Exhibit 10.1

EGALET CORPORATION

 

2013 STOCK-BASED

INCENTIVE COMPENSATION PLAN

 

(as amended and restated effective April 5, 2018)

 

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EGALET CORPORATION

2013 STOCK-BASED

INCENTIVE COMPENSATION PLAN

(as amended and restated effective April 5, 2018)

 

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
Non-Employee Directors by offering them a greater stake in the Company’s success
and a closer identity with it, and to encourage ownership of the Company’s stock
by such Employees, Consultants and Non-Employee Directors.

 

2.         Definitions

 

As used herein, the following definitions shall apply:

 

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 a grant of Common Stock, Deferred Stock, Restricted
Stock, Restricted Stock Units, Options or SARs under the Plan.

 

2.3.      “Award Agreement” means the written agreement, instrument or document
evidencing an Award, including any such item in an electronic medium.

 

2.4.      “Board” means the Board of Directors of the Company.

 

2.5.      “Change in Control” means, after the Effective Date (and not including
the public offering of the Company, which shall not be treated as a Change in
Control for purposes of the Plan), any of the following events:

 

 

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(a)        a “person” (as such term in used in Sections 13(d) and 14(d) of the
1934 Act), other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, is or becomes the
“beneficial owner” (as defined in Rule 13D-3 under the 1934 Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the combined voting power of the Company’s then outstanding securities;
or

 

(b)        during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board and any new director (other than a
director designated by a person who has entered into an agreement with the
Company to effect a transaction described in Section 2.5(a), Section 2.5(c) or
Section 2.5(d) hereof) whose election by the Board or nomination for election by
the Company’s stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously approved,
cease for any reason to constitute a majority thereof; or

 

(c)        the Company merges or consolidates with any other corporation, other
than in a merger or consolidation that would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least fifty percent (50%) of the combined voting power
of the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or

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(d)        the complete liquidation of the Company or the sale or other
disposition of all or substantially all of the Company’s assets.

 

(e)       Notwithstanding anything in the Plan or an Award Agreement to the
contrary, if an Award is subject to Section 409A of the Code, no event that, but
for this Section, would be a Change in Control as defined in the Plan or the
Award Agreement, as applicable, shall be a Change in Control unless such event
is also a “change in control event” as defined in Section 409A of the Code.

 

2.6.      “Code” means the Internal Revenue Code of 1986, as amended, and the
Treasury regulations promulgated thereunder.  A reference to any provision of
the Code or the Treasury regulations promulgated thereunder shall include
reference to any successor provision of the Code or the Treasury regulations.

 

2.7.      “Committee” means the committee designated by the Board to administer
the Plan under Section 4.  The Committee shall have at least two members and
each member of the Committee shall be a Non-Employee Director, an Outside
Director and an “independent director” within the meaning of Rule 5605(a)(2) of
the NASDAQ Stock Market Equity Rules.

 

2.8.      “Common Stock” means the common stock of the Company, par value $0.001
per share, or such other class or kind of shares or other securities resulting
from the application of Section 13.

 

2.9.      “Company” means Egalet Corporation, a Delaware corporation, or any
successor corporation.

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2.10.    “Consultant” means an individual who renders services to the Company, a
Subsidiary or an Affiliate as a consultant, advisor or independent contractor.

 

2.11.    “Deferral Period” means the period during which the receipt of a
Deferred Stock Award under Section 7 will be deferred.

 

2.12.    “Deferred Stock” means Common Stock to be delivered at the end of a
Deferral Period and awarded by the Committee under Section 7.

 

2.13.    “Effective Date” has the meaning set forth in Section 25.

 

2.14.    “Employee” means an individual, including an officer or director, who
is employed by the Company, a Subsidiary or an Affiliate.

 

2.15.    “Fair Market Value” means the fair market value of Common Stock
determined by such methods or procedures as shall be established from time to
time by the Committee in good faith and in accordance with applicable
law.  Unless otherwise determined by the Committee, the Fair Market Value of
Common Stock shall mean, on any given date, the closing price of a share of
Common Stock on the principal national securities exchange on which the Common
Stock is listed on such date or, if Common Stock was not traded on such date, on
the last preceding day on which the Common Stock was traded.

 

2.16.    “Incentive Stock Option” means an Option or a portion thereof 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 in the applicable Award
Agreement.

 

2.17.    “1934 Act” means the Securities Exchange Act of 1934, as amended, and
the rules promulgated thereunder.  A reference to any provision of the 1934 Act
or rule promulgated under the 1934 Act shall include reference to any successor
provision or rule.

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2.18.    “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.

 

2.19.    “Non-Qualified Option” means an Option or a portion thereof not
intended to be an Incentive Stock Option and designated as a Non-Qualified
Option in the applicable Award Agreement.

 

2.20.    “Option” means a right to purchase a specified number of shares of
Common Stock at a specified price awarded by the Committee under Section 6 of
the Plan.

 

2.21.    “Outside Director” means a member of the Board who meets the definition
of an “outside director” under Section 162(m) of the Code.

 

2.22.    “Participant” means any Employee, Consultant or Non-Employee Director
who receives an Award.

 

2.23.    “Performance Cycle” means the period selected by the Committee during
which the performance of the Company, any Subsidiary, any Affiliate or any
business unit thereof, or any individual is measured for the purpose of
determining the extent to which a Performance Goal has been achieved.

 

2.24.    “Performance Goal” means a goal that must be met by the end of a period
specified by the Committee (but that is substantially uncertain of being met
before the grant of the Award) and that, in the case of Qualified
Performance-Based Awards, must be based upon any one or more of the following as
they relate to the Company, its Subsidiaries or Affiliates (or any business unit
or department thereof): (i) stock price, (ii) market share, (iii) sales, (iv)
earnings per share, (v) diluted earnings per share, (vi) diluted net income per
share,

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(vii) return on shareholder equity, (viii) costs, (ix) cash flow, (x) return on
total assets, (xi) return on capital or invested capital, (xii) return on net
assets, (xiii) operating income, (xiv) net income, (xv) earnings (or net income)
before interest, taxes, depreciation and amortization, (xvi) improvements in
capital structure, (xvii) gross, operating or other margins, (xviii) budget and
expense management, (xix) productivity ratios, (xx) working capital targets,
(xxi) enterprise value, (xxii) safety record, (xxiii) completion of acquisitions
or business expansion of the company, our subsidiaries or affiliates (or any
business unit or department thereof) (xxiv) economic value added or other value
added measurements, (xxv) expenses targets, (xxvi) operating efficiency,
 (xxvii) regulatory body approvals for commercialization of products,  (xxviii)
implementation or completion of critical projects or related milestones
(including, without limitation, milestones such as clinical trial enrollment
targets, commencement of phases of clinical trials and completion of phases of
clinical trials) or (xxix) partnering or similar transactions, in all cases,
whether measured absolutely or relative to an index or peer group.  The
Committee shall have discretion to determine the specific targets with respect
to each of these categories of Performance Goals.  Performance Goals with
respect to Awards that are not intended to be Qualified Performance-Based Awards
may be based on one or more of the preceding measures or any other measure that
the Committee may determine in its sole discretion.  If the Committee determines
that a change in the business, operations, corporate structure or capital
structure of the Company, or the manner in which it conducts its business, or
other events or circumstances render the Performance Goals unsuitable, the
Committee may modify such Performance Goals or the related minimum acceptable
level of achievement, in whole or in part, as the Committee deems appropriate
and equitable.

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2.25.    “Plan” means the Egalet Corporation 2013 Stock-Based Incentive
Compensation Plan herein set forth, as amended and/or restated from time to
time.

 

2.26.    “Qualified Performance-Based Award” means an Award or portion of an
Award that is intended to satisfy the requirements for “qualified
performance-based compensation” under Section 162(m) of the Code.

 

2.27.    “Restricted Stock” means Common Stock awarded by the Committee under
Section 8 of the Plan.

 

2.28.    “Restricted Stock Unit” means the right to a payment in Common Stock or
in cash, or in a combination thereof, awarded by the Committee under Section 9
of the Plan.

 

2.29.  “Restriction Period” means the period during which Restricted Stock
awarded under Section 8 of the Plan and Restricted Stock Units awarded under
Section 9 of the Plan are subject to forfeiture.

 

2.30.    “SAR” means a stock appreciation right awarded by the Committee under
Section 11 of the Plan.

 

2.31.    “Subsidiary” means any corporation (other than the Company),
partnership, joint venture or other business entity of which 50% or more of the
outstanding voting power is beneficially owned, directly or indirectly, by the
Company.

 

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.

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3.         Eligibility

 

Any Employee, Consultant or Non-Employee Director is eligible to receive an
Award.

 

4.         Administration and Implementation of Plan

 

4.1.      The Plan shall be administered by the Committee.  Any action of the
Committee in administering the Plan shall be final, conclusive and binding on
all persons, including the Company, its Subsidiaries and Affiliates, their
Employees, Consultants and directors, Participants, persons claiming rights from
or through Participants and stockholders of the Company.  No member of the
Committee shall be personally liable for any action, determination, or
interpretation taken or made in good faith by the Committee with respect to the
Plan or any Awards granted hereunder, and all members of the Committee shall be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.

 

4.2.      Subject to the provisions of the Plan, the Committee shall have full
and final authority in its discretion (a) to select the Employees, Consultants
and Non-Employee Directors who will receive Awards pursuant to the Plan, (b) to
determine the type or types of Awards to be granted to each Participant, (c) to
determine the number of shares of Common Stock to which an Award will relate,
the terms and conditions of any Award granted under the Plan (including, but not
limited to, restrictions as to vesting, transferability or forfeiture,
exercisability or settlement of an Award and waivers or accelerations thereof,
and waivers of or modifications to performance conditions relating to an Award,
based in each case on such considerations as the Committee shall determine) and
all other matters to be determined in

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connection with an Award; (d) to determine whether, to what extent, and under
what circumstances an Award may be canceled, forfeited, or surrendered; (e) to
determine whether, and to certify that, Performance Goals to which the
settlement of an Award is subject are satisfied; (f) to correct any defect or
supply any omission or reconcile any inconsistency in the Plan, and to adopt,
amend and rescind such rules and regulations as, in its opinion, may be
advisable in the administration of the Plan; and (g) to construe and interpret
the Plan and to make all other determinations as it may deem necessary or
advisable for the administration of the Plan.

 

4.3.      The Committee’s powers shall also include responsibility to determine
the effect, if any, of a Change in Control of the Company upon outstanding
Awards.  Upon a Change in Control, the Committee may, at its discretion, (i)
fully vest any or all Awards made under the Plan, (ii) determine whether all
applicable Performance Goals have been achieved and the applicable level of
performance, (iii) cancel any outstanding Awards in exchange for a cash payment
of an amount (including zero) equal to the difference between the then Fair
Market Value of the Award less the option or base price of the Award, (iv) after
having given the Participant a reasonable chance to exercise any vested
outstanding Options or SARs, terminate any or all of the Participant’s
unexercised Options or SARs, (v) where the Company is not the surviving
corporation, cause the surviving corporation to assume all outstanding Awards or
replace all outstanding Awards with comparable awards or (vi) take such other
action as the Committee shall determine to be appropriate.

 

4.4.      The Committee may impose on any Award or the exercise thereof, at the
date of grant or thereafter, such terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in

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the event of the Participant’s termination of employment or service with the
Company or any Subsidiary or Affiliate; provided, however, that the Committee
shall retain full power to accelerate or waive any such term or condition as it
may have previously imposed, including, without limitation, any minimum vesting
period.  All Awards shall be evidenced by an Award Agreement.  The right of a
Participant to exercise or receive a grant or settlement of any Award, and the
timing thereof, may be subject to such Performance Goals as may be specified by
the Committee.

 

4.5.      To the extent permitted by applicable law, the Committee may delegate
some or all of its authority with respect to the Plan and Awards to any
executive officer of the Company or any other person or persons designated by
the Committee, in each case, acting individually or as a committee, provided
that the Committee may not delegate its authority hereunder to make awards to
Employees who are (i) “officers” as defined in Rule 16a-1(f) under the 1934 Act,
(ii) “covered employees” within the meaning of Section 162(m) of the Code or
(iii) officers or other Employees who are delegated authority by the Committee
pursuant to this Section.  Any delegation hereunder shall be subject to the
restrictions and limits that the Committee specifies at the time of such
delegation or thereafter.  The Committee may at any time rescind the authority
delegated to any person pursuant to this Section.  Any action undertaken by any
such person or persons in accordance with the Committee’s delegation of
authority pursuant to this Section shall have the same force and effect as if
undertaken directly by the Committee.

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5.         Shares of Stock Subject to the Plan

 

5.1.      Subject to adjustment as provided in Section 13, the total number of
shares of Common Stock available for Awards under the Plan shall be 6,280,000.

 

5.2.      Subject to adjustment as provided in Section 13, (i) the maximum
number of shares of Common Stock available for Awards that are intended to be
Incentive Stock Options shall not exceed 6,280,000 and (ii) the maximum number
of shares of Common Stock available for Awards that may be granted to any
individual Participant shall not exceed 1,840,000 during any calendar year.

 

5.3.      If any shares subject to an Award are forfeited or such Award
otherwise terminates, any shares counted against the number of shares available
for issuance pursuant to the Plan with respect to such Award shall, to the
extent of any such forfeiture or termination, again be available for Awards
under the Plan; provided, however, that the Committee may adopt procedures for
the counting of shares relating to any Award to ensure appropriate counting,
avoid double counting, and provide for adjustments in any case in which the
number of shares actually distributed differs from the number of shares
previously counted in connection with such Award.  SARs or Restricted Stock
Units to be settled in shares of Common Stock shall be counted in full against
the number of shares available for award under the Plan, regardless of the
number of shares of Common Stock issued upon settlement of the SAR or Restricted
Stock Unit.  If any shares subject to an Award are retained or reacquired by the
Company in payment of an exercise price or satisfaction of a withholding or
other tax obligation in connection with any Award, such shares shall not be made
available for future Awards under the Plan.

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5.4.      Any shares issued hereunder may consist, in whole or in part, of
authorized and unissued shares or treasury shares.  Any shares issued by the
Company through the assumption or substitution of outstanding grants in
connection with the acquisition of another entity shall not reduce the maximum
number of shares available for delivery under the Plan.

 

6.         Common Stock

 

An Award of Common Stock is a grant by the Company of a specified number of
shares of Common Stock to the Participant, which shares are not subject to
forfeiture except as set forth in Section 21.  Upon the Award of Common Stock,
the Committee may direct the number of shares of Common Stock subject to such
Award be issued to the Participant, designating the Participant as the
registered owner.  The Participant shall have all of the customary rights of a
stockholder with respect to the Award of Common Stock, including the right to
vote shares of the Common Stock and receive dividends with respect to the Common
Stock.

 

7.         Deferred Stock

 

An Award of Deferred Stock is an agreement by the Company to deliver to the
Participant 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:

 

7.1.      Upon the Award of Deferred Stock, the Committee shall direct that the
number of shares subject to such Award be credited to the Participant’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 the Award Agreement.  Prior to
issuance and delivery of the Deferred Stock,

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the Participant shall have no rights as a stockholder with respect to any shares
of Deferred Stock credited to the Participant's account.

 

7.2.      During the Deferral Period, no dividend shall be paid with respect to
shares covered by a Deferred Stock Award and the Participant shall have no
future right to any dividend paid during the Deferral Period.

 

7.3.      The Deferral Period may consist of one or more installments.  Provided
that the Deferred Stock has not been previously forfeited, at the end of the
Deferral Period or any installment thereof, the shares of Deferred Stock
applicable to such installment, shall be issued and delivered to the Participant
(or, where appropriate, the Participant’s legal representative) in accordance
with the terms of the Award Agreement.  Subject to the Committee’s authority
under Sections 4.3 and 4.4 to accelerate the vesting of Awards, the Deferral
Period with respect to Deferred Stock granted to a Participant other than a
Non-Employee Director shall commence on the date of grant and end no earlier
than four years following the date of grant; provided that the Deferral Period
may end for up to one-quarter of the shares of Deferred Stock on each
anniversary of the date of grant; further provided that the Deferral Period for
Deferred Stock that vests based on the achievement of specified Performance
Goals shall end no earlier than one year following the date of grant.

 

8.         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:

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8.1.      Upon the Award of Restricted Stock, the Committee may direct the
number of shares of Common Stock subject to such Award be issued to the
Participant or placed in a restricted stock account (including an electronic
account) with the transfer agent and in either case designating the Participant
as the registered owner.  The certificate(s), if any, representing such shares
shall be physically or electronically legended, as applicable, as to sale,
transfer, assignment, pledge or other encumbrances during the Restriction Period
and, if issued to the Participant, returned to the Company to be held in escrow
during the Restriction Period.  In all cases, the Participant shall sign a stock
power endorsed in blank to the Company to be held in escrow during the
Restriction Period.

 

8.2.      During the Restriction Period, the Participant shall have the right to
vote shares of Restricted Stock.  During the Restriction Period, no dividend
shall be paid with respect to the number of shares covered by a Restricted Stock
Award and the Participant shall have no future right to any dividend paid during
the Restriction Period.

 

8.3.      Provided that the Restricted Stock has not been previously forfeited,
at the end of the Restriction Period the restrictions imposed under the Award
Agreement shall lapse with respect to the number of shares specified thereunder,
and the legend, if any, imposed hereunder shall be removed and such number of
shares delivered to the Participant (or, where appropriate, the Participant's
legal representative).

 

8.4.      Subject to the Committee’s authority under Sections 4.3 and 4.4 to
accelerate the vesting of Awards, the Restriction Period with respect to
Restricted Stock granted to a Participant other than a Non-Employee Director
shall commence on the date of grant and end no earlier than four years following
the date of grant; provided that the Restriction Period

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may end for up to one-quarter of the shares of Restricted Stock on each
anniversary of the date of grant; further provided that the Restriction Period
for Restricted Stock that vests based on the achievement of specified
Performance Goals shall end no earlier than one year following the date of
grant.

 

9.         Restricted Stock Units

 

An Award of Restricted Stock Units is a grant by the Company of the right to
receive a payment in Common Stock or in cash, or in a combination thereof, that
is equal to the Fair Market Value of a share of Common Stock as of the date of
vesting or payment, as set forth in the applicable Award Agreement, which right
is subject to forfeiture upon the happening of specified events. Such an Award
shall be subject to the following terms and conditions:

 

9.1.      Any amount payable upon the end of the Restriction Period with respect
to a Restricted Stock Unit shall be paid by the Company in shares of Common
Stock, in cash or in a combination of shares of Common Stock and cash, as
determined by the Committee in its sole discretion or as set forth in the Award
Agreement.

 

9.2.      Provided that the Restricted Stock Units have not been previously
forfeited, at the end of the Restriction Period the restrictions imposed under
the Award Agreement shall lapse with respect to the number of Restricted Stock
Units specified thereunder, and shares of Common Stock or cash with a value
equal to the Fair Market Value of the shares of Common Stock underlying such
Restricted Stock Units shall be delivered to the Participant (or, where
appropriate, the Participant's legal representative).

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9.3.      Subject to the Committee’s authority under Sections 4.3 and 4.4 to
accelerate the vesting of Awards, the Restriction Period with respect to
Restricted Stock Units granted to a Participant other than a Non-Employee
Director shall commence on the date of grant and end no earlier than four years
following the date of grant; provided that the Restriction Period may end for up
to one-quarter of the Restricted Stock Units on each anniversary of the date of
grant; further provided that the Restriction Period for Restricted Stock Units
that vest based on the achievement of specified Performance Goals shall end no
earlier than one year following the date of grant.

 

10.       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:

 

10.1.    Option Price:  The price per share at which Common Stock may be
purchased upon exercise of an Option shall be determined by the Committee, but
shall be not less than 100% of the Fair Market Value of a share of Common Stock
on the date of grant (or 110% of such Fair Market Value in the case of an
Incentive Stock Option granted to a Ten Percent Shareholder), unless the Option
was granted through the assumption of, or in substitution for, outstanding
awards previously granted by an entity acquired by the Company or any Subsidiary
or Affiliate or with which the Company or any Subsidiary or Affiliate combines.

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10.2.    Term of Options:  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).

 

10.3.    Incentive Stock Options:  Each provision of the Plan and each Award
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 an Award Agreement that cannot be so
construed shall be disregarded.  In no event may a Participant be granted an
Incentive Stock Option which does not comply with the grant and vesting
limitations prescribed by Section 422(b) of the Code.  Incentive Stock Options
may not be granted to Employees of Affiliates or to Consultants or Non-Employee
Directors.

 

10.4.    Payment of Option Price:  The option price of the shares of Common
Stock received upon the exercise of an Option shall be paid within three days of
the date of exercise: (i) in cash, or (ii) with the proceeds received from a
broker-dealer whom the Participant has authorized to sell all or a portion of
the Common Stock covered by the Option, or (iii) with the consent of the
Committee, in whole or in part in Common Stock held by the Participant and
valued at Fair Market Value on the date of exercise.  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 held by the Participant and valued at Fair
Market Value on the date the Option is exercised.  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.  An
Option may be exercised only for a whole number of shares of Common Stock.

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10.5.    Minimum Vesting Period for Options:  Subject to the Committee’s
authority under Sections 4.3 and 4.4 to accelerate the vesting of Awards, the
minimum vesting period for an Option granted to a participant other than a
Non-Employee Director shall be four years from the date of grant; provided that
an Option may vest and become exercisable for up to one-quarter of the shares of
Common Stock underlying the Option on the first anniversary of the date of grant
and for up to 1/48 of the Shares of Common Stock underlying the Option each
month thereafter; further provided that an Option that vests based on the
achievement of specified Performance Goals may vest and become exercisable for
the shares of Common Stock underlying the Option at any time on or after the
first anniversary of the date of grant. Notwithstanding the foregoing, a
Participant who is subject to Section 16 of the 1934 Act may direct the Company
to withhold Shares otherwise to be delivered upon the exercise of an Award in
order to pay the exercise price due on such Award.

 

11.       Stock Appreciation Rights

 

SARs give the Participant the right to receive, upon exercise of the SAR, the
excess of (i) the Fair Market Value of one share of Common Stock on the date of
exercise over (ii) the grant price of the SAR as determined by the Committee,
but which may never be less than 100% of the Fair Market Value of a share of
Common Stock on the date of grant.  The grant of SARs shall be subject to the
following terms and conditions:

 

11.1.    The term of a SAR shall in no event be greater than ten years.

 

11.2.    The Committee shall determine the time or times at which a SAR may be
exercised in whole or in part, the method of exercise, the method of settlement,
form of consideration payable in settlement, method by which Common Stock will
be delivered or

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deemed to be delivered to Participants, whether or not a SAR shall be in tandem
with any other Award, and any other terms and conditions of any SAR.

 

11.3.    Subject to the Committee’s authority under Sections 4.3 and 4.4 to
accelerate the vesting of Awards, the minimum vesting period for a SAR granted
to a Participant other than a Non-Employee Director shall be four years from the
date of grant; provided that a SAR may vest and become exercisable for up to
one-quarter of the shares of Common Stock underlying the SAR on each anniversary
of the date of grant; further provided that a SAR that vests based on the
achievement of specified Performance Goals may vest and become exercisable for
the shares of Common Stock underlying the SAR at any time on or after the first
anniversary of the date of grant.

 

11.4.    The Committee may provide that a SAR shall be deemed to be exercised at
the close of business on the scheduled expiration date of such SAR.

 

12.       Qualified Performance-Based Awards.

 

To the extent the Committee determines, in its sole discretion, that it is
necessary or advisable in order to comply with the deductibility limitations of
Section 162(m) of the Code applicable to Qualified Performance-Based Awards, the
following rules shall apply:

 

12.1.    Only an Employee who is a  “covered employee” within the meaning of
Section 162(m) of the Code shall be eligible to receive Qualified
Performance-Based Awards.  The Committee shall designate in its sole discretion
which covered employees will be Participants for a Performance Cycle within the
earlier of (i) the first 90 days of a Performance Cycle and (ii) the lapse of
25% of the Performance Cycle.

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12.2.    The Committee shall establish in writing within the earlier of (i) the
first 90 days of a Performance Cycle and (ii) the lapse of 25% of the
Performance Cycle, and in any event, while the outcome is substantially
uncertain, (A) Performance Goals for the Performance Cycle, and (B) in respect
of such Performance Goals, a minimum acceptable level of achievement below which
no payment will be made or no Award shall vest or become exercisable, and an
objective formula or other method for determining the amount of any payment to
be made or the extent to which an Award hereunder shall vest or become
exercisable if performance is at or above such minimum acceptable level but
falls short of the maximum achievement of the specified Performance Goals.

 

12.3.    Following the completion of a Performance Cycle, the Committee shall
review and certify in writing whether, and to what extent, the Performance Goals
for the Performance Cycle have been achieved and, if so, to also calculate and
certify in writing the amount of the Qualified Performance-Based Awards earned
for the Performance Cycle based upon the Performance Goals and the related
formulas or methods as determined pursuant to Section 12.2.  The Committee shall
then determine the actual amount payable or the extent to which an Award is
vested or exercisable as a result of attainment of such Performance Goals under
each Participant’s Award for the Performance Cycle, and, in doing so, may reduce
or eliminate, except as otherwise provided in the Award Agreement, the amount of
the Award.  In no event shall the Committee have the authority to increase Award
amounts to any covered employee under a Qualified Performance-Based Award.

 

12.4.    A Qualified Performance-Based Award granted, vesting or becoming
exercisable with respect to a Performance Cycle shall be paid (unless such Award
is

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subject to the Participant’s exercise, which exercise such Participant has not
effectuated) as soon as practicable following completion of the certification
described in Section 12.3 but in no event later than December 31 of the year
following the year in which the applicable Performance Cycle ends.

 

13.       Adjustments upon Changes in Capitalization

 

13.1.    In order to prevent dilution or enlargement of the rights of
Participants under the Plan as a result of any stock dividend, recapitalization,
forward stock split or reverse stock split, reorganization, division, merger,
consolidation, spin-off, combination, repurchase or share exchange,
extraordinary or unusual cash distribution or other similar corporate
transaction or event that affects the Common Stock, the Committee shall adjust
(i) the number and kind of shares of Common Stock which may thereafter be issued
in connection with Awards, (ii) the number and kind of shares of Common Stock
issuable in respect of outstanding Awards, (iii) the aggregate number and kind
of shares of Common Stock available under the Plan, and (iv) the exercise or
grant price relating to any Award.  Any such adjustment shall be made in an
equitable manner which reflects the effect of such transaction or event.  It is
provided, however, that in the case of any such transaction or event, the
Committee may make any additional adjustments to the items in (i) through (iv)
above which it deems appropriate in the circumstances, or make provision for a
cash payment with respect to any outstanding Award; and it is provided, further,
that no adjustment shall be made under this Section that would cause the Plan to
violate Section 422 of the Code with respect to Incentive Stock Options or that
would adversely affect the status of any Award that is “performance-based
compensation” under Section 162(m) of the Code.

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13.2.    In addition, the Committee is authorized to make adjustments in the
terms and conditions of, and the criteria included in, Awards, including any
Performance Goals, in recognition of unusual or nonrecurring events (including,
without limitation, events described in Section 13.1) affecting the Company, any
Subsidiary or Affiliate, or in response to changes in applicable laws,
regulations, or accounting principles.  Notwithstanding the foregoing, no
adjustment shall be made in any outstanding Awards to the extent that such
adjustment would adversely affect the intended status of the Award as
“performance-based compensation” under Section 162(m) of the Code.

 

14.       Termination and Amendment

 

14.1.    The Board may amend, alter, suspend, discontinue, or terminate the Plan
without the consent of the Company’s stockholders or Participants, except that
any such amendment, alteration, suspension, discontinuation, or termination
shall be subject to the approval of the Company’s stockholders if (i) such
action would increase the number of shares subject to the Plan, (ii) such action
results in the repricing, replacement or repurchase of any Option, SAR  or other
Award, or (iii) such stockholder approval is required by any federal or state
law or regulation or the rules of any stock exchange or automated quotation
system on which the Common Stock may then be listed or quoted, in each case,
except as provided in Section 13.1; provided, however, that without the consent
of an affected Participant, no amendment, alteration, suspension,
discontinuation, or termination of the Plan may materially and adversely affect
the rights of such Participant under any Award theretofore granted and any Award
Agreement relating thereto, except as the Committee determines in its sole
discretion to be necessary or advisable to ensure a deduction under Section
162(m) of the Code or to comply

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with Section 409A of the Code or an exemption therefrom.  The Committee may
waive any conditions or rights under, or amend, alter, suspend, discontinue, or
terminate, any Award theretofore granted and any Award Agreement relating
thereto; provided, however, that without the consent of an affected Participant,
no such amendment, alteration, suspension, discontinuation, or termination of
any Award may materially and adversely affect the rights of such Participant
under such Award, except as the Committee determines in its sole discretion to
be necessary or advisable to ensure a deduction under Section 162(m) of the Code
or to comply with Section 409A of the Code or an exemption therefrom.

 

14.2.    The foregoing notwithstanding, any Performance Goal or other
performance condition specified in connection with an Award shall not be deemed
a fixed contractual term, but shall remain subject to adjustment by the
Committee, in its discretion at any time in view of the Committee’s assessment
of the Company’s strategy, performance of comparable companies, and other
circumstances, except to the extent that any such adjustment to a performance
condition would adversely affect the intended status of an  Award as
“performance-based compensation” under Section 162(m) of the Code.

 

15.       No Right to Award, Employment or Service

 

Neither the Plan nor any action taken hereunder shall be construed as giving any
Employee, Consultant or Non-Employee Director any right to be retained in the
employ or service of the Company, any Subsidiary or Affiliate.  For purposes of
the Plan, transfer of employment or service between the Company and its
Subsidiaries and Affiliates shall not be deemed a termination of employment or
service.

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16.       Taxes

 

The Company, any Subsidiary or Affiliate is authorized to withhold from any
payment relating to an Award under the Plan, including from a distribution of
Common Stock or any payroll or other payment to a Participant amounts of
withholding and other taxes due in connection with any transaction involving an
Award, and to take such other action as the Committee may deem advisable to
enable the Company, the Subsidiary or Affiliate and Participants to satisfy
obligations for the payment of withholding taxes and other tax obligations
relating to any Award.  This authority shall include authority to withhold or
receive Common Stock or other property and to make cash payments in respect
thereof in satisfaction of a Participant’s tax obligations.  Withholding of
taxes in the form of shares of Common Stock shall not occur at a rate that
exceeds the minimum required statutory federal and state withholding
rates.  Participants who are subject to the reporting requirements of Section 16
of the 1934 Act may elect to pay all or a portion of any withholding or other
taxes due in connection with an Award by directing the Company to withhold
shares of Common Stock that would otherwise be received in connection with such
Award.

 

17.       Limits on Transferability; Beneficiaries

 

No Award or other right or interest of a Participant under the Plan shall be
pledged, encumbered, or hypothecated to, or in favor of, or subject to any lien,
obligation, or liability of such Participant to, any party, other than the
Company, any Subsidiary or Affiliate, or assigned or transferred by such
Participant otherwise than by will or the laws of descent and distribution, and
such Awards and rights shall be exercisable during the lifetime of the
Participant only by the Participant or his or her guardian or legal
representative.

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Notwithstanding the foregoing, the Committee may, in its discretion, provide
that Awards or other rights or interests of a Participant granted pursuant to
the Plan (other than an Incentive Stock Option) be transferable, without
consideration, to immediate family members (i.e., children, grandchildren or
spouse), to trusts for the benefit of such immediate family members and to
partnerships in which such family members are the only partners.  The Committee
may attach to such transferability feature such terms and conditions as it deems
advisable.  In addition, a Participant may, in the manner established by the
Committee, designate a beneficiary (which may be a person or a trust) to
exercise the rights of the Participant, and to receive any distribution, with
respect to any Award upon the death of the Participant.  A beneficiary,
guardian, legal representative or other person claiming any rights under the
Plan from or through any Participant shall be subject to all terms and
conditions of the Plan and any Award Agreement applicable to such Participant,
except as otherwise determined by the Committee, and to any additional
restrictions deemed necessary or appropriate by the Committee.

 

18.       No Rights to Awards; No Stockholder Rights

 

No Participant shall have any claim to be granted any Award under the Plan, and
there is no obligation for uniformity of treatment of Participants.  No Award
shall confer on any Participant any of the rights of a stockholder of the
Company unless and until Common Stock is duly issued or transferred to the
Participant in accordance with the terms of the Award.

 

19.       Foreign Nationals.

 

Without amending the Plan, Awards may be granted to Employees, Consultants and
Non-Employee Directors who are foreign nationals or are employed or providing
services outside the United States or both, on such terms and conditions
different from those specified in

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the Plan as may, in the judgment of the Committee, be necessary or desirable to
further the purpose of the Plan.  Moreover, the Committee may approve such
supplements to, or amendments, restatements or alternative versions of, the Plan
as it may consider necessary or appropriate for such purposes without thereby
affecting the terms of the Plan as in effect for any other purpose, provided
that no such supplements, amendments, restatements or alternative versions shall
include any provisions that are inconsistent with the terms of the Plan, as then
in effect, unless the Plan could have been amended to eliminate such
inconsistency without further approval by the stockholders of the Company.

 

20.       Securities Law Requirements

 

20.1.    No Award granted hereunder shall be exercisable if the Company shall at
any time determine that (a) the listing upon any securities exchange,
registration or qualification under any state or federal law of any Common Stock
otherwise deliverable upon such exercise, or (b) the consent or approval of any
regulatory body or the satisfaction of withholding tax or other withholding
liabilities, is necessary or appropriate in connection with such exercise.  In
any of the events referred to in clause (a) or clause (b) above, the
exercisability of such Awards shall be suspended and shall not be effective
unless and until such withholding, listing, registration, qualifications or
approval shall have been effected or obtained free of any conditions not
acceptable to the Company in its sole discretion, notwithstanding any
termination of any Award or any portion of any Award during the period when
exercisability has been suspended.

 

20.2.    The Committee may require, as a condition to the right to exercise any
Award that the Company receive from the Participant, at the time any such Award
is

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exercised, vests or any applicable restrictions lapse, representations,
warranties and agreements to the effect that the shares are being purchased or
acquired by the Participant for investment only and without any present
intention to sell or otherwise distribute such shares and that the Participant
will not dispose of such shares in transactions which, in the opinion of counsel
to the Company, would violate the registration provisions of the Securities Act
of 1933, as then amended, and the rules and regulations thereunder.  The
certificates issued to evidence such shares shall bear appropriate legends
summarizing such restrictions on the disposition thereof.

 

21.       Recoupment

 

Any Award granted pursuant to the Plan shall be subject to mandatory repayment
by the Participant to the Company pursuant to the terms of any Company
“clawback” or recoupment policy directly applicable to the Plan and (i) set
forth in the Participant’s Award Agreement or (ii) required by law to be
applicable to the Participant.

 

22.       Termination

 

Unless the Plan previously shall have been terminated by action of the Board,
the Plan shall terminate on the 10-year anniversary of the Effective Date, and
no Awards under the Plan shall thereafter be granted.

 

23.       Fractional Shares

 

The Company will not be required to issue any fractional shares of Common Stock
pursuant to the Plan.  The Committee may provide for the elimination of
fractions and for the settlement of fractions in cash.

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24.       Governing Law

 

To the extent that Federal laws do not otherwise control, the validity and
construction of the Plan and any Award Agreement entered into thereunder shall
be construed and enforced in accordance with the laws of the State of Delaware,
but without giving effect to the choice of law principles thereof.

 

25.       Effective Date

 

The Plan shall be effective as of the date approved by the Company’s
shareholders.

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