Exhibit 10.3

 

ADOLOR CORPORATION

 

AMENDED AND RESTATED 2003 STOCK-BASED

INCENTIVE COMPENSATION PLAN

 

Adopted February 27, 2003

Amended January 6, 2004

Amended May 18, 2006

Amended December 13, 2006 Effective January 1, 2007

Amended April 12, 2007

Amended February 21, 2008

Amended May 22, 2008

Amended May 12, 2009

 

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ADOLOR CORPORATION

 

2003 STOCK-BASED INCENTIVE COMPENSATION PLAN

 

1.             PURPOSE OF THE PLAN

 

The purpose of the Plan is to assist the Company, its Subsidiaries and
Affiliates in attracting and retaining valued Employees, Consultants and
Directors by offering them a greater stake in the Company’s success and a closer
identification with it, and to encourage ownership of the Company’s stock by
such Employees, Consultants and Directors.

 

2.             DEFINITIONS

 

2.1.          “AFFILIATE” MEANS ANY ENTITY OTHER THAN THE SUBSIDIARIES IN WHICH
THE COMPANY HAS A SUBSTANTIAL DIRECT OR INDIRECT EQUITY INTEREST, AS DETERMINED
BY THE BOARD.

 

2.2.          “AWARD” MEANS AN AWARD OF DEFERRED STOCK, RESTRICTED STOCK OR
OPTIONS UNDER THE PLAN.

 

2.3.          “BOARD” MEANS THE BOARD OF DIRECTORS OF THE COMPANY.

 

2.4.          “CAUSE” MEANS THE PARTICIPANT’S (I) CONVICTION FOR COMMITTING A
FELONY UNDER FEDERAL LAW OR OF THE STATE IN WHICH SUCH ACTION OCCURRED,
(II) DISHONESTY IN THE COURSE OF FULFILLING HIS OR HER EMPLOYMENT OR CONSULTING
DUTIES OR (III) WILLFUL AND DELIBERATE FAILURE TO PERFORM HIS OR HER EMPLOYMENT
OR CONSULTING DUTIES IN ANY MATERIAL RESPECT, OR SUCH OTHER SIMILAR EVENTS AS
SHALL BE DETERMINED BY THE COMMITTEE.  THE COMMITTEE SHALL HAVE THE SOLE
DISCRETION TO DETERMINE WHETHER “CAUSE” AS SET FORTH IN (I), (II) OR (III) ABOVE
EXISTS, AND ITS DETERMINATION SHALL BE FINAL.

 

2.5.          “CHANGE OF CONTROL” MEANS THE HAPPENING OF ANY OF THE FOLLOWING:

 

(I)            ANY PERSON, OTHER THAN (A) THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) A TRUSTEE OR OTHER FIDUCIARY HOLDING SECURITIES UNDER AN
EMPLOYEE BENEFIT PLAN OF THE COMPANY OR ANY OF ITS SUBSIDIARIES, (C) AN
UNDERWRITER TEMPORARILY HOLDING SECURITIES PURSUANT TO AN OFFERING OF SUCH
SECURITIES, (D) A CORPORATION OWNED, DIRECTLY OR INDIRECTLY, BY THE STOCKHOLDERS
OF THE COMPANY IN SUBSTANTIALLY THE SAME PROPORTION AS THEIR OWNERSHIP OF STOCK
OF THE COMPANY, OR (E) A HOLDER OR ANY “GROUP” (AS SUCH TERM IS USED IN SECTIONS
13(D) AND 14(D) OF THE EXCHANGE ACT) WHICH INCLUDES SUCH HOLDER, BECOMES THE
“BENEFICIAL OWNER” (AS DEFINED IN RULE 13D-3 UNDER THE EXCHANGE ACT), DIRECTLY
OR INDIRECTLY, OF SECURITIES OF THE COMPANY (NOT INCLUDING IN THE SECURITIES
BENEFICIALLY OWNED BY SUCH PERSON ANY SECURITIES ACQUIRED DIRECTLY FROM THE
COMPANY OR ITS SUBSIDIARIES) REPRESENTING MORE THAN 20% OF EITHER THE THEN
OUTSTANDING SHARES OF STOCK OF THE COMPANY OR THE COMBINED VOTING POWER OF THE
COMPANY’S THEN OUTSTANDING SECURITIES;

 

(II)           THE INDIVIDUALS WHO SERVE ON THE BOARD AS OF THE EFFECTIVE DATE
HEREOF (THE “INCUMBENT DIRECTORS”) CEASE FOR ANY REASON TO CONSTITUTE AT LEAST A
MAJORITY OF THE BOARD; PROVIDED, HOWEVER, ANY PERSON WHO BECOMES A DIRECTOR
SUBSEQUENT TO THE EFFECTIVE DATE HEREOF, WHOSE ELECTION OR NOMINATION FOR
ELECTION WAS APPROVED BY A VOTE OF AT LEAST A MAJORITY OF THE DIRECTORS THEN
CONSTITUTING THE INCUMBENT BOARD, SHALL FOR PURPOSES OF THIS CLAUSE (II) BE
CONSIDERED AN INCUMBENT DIRECTOR;

 

(III)          THE CONSUMMATION OF A MERGER OR CONSOLIDATION OF THE COMPANY IN
WHICH THE STOCKHOLDERS OF THE COMPANY IMMEDIATELY PRIOR TO SUCH MERGER OR
CONSOLIDATION, WOULD NOT, IMMEDIATELY

 

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AFTER THE MERGER OR CONSOLIDATION, BENEFICIALLY OWN (AS SUCH TERM IS DEFINED IN
RULE 13D-3 UNDER THE EXCHANGE ACT), DIRECTLY OR INDIRECTLY, SHARES REPRESENTING
IN THE AGGREGATE 50% OR MORE OF THE COMBINED VOTING POWER OF THE SECURITIES OF
THE CORPORATION ISSUING CASH OR SECURITIES IN THE MERGER OR CONSOLIDATION (OR OF
ITS ULTIMATE PARENT CORPORATION, IF ANY); OR

 

(IV)          THE STOCKHOLDERS OF THE COMPANY APPROVE A PLAN OF COMPLETE
LIQUIDATION OR DISSOLUTION OF THE COMPANY, OR THERE IS CONSUMMATED AN AGREEMENT
FOR THE SALE OR DISPOSITION BY THE COMPANY OF ALL OR SUBSTANTIALLY ALL OF THE
COMPANY’S ASSETS, OTHER THAN A SALE OR DISPOSITION BY THE COMPANY OF ALL OR
SUBSTANTIALLY ALL OF THE COMPANY’S ASSETS TO AN ENTITY, AT LEAST 50% OF THE
COMBINED VOTING POWER OF THE VOTING SECURITIES OF WHICH ARE OWNED BY PERSONS IN
SUBSTANTIALLY THE SAME PROPORTION AS THEIR OWNERSHIP OF THE COMPANY IMMEDIATELY
PRIOR TO SUCH SALE.

 

If an event set forth in clause (i)(e) of the definition of “Change of Control”
occurs, a Change of Control shall be deemed to have occurred for each Holder
other than any Holder who alone or as part of any “group” (as such term is used
in Sections 13(d) and 14(d) of the Exchange Act), becomes the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company or its
Subsidiaries) representing more than 20% of either the then outstanding shares
of Stock of the Company or the combined voting power of the Company’s then
outstanding securities.

 

2.6.          “CODE” MEANS THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.

 

2.7.          “COMMON STOCK” MEANS THE COMMON STOCK OF THE COMPANY, PAR VALUE
$.0001 PER SHARE, OR SUCH OTHER CLASS OR KIND OF SHARES OR OTHER SECURITIES
RESULTING FROM THE APPLICATION OF SECTION 9.

 

2.8.          “COMPANY” MEANS ADOLOR CORPORATION, A DELAWARE CORPORATION, OR ANY
SUCCESSOR CORPORATION.

 

2.9.          “COMMITTEE” MEANS THE COMMITTEE DESIGNATED BY THE BOARD TO
ADMINISTER THE PLAN UNDER SECTION 4.  THE COMMITTEE SHALL HAVE AT LEAST TWO
MEMBERS, EACH OF WHOM SHALL BE A MEMBER OF THE BOARD, A NON-EMPLOYEE DIRECTOR
AND AN OUTSIDE DIRECTOR.

 

2.10.        “CONSULTANT” MEANS A KEY CONSULTANT OR ADVISOR TO THE COMPANY, ITS
SUBSIDIARIES OR AFFILIATES WHO IS NOT AN EMPLOYEE.

 

2.11.        “DEFERRED STOCK” MEANS AN AWARD MADE UNDER SECTION 6 OF THE PLAN TO
RECEIVE COMMON STOCK AT THE END OF A SPECIFIED DEFERRAL PERIOD.

 

2.12.        “DEFERRAL PERIOD” MEANS THE PERIOD DURING WHICH THE RECEIPT OF A
DEFERRED STOCK AWARD UNDER SECTION 6 OF THE PLAN WILL BE DEFERRED.

 

2.13.        “DIRECTOR” MEANS A MEMBER OF THE BOARD.

 

2.14.        “DISABILITY” MEANS DISABLED WITHIN THE MEANING OF SECTION
22(E)(3) OF THE CODE.

 

2.15.        “EMPLOYEE” MEANS AN OFFICER OR OTHER EMPLOYEE OF THE COMPANY, A
SUBSIDIARY OR AN AFFILIATE INCLUDING A DIRECTOR WHO IS SUCH AN EMPLOYEE.

 

2.16.        “FAIR MARKET VALUE” MEANS, ON ANY GIVEN DATE (I) IF SHARES OF
COMMON STOCK ARE THEN LISTED ON A NATIONAL STOCK EXCHANGE, THE CLOSING SALES
PRICE PER SHARE OF COMMON STOCK ON THE EXCHANGE FOR THE LAST PRECEDING DATE ON
WHICH THERE WAS A SALE OF SHARES OF COMMON STOCK ON SUCH EXCHANGE, AS DETERMINED
BY THE COMMITTEE, (II) IF SHARES OF COMMON STOCK ARE THEN LISTED ON THE NASDAQ
NATIONAL MARKET OR THE NASDAQ

 

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SMALLCAP MARKET, THE CLOSING SALES PRICE (OR THE CLOSING BID PRICE IF NO SALES
WERE REPORTED) PER SHARE OF COMMON STOCK ON THE NASDAQ NATIONAL MARKET OR THE
NASDAQ SMALLCAP MARKET, AS APPLICABLE, FOR THE LAST PRECEDING DATE ON WHICH
THERE WAS A SALE OF SHARES OF COMMON STOCK ON THE NASDAQ NATIONAL MARKET OR THE
NASDAQ SMALLCAP MARKET, AS APPLICABLE, AS DETERMINED BY THE COMMITTEE, (III) IF
SHARES OF COMMON STOCK ARE NOT THEN LISTED ON A NATIONAL STOCK EXCHANGE, THE
NASDAQ NATIONAL MARKET OR THE NASDAQ SMALL CAP MARKET BUT ARE THEN TRADED ON AN
OVER-THE-COUNTER MARKET, THE AVERAGE OF THE CLOSING BID AND ASKED PRICES FOR THE
SHARES OF COMMON STOCK IN SUCH OVER-THE-COUNTER MARKET FOR THE LAST PRECEDING
DATE ON WHICH THERE WAS A SALE OF SUCH SHARES OF COMMON STOCK IN SUCH MARKET, AS
DETERMINED BY THE COMMITTEE, OR (IV) IF SHARES OF COMMON STOCK ARE NOT THEN
LISTED ON A NATIONAL STOCK EXCHANGE OR TRADED ON AN OVER-THE-COUNTER MARKET, OR
IF THE COMMITTEE DETERMINES THAT THE VALUE AS DETERMINED PURSUANT TO
SECTION (I), (II) OR (III) ABOVE DOES NOT REFLECT FAIR MARKET VALUE, THE
COMMITTEE SHALL DETERMINE FAIR MARKET VALUE AFTER TAKING INTO ACCOUNT SUCH
FACTORS THAT IT DEEMS APPROPRIATE. NOTWITHSTANDING THE FOREGOING, IF SHARES ARE
LISTED ON A NATIONAL STOCK EXCHANGE OR TRADED ON AN OVER-THE-COUNTER MARKET,
SOLELY FOR PURPOSES OF DETERMINING THE EXERCISE PRICE OF ANY OPTION GRANTED
HEREUNDER, THE FAIR MARKET VALUE PER SHARE SHALL BE THE CLOSING SALES PRICE ON
THE APPLICABLE EXCHANGE OR MARKET ON THE DATE SUCH OPTION IS GRANTED.

 

2.17.        “HOLDER” MEANS A PARTICIPANT TO WHOM AN AWARD IS MADE.

 

2.18.        “INCENTIVE STOCK OPTION” MEANS AN OPTION INTENDED TO MEET THE
REQUIREMENTS OF AN INCENTIVE STOCK OPTION AS DEFINED IN SECTION 422 OF THE CODE
AND DESIGNATED AS AN INCENTIVE STOCK OPTION.

 

2.19.        “1934 ACT” MEANS THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

2.20.        “NON-EMPLOYEE DIRECTOR” MEANS A MEMBER OF THE BOARD WHO MEETS THE
DEFINITION OF A “NON-EMPLOYEE DIRECTOR” UNDER RULE 16B-3(B)(3) PROMULGATED BY
THE SECURITIES AND EXCHANGE COMMISSION UNDER THE 1934 ACT.

 

2.21.        “NON-QUALIFIED OPTION” MEANS AN OPTION NOT INTENDED TO BE AN
INCENTIVE STOCK OPTION, AND DESIGNATED AS A NON-QUALIFIED OPTION.

 

2.22.        “OPTION” MEANS ANY STOCK OPTION GRANTED FROM TIME TO TIME UNDER
SECTION 8 OF THE PLAN.

 

2.23.        “OUTSIDE DIRECTOR” MEANS A MEMBER OF THE BOARD WHO MEETS THE
DEFINITION OF AN “OUTSIDE DIRECTOR” UNDER TREASURY REGULATION §
1.162-27(E)(3)(I).

 

2.24.        “PARTICIPANT” MEANS A CONSULTANT, DIRECTOR OR EMPLOYEE.

 

2.25.        “PERFORMANCE GOAL” MEANS A GOAL THAT MUST BE MET BY THE END OF A
PERIOD SPECIFIED BY THE COMMITTEE (BUT THAT IS SUBSTANTIALLY UNCERTAIN TO BE MET
BEFORE THE GRANT OF AN AWARD) BASED UPON: (I) THE PRICE OF COMMON STOCK,
(II) THE MARKET SHARE OF THE COMPANY, ITS SUBSIDIARIES OR AFFILIATES (OR ANY
BUSINESS UNIT THEREOF), (III) SALES BY THE COMPANY, ITS SUBSIDIARIES OR
AFFILIATES (OR ANY BUSINESS UNIT THEREOF), (IV) EARNINGS PER SHARE OF COMMON
STOCK, (V) RETURN ON SHAREHOLDER EQUITY OF THE COMPANY, (VI) COSTS OF THE
COMPANY, ITS SUBSIDIARIES OR AFFILIATES (OR ANY BUSINESS UNIT THEREOF),
(VII) CASH FLOW OF THE COMPANY, ITS SUBSIDIARIES OR AFFILIATES (OR ANY BUSINESS
UNIT THEREOF), (VIII) RETURN ON TOTAL ASSETS OF THE COMPANY, ITS SUBSIDIARIES OR
AFFILIATES (OR ANY BUSINESS UNIT THEREOF), (IX) RETURN ON INVESTED CAPITAL OF
THE COMPANY, ITS SUBSIDIARIES OR AFFILIATES (OR ANY BUSINESS UNIT THEREOF),
(X) RETURN ON NET ASSETS OF THE COMPANY, ITS SUBSIDIARIES OR AFFILIATES (OR ANY
BUSINESS UNIT THEREOF), (XI) OPERATING INCOME OF THE COMPANY, ITS SUBSIDIARIES
OR AFFILIATES (OR ANY BUSINESS UNIT THEREOF), (XII) NET INCOME OF THE COMPANY,
ITS SUBSIDIARIES OR AFFILIATES (OR ANY BUSINESS UNIT THEREOF), OR (XIII) ANY
OTHER GOAL THE COMMITTEE DEEMS APPROPRIATE.

 

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2.26.        “PERSON” MEANS ANY INDIVIDUAL, PARTNERSHIP, CORPORATION, COMPANY,
LIMITED LIABILITY COMPANY, ASSOCIATION, TRUST, JOINT VENTURE, UNINCORPORATED
ORGANIZATION, ENTITY OR DIVISION, OR ANY GOVERNMENT, GOVERNMENTAL DEPARTMENT OR
AGENCY OR POLITICAL SUBDIVISION THEREOF.

 

2.27.        “PLAN” MEANS THE ADOLOR CORPORATION 2003 STOCK-BASED INCENTIVE
COMPENSATION PLAN HEREIN SET FORTH, AS AMENDED FROM TIME TO TIME.

 

2.28.        “RESTRICTED STOCK” MEANS COMMON STOCK AWARDED BY THE COMMITTEE
UNDER SECTION 7 OF THE PLAN.

 

2.29.        “RESTRICTION PERIOD” MEANS THE PERIOD DURING WHICH RESTRICTED STOCK
AWARDED UNDER SECTION 7 OF THE PLAN IS SUBJECT TO FORFEITURE.

 

2.30.        “RETIREMENT” MEANS RETIREMENT FROM THE ACTIVE EMPLOYMENT OF THE
COMPANY, A SUBSIDIARY OR AN AFFILIATE PURSUANT TO THE RELEVANT PROVISIONS OF THE
APPLICABLE PENSION PLAN OF SUCH ENTITY OR AS OTHERWISE DETERMINED BY THE BOARD.

 

2.31.        “SUBSIDIARY” MEANS ANY CORPORATION (OTHER THAN THE COMPANY) IN AN
UNBROKEN CHAIN OF CORPORATIONS BEGINNING WITH THE COMPANY (OR ANY SUBSEQUENT
PARENT OF THE COMPANY) IF EACH OF THE CORPORATIONS OTHER THAN THE LAST
CORPORATION IN THE UNBROKEN CHAIN OWNS STOCK POSSESSION 50% OR MORE OF THE TOTAL
COMBINED VOTING POWER OF ALL CLASSES OF STOCK IN ONE OF THE OTHER CORPORATIONS
IN SUCH CHAIN.

 

2.32.        “TEN PERCENT SHAREHOLDER” MEANS A PERSON WHO ON ANY GIVEN DATE
OWNS, EITHER DIRECTLY OR INDIRECTLY (TAKING INTO ACCOUNT THE ATTRIBUTION
RULES CONTAINED IN SECTION 424(D) OF THE CODE), STOCK POSSESSING MORE THAN 10%
OF THE TOTAL COMBINED VOTING POWER OF ALL CLASSES OF STOCK OF THE COMPANY OR A
SUBSIDIARY.

 

3.             ELIGIBILITY

 

Any Participant is eligible to receive an Award.

 

4.             ADMINISTRATION AND IMPLEMENTATION OF PLAN

 

4.1.          THE PLAN SHALL BE ADMINISTERED BY THE COMMITTEE, WHICH SHALL HAVE
FULL POWER TO INTERPRET AND ADMINISTER THE PLAN AND FULL AUTHORITY TO ACT IN
SELECTING THE PARTICIPANTS TO WHOM AWARDS WILL BE GRANTED, IN DETERMINING THE
TYPE AND AMOUNT OF AWARDS TO BE GRANTED TO EACH SUCH PARTICIPANT, THE TERMS AND
CONDITIONS OF AWARDS GRANTED UNDER THE PLAN AND THE TERMS OF AGREEMENTS WHICH
WILL BE ENTERED INTO WITH HOLDERS.  NOTWITHSTANDING THE FOREGOING, THE BOARD MAY
DESIGNATE ONE OR MORE OF ITS MEMBERS OR OFFICERS OF THE COMPANY TO SERVE AS A
SECONDARY COMMITTEE AND DELEGATE TO THE SECONDARY COMMITTEE AUTHORITY TO GRANT
AWARDS TO ELIGIBLE INDIVIDUALS WHO ARE NOT SUBJECT TO THE REQUIREMENTS OF
RULE 16B-3 UNDER THE 1934 ACT OR SECTION 162(M) OF THE CODE.  THE SECONDARY
COMMITTEE SHALL HAVE THE SAME AUTHORITY WITH RESPECT TO SELECTING THE
INDIVIDUALS TO WHOM SUCH AWARDS ARE GRANTED AND ESTABLISHING THE TERMS AND
CONDITIONS OF SUCH AWARDS AS THE COMMITTEE HAS UNDER THE TERMS OF THE PLAN.

 

4.2.          THE COMMITTEE’S POWERS SHALL INCLUDE, BUT NOT BE LIMITED TO, THE
POWER TO DETERMINE WHETHER, TO WHAT EXTENT AND UNDER WHAT CIRCUMSTANCES AN
OPTION MAY BE EXCHANGED FOR CASH, RESTRICTED STOCK, DEFERRED STOCK OR SOME
COMBINATION THEREOF; TO DETERMINE WHETHER, TO WHAT EXTENT AND UNDER WHAT
CIRCUMSTANCES AN AWARD IS MADE AND OPERATES ON A TANDEM BASIS WITH OTHER AWARDS
MADE HEREUNDER; TO DETERMINE WHETHER, TO WHAT EXTENT AND UNDER WHAT
CIRCUMSTANCES COMMON STOCK OR CASH PAYABLE WITH RESPECT TO AN AWARD SHALL BE
DEFERRED, EITHER AUTOMATICALLY OR AT THE ELECTION OF THE HOLDER (INCLUDING THE
POWER TO ADD DEEMED EARNINGS TO ANY SUCH DEFERRAL); TO GRANT AWARDS (OTHER THAN
INCENTIVE STOCK OPTIONS) THAT ARE TRANSFERABLE BY THE HOLDER; AND TO DETERMINE
THE EFFECT, IF ANY, OF A CHANGE IN CONTROL OF THE COMPANY UPON OUTSTANDING
AWARDS.

 

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4.3.          THE COMMITTEE SHALL HAVE THE POWER TO ADOPT REGULATIONS FOR
CARRYING OUT THE PLAN AND TO MAKE CHANGES IN SUCH REGULATIONS AS IT SHALL, FROM
TIME TO TIME, DEEM ADVISABLE.  THE COMMITTEE SHALL HAVE THE POWER UNILATERALLY
AND WITHOUT APPROVAL OF A HOLDER TO AMEND AN EXISTING AWARD IN ORDER TO CARRY
OUT THE PURPOSES OF THE PLAN SO LONG AS SUCH AN AMENDMENT DOES NOT TAKE AWAY ANY
BENEFIT GRANTED TO A HOLDER BY THE AWARD AND AS LONG AS THE AMENDED AWARD
COMPORTS WITH THE TERMS OF THE PLAN.  ANY INTERPRETATION BY THE COMMITTEE OF THE
TERMS AND PROVISIONS OF THE PLAN AND THE ADMINISTRATION THEREOF, AND ALL ACTION
TAKEN BY THE COMMITTEE, SHALL BE FINAL AND BINDING ON HOLDERS.

 

4.4.          THE COMMITTEE MAY CONDITION THE GRANT OF ANY AWARD OR THE LAPSE OF
ANY DEFERRAL OR RESTRICTION PERIOD (OR ANY COMBINATION THEREOF) UPON THE
HOLDER’S ACHIEVEMENT OF A PERFORMANCE GOAL THAT IS ESTABLISHED BY THE COMMITTEE
BEFORE THE GRANT OF THE AWARD.  THE COMMITTEE SHALL HAVE DISCRETION TO DETERMINE
THE SPECIFIC TARGETS WITH RESPECT TO EACH PERFORMANCE GOAL.  BEFORE GRANTING AN
AWARD OR PERMITTING THE LAPSE OF ANY DEFERRAL OR RESTRICTION PERIOD SUBJECT TO
THIS SECTION, THE COMMITTEE SHALL CERTIFY THAT AN INDIVIDUAL HAS SATISFIED THE
APPLICABLE PERFORMANCE GOAL.

 

5.             SHARES OF STOCK SUBJECT TO THE PLAN

 

5.1.          SUBJECT TO ADJUSTMENT AS PROVIDED IN SECTION 9, THE TOTAL NUMBER
OF SHARES OF COMMON STOCK AVAILABLE FOR AWARDS UNDER THE PLAN SHALL BE 7,600,000
SHARES, ALL OF WHICH MAY BE GRANTED AS INCENTIVE STOCK OPTIONS.

 

5.2.          THE MAXIMUM NUMBER OF SHARES OF COMMON STOCK SUBJECT TO AWARDS
THAT MAY BE GRANTED TO ANY PARTICIPANT SHALL NOT EXCEED 750,000 DURING ANY
CALENDAR YEAR (THE “INDIVIDUAL LIMIT”).  SUBJECT TO SECTION 5.3, SECTION 9 AND
SECTION 12.7, ANY AWARD THAT IS CANCELED OR REPRICED BY THE COMMITTEE SHALL
COUNT AGAINST THE INDIVIDUAL LIMIT.  NOTWITHSTANDING THE FOREGOING, THE
INDIVIDUAL LIMIT MAY BE ADJUSTED TO REFLECT THE EFFECT ON AWARDS OF ANY
TRANSACTION OR EVENT DESCRIBED IN SECTION 9.

 

5.3.          ANY SHARES ISSUED BY THE COMPANY THROUGH THE ASSUMPTION OR
SUBSTITUTION OF OUTSTANDING GRANTS FROM AN ACQUIRED COMPANY SHALL NOT (I) REDUCE
THE SHARES AVAILABLE FOR AWARDS UNDER THE PLAN, OR (II) BE COUNTED AGAINST THE
INDIVIDUAL LIMIT.  ANY SHARES ISSUED HEREUNDER MAY CONSIST, IN WHOLE OR IN PART,
OF AUTHORIZED AND UNISSUED SHARES OR TREASURY SHARES.  IF ANY SHARES SUBJECT TO
ANY AWARD GRANTED HEREUNDER ARE FORFEITED OR SUCH AWARD OTHERWISE TERMINATES
WITHOUT THE ISSUANCE OF SUCH SHARES OR THE PAYMENT OF OTHER CONSIDERATION IN
LIEU OF SUCH SHARES, THE SHARES SUBJECT TO SUCH AWARD, TO THE EXTENT OF ANY SUCH
FORFEITURE OR TERMINATION, SHALL AGAIN BE AVAILABLE FOR AWARDS UNDER THE PLAN. 
NOTWITHSTANDING THE FOREGOING SENTENCE, ANY SHARES SUBJECT TO ANY OPTION GRANTED
HEREUNDER THAT ARE TENDERED FOR EXCHANGE BY THE PERSON HOLDING SUCH OPTION IN
CONNECTION WITH THE ONE-TIME-ONLY OPTION EXCHANGE OFFER DESCRIBED IN
SECTION 12.7 HEREIN SHALL AGAIN BE AVAILABLE FOR AWARDS UNDER THE PLAN.

 

6.             DEFERRED STOCK

 

An Award of Deferred Stock is an agreement by the Company to deliver to the
recipient a specified number of shares of Common Stock at the end of a specified
deferral period or periods.  Such an Award shall be subject to the following
terms and conditions:

 

6.1.          DEFERRED STOCK AWARDS SHALL BE EVIDENCED BY DEFERRED STOCK
AGREEMENTS.  SUCH AGREEMENTS SHALL CONFORM TO THE REQUIREMENTS OF THE PLAN AND
MAY CONTAIN SUCH OTHER PROVISIONS AS THE COMMITTEE SHALL DEEM ADVISABLE.

 

6.2.          UPON DETERMINATION OF THE NUMBER OF SHARES OF DEFERRED STOCK TO BE
AWARDED TO A HOLDER, THE COMMITTEE SHALL DIRECT THAT THE SAME BE CREDITED TO THE
HOLDER’S ACCOUNT ON THE BOOKS OF THE COMPANY BUT THAT ISSUANCE AND DELIVERY OF
THE SAME SHALL BE DEFERRED UNTIL THE DATE OR DATES PROVIDED IN SECTION 6.5
HEREOF.

 

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PRIOR TO ISSUANCE AND DELIVERY HEREUNDER THE HOLDER SHALL HAVE NO RIGHTS AS A
STOCKHOLDER WITH RESPECT TO ANY SHARES OF DEFERRED STOCK CREDITED TO THE
HOLDER’S ACCOUNT.

 

6.3.          SUBJECT TO THE PROVISIONS OF SECTION 6.4 CONCERNING DEFERRED STOCK
AWARDS THAT ARE SUBJECT TO THE ACHIEVEMENT OF PERFORMANCE GOALS, AMOUNTS EQUAL
TO ANY DIVIDENDS DECLARED DURING THE DEFERRAL PERIOD WITH RESPECT TO THE NUMBER
OF SHARES COVERED BY A DEFERRED STOCK AWARD WILL BE PAID TO THE HOLDER
CURRENTLY, OR DEFERRED AND DEEMED TO BE REINVESTED IN ADDITIONAL DEFERRED STOCK,
OR OTHERWISE REINVESTED ON SUCH TERMS AS ARE DETERMINED AT THE TIME OF THE AWARD
BY THE COMMITTEE, IN ITS SOLE DISCRETION, AND SPECIFIED IN THE DEFERRED STOCK
AGREEMENT.

 

6.4.          THE COMMITTEE MAY CONDITION THE GRANT OF AN AWARD OF DEFERRED
STOCK OR THE EXPIRATION OF THE DEFERRAL PERIOD UPON THE HOLDER’S ACHIEVEMENT OF
ONE OR MORE PERFORMANCE GOAL(S) SPECIFIED IN THE DEFERRED STOCK AGREEMENT. 
UNLESS OTHERWISE SPECIFIED IN A DEFERRED STOCK AGREEMENT, IF THE HOLDER FAILS TO
ACHIEVE THE SPECIFIED PERFORMANCE GOAL(S), THE COMMITTEE SHALL NOT GRANT THE
DEFERRED STOCK AWARD TO THE HOLDER, OR THE HOLDER SHALL FORFEIT THE AWARD AND NO
COMMON STOCK SHALL BE TRANSFERRED TO HIM PURSUANT TO THE DEFERRED STOCK AWARD. 
DIVIDENDS PAID DURING THE DEFERRAL PERIOD ON DEFERRED STOCK SUBJECT TO A
PERFORMANCE GOAL SHALL BE REINVESTED IN ADDITIONAL DEFERRED STOCK AND THE
EXPIRATION OF THE DEFERRAL PERIOD FOR SUCH DEFERRED STOCK SHALL BE SUBJECT TO
THE PERFORMANCE GOAL(S) PREVIOUSLY ESTABLISHED BY THE COMMITTEE.

 

6.5.          THE DEFERRED STOCK AGREEMENT SHALL SPECIFY THE DURATION OF THE
DEFERRAL PERIOD, TAKING INTO ACCOUNT TERMINATION OF EMPLOYMENT OR SERVICE ON
ACCOUNT OF DEATH, DISABILITY, RETIREMENT OR OTHER CAUSE.  THE DEFERRAL PERIOD
MAY CONSIST OF ONE OR MORE INSTALLMENTS.  AT THE END OF THE DEFERRAL PERIOD OR
ANY INSTALLMENT THEREOF THE SHARES OF DEFERRED STOCK APPLICABLE TO SUCH
INSTALLMENT CREDITED TO THE ACCOUNT OF A HOLDER SHALL BE ISSUED AND DELIVERED TO
THE HOLDER (OR, WHERE APPROPRIATE, THE HOLDER’S LEGAL REPRESENTATIVE) IN
ACCORDANCE WITH THE TERMS OF THE DEFERRED STOCK AGREEMENT.  THE COMMITTEE MAY,
IN ITS SOLE DISCRETION, ACCELERATE THE DELIVERY OF ALL OR ANY PART OF A DEFERRED
STOCK AWARD OR WAIVE THE DEFERRAL LIMITATIONS FOR ALL OR ANY PART OF A DEFERRED
STOCK AWARD.

 

7.             RESTRICTED STOCK

 

An Award of Restricted Stock is a grant by the Company of a specified number of
shares of Common Stock to the Participant, which shares are subject to
forfeiture upon the happening of specified events.  Such an Award shall be
subject to the following terms and conditions:

 

7.1.          RESTRICTED STOCK SHALL BE EVIDENCED BY RESTRICTED STOCK
AGREEMENTS.  SUCH AGREEMENTS SHALL CONFORM TO THE REQUIREMENTS OF THE PLAN AND
MAY CONTAIN SUCH OTHER PROVISIONS AS THE COMMITTEE SHALL DEEM ADVISABLE.

 

7.2.          UPON DETERMINATION OF THE NUMBER OF SHARES OF RESTRICTED STOCK TO
BE GRANTED TO THE HOLDER, THE COMMITTEE SHALL DIRECT THAT A CERTIFICATE OR
CERTIFICATES REPRESENTING THE NUMBER OF SHARES OF COMMON STOCK BE ISSUED TO THE
HOLDER WITH THE HOLDER DESIGNATED AS THE REGISTERED OWNER.  THE
CERTIFICATE(S) REPRESENTING SUCH SHARES SHALL BE LEGENDED AS TO SALE, TRANSFER,
ASSIGNMENT, PLEDGE OR OTHER ENCUMBRANCES DURING THE RESTRICTION PERIOD AND
DEPOSITED BY THE HOLDER, TOGETHER WITH A STOCK POWER ENDORSED IN BLANK, WITH THE
COMPANY, TO BE HELD IN ESCROW DURING THE RESTRICTION PERIOD.

 

7.3.          DURING THE RESTRICTION PERIOD THE HOLDER SHALL HAVE THE RIGHT TO
VOTE THE SHARES OF RESTRICTED STOCK.  SUBJECT TO THE PROVISIONS OF SECTION 7.4
CONCERNING RESTRICTED STOCK AWARDS THAT ARE SUBJECT TO THE ACHIEVEMENT OF
PERFORMANCE GOALS, AMOUNTS EQUAL TO ANY DIVIDENDS DECLARED DURING THE
RESTRICTION PERIOD WITH RESPECT TO THE NUMBER OF SHARES COVERED BY A RESTRICTED
STOCK AWARD WILL BE PAID TO THE HOLDER CURRENTLY, OR DEFERRED AND DEEMED TO BE
REINVESTED IN ADDITIONAL RESTRICTED STOCK, OR OTHERWISE REINVESTED ON SUCH TERMS
AS ARE DETERMINED AT THE TIME OF THE AWARD BY THE COMMITTEE, IN ITS SOLE
DISCRETION, AND SPECIFIED IN THE RESTRICTED STOCK AGREEMENT.

 

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7.4.          THE COMMITTEE MAY CONDITION THE GRANT OF AN AWARD OF RESTRICTED
STOCK OR THE EXPIRATION OF THE RESTRICTION PERIOD UPON THE HOLDER’S ACHIEVEMENT
OF ONE OR MORE PERFORMANCE GOAL(S) SPECIFIED IN THE RESTRICTED STOCK AGREEMENT. 
UNLESS OTHERWISE SPECIFIED IN A RESTRICTED STOCK AGREEMENT, IF THE HOLDER FAILS
TO ACHIEVE THE SPECIFIED PERFORMANCE GOAL(S), THE COMMITTEE SHALL NOT GRANT THE
RESTRICTED STOCK TO THE HOLDER, OR THE HOLDER SHALL FORFEIT THE AWARD OF
RESTRICTED STOCK AND THE COMMON STOCK SHALL BE FORFEITED TO THE COMPANY. 
DIVIDENDS PAID DURING THE RESTRICTION PERIOD ON RESTRICTED STOCK SUBJECT TO A
PERFORMANCE GOAL SHALL BE REINVESTED IN ADDITIONAL RESTRICTED STOCK AND THE
EXPIRATION OF THE RESTRICTION PERIOD FOR SUCH RESTRICTED STOCK SHALL BE SUBJECT
TO THE PERFORMANCE GOAL(S) PREVIOUSLY ESTABLISHED BY THE COMMITTEE.

 

7.5.          THE RESTRICTED STOCK AGREEMENT SHALL SPECIFY THE DURATION OF THE
RESTRICTION PERIOD AND THE PERFORMANCE, EMPLOYMENT OR OTHER CONDITIONS
(INCLUDING TERMINATION OF EMPLOYMENT OR SERVICE ON ACCOUNT OF DEATH, DISABILITY,
RETIREMENT OR OTHER CAUSE) UNDER WHICH THE RESTRICTED STOCK MAY BE FORFEITED TO
THE COMPANY.  AT THE END OF THE RESTRICTION PERIOD THE RESTRICTIONS IMPOSED
HEREUNDER SHALL LAPSE WITH RESPECT TO THE NUMBER OF SHARES OF RESTRICTED STOCK
AS DETERMINED BY THE COMMITTEE, AND THE LEGEND SHALL BE REMOVED AND SUCH NUMBER
OF SHARES DELIVERED TO THE HOLDER (OR, WHERE APPROPRIATE, THE HOLDER’S LEGAL
REPRESENTATIVE).  THE COMMITTEE MAY, IN ITS SOLE DISCRETION, MODIFY OR
ACCELERATE THE VESTING AND DELIVERY OF SHARES OF RESTRICTED STOCK.

 

8.             OPTIONS

 

Options give a Participant the right to purchase a specified number of shares of
Common Stock from the Company for a specified time period at a fixed price. 
Options may be either Incentive Stock Options or Non-Qualified Stock Options. 
The grant of Options shall be subject to the following terms and conditions:

 

8.1.          OPTION GRANTS:  OPTIONS SHALL BE EVIDENCED BY OPTION AGREEMENTS. 
SUCH AGREEMENTS SHALL CONFORM TO THE REQUIREMENTS OF THE PLAN, AND MAY CONTAIN
SUCH OTHER PROVISIONS AS THE COMMITTEE SHALL DEEM ADVISABLE.

 

8.2.          SPECIFIC OPTION GRANTS TO DIRECTORS:  EACH DIRECTOR WHO IS NOT AN
EMPLOYEE OF THE COMPANY SHALL RECEIVE AN OPTION TO PURCHASE 25,000 SHARES OF
COMMON STOCK UPON HIS OR HER INITIAL ELECTION TO THE BOARD, AND THE SHARES OF
COMMON STOCK UNDERLYING SUCH OPTIONS SHALL VEST ONE-THIRD (1/3) PER YEAR THAT
SUCH DIRECTOR REMAINS A DIRECTOR FOR THREE YEARS BEGINNING ON THE FIRST
ANNIVERSARY OF THE GRANT.  BEGINNING AT THE 2003 ANNUAL MEETING OF THE
STOCKHOLDERS OF THE COMPANY AND AT EACH ANNUAL MEETING OF THE STOCKHOLDERS OF
THE COMPANY HELD THEREAFTER WHILE THE PLAN IS IN EFFECT, EACH DIRECTOR
CONTINUING AS SUCH AFTER SUCH MEETING WHO IS NOT AN EMPLOYEE OF THE COMPANY
SHALL RECEIVE AN OPTION TO PURCHASE 20,000 SHARES OF COMMON STOCK, AND THE
SHARES OF COMMON STOCK UNDERLYING SUCH OPTIONS SHALL VEST IN FULL ON THE FIRST
ANNIVERSARY OF THE GRANT; PROVIDED, HOWEVER, THAT IN THE EVENT A DIRECTOR
RESIGNS FROM THE BOARD OTHER THAN FOR CAUSE PRIOR TO SUCH ONE-YEAR ANNIVERSARY,
THE VESTING OF SUCH OPTION SHALL ACCELERATE SO THAT SUCH OPTION BECOMES
IMMEDIATELY EXERCISABLE WITH RESPECT TO ONE-TWELFTH (1/12) OF THE SHARES OF
COMMON STOCK UNDERLYING SUCH OPTION FOR EACH FULL MONTH THAT HAS ELAPSED BETWEEN
THE DATE OF THE GRANT OF SUCH OPTION AND THE DATE OF SUCH RESIGNATION. 
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE PLAN, THE PRICE PER SHARE AT
WHICH COMMON STOCK MAY BE PURCHASED UPON THE EXERCISE OF AN OPTION GRANTED
PURSUANT TO THIS SECTION 8.2 SHALL BE NOT LESS THAN THE FAIR MARKET VALUE OF A
SHARE OF COMMON STOCK ON THE DATE OF GRANT.

 

8.3.          Option Price: The price per share at which Common Stock may be
purchased upon exercise of an Option shall be not less than the Fair Market
Value of a share of Common Stock on the date of grant.  In the case of any
Incentive Stock Option granted to a Ten Percent Shareholder, the option price
per share shall not be less than 110% of the Fair Market Value of a share of
Common Stock on the date of grant.

 

8.4           TERM OF OPTIONS:  THE OPTION AGREEMENTS SHALL SPECIFY WHEN AN
OPTION MAY BE EXERCISABLE AND THE TERMS AND CONDITIONS APPLICABLE THERETO.  THE
TERM OF AN OPTION SHALL IN NO EVENT BE GREATER THAN TEN YEARS (FIVE YEARS IN THE
CASE OF AN INCENTIVE STOCK OPTION GRANTED TO A TEN PERCENT SHAREHOLDER AND TEN
YEARS IN THE CASE OF ALL OTHER INCENTIVE STOCK OPTIONS).  THE COMMITTEE MAY, IN
ITS SOLE DISCRETION, ACCELERATE THE TIME AT

 

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WHICH AN OPTION VESTS.  THE COMMITTEE MAY, IN ITS SOLE DISCRETION, EXTEND THE
PERIOD OF EXERCISE FOR OPTIONS THAT HAVE VESTED.

 

8.5           INCENTIVE STOCK OPTIONS:  EACH PROVISION OF THE PLAN AND EACH
OPTION AGREEMENT RELATING TO AN INCENTIVE STOCK OPTION SHALL BE CONSTRUED SO
THAT EACH INCENTIVE STOCK OPTION SHALL BE AN INCENTIVE STOCK OPTION AS DEFINED
IN SECTION 422 OF THE CODE, AND ANY PROVISIONS OF THE OPTION AGREEMENT THEREOF
THAT CANNOT BE SO CONSTRUED SHALL BE DISREGARDED.  IN NO EVENT MAY A HOLDER BE
GRANTED AN INCENTIVE STOCK OPTION WHICH DOES NOT COMPLY WITH SUCH GRANT AND
VESTING LIMITATIONS AS MAY BE PRESCRIBED BY SECTION 422(B) OF THE CODE. 
INCENTIVE STOCK OPTIONS MAY ONLY BE GRANTED TO EMPLOYEES; PROVIDED, HOWEVER,
THAT THEY MAY NOT BE GRANTED TO EMPLOYEES OF AFFILIATES.  WITHOUT LIMITING THE
FOREGOING, THE AGGREGATE FAIR MARKET VALUE (DETERMINED AS OF THE TIME THE OPTION
IS GRANTED) OF THE COMMON STOCK WITH RESPECT TO WHICH AN INCENTIVE STOCK OPTION
MAY FIRST BECOME EXERCISABLE BY A PARTICIPANT IN ANY ONE CALENDAR YEAR UNDER THE
PLAN SHALL NOT EXCEED $100,000.

 

8.6           RESTRICTIONS ON TRANSFERABILITY OF INCENTIVE STOCK OPTIONS:  NO
INCENTIVE STOCK OPTION SHALL BE TRANSFERABLE OTHERWISE THAN BY WILL OR THE LAWS
OF DESCENT AND DISTRIBUTION AND, DURING THE LIFETIME OF THE HOLDER, SHALL BE
EXERCISABLE ONLY BY THE HOLDER.  UPON THE DEATH OF A HOLDER, THE PERSON TO WHOM
THE RIGHTS HAVE PASSED BY WILL OR BY THE LAWS OF DESCENT AND DISTRIBUTION MAY
EXERCISE AN INCENTIVE STOCK OPTION ONLY IN ACCORDANCE WITH THIS SECTION 8.

 

8.7           PAYMENT OF OPTION PRICE:  THE OPTION PRICE OF THE SHARES OF COMMON
STOCK UPON THE EXERCISE OF AN OPTION SHALL BE PAID: (I) IN FULL IN CASH AT THE
TIME OF THE EXERCISE, (II) WITH THE CONSENT OF THE COMMITTEE, IN WHOLE OR IN
PART IN COMMON STOCK HELD BY THE HOLDER FOR AT LEAST SIX MONTHS VALUED AT FAIR
MARKET VALUE ON THE DATE OF EXERCISE, OR (III) IF APPROVED BY THE COMMITTEE IN
ITS DISCRETION, BY ASSIGNING TO THE COMPANY A SUFFICIENT AMOUNT OF THE PROCEEDS
FROM THE SALE OF SHARES OF COMMON STOCK TO BE ACQUIRED PURSUANT TO SUCH EXERCISE
AND INSTRUCTING THE BROKER OR SELLING AGENT TO PAY THAT AMOUNT TO THE COMPANY,
WHICH AMOUNT SHALL BE PAID IN CASH TO THE COMPANY ON THE DATE SUCH SHARES OF
COMMON STOCK ARE ISSUED TO THE PARTICIPANT.  WITH THE CONSENT OF THE COMMITTEE,
PAYMENT UPON THE EXERCISE OF A NON-QUALIFIED OPTION MAY BE MADE IN WHOLE OR IN
PART BY RESTRICTED STOCK WHICH HAS BEEN HELD BY THE HOLDER FOR AT LEAST SIX
MONTHS (BASED ON THE FAIR MARKET VALUE OF THE RESTRICTED STOCK ON THE DATE THE
OPTION IS EXERCISED, AS DETERMINED BY THE COMMITTEE).  IN SUCH CASE THE COMMON
STOCK TO WHICH THE OPTION RELATES SHALL BE SUBJECT TO THE SAME FORFEITURE
RESTRICTIONS ORIGINALLY IMPOSED ON THE RESTRICTED STOCK EXCHANGED THEREFOR.

 

8.8           TERMINATION BY DEATH:  UNLESS OTHERWISE PROVIDED IN AN OPTION
AGREEMENT, IF A HOLDER’S EMPLOYMENT OR SERVICE BY THE COMPANY, A SUBSIDIARY OR
AFFILIATE TERMINATES BY REASON OF DEATH, ANY OPTION GRANTED TO SUCH HOLDER MAY
THEREAFTER BE EXERCISED (TO THE EXTENT SUCH OPTION WAS EXERCISABLE AT THE TIME
OF DEATH) BY, WHERE APPROPRIATE, THE HOLDER’S TRANSFEREE OR BY THE HOLDER’S
LEGAL REPRESENTATIVE, FOR A PERIOD OF 12 MONTHS FROM THE DATE OF DEATH OR UNTIL
THE EXPIRATION OF THE STATED TERM OF THE OPTION, WHICHEVER PERIOD IS SHORTER.

 

8.9           TERMINATION BY REASON OF DISABILITY:  UNLESS OTHERWISE PROVIDED IN
AN OPTION AGREEMENT, IF A HOLDER’S EMPLOYMENT OR SERVICE BY THE COMPANY, A
SUBSIDIARY OR AFFILIATE TERMINATES BY REASON OF DISABILITY, ANY UNEXERCISED
OPTION GRANTED TO THE HOLDER MAY THEREAFTER BE EXERCISED BY THE HOLDER (OR,
WHERE APPROPRIATE, THE HOLDER’S TRANSFEREE OR LEGAL REPRESENTATIVE), TO THE
EXTENT IT WAS EXERCISABLE AT THE TIME OF TERMINATION, FOR A PERIOD OF 12 MONTHS
FROM THE DATE OF SUCH TERMINATION OF EMPLOYMENT OR SERVICE OR UNTIL THE
EXPIRATION OF THE STATED TERM OF THE OPTION, WHICHEVER PERIOD IS SHORTER.

 

8.10         TERMINATION BY REASON OF  RETIREMENT:  IF A HOLDER’S EMPLOYMENT BY
OR SERVICE WITH THE COMPANY, A SUBSIDIARY OR AFFILIATE TERMINATES BY REASON OF
RETIREMENT, ANY UNEXERCISED OPTION GRANTED TO THE HOLDER MAY THEREAFTER BE
EXERCISED BY THE HOLDER (OR, WHERE APPROPRIATE, THE HOLDER’S TRANSFEREE OR LEGAL
REPRESENTATIVE), TO THE EXTENT IT WAS EXERCISABLE AT THE TIME OF TERMINATION,
FOR A PERIOD OF 90 DAYS FROM THE DATE OF SUCH TERMINATION OF EMPLOYMENT OR
SERVICE OR UNTIL THE EXPIRATION OF THE STATED TERM OF THE OPTION, WHICHEVER
PERIOD IS SHORTER.

 

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8.11         TERMINATION NOT FOR CAUSE:  IF A HOLDER’S EMPLOYMENT BY OR SERVICE
WITH THE COMPANY, A SUBSIDIARY OR AFFILIATE IS TERMINATED BY THE COMPANY, THE
SUBSIDIARY OR AFFILIATE NOT FOR CAUSE, ANY UNEXERCISED OPTION GRANTED TO THE
HOLDER MAY THEREAFTER BE EXERCISED BY THE HOLDER (OR, WHERE APPROPRIATE, THE
HOLDER’S TRANSFEREE OR LEGAL REPRESENTATIVE), TO THE EXTENT IT WAS EXERCISABLE
AT THE TIME OF TERMINATION, FOR A PERIOD OF 90 DAYS FROM THE DATE OF SUCH
TERMINATION OF EMPLOYMENT OR SERVICE OR UNTIL THE EXPIRATION OF THE STATED TERM
OF THE OPTION, WHICHEVER PERIOD IS SHORTER.

 

8.12         TERMINATION FOR CAUSE:  IF A HOLDER’S EMPLOYMENT OR SERVICE WITH
THE COMPANY, A SUBSIDIARY OR AFFILIATE IS TERMINATED BY THE COMPANY, THE
SUBSIDIARY OR AFFILIATE FOR CAUSE, ALL UNEXERCISED OPTIONS AWARDED TO THE HOLDER
SHALL TERMINATE ON THE DATE OF SUCH TERMINATION.

 

8.13         TERMINATION FOR OTHER REASON:  IF A HOLDER’S EMPLOYMENT OR SERVICE
WITH THE COMPANY, A SUBSIDIARY OR AFFILIATE TERMINATES FOR ANY REASON NOT
SPECIFIED IN THIS SECTION 8 (INCLUDING VOLUNTARY TERMINATION), ANY UNEXERCISED
OPTION GRANTED TO THE HOLDER MAY THEREAFTER BE EXERCISED BY THE HOLDER (OR,
WHERE APPROPRIATE, THE HOLDER’S TRANSFEREE OR LEGAL REPRESENTATIVE), TO THE
EXTENT IT WAS EXERCISABLE AT THE TIME OF TERMINATION, FOR A PERIOD OF 90 DAYS
FROM THE DATE OF SUCH TERMINATION OF EMPLOYMENT OR SERVICE OR UNTIL THE
EXPIRATION OF THE STATED TERM OF THE OPTION, WHICHEVER PERIOD IS SHORTER.

 

8.14         CONTINUATION OF SERVICE: NOTWITHSTANDING ANYTHING TO THE CONTRARY
IN THIS SECTION 8, A HOLDER’S CESSATION OF SERVICE AS AN EMPLOYEE, DIRECTOR OR
CONSULTANT OTHER THAN FOR CAUSE SHALL NOT BE TREATED AS A TERMINATION UNDER THIS
SECTION 8 IF THE HOLDER CONTINUES WITHOUT INTERRUPTION TO SERVE THEREAFTER IN A
MATERIAL MANNER IN ONE (OR MORE) OF SUCH OTHER CAPACITIES, AS DETERMINED BY THE
COMMITTEE IN ITS SOLE DISCRETION.

 

9.             CHANGES IN CAPITALIZATION; CHANGE OF CONTROL

 

9.1.          IN THE EVENT OF A REORGANIZATION, RECAPITALIZATION, STOCK SPLIT,
SPIN-OFF, SPLIT-OFF, SPLIT-UP, STOCK DIVIDEND, ISSUANCE OF STOCK RIGHTS,
COMBINATION OF SHARES, MERGER, CONSOLIDATION OR ANY OTHER CHANGE IN THE
CORPORATE STRUCTURE OF THE COMPANY AFFECTING COMMON STOCK, OR ANY DISTRIBUTION
TO STOCKHOLDERS OF THE COMPANY OTHER THAN A CASH DIVIDEND, THE BOARD SHALL MAKE
APPROPRIATE ADJUSTMENT IN THE NUMBER AND KIND OF SHARES AUTHORIZED BY THE PLAN
AND ANY OTHER ADJUSTMENTS TO OUTSTANDING AWARDS AS IT DETERMINES APPROPRIATE. 
NO FRACTIONAL SHARES OF COMMON STOCK SHALL BE ISSUED PURSUANT TO SUCH AN
ADJUSTMENT.  THE FAIR MARKET VALUE OF ANY FRACTIONAL SHARES RESULTING FROM
ADJUSTMENTS PURSUANT TO THIS SECTION SHALL, WHERE APPROPRIATE, BE PAID IN CASH
TO THE HOLDER.

 

9.2.          UPON A CHANGE OF CONTROL, THE COMMITTEE SHALL FULLY VEST ALL
AWARDS MADE UNDER THE PLAN.  IN ADDITION, UPON A CHANGE OF CONTROL, THE
COMMITTEE MAY, AT ITS DISCRETION (I) CANCEL ANY OUTSTANDING AWARDS IN EXCHANGE
FOR A CASH PAYMENT OF AN AMOUNT EQUAL TO THE DIFFERENCE BETWEEN THE THEN FAIR
MARKET VALUE OF THE AWARD LESS THE OPTION OR BASE PRICE OF THE AWARD, (II) AFTER
HAVING GIVEN THE AWARD HOLDER A CHANCE TO EXERCISE ANY OUTSTANDING OPTIONS,
TERMINATE ANY OR ALL OF THE AWARD HOLDER’S UNEXERCISED OPTIONS, OR (III) WHERE
THE COMPANY IS NOT THE SURVIVING CORPORATION, CAUSE THE SURVIVING CORPORATION TO
ASSUME OR REPLACE ALL OUTSTANDING AWARDS WITH COMPARABLE AWARDS.

 

9.3.          THE JUDGMENT OF THE COMMITTEE WITH RESPECT TO ANY MATTER REFERRED
TO IN THIS SECTION 9 SHALL BE CONCLUSIVE AND BINDING UPON EACH HOLDER WITHOUT
THE NEED FOR ANY AMENDMENT TO THE PLAN.

 

10.          EFFECTIVE DATE, TERMINATION AND AMENDMENT

 

THE PLAN SHALL BECOME EFFECTIVE ON FEBRUARY 27, 2003, SUBJECT TO SHAREHOLDER
APPROVAL.  OPTIONS GRANTED UNDER THE PLAN PRIOR TO SUCH SHAREHOLDER APPROVAL
SHALL EXPRESSLY NOT BE EXERCISABLE PRIOR TO SUCH APPROVAL.  THE PLAN SHALL
REMAIN IN FULL FORCE AND EFFECT UNTIL THE EARLIER OF TEN YEARS FROM THE DATE OF
ITS ADOPTION BY THE BOARD, OR THE DATE IT IS TERMINATED BY THE BOARD.  THE BOARD
SHALL HAVE THE POWER TO AMEND, SUSPEND OR TERMINATE THE PLAN AT ANY TIME,
PROVIDED THAT NO SUCH AMENDMENT SHALL BE MADE WITHOUT SHAREHOLDER APPROVAL
(EXCEPT AS PROVIDED IN SECTION 9) WHICH SHALL (I) INCREASE  THE TOTAL NUMBER OF
SHARES AVAILABLE FOR ISSUANCE PURSUANT TO THE PLAN; (II) MATERIALLY

 

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INCREASE THE BENEFITS TO PARTICIPANTS, INCLUDING ANY MATERIAL CHANGE TO:
(A) PERMIT A REPRICING (OR DECREASE IN EXERCISE PRICE) OF OUTSTANDING OPTIONS,
(B) REDUCE THE PRICE AT WHICH SHARES OR OPTIONS TO PURCHASE SHARES MAY BE
OFFERED, OR (C) EXTEND THE DURATION OF THE PLAN; (III) CHANGE THE CLASS OF
PARTICIPANTS ELIGIBLE TO BE HOLDERS; (IV) MODIFY THE INDIVIDUAL LIMIT (EXCEPT AS
PROVIDED SECTION 9) OR THE CATEGORIES OF PERFORMANCE GOALS SET FORTH IN
SECTION 4.4; (V) EXPAND THE TYPES OF AWARDS PROVIDED UNDER THE PLAN; OR
(VI) CHANGE THE PROVISIONS OF THIS SECTION 10.  TERMINATION OF THE PLAN PURSUANT
TO THIS SECTION 10 SHALL NOT AFFECT AWARDS OUTSTANDING UNDER THE PLAN AT THE
TIME OF TERMINATION.

 

11.          TRANSFERABILITY

 

EXCEPT AS PROVIDED IN SECTION 8.6 AND THIS SECTION 11, AWARDS MAY NOT BE
PLEDGED, ASSIGNED OR TRANSFERRED FOR ANY REASON DURING THE HOLDER’S LIFETIME,
AND ANY ATTEMPT TO DO SO SHALL BE VOID AND THE RELEVANT AWARD SHALL BE
FORFEITED.  THE COMMITTEE MAY GRANT AWARDS (EXCEPT INCENTIVE STOCK OPTIONS) THAT
ARE TRANSFERABLE BY THE HOLDER DURING HIS LIFETIME, BUT SUCH AWARDS SHALL BE
TRANSFERABLE ONLY TO THE EXTENT SPECIFICALLY PROVIDED IN THE AGREEMENT ENTERED
INTO WITH THE HOLDER.  THE TRANSFEREE OF THE HOLDER SHALL, IN ALL CASES, BE
SUBJECT TO THE PROVISIONS OF THE AGREEMENT BETWEEN THE COMPANY AND THE HOLDER.

 

12.          GENERAL PROVISIONS

 

12.1.        NOTHING CONTAINED IN THE PLAN, OR ANY AWARD GRANTED PURSUANT TO THE
PLAN, SHALL CONFER UPON ANY EMPLOYEE OR CONSULTANT ANY RIGHT WITH RESPECT TO
CONTINUANCE OF EMPLOYMENT OR SERVICE BY THE COMPANY, A SUBSIDIARY OR AFFILIATE,
NOR INTERFERE IN ANY WAY WITH THE RIGHT OF THE COMPANY, A SUBSIDIARY OR
AFFILIATE TO TERMINATE THE EMPLOYMENT OR SERVICE OF ANY EMPLOYEE OR CONSULTANT
AT ANY TIME.

 

12.2.        NOTHING CONTAINED IN THE PLAN, AND NO ACTION TAKEN PURSUANT TO THE
PROVISIONS OF THE PLAN, SHALL CREATE OR SHALL BE CONSTRUED TO CREATE A TRUST OF
ANY KIND, OR A FIDUCIARY RELATIONSHIP BETWEEN THE COMPANY OR ITS SUBSIDIARIES,
OR THEIR OFFICERS OR THE COMMITTEE, ON THE ONE HAND, AND ANY PARTICIPANT, THE
COMPANY, ITS SUBSIDIARIES OR ANY OTHER PERSON OR ENTITY, ON THE OTHER.

 

12.3.        FOR PURPOSES OF THIS PLAN, NEITHER (I) TRANSFER OF EMPLOYMENT
BETWEEN THE COMPANY AND ITS SUBSIDIARIES AND AFFILIATES NOR (II) TRANSFER OF
STATUS FROM EMPLOYEE TO CONSULTANT SHALL BE DEEMED TERMINATION OF EMPLOYMENT.

 

12.4.        HOLDERS SHALL BE RESPONSIBLE TO MAKE APPROPRIATE PROVISION FOR ALL
TAXES REQUIRED TO BE WITHHELD IN CONNECTION WITH ANY AWARD, THE EXERCISE THEREOF
AND THE TRANSFER OF SHARES OF COMMON STOCK PURSUANT TO THIS PLAN.  SUCH
RESPONSIBILITY SHALL EXTEND TO ALL APPLICABLE FEDERAL, STATE, LOCAL OR FOREIGN
WITHHOLDING TAXES.  IN THE CASE OF THE PAYMENT OF AWARDS IN THE FORM OF COMMON
STOCK, OR THE EXERCISE OF OPTIONS, THE COMPANY SHALL HAVE THE RIGHT TO RETAIN
THE NUMBER OF SHARES OF COMMON STOCK WHOSE FAIR MARKET VALUE EQUALS THE AMOUNT
TO BE WITHHELD IN SATISFACTION OF THE APPLICABLE WITHHOLDING TAXES.  AGREEMENTS
EVIDENCING SUCH AWARDS SHALL CONTAIN APPROPRIATE PROVISIONS TO EFFECT
WITHHOLDING IN THIS MANNER.

 

12.5.        WITHOUT AMENDING THE PLAN, AWARDS MAY BE GRANTED TO PARTICIPANTS
WHO ARE FOREIGN NATIONALS OR EMPLOYED OUTSIDE THE UNITED STATES OR BOTH, ON SUCH
TERMS AND CONDITIONS DIFFERENT FROM THOSE SPECIFIED IN THE PLAN AS MAY, IN THE
JUDGMENT OF THE COMMITTEE, BE NECESSARY OR DESIRABLE TO FURTHER THE PURPOSE OF
THE PLAN.

 

12.6.        TO THE EXTENT THAT FEDERAL LAWS (SUCH AS THE 1934 ACT, THE CODE OR
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974) DO NOT OTHERWISE CONTROL,
THE PLAN AND ALL DETERMINATIONS MADE AND ACTIONS TAKEN PURSUANT HERETO SHALL BE
GOVERNED BY THE LAW OF THE STATE OF DELAWARE AND CONSTRUED ACCORDINGLY.

 

12.7.        THE COMMITTEE MAY AMEND ANY OUTSTANDING AWARDS TO THE EXTENT IT
DEEMS APPROPRIATE; PROVIDED, HOWEVER, EXCEPT AS PROVIDED IN SECTION 9, NO AWARD
MAY BE REPRICED, REPLACED, REGRANTED THROUGH CANCELLATION, OR MODIFIED WITHOUT
SHAREHOLDER APPROVAL IF THE EFFECT WOULD BE TO REDUCE THE EXERCISE PRICE FOR

 

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THE SHARES UNDERLYING THE AWARD.  THE COMMITTEE MAY AMEND AWARDS WITHOUT THE
CONSENT OF THE HOLDER, EXCEPT IN THE CASE OF AMENDMENTS ADVERSE TO THE HOLDER,
IN WHICH CASE THE HOLDER’S CONSENT IS REQUIRED TO ANY SUCH AMENDMENT.

 

Notwithstanding any other provision of the Plan to the contrary, upon approval
of the Company’s stockholders, the Committee may provide for, and the Company
may implement, a one-time-only option exchange offer, pursuant to which certain
outstanding Options could, at the election of the person holding such Option, be
tendered to the Company for cancellation in exchange for the issuance of a
lesser amount of Options with a lower exercise price, provided that such
one-time-only option exchange offer is commenced within six months of the date
of such stockholder approval.

 

12.8.        ALL SHARES OF COMMON STOCK PURCHASED UPON THE EXERCISE OF AN OPTION
OR ISSUED PURSUANT TO AN AWARD OF DEFERRED STOCK OR RESTRICTED STOCK SHALL BE
SUBJECT TO RESTRICTIONS ON TRANSFER PURSUANT TO APPLICABLE SECURITIES LAWS AND
SUCH OTHER AGREEMENTS AS THE COMMITTEE SHALL DEEM APPROPRIATE AND SHALL BEAR A
LEGEND SUBJECTING SUCH SHARES TO THOSE RESTRICTIONS ON TRANSFER IN ACCORDANCE
WITH THE APPLICABLE AWARD.  THE CERTIFICATES SHALL ALSO BEAR A LEGEND REFERRING
TO ANY RESTRICTIONS ON TRANSFER ARISING HEREUNDER OR UNDER ANY OTHER APPLICABLE
LAW, REGULATION, RULE OR AGREEMENT.

 

12.9.        THE PLAN AND EACH AWARD UNDER THE PLAN SHALL BE SUBJECT TO THE
REQUIREMENT THAT IF AT ANY TIME THE COMMITTEE SHALL DETERMINE THAT (I) THE
LISTING, REGISTRATION OR QUALIFICATION OF THE SHARES OF COMMON STOCK PURCHASED
UPON THE EXERCISE OF AN OPTION OR ISSUED PURSUANT TO AN AWARD OF DEFERRED STOCK
OR RESTRICTED STOCK UPON ANY SECURITIES EXCHANGE OR UNDER ANY STATE OR FEDERAL
LAW, (II) THE CONSENT OR APPROVAL OF ANY GOVERNMENT REGULATORY BODY OR (III) AN
AGREEMENT BY THE RECIPIENT OF AN AWARD WITH RESPECT TO THE DISPOSITION OF SUCH
SHARES IS NECESSARY OR DESIRABLE AS A CONDITION OF, OR IN CONNECTION WITH, THE
PLAN OR THE GRANTING OF SUCH AWARD OR THE ISSUE OR PURCHASE OF SUCH SHARES
THEREUNDER, THE AWARD MAY NOT BE CONSUMMATED IN WHOLE OR IN PART UNTIL SUCH
LISTING, REGISTRATION, QUALIFICATION, CONSENT, APPROVAL OR AGREEMENT SHALL HAVE
BEEN EFFECTED OR OBTAINED FREE OF ANY CONDITIONS NOT ACCEPTABLE TO THE
COMMITTEE.

 

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