award. Subject to Section 1.4.2, in no event will grants in
-------------
any calendar year to any one individual under this Section 5.2
relate to more than 20,000 shares.
5.2.3 Committee Certification. To the extent required by Section 162(m),
-----------------------
before any Performance-Based Award under this Section 5.2 is paid,
the Committee must certify that the material terms of the
Performance-Based Award were satisfied.
5.2.4 Terms and Conditions of Awards. The Committee will have discretion
------------------------------
to determine the restrictions or other limitations of the individual
Awards under this Section 5.2.
5.2.5 Stock Payout Features. In lieu of cash payment of an Award, the
---------------------
Committee may require or allow all or a portion of the Award to be
paid in the form of stock, Restricted Shares, an Option, or another
Award.
5.2.6 Adjustments for Material Changes. Performance goals or other
---------------------------------
features of an Award under this Section 5.2 may provide that they
(i) shall be adjusted to reflect a change in corporate
capitalization, a corporate transaction (such as a reorganization,
combination, separation, or merger) or a complete or partial
corporate liquidation, or (ii) shall be calculated either without
regard for or to reflect any change in accounting policies or
practices affecting the Company and/or the business criteria or
performance goals or targets, or (iii) shall be adjusted for any
other circumstance or event, or (iv) any combination of (i) through
(iii), but only to the extent in each case that such adjustment or
determination in respect of Performance-Based Awards would be
consistent with the requirements of Section 162(m) to qualify as
performance-based compensation.
5.3 Grants of Stock Bonuses. The Committee may grant a Stock Bonus to any
-----------------------
Eligible Person to reward exceptional or special services, contributions or
achievements in the manner and on such terms and conditions (including any
restrictions on such shares) as determined from time to time by the
Committee. The number of shares so awarded will be determined by the
Committee. The Award may be granted independently or in lieu of a cash
bonus.
5.4 Deferred Payments. The Committee may authorize for the benefit of any
-----------------
Eligible Person the deferral of any payment of cash or shares that may
become due or of cash otherwise payable under this Plan, and provide for
accredited benefits thereon based upon such deferment, at the election or
at the request of such Participant, subject to the other terms of this
Plan. Such deferral will be subject to such further conditions,
restrictions or requirements as the Committee may impose, subject to any
then vested rights of Participants.
11
<PAGE>
6. Other Provisions.
----------------
6.1 Rights of Eligible Persons, Participants and Beneficiaries.
----------------------------------------------------------
6.1.1 Employment Status. Status as an Eligible Person will not be
-----------------
construed as a commitment that any Award will be made under this
Plan to an Eligible Person or to Eligible Persons generally.
6.1.2 No Employment Contract. Nothing contained in this Plan (or in any
----------------------
other documents related to this Plan or to any Award) will confer
upon any Eligible Person or Participant any right to continue in the
employ or other service of the Company, constitute any contract or
agreement of employment or other service or affect an employee's
status as an employee at will, nor shall interfere in any way with
the right of the Company to change such person's compensation or
other benefits, or to terminate his or her employment or other
service, with or without cause. Nothing in this Section 3.1.2,
however, is intended to adversely affect any express independent
right of such person under a separate employment or service contract
other than an Award Agreement.
6.1.3 Plan Not Funded. Awards payable under this Plan will be payable in
---------------
shares or from the general assets of the Corporation, and (except as
provided in Section 1.4.3) no special or separate reserve, fund or
deposit will be made to assure payment of such Awards. No
Participant, Beneficiary or other person will have any right, title
or interest in any fund or in any specific asset (including shares
of Common Stock) of the Company by reason of any Award hereunder.
Neither the provisions of this Plan (or of any related documents),
nor the creation or adoption of this Plan, nor any action taken
pursuant to the provisions of this Plan will create, or be construed
to create, a trust of any kind or a fiduciary relationship between
the Company and any Participant, Beneficiary or other person. To the
extent that a Participant, Beneficiary or other person acquires a
right to receive payment pursuant to any Award hereunder, such right
will be no greater than the right of any unsecured general creditor
of the Company.
6.1.4 Charter Documents. The Articles of Incorporation and By-Laws of the
-----------------
Corporation, as either of them may be amended from time to time, may
provide for additional restrictions and limitations with respect to
the Common Stock (including additional restrictions and limitations
on the transfer of shares of Common Stock) or priorities, rights and
preferences as to securities and interests prior in rights to the
Common Stock. To the extent that these restrictions and limitations
are greater than those set forth in this Plan or any Award
Agreement, such restrictions and limitations shall apply to any
shares of Common Stock acquired pursuant to the exercise of Awards
and are incorporated herein by this reference.
12
<PAGE>
6.2 Effects of Termination of Employment; Termination of Subsidiary Status;
-----------------------------------------------------------------------
Discretionary Provisions.
------------------------
6.2.1 Dismissal for Cause. Unless otherwise provided in the Award
-------------------
Agreement or a written employment agreement between the Participant
and the Company and subject to earlier termination pursuant to or as
contemplated by Section 1.6 or 6.3, if a Participant is terminated
by the Company for Cause, the Option will terminate on the Severance
Date, whether or not then vested and/or exercisable.
6.2.2 Resignation. Unless otherwise provided in the Award Agreement or a
-----------
written employment agreement between the Participant and the Company
(consistent with Section 260.140.46 of the Regulations adopted under
the California Corporate Securities Law to the extent such
provisions are applicable to the Option) and subject to earlier
termination pursuant to or as contemplated by Section 1.6 or 6.3, if
a Participant resigns (other than because of a Total Disability or
Retirement):
(a) the Participant will have until the date that is 30 days after
the Severance Date to exercise the Option (or portion thereof)
to the extent that it was vested on the Severance Date;
(b) the Option, to the extent not vested on the Severance Date,
shall terminate on the Severance Date; and
(c) the Option, to the extent not exercised, shall terminate at the
close of business on the last day of the 30-day period.
6.2.3 Layoff or Other Involuntary Termination. Unless otherwise provided
---------------------------------------
in the Award Agreement or a written employment agreement between the
Participant and the Company (consistent with Section 260.140.46 of
the Regulations adopted under the California Corporate Securities
Law to the extent such provisions are applicable to the Option) and
subject to earlier termination pursuant to or as contemplated by
Section 1.6 or 6.3, if a Participant is laid off or otherwise
terminated at the will of the Company (other than in circumstances
constituting a termination because of Total Disability, Retirement,
or a termination by the Company for Cause):
(a) the Participant will have until the date which is three (3)
months after the Severance Date to exercise the Option (or
portion thereof) to the extent that it was vested on the
Severance Date;
(b) the Option, to the extent not vested on the Severance Date,
shall terminate on the Severance Date; and
(c) the Option, to the extent not exercised, shall terminate at the
close of business on the last day of the 3-month period.
6.2.4 Death, Disability, or Retirement. Unless otherwise provided in the
--------------------------------
Award Agreement or a written employment agreement between the
Participant and the
13
<PAGE>
Company (consistent with Section 260.140.46 of the Regulations
adopted under the California Corporate Securities Law to the extent
such provisions are applicable to the Option) and subject to earlier
termination pursuant to or as contemplated by Section 1.6 or 6.3, if
a Participant's employment by the Company terminates as a result of
Total Disability or death, or the Participant's Retirement:
(a) the Participant (or his or her Personal Representative or
Beneficiary, in the case of the Participant's disability or
death, respectively), will have until the date that is 12
months after the Severance Date to exercise the Option (or
portion thereof) to the extent that it was vested on the
Severance Date;
(b) the Option, to the extent not vested on the Severance Date,
shall terminate on the Severance Date; and
(c) the Option, to the extent not exercised, shall terminate at the
close of business on the last day of the 12-month period.
6.2.5 Events Not Deemed a Termination of Employment. Unless Company
---------------------------------------------
policy or the Committee otherwise provides, a Participant's
employment relationship with the Company shall not be considered
terminated solely due to any sick leave, military leave, or any
other leave of absence, authorized by the Company or the Committee.
Any Option held by any Eligible Person on approved leave of absence
shall continue to vest, unless the Committee or Company otherwise
provides in connection with the Award, the particular leave or by
Company policy. In no event shall an Option be exercised after the
expiration of the term set forth in the Award Agreement or the
termination of the Option in accordance with Section 6.3.
6.2.6 Effect of Change of Subsidiary Status. For purposes of this Plan
-------------------------------------
and any Option hereunder, if an entity ceases to be a Subsidiary, a
termination of employment will be deemed to have occurred with
respect to each Eligible Person in respect of such Subsidiary who
does not continue as an Eligible Person in respect of another entity
within the Company.
6.2.7 Committee Discretion. Notwithstanding the foregoing provisions of
--------------------
this Section 6.2, in the event of, or in anticipation of, a
termination of employment with the Company for any reason, other
than a discharge for cause, the Committee may increase the portion
of the Participant's Option available to the Participant, or
Participant's Beneficiary or Personal Representative, as the case
may be, or, subject to the provisions of Section 6.3, extend the
exercisability period upon such terms as the Committee determines
and expressly sets forth in or by amendment to the Award Agreement.
6.3 Adjustments; Acceleration.
-------------------------
6.3.1 Adjustments. Subject to Section 6.3.5, upon or in contemplation of
-----------
any reclassification, recapitalization, stock split (including a
stock split in the form of
14
<PAGE>
a stock dividend) or reverse stock split; any merger, combination,
consolidation or other reorganization; any split-up; spin-off, or
similar extraordinary dividend distribution ("spin-off") in respect
of the Common Stock (whether in the form of securities or property);
any exchange of Common Stock or other securities of the Corporation,
or any similar, unusual or extraordinary corporate transaction in
respect of the Common Stock; or a sale of substantially all the
assets of the Corporation as an entirety ("asset sale"); then the
Committee shall, in such manner, to such extent (if any) and at such
time as it deems appropriate and equitable in the circumstances:
(a) in any of such events, proportionately adjust any or all of (i)
the number of shares of Common Stock or the number and type of
other securities that thereafter may be made the subject of
Awards (including the specific maxima and numbers of shares set
forth elsewhere in this Plan), (ii) the number, amount and type
of shares of Common Stock (or other securities or property)
subject to any or all outstanding Awards, (iii) the grant,
purchase, or exercise price of any or all outstanding Awards,
(iv) the securities, cash or other property deliverable upon
exercise of any outstanding Awards, or (v) the performance
standards appropriate to any outstanding Awards, or
(b) in the case of a reclassification, recapitalization, merger,
consolidation, combination, or other reorganization, spin-off
or asset sale, make provision for a cash payment or for the
substitution or exchange of any or all outstanding Awards or
the cash, securities or property deliverable to the holder of
any or all outstanding Awards based upon the distribution or
consideration payable to holders of the Common Stock upon or in
respect of such event.
In this context, the Committee may not make adjustments that would
disqualify Options as Incentive Stock Options without the written
consent of holders of Incentive Stock Options materially adversely
affected thereby.
In any of such events, the Committee may take such action prior to
such event to the extent that the Committee deems the action
necessary to permit the Participant to realize the benefits intended
to be conveyed with respect to the underlying shares in the same
manner as is or will be available to stockholders generally.
6.3.2 Acceleration of Awards Upon Change in Control. Subject to Section
---------------------------------------------
6.3.5, the Committee may, in its discretion (in the Award Agreement,
at the time of the event, or otherwise), provide that upon the
occurrence of (or, as may be necessary to effectuate the purposes of
the acceleration, immediately prior to) a Change in Control Event:
(a) each Option and Stock Appreciation Right will become
immediately vested and exercisable,
15
<PAGE>
(b) Restricted Stock will immediately vest free of restrictions,
and
(c) each Performance Share Award will become payable to the
Participant.
The Committee may provide that only certain Awards (or portions
thereof) will be so accelerated, may determine the extent to which
acceleration will occur, may establish a different time in respect
of the Change in Control Event for the acceleration, and may accord
any Eligible Person a right to refuse any acceleration. A
Participant's Awards shall also be subject to any acceleration
provisions that are expressly set forth in a written agreement of
employment (if any) between the Company and the Participant in
effect on the grant date of the Award. Any acceleration of Awards
will comply with applicable legal requirements and, if necessary to
accomplish the purposes of the acceleration or if the circumstances
otherwise require, may be deemed by the Committee to occur (subject
to Sections 6.3.4 through 6.3.6) not greater than 30 days before or
only upon the consummation of the event.
6.3.3 Possible Early Termination of Accelerated Awards. If any Option or
------------------------------------------------
other right to acquire Common Stock under this Plan has been fully
accelerated as permitted by Section 6.3.2 but is not exercised prior
to (i) a dissolution of the Corporation, or (ii) an event described
in Section 6.3.1 that the Corporation does not survive, or (iii) the
consummation of an event described in Section 6.3.1 involving a
Change in Control Event approved by the Board, such Option or right
will terminate, subject to any provision that has been expressly
made by the Committee through a plan of reorganization approved by
the Board or otherwise for the survival, substitution, assumption,
exchange or other settlement of such Option or right.
6.3.4 Possible Rescission of Acceleration. If the vesting of an Option
-----------------------------------
has been accelerated in anticipation of an event and the Committee
or the Board later determines that the event will not occur, the
Committee may rescind the effect of the acceleration as to any then
outstanding and unexercised or otherwise unvested Options.
6.3.5 Pooling Exception. Any discretion with respect to the events
-----------------
addressed in this Section 6.3, including any acceleration of
vesting, shall be limited to the extent required by applicable
accounting requirements in the case of a transaction intended to be
accounted for as a pooling of interests transaction.
6.4 Compliance with Laws.
--------------------
6.4.1 General. This Plan, the granting and vesting of Awards under this
-------
Plan and the offer, issuance and delivery of shares of Common Stock
and/or the payment of money under this Plan or under Awards are
subject to compliance with all applicable federal and state laws,
rules and regulations (including but not limited to state and
federal securities law, and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as
may, in the
16
<PAGE>
opinion of counsel for the Corporation, be necessary or advisable in
connection therewith. Any securities delivered under this Plan may
be subject to such restrictions that the Committee may require to
preserve a pooling of interests under generally accepted accounting
principles. The person acquiring such securities will, if requested
by the Corporation, provide such assurances and representations to
the Corporation as the Committee may deem necessary or desirable to
assure compliance with all applicable legal and accounting
requirements.
Without limiting the foregoing provisions of this Section 6.4.1 and
to the extent applicable, (a) the provisions of this Plan and
Options are subject to compliance with Section 260.140.41 of the
Regulations adopted under the California Corporate Securities Law,
and (b) the Corporation shall deliver annually to Participants such
financial statements of the Corporation as are required to satisfy
Section 260.140.46 of the Regulations adopted under the California
Corporate Securities Law.
6.4.2 Compliance with Securities Laws. No Participant shall sell, pledge
-------------------------------
or otherwise transfer shares of Common Stock acquired pursuant to an
Award or any interest in such shares except in accordance with the
express terms of this Plan and the applicable Award Agreement. Any
attempted transfer in violation of this Section 6.4 shall be void
and of no effect. Without in any way limiting the provisions set
forth above, no Participant shall make any disposition of all or any
portion of shares acquired pursuant to an Award, except in
compliance with all applicable federal and state securities laws and
unless and until:
(a) there is then in effect a registration statement under the
Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration
statement; or
(b) such disposition is made in accordance with Rule 144 under the
Securities Act; or
(c) such Participant notifies the Corporation of the proposed
disposition and furnishes the Corporation with a statement of
the circumstances surrounding the proposed disposition, and, if
requested by the Corporation, such Participant furnishes the
Corporation with an opinion of counsel acceptable to the
Corporation's counsel, that such disposition will not require
registration under the Securities Act and will be in compliance
with all applicable state securities laws.
Notwithstanding anything else herein to the contrary, the Company
has no obligation to register the Common Stock or file any
registration statement under either federal or state securities
laws, nor does the Company make any representation concerning the
likelihood of a public offering of the Common Stock or any other
securities of the Company.
17
<PAGE>
6.4.3 Share Legends. All certificates evidencing shares of Common Stock
-------------
issued or delivered under this Plan shall bear the following legends
and/or any other appropriate or required legends under applicable
laws:
"OWNERSHIP OF THIS CERTIFICATE, THE SHARES EVIDENCED BY THIS
CERTIFICATE AND ANY INTEREST THEREIN ARE SUBJECT TO SUBSTANTIAL
RESTRICTIONS ON TRANSFER UNDER APPLICABLE LAW AND UNDER AGREEMENTS
WITH THE CORPORATION, INCLUDING RESTRICTIONS ON SALE, ASSIGNMENT,
TRANSFER, PLEDGE OR OTHER DISPOSITION."
"THE SHARES ARE SUBJECT TO RIGHTS OF FIRST REFUSAL AND THE
CORPORATION'S CALL RIGHTS TO REPURCHASE THEM UNDER THE CORPORATION'S
1999 LONG-TERM INCENTIVE PLAN AND AGREEMENTS WITH THE CORPORATION
THEREUNDER, COPIES OF WHICH ARE AVAILABLE FOR REVIEW AT THE OFFICE
OF THE SECRETARY OF THE CORPORATION."
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), NOR
HAVE THEY BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF
ANY STATE. NO TRANSFER OF SUCH SECURITIES WILL BE PERMITTED UNLESS A
REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH
TRANSFER, THE TRANSFER IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE
ACT, OR IN THE OPINION OF COUNSEL TO THE CORPORATION, REGISTRATION
UNDER THE ACT IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY
WITH THE ACT AND WITH APPLICABLE STATE SECURITIES LAWS."
6.5 Tax Withholding.
---------------
6.5.1 Tax Withholding. Upon any exercise, vesting, or payment of any
Option or upon the disposition of shares of Common Stock acquired
pursuant to the exercise of an Incentive Stock Option prior to
satisfaction of the holding period requirements of Section 422 of
the Code, the Company shall have the right at its option to:
(a) require the Participant (or Personal Representative or
Beneficiary, as the case may be) to pay or provide for payment
of the amount of any taxes which the Company may be required to
withhold with respect to such Option event or payment;
(b) deduct from any amount payable in cash the amount of any taxes
which the Company may be required to withhold with respect to
such cash payment; or
18
<PAGE>
(c) reduce the number of shares of Common Stock to be delivered by
(or otherwise reacquire) the appropriate number of shares of
Common Stock, valued at their then Fair Market Value, to
satisfy such withholding obligation.
The Committee may in its sole discretion (subject to Section 6.4)
grant (either at the time of the Option or thereafter) to the
Participant the right to elect, pursuant to such rules and subject
to such conditions as the Committee may establish, to have the
Corporation utilize the withholding offset under clause (c) above.
6.5.2 Tax Loans. If so provided in the Award Agreement or otherwise
---------
authorized by the Committee, the Corporation may, to the extent
permitted by law, authorize a loan to an Eligible Person in the
amount of any taxes that the Company may be required to withhold
with respect to shares of Common Stock received (or disposed of, as
the case may be) pursuant to a transaction described in Section
6.5.1. Such a loan will be for a term not greater than nine months
and at a rate of interest and pursuant to such other terms and
conditions as the Corporation, under applicable law, may establish.
6.6 Plan Amendment, Termination and Suspension.
------------------------------------------
6.6.1 Board Authorization. The Board may, at any time, terminate or, from
-------------------
time to time, amend, modify or suspend this Plan, in whole or in
part. No Awards may be granted during any suspension of this Plan or
after termination of this Plan, but the Committee will retain
jurisdiction as to Awards then outstanding in accordance with the
terms of this Plan.
6.6.2 Stockholder Approval. Any amendment to this Plan shall be subject
--------------------
to stockholder approval to the extent then required under Section
422 or 424 of the Code or any other applicable law, or deemed
necessary or advisable by the Board.
6.6.3 Amendments to Awards. Without limiting any other express authority
--------------------
of the Committee under but subject to the express limits of this
Plan, the Committee by agreement or resolution (a) may waive
conditions of or limitations on Awards to Eligible Persons that the
Committee in the prior exercise of its discretion has imposed,
without the consent of a Participant, and (b) may make other changes
to the terms and conditions of Awards that do not affect in any
manner materially adverse to the Participant, the Participant's
rights and benefits under an Award, provided that changes
--------
contemplated by Section 6.3 or Section 6.6.5 will not be deemed to
constitute changes or amendments for purposes of this Section 6.6.
6.6.4 Limitations on Amendments to Plan and Awards. No amendment,
--------------------------------------------
suspension or termination of this Plan or change of or affecting any
outstanding Award will, without written consent of the Participant,
affect in any manner materially adverse to the Participant any
rights or benefits of the Participant or obligations of the
Corporation under any Award granted under this Plan prior to the
effective date of
19
<PAGE>
such change. Changes contemplated by Section 6.3 or Section 6.6.5
will not be deemed to constitute changes or amendments for purposes
of this Section 6.6.
6.6.5 Accounting Changes. Notwithstanding the foregoing provisions of
------------------
this Section 6.6.3 or Section 6.6.4, if the accounting treatment
under generally accepted accounting principles of any Options
granted hereunder would be materially more adverse to the Company
than anticipated at the time of approval of this Plan or the Options
(including, without limitation, if any Option(s) would render
pooling accounting unavailable to the Company with respect to any
transaction that would, in the absence of such Option(s), be
accounted for as a pooling of interests transaction) because of a
change in those principles or the interpretation or application
thereof by the Corporation's independent accountants, the Committee
may, in the exercise of its discretion and without the consent of
the Participant, amend the terms of such Options to the extent the
Committee deems necessary to eliminate such effect.
6.7 Privileges of Stock Ownership. Except as otherwise expressly authorized by
-----------------------------
the Committee or this Plan, a Participant will not be entitled to any
privilege of stock ownership as to any shares of Common Stock not actually
delivered to and held of record by the Participant. No adjustment will be
made for dividends or other rights as a stockholder for which a record date
is prior to such date of delivery.
6.8 Effective Date of the Plan. This Plan is effective upon its approval by
--------------------------
the Board (the "Effective Date"), subject to approval by the stockholders
of the Corporation within twelve months after the date of such Board
approval.
6.9 Term of the Plan. Unless earlier terminated by the Board, this Plan will
----------------
terminate at the close of business on the day before the 10th anniversary
of the Effective Date (the "Termination Date") and no Awards may be granted
under this Plan after that date. Unless otherwise expressly provided in
this Plan or in an applicable Award Agreement, any Award granted prior to
the termination date may extend beyond such date, and all authority of the
Committee with respect to Awards hereunder, including the authority to
amend an Award, will continue during any suspension of this Plan and in
respect of Awards outstanding on the termination date.
6.10 Governing Law/Construction/Severability.
---------------------------------------
6.10.1 Choice of Law. This Plan, the Awards, all documents evidencing
-------------
Awards and all other related documents will be governed by, and
construed in accordance with, the laws of the state of Delaware.
6.10.2 Severability. If a court of competent jurisdiction holds any
------------
provision invalid and unenforceable, the remaining provisions of
this Plan will continue in effect provided that the essential
economic terms of this Plan and any Award can still be enforced.
20
<PAGE>
6.10.3 Plan Construction.
-----------------
(a) Rule 16b-3. It is the intent of the Corporation that
----------
transactions involving the Awards under this Plan, in the case
of Participants who are or may be subject to Section 16 of the
Exchange Act, satisfy to the extent feasible the requirements
for applicable exemptions under Rule 16 so that such persons
(unless they otherwise agree) will be entitled to the benefits
of Rule 16b-3 or other exemptive rules under Section 16 of the
Exchange Act in respect of those transactions and will not be
subjected to avoidable liability thereunder.
(b) Section 162(m). It is the further intent of the Company that
--------------
Options or SARs with an exercise or base price not less than
Fair Market Value on the date of grant and Performance-Based
Awards under Section 5.2 of this Plan that are granted to or
held by a person subject to Section 162(m) will qualify as
performance-based compensation under Section 162(m) to the
extent that the Committee authorizing the Award (or the
payment thereof, as the case may be) satisfies the
administrative requirements thereof. This Plan shall be
interpreted consistent with such intent.
6.11 Captions. Captions and headings are given to the sections and subsections
--------
of this Plan solely as a convenience to facilitate reference. Such
headings will not be deemed in any way material or relevant to the
construction or interpretation of this Plan or any provision thereof.
6.12 Non-Exclusivity of Plan. Nothing in this Plan will limit or be deemed to
-----------------------
limit the authority of the Board or the Committee to grant awards or
authorize any other compensation, with or without reference to the Common
Stock, under any other plan or authority.
6.13 No Restriction on Corporate Powers. The existence of the Plan and the
----------------------------------
Awards granted hereunder shall not affect or restrict in any way the right
or power of the Board or the stockholders of the Corporation to make or
authorize any adjustment, recapitalization, reorganization or other change
in the Corporation's capital structure or its business, any merger or
consolidation of the Corporation, any issue of bonds, debentures,
preferred or prior preference stocks ahead of or affecting the
Corporation's capital stock or the rights thereof, the dissolution or
liquidation of the Corporation or any sale or transfer of all or any part
of its assets or business, or any other corporate act or proceeding.
6.14 Effect on Other Benefits. Payments and other benefits received by a
------------------------
Participant under an Award made pursuant to this Plan shall not be deemed
a part of a Participant's regular, recurring compensation for purposes of
the termination, indemnity or severance pay law of any country or state
and shall not be included in, nor have any effect on, the determination of
benefits under any other employee benefit plan or similar arrangement
provided by the Corporation or a Subsidiary unless expressly so provided
by such other plan or arrangements. Awards under this Plan may be made in
combination with or in
21
<PAGE>
tandem with, or as alternatives to, grants, awards or payments under any
other Corporation or Subsidiary plan.
7. Definitions.
-----------
"Award" means an award of any Option, Stock Appreciation Right, Restricted
Stock, Stock Bonus, performance share award, dividend equivalent or deferred
payment right or other right or security that would constitute a "derivative
security" under Rule 16a-1(c) of the Exchange Act, or any combination thereof,
whether alternative or cumulative, authorized by and granted under this Plan.
"Award Agreement" means any writing setting forth the terms of an Award that has
been authorized by the Committee.
"Award Date" means the date upon which the Committee took the action granting an
Award or such later date as the Committee designates as the Award Date at the
time of the grant of the Award.
"Beneficiary" means the person, persons, trust or trusts designated by a
Participant, or, in the absence of a designation, entitled by will or the laws
of descent and distribution, to receive the benefits specified in the Award
Agreement and under this Plan if the Participant dies, and means the
Participant's executor or administrator if no other Beneficiary is designated
and able to act under the circumstances.
"Board" means the Board of Directors of the Corporation.
"Cause" means any act of theft, embezzlement, fraud, dishonesty, gross
negligence, repeated failure to perform assigned duties, a breach of fiduciary
duty to the Corporation or a breach of or deliberate disregard of the applicable
law or Company policy in any material respect, the unauthorized disclosure of
any trade secrets or confidential information of the Corporation, unfair
competition with the Corporation, inducement of any customer of the Corporation
to break any contract with the Corporation, or inducement of any principal for
whom the Corporation acts as agent to terminate such agency relationship. For
the purpose of this Plan, a termination of services for Cause shall be deemed to
occur (subject to reinstatement upon a contrary final determination by the Board
or Committee) on the date when the Company delivers notice to the Participant of
Cause and shall be final in all respects on the date the Participant's service
is terminated. For purposes of this definition, the Corporation includes any
affiliate of the Corporation.
"Change in Control Event" means any of the following:
(a) Approval by the stockholders of the Corporation of the dissolution or
liquidation of the Corporation;
(b) Approval by the stockholders of the Corporation of a merger,
consolidation, or other reorganization, with or into, or the sale of
all or substantially all of the Corporation's business and/or assets
as an entirety to, one or more entities that are not Subsidiaries or
other affiliates of the Company (a "Business Combination"),
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unless (1) as a result of the Business Combination more than 50% of
the outstanding voting power generally in the election of directors of
the surviving or resulting entity or a parent thereof (the "Successor
Entity") immediately after the reorganization are, or will be, owned,
directly or indirectly, by holders of the Corporation's voting
securities immediately before the Business Combination; and (2) no
Person (excluding the Successor Entity or an Excluded Person)
beneficially owns, directly or indirectly, more than 50% of the
outstanding shares or the combined voting power of the outstanding
voting securities of the Successor Entity, after giving effect to the
Business Combination, except to the extent that such ownership existed
prior to the Business Combination.
The stockholders before and after the Business Combination shall be
determined on the basis of the following assumptions: (1) there is no
change in the record ownership of the Corporation's securities from
the record date for such approval until the consummation of the
Business Combination, and (2) record owners other than affiliates of
the Corporation hold no securities of the other parties to such
reorganization.
(c) Approval by the stockholders of the Corporation of the sale of
substantially all of the Corporation's business and/or assets to a
person or entity that is not a Subsidiary or other affiliate; or;
(d) Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act other than an Excluded Person becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing more than
50% of the combined voting power of the Corporation's then outstanding
securities entitled to then vote generally in the election of
directors of the Corporation, other than as a result of (1) an
acquisition directly from the Company, (2) an acquisition by the
Company, (3) an acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or a Successor Entity;
or
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Commission" means the Securities and Exchange Commission.
"Committee" means the Board or one or more committees of director(s) appointed
by the Board to administer this Plan with respect to the Awards within the scope
of authority delegated to the acting Committee by the Board. At least one
committee will be comprised only of two or more directors, each of whom, in
respect of any decision involving both (i) a Participant affected by the
decision who is or may be subject to Section 162(m), and (ii) compensation
intended as performance-based compensation within the meaning of Section 162(m),
will be Disinterested; in acting on any transaction with or for the benefit of a
Section 16 Person, the participating members of such Committee also shall be
Non-Employee Directors within the meaning of Rule 16b-3.
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"Common Stock" means the shares of the Class C Common Stock of the Corporation
and such other securities or property as may become the subject of Awards, or
become subject to Awards, pursuant to an adjustment made under Section 6.3 of
this Plan.
"Company" means the Corporation and its Subsidiaries.
"Corporation" means RC Transaction Corp., a Delaware corporation, and its
successors.
"Disinterested" means a director who is an "outside director" within the meaning
of Section 162(m) and any applicable legal or regulatory requirements.
"Early Terminate Date" means the date the Common Stock is first registered under
the Exchange Act and listed or quoted on a recognized national securities
exchange or in the NASDAQ National Market Quotation System.
"Eligible Employee" means an officer (whether or not a director) or employee of
the Company.
"Eligible Person" means an Eligible Employee, or any Other Eligible Person, as
determined by the Committee.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from time
to time.
"Excluded Person" means (a) any person described in and satisfying the
conditions of Rule 13d-1(b)(1) under the Exchange Act, (b) Evercore Capital
Partners L.P. (or its successor), (c) the Company, or (d) an employee benefit
plan (or related trust) sponsored or maintained by the Company or the Successor
Entity.
"Fair Market Value" on any date means:
(a) if the stock is listed or admitted to trade on a national securities
exchange, the closing price of the stock on the Composite Tape, as
published in the Western Edition of The Wall Street Journal, of the
principal national securities exchange on which the stock is so listed
or admitted to trade, on such date, or, if there is no trading of the
stock on such date, then the closing price of the stock as quoted on
such Composite Tape on the next preceding date on which there was
trading in such shares;
(b) if the stock is not listed or admitted to trade on a national
securities exchange, the last/closing price for the stock on such
date, as furnished by the National Association of Securities Dealers,
Inc. ("NASD") through the NASDAQ National Market Reporting System or a
similar organization if the NASD is no longer reporting such
information;
(c) if the stock is not listed or admitted to trade on a national
securities exchange and is not reported on the National Market
Reporting System, the mean between the bid and asked price for the
stock on such date, as furnished by the NASD or a similar
organization; or
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(d) if the stock is not listed or admitted to trade on a national
securities exchange, is not reported on the National Market Reporting
System and if bid and asked prices for the stock are not furnished by
the NASD or a similar organization, the value as established by the
Committee at such time for purposes of this Plan.
Any determination as to fair market value made pursuant to this Plan
shall be determined without regard to any restriction other than a
restriction which, by its terms, will never lapse, and shall be
conclusive and binding on all persons.
"Incentive Stock Option" means an Option that is designated and intended as an
incentive stock option within the meaning of Section 422 of the Code, the award
of that contains such provisions (including but not limited to the receipt of
stockholder approval of this Plan, if the award is made prior to such approval)
and is made under such circumstances and to such persons as may be necessary to
comply with that section.
"Nonqualified Stock Option" means an Option that is designated as a Nonqualified
Stock Option and will include any Option intended as an Incentive Stock Option
that fails to meet the applicable legal requirements thereof. Any Option
granted hereunder that is not designated as an incentive stock option will be
deemed to be designated a nonqualified stock option under this Plan and not an
incentive stock option under the Code.
"Option" means an option to purchase Common Stock granted under this Plan. The
Committee will designate any Option granted to an employee of the Corporation or
a Subsidiary as a Nonqualified Stock Option or an Incentive Stock Option.
"Other Eligible Person" means any director of, or any individual consultant or
advisor or agent who renders or has rendered bona fide services (other than
---- ----
services in connection with the offering or sale of securities of the Company in
a capital raising transaction) to, the Company, and who (to the extent provided
in the next sentence) is selected to participate in this Plan by the Committee.
A person who is neither an employee, officer, nor director who provides bona
----
fide services to the Company may be selected as an Other Eligible Person only
----
if such person's participation in this Plan would not adversely affect (a) the
Corporation's eligibility to use Form S-8 to register under the Securities Act,
the offering of shares issuable under this Plan by the Company, or (b) the
Corporation's compliance with any other applicable laws.
"Participant" means an Eligible Person who has been granted and holds an Award
under this Plan.
"Performance Share Award" means an Award of a right to receive shares of Common
Stock under Section 5.1, or to receive shares of Common Stock or other
compensation (including cash) under Section 5.2, the issuance or payment of
which is contingent upon, among other conditions, the attainment of performance
objectives specified by the Committee.
"Personal Representative" means the person or persons who, upon the disability
or incompetence of a Participant, has acquired on behalf of the Participant, by
legal proceeding or otherwise, the power to exercise the rights or receive
benefits under this Plan by virtue of having become the legal representative of
the Participant.
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"Plan" means this Resources Connection, Inc. 1999 Long-Term Incentive Plan, as
it may hereafter be amended from time to time.
"Restricted Shares" or "Restricted Stock" means shares of Common Stock awarded
to a Participant under this Plan, subject to payment of such consideration, if
any, and such conditions on vesting (which may include, among others, the
passage of time, specified performance objectives or other factors) and such
transfer and other restrictions as are established in or pursuant to this Plan
and the related Award Agreement, for so long as such shares remain unvested
under the terms of the applicable Award Agreement.
"Retirement" means retirement with the consent of the Company or, from active
service as an employee or officer of the Company on or after attaining (a) age
55 with ten or more years of employment with the Company, or (b) age 65.
"Rule 16b-3" means Rule 16b-3 as promulgated by the Commission pursuant to the
Exchange Act, as amended from time to time.
"Section 16 Person" means a person subject to Section 16(a) of the Exchange Act.
"Section 162(m)" means Section 162(m) of the Code and the regulations
promulgated thereunder.
"Securities Act" means the Securities Act of 1933, as amended from time to time.
"Severance Date" means the date of a Participant's termination of employment
with the Company for any reason whatsoever.
"Stock Appreciation Right" or "SAR" means a right authorized under this Plan to
receive a number of shares of Common Stock or an amount of cash, or a
combination of shares and cash, the aggregate amount or value of which is
determined by reference to a change in the Fair Market Value of the Common
Stock.
"Stock Bonus" means an Award of shares of Common Stock granted under this Plan
for no consideration other than past services and without restriction other than
such transfer or other restrictions as the Committee may deem advisable to
assure compliance with law.
"Subsidiary" means any corporation or other entity a majority of whose
outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Corporation.
"Total Disability" means a "total and permanent disability" within the meaning
of Section 22(e)(3) of the Code and, with respect to Awards other than Incentive
Stock Options, such other disabilities, infirmities, afflictions, or conditions
as the Committee may include.
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