Exhibit 10.1

LIPID SCIENCES, INC.
Performance Equity Plan
(As Amended on December 14, 2006)

Section 1. Purpose; Definitions.

1.1. Purpose. The purpose of the Lipid Sciences, Inc. 2001 Performance Equity
Plan is to enable the Company to offer to its employees, officers, directors and
consultants whose past, present and/ or potential contributions to the Company
and its Subsidiaries have been, are or will be important to the success of the
Company, an opportunity to acquire a proprietary interest in the Company. The
various types of long-term incentive awards that may be provided under the Plan
will enable the Company to respond to changes in compensation practices, tax
laws, accounting regulations and the size and diversity of its businesses.

1.2. Definitions. For purposes of the Plan, the following terms shall be defined
as set forth below:

(a)           “Agreement” means the agreement between the Company and the
Holder, or such other document as may be determined by the Committee, setting
forth the terms and conditions of an award under the Plan.

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

(c)           “Code” means the Internal Revenue Code of 1986, as amended from
time to time.

(d)           “Committee” means the Stock Option Committee of the Board or any
other committee of the Board that the Board may designate to administer the Plan
or any portion thereof. If no Committee is so designated, then all references in
this Plan to “Committee” shall mean the Board.

(e)           “Common Stock” means the Common Stock of the Company, no par
value.

(f)            “Company” means Lipid Sciences, Inc., a corporation organized
under the laws of the State of Delaware.

(g)           “Deferred Stock” means Common Stock to be received under an award
made pursuant to Section 8, below, at the end of a specified deferral period.

(h)           “Disability” means physical or mental impairment as determined
under procedures established by the Committee for purposes of the Plan.

(i)            “Effective Date” means the date set forth in Section 12.1, below.

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(j)            “Fair Market Value”, unless otherwise required by any applicable
provision of the Code or any regulations issued thereunder, means, as of any
given date: (i) if the Common Stock is listed on a national securities exchange
or quoted on the Nasdaq National Market or Nasdaq SmallCap Market, the last sale
price of the Common Stock in the principal trading market for the Common Stock
on such date, as reported by the exchange or Nasdaq, as the case may be; (ii) if
the Common Stock is not listed on a national securities exchange or quoted on
the Nasdaq National Market or Nasdaq SmallCap Market, but is traded in the
over-the-counter market, the closing bid price for the Common Stock on such
date, as reported by the OTC Bulletin Board or the National Quotation Bureau,
Incorporated or similar publisher of such quotations; and (iii) if the fair
market value of the Common Stock cannot be determined pursuant to clause (i) or
(ii) above, such price as the Committee shall determine, in good faith.

(k)           “Holder” means a person who has received an award under the Plan.

(l)            “Incentive Stock Option” means any Stock Option intended to be
and designated as an “incentive stock option” within the meaning of Section 422
of the Code.

(m)          “Nonqualified Stock Option” means any Stock Option that is not an
Incentive Stock Option.

(n)           “Other Stock-Based Award” means an award under Section 9, below,
that is valued in whole or in part by reference to, or is otherwise based upon,
Common Stock.

(o)           “Parent” means any present or future “parent corporation” of the
Company, as such term is defined in Section 424(e) of the Code (without regard
to the phrase “at the time of the granting of the option” in such Section).

(p)           “Plan” means the Lipid Sciences, Inc. 2001 Performance Equity
Plan, as hereinafter amended from time to time.

(q)           “Repurchase Value” shall mean the Fair Market Value in the event
the award to be settled under Section 2.2(h) or repurchased under Section 10.2
is comprised of shares of Common Stock and the difference between Fair Market
Value and the Exercise Price (if lower than Fair Market Value) in the event the
award is a Stock Option or Stock Appreciation Right; in each case, multiplied by
the number of shares subject to the award.

(r)            “Restricted Stock” means Common Stock received under an award
made pursuant to Section 7, below, that is subject to restrictions under said
Section 7.

(s)           “SAR Value” means the excess of the Fair Market Value (on the
exercise date) over the exercise price that the participant would have otherwise
had to pay to exercise the related Stock Option, multiplied by the number of
shares for which the Stock Appreciation Right is exercised.

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(t)            “Stock Appreciation Right” means the right to receive from the
Company, on surrender of all or part of the related Stock Option, without a cash
payment to the Company, a number of shares of Common Stock equal to the SAR
Value divided by the Fair Market Value (on the exercise date).

(u)           “Stock Option” or “Option” means any option to purchase shares of
Common Stock which is granted pursuant to the Plan.

(v)           “Stock Reload Option” means any option granted under Section 5.3
of the Plan.

(w)          “Subsidiary” means any present or future “subsidiary corporation”
of the Company, as such term is defined in Section 424(f) of the Code (without
regard to the phrase “at the time of the granting of the option” in such
Section).

(x)            “Termination” means that the Holder has ceased to be an employee
or director of, or consultant to, the Company or its Subsidiaries and no longer
serves in any such capacity on behalf of the Company or its Subsidiaries.  An
event that causes a Subsidiary to cease being a Subsidiary shall be treated as a
“Termination” of that Subsidiary’s employees, directors and consultants.

(y)           “Vest” means to become exercisable or to otherwise obtain
ownership rights in an award.

Section 2. Administration.

2.1. Committee Membership. The Plan shall be administered by the Board or a
Committee, as provided herein. Committee members shall serve for such term as
the Board may in each case determine, and shall be subject to removal at any
time by the Board. The Committee members shall be “non-employee directors” as
defined in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended (“Exchange Act”), and “outside directors” within the meaning of Section
162(m) of the Code.

2.2. Powers of Committee. The Committee shall have full authority to award,
pursuant to the terms of the Plan: (i) Stock Options, (ii) Stock Appreciation
Rights, (iii) Restricted Stock, (iv) Deferred Stock, (v) Stock Reload Options
and/or (vi) Other Stock-Based Awards (collectively, “Awards”). For purposes of
illustration and not of limitation, the Committee shall have the authority
(subject to the express provisions of this Plan):

(a) to select, from the persons designated as eligible recipients of awards in
Section 4.1, the officers, employees, directors and consultants of the Company
or any Subsidiary to whom Stock Options, Stock Appreciation Rights, Restricted
Stock, Deferred Stock, Reload Stock Options and/or Other Stock-Based Awards may
from time to time be awarded hereunder;

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(b) to determine the terms and conditions, not inconsistent with the terms of
the Plan, of any award granted hereunder (including, but not limited to, number
of shares, share exercise price or types of consideration paid upon exercise of
such options, such as other securities of the Company or other property, any
restrictions or limitations, and any vesting, exchange, surrender, cancellation,
acceleration, termination, exercise or forfeiture provisions, as the Committee
shall determine);

(c) to determine any specified performance goals or such other factors or
criteria which need to be attained for the vesting of an award granted
hereunder;

(d) to determine the terms and conditions under which awards granted hereunder
are to operate on a tandem basis and/or in conjunction with or apart from other
equity awarded under this Plan and cash and non-cash awards made by the Company
or any Subsidiary outside of this Plan;

(e) to permit a Holder to elect to defer a payment under the Plan under such
rules and procedures as the Committee may establish, including the payment or
crediting of interest on deferred amounts denominated in cash and of dividend
equivalents on deferred amounts denominated in Common Stock;

(f) to determine the extent and circumstances under which Common Stock and other
amounts payable with respect to an award hereunder shall be deferred that may be
either automatic or at the election of the Holder; and

(g) to substitute (i) new Stock Options for previously granted Stock Options,
which previously granted Stock Options have higher option exercise prices and/or
contain other less favorable terms, and (ii) new awards of any other type for
previously granted awards of the same type, which previously granted awards are
upon less favorable terms; and

(h) to make payments and distributions with respect to awards (i.e., to “settle”
awards) through cash payments in an amount equal to the Repurchase Value.

Notwithstanding anything contained herein to the contrary, the Committee shall
not grant to any one Holder in any one calendar year awards for more than
500,000 shares in the aggregate.

2.3. Interpretation of Plan.

(a) Committee Authority. Subject to Section 11, below, the Committee shall have
the authority to adopt, alter and repeal such administrative rules, guidelines
and practices governing the Plan as it shall from time to time deem advisable to
interpret the terms and provisions of the Plan and any award issued under the
Plan (and to determine the form and substance of all Agreements relating
thereto), and to otherwise supervise the administration of the Plan. Subject to
Section 11, below, all decisions made by the

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Committee pursuant to the provisions of the Plan shall be made in the
Committee’s sole discretion and shall be final and binding upon all persons,
including the Company, its Subsidiaries and Holders.

(b) Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term or provision of the Plan relating to Incentive Stock
Options (including but not limited to Stock Reload Options or Stock Appreciation
rights granted in conjunction with an Incentive Stock Option) or any Agreement
providing for Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be so exercised, so
as to disqualify the Plan under Section 422 of the Code or, without the consent
of the Holder(s) affected, to disqualify any Incentive Stock Option under such
Section 422.

Section 3. Stock Subject to Plan.

3.1. Number of Shares. The total number of shares of Common Stock reserved and
available for issuance under the Plan shall be 5,000,000 shares; provided that
this number of shares shall automatically increase on the January 1, in each of
the calendar years 2002, 2003, 2004, 2005 and 2006 by an amount equal to 3% of
the shares of Common Stock outstanding on December 31 of the immediately
preceding calendar year as reflected on the stock ledger of the Company, if the
Plan is then in effect, but in no event shall any annual increase exceed 500,000
shares of Common Stock. Shares of Common Stock under the Plan (“Shares”) may
consist, in whole or in part, of authorized and unissued shares or treasury
shares. If a Stock Option expires or is cancelled without being exercised, the
Shares of Common Stock that were subject to such Stock Option shall revert to
the Plan and again be available for future issuance under this Plan.  Similarly,
if a Stock Appreciation Right or Deferred Stock award is cancelled before it is
exercised (in the case of a Stock Appreciation Right) or before the end of the
Deferral Period (in the case of a Deferred Stock award, and the shares of Common
Stock subject to such Stock Appreciation Right or Deferred Stock award are never
in fact issued to the Holder thereof, such Shares shall revert to the Plan and
again be available for future issuance under this Plan.

3.2. Changes in Capital Structure.  In the event of any stock dividend,
recapitalization, reclassification of Stock, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination, or other
similar corporate transaction or event (not including a Fundamental Transaction
or Change of Control as defined in Sections 10.1 and 10.2, respectively),
appropriate adjustments shall be made to: (a) the number and type of Options or
other awards that may be granted under this Plan; (b) the number and type of
Options or other awards that may be granted to any individual under this Plan;
(c) the exercise price and number and class of securities issuable under each
outstanding Option or other award, and (d) the repurchase price of any
securities or awards granted hereunder subject to a right of repurchase in favor
of the Corporation; provided, however, in each case, that with respect to awards
of incentive

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stock options no such adjustment will be authorized to the extent that such
authority would cause such options to be treated as incentive stock options; and
provided further, however, unless the Committee specifies otherwise, any
securities issuable as a result of any such adjustment shall be rounded to the
next lower whole security.

Section 4. Eligibility; Limitations.

4.1 Eligibility. Awards may be made or granted to employees, officers, directors
and consultants who are deemed to have rendered or to be able to render
significant services to the Company or its Subsidiaries and who are deemed to
have contributed or to have the potential to contribute to the success of the
Company. Notwithstanding any other provision of this Plan, Incentive Stock
Option may be granted to, and only to, persons who are employees of the Company
or a Subsidiary at the time of grant. An award other than an Incentive Stock
Option may be made or granted to a person in connection with his hiring or
retention, or at any time on or after the date he reaches an agreement (oral or
written) with the Company with respect to such hiring or retention, even though
it may be prior to the date the person first performs services for the Company
or its Subsidiaries; provided, however, that no portion of any such award shall
vest prior to the date the person first performs such services. If an Incentive
Stock Option is awarded to a person in connection with his or her becoming an
employee of the Company or a Subsidiary, such Incentive Stock Option shall, for
all purposes, be deemed granted no earlier than the day on which such person’s
employment begins.

4.2 Section 162(m) Limitation. So long as the Company is a “publicly held
corporation” within the meaning of Section 162(m) of the Code: (a) no employee
of the Company or prospective employee of the Company may be granted one or more
awards hereunder within any fiscal year representing more than 250,000 Shares or
the right to acquire more than 250,000 Shares, subject to adjustment under
Section 3.2, and (b) Options may be granted to an Executive only by the
Committee (and, notwithstanding Section 2.1, not by the Board). If an Option is
cancelled without being exercised, that cancelled Option shall continue to be
counted against the limit on Options that may be granted to any individual under
this Section 4.2. For purposes of the Plan, an “Executive” shall mean any
individual who is subject to Section 16 of the Exchange Act or who is a “covered
employee” under Section 162(m) of the Code, in either case because of such
individual’s affiliation with the Company or an affiliate of the Company.

Section 5. Stock Options.

5.1. Grant and Exercise. Stock Options granted under the Plan may be of two
types: (i) Incentive Stock Options and (ii) Nonqualified Stock Options. Any
Stock Option granted under the Plan shall contain such terms, not inconsistent
with this Plan, or with respect to Incentive Stock Options, not inconsistent
with the Plan and the Code, as the Committee may from time to time approve. The
Committee shall have the authority to grant Incentive Stock Options or
Non-Qualified Stock Options, or both types of Stock

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Options which may be granted alone or in addition to other awards granted under
the Plan. To the extent that any Stock Option intended to qualify as an
Incentive Stock Option does not so qualify, it shall constitute a separate
Nonqualified Stock Option.

5.2. Terms and Conditions. Stock Options granted under the Plan shall be subject
to the following terms and conditions:

(a) Option Term. The term of each Stock Option shall be fixed by the Committee;
provided, however, that an Incentive Stock Option may be granted only within the
ten-year period commencing from the Effective Date and may only be exercised
within ten years of the date of grant (or five years in the case of an Incentive
Stock Option granted to an optionee who, at the time of grant, owns Common Stock
possessing more than 10% of the total combined voting power of all classes of
voting stock of the Company, or the Parent or a Subsidiary of the Company (“10%
Stockholder”).

(b) Exercise Price. The exercise price per share of Common Stock purchasable
under an Incentive Stock Option shall be determined by the Committee at the time
of grant and may not be less than 100% of the Fair Market Value on the date of
grant (or, if greater, the par value of a share of Common Stock); provided,
however, that the exercise price of an Incentive Stock Option granted to a 10%
Stockholder shall not be less than 110% of the Fair Market Value on the date of
grant

(c) Exercisability. Stock Options shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined by the Committee and
as set forth in Section 10, below. If the Committee provides, in its discretion,
that any Stock Option is exercisable only in installments, i.e., that it vests
over time, the Committee may waive such installment exercise provisions at any
time at or after the time of grant in whole or in part, based upon such factors
as the Committee shall determine.

(d) Method of Exercise. Subject to whatever installment, exercise and waiting
period provisions are applicable in a particular case, Stock Options may be
exercised in whole or in part at any time during the term of the Option by
giving written notice of exercise to the Company specifying the number of shares
of Common Stock to be purchased. Such notice shall be accompanied by payment in
full of the purchase price, which shall be in cash or, if provided in the
Agreement, either in shares of Common Stock (including Restricted Stock and
other contingent awards under this Plan) or partly in cash and partly in such
Common Stock, or such other means which the Committee determines are consistent
with the Plan’s purpose and applicable law. Cash payments shall be made by wire
transfer, certified or bank check or personal check, in each case payable to the
order of the Company; provided, however, that the Company shall not be required
to deliver certificates for shares of Common Stock with respect to which an
Option is exercised until the Company has confirmed the receipt of good and
available funds in payment of the purchase price thereof (except that, in the
case of an exercise arrangement approved by the Committee and described in the
last sentence of this

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paragraph, payment may be made as soon as practicable after the exercise).
Payments in the form of Common Stock shall be valued at the Fair Market Value on
the date prior to the date of exercise. Such payments shall be made by delivery
of stock certificates in negotiable form that are effective to transfer good and
valid title thereto to the Company, free of any liens or encumbrances. Subject
to the terms of the Agreement, the Committee may, in its sole discretion, at the
request of the Holder, deliver upon the exercise of a Nonqualified Stock Option
a combination of shares of Deferred Stock and Common Stock; provided, however,
that, notwithstanding the provisions of Section 8 of the Plan, such Deferred
Stock shall be fully vested and not subject to forfeiture. A Holder shall have
none of the rights of a Stockholder with respect to the shares subject to the
Option until such shares shall be transferred to the Holder upon the exercise of
the Option. The Committee may permit a Holder to elect to pay the Exercise Price
upon the exercise of a Stock Option by irrevocably authorizing a third party to
sell shares of Common Stock (or a sufficient portion of the shares) acquired
upon exercise of the Stock Option and remit to the Company a sufficient portion
of the sale proceeds to pay the entire Exercise Price and any tax withholding
resulting from such exercise.

(e) Transferability. Except as may be set forth in the next sentence of this
Section or in the Agreement, no Stock Option shall be transferable by the Holder
other than by will or by the laws of descent and distribution or as permitted by
the Code and Rule 16b-3 under the Exchange Act, and all Stock Options shall be
exercisable, during the Holder’s lifetime, only by the Holder (or, to the extent
of legal incapacity or incompetency, the Holder’s guardian or legal
representative). Notwithstanding the foregoing, a Holder may (A) transfer any
Stock Option pursuant to a Qualified Domestic Relations Order, and (B) with the
approval of the Committee, transfer a Nonqualified Stock Option by gift, for no
consideration, to or for the benefit of the Holder’s “Immediate Family” (as
defined below), or to an entity in which the Holder and/or members of Holder’s
Immediate Family own more than fifty percent of the voting interest, in exchange
for an interest in that entity, subject to such limits as the Committee may
establish and the execution of such documents as the Committee may require, and
the transferee shall remain subject to all the terms and conditions applicable
to the Stock Option prior to such transfer.  The term “Immediate Family” shall
mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law, including adoptive
relationships, any person sharing the Holder’s household (other than a tenant or
employee), a trust in which these persons have more than fifty percent
beneficial interest, and a foundation in which these persons (or the Holder)
control the management of the assets.

(f) Termination by Reason of Death. If a Holder’s Termination is by reason of
death, any Stock Option held by such Holder, unless otherwise determined by the
Committee and set forth in the Agreement, shall thereupon automatically
terminate, except that the portion of such Stock Option that has vested on the
date of death may

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thereafter be exercised by the legal representative of the estate or by the
legatee of the Holder under the will of the Holder, for a period of one year (or
such other greater or lesser period as the Committee may specify in the
Agreement) from the date of such death or until the expiration of the stated
term of such Stock Option, whichever period is shorter.

(g) Termination by Reason of Disability. If a Holder’s Termination is by reason
of Disability, any Stock Option held by such Holder, unless otherwise determined
by the Committee and set forth in the Agreement, shall thereupon automatically
terminate, except that the portion of such Stock Option that has vested on the
date of Termination may thereafter be exercised by the Holder for a period of
one year (or such other greater or lesser period as the Committee may specify in
the Agreement) from the date of Termination or until the expiration of the
stated term of such Stock Option, whichever period is shorter.

(h) Other Termination. Subject to the provisions of Section 13.3, below, and
unless otherwise determined by the Committee and set forth in the Agreement, if
a Holder’s Termination is for any reason other than death or Disability, then
the portion of such Stock Option that has vested on the date of Termination may
be exercised for the lesser of three months after Termination or the balance of
such Stock Option’s term (or such other greater or lesser period as the
Committee may specify in the Agreement).

(i) Additional Incentive Stock Option Limitation. In the case of an Incentive
Stock Option, the aggregate Fair Market Value (on the date of grant of the
Option) with respect to which Incentive Stock Options become exercisable for the
first time by a Holder during any calendar year (under all such plans of the
Company and its Parent and Subsidiaries) shall not exceed $100,000.

(j) Buyout and Settlement Provisions. The Committee may at any time, in its sole
discretion, offer to repurchase a Stock Option previously granted, based upon
such terms and conditions as the Committee shall establish and communicate to
the Holder at the time that such offer is made.

5.3. Stock Reload Option. The exercise price per share of Common Stock
purchasable under an incentive stock option shall be determined by the Committee
at the time of grant and may not be less than 100% of the Fair Market Value on
the date of grant (or, if greater, the par value of a share of Common Stock);
provided, however, that the exercise price of an incentive stock option granted
to a 10% Stockholder shall not be less than 110% of the Fair Market Value on the
date of grant.

Section 6. Stock Appreciation Rights.

6.1. Grant and Exercise. The Committee may grant Stock Appreciation Rights to
participants who have been or are being granted Stock Options under the Plan as
a means

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of allowing such participants to exercise their Stock Options without the need
to pay the exercise price in cash. In the case of a Nonqualified Stock Option, a
Stock Appreciation Right may be granted either at or after the time of the grant
of such Nonqualified Stock Option. In the case of an Incentive Stock Option, a
Stock Appreciation Right may be granted only at the time of the grant of such
Incentive Stock Option.

6.2. Terms and Conditions. Stock Appreciation Rights shall be subject to the
following terms and conditions:

(a) Exercisability. Stock Appreciation Rights shall be exercisable as shall be
determined by the Committee and set forth in the Agreement, subject to the
limitations, if any, imposed by the Code with respect to related Incentive Stock
Options.

(b) Termination. A Stock Appreciation Right shall terminate and shall no longer
be exercisable upon the termination or exercise of the related Stock Option.

(c) Method of Exercise. Stock Appreciation Rights shall be exercisable upon such
terms and conditions as shall be determined by the Committee and set forth in
the Agreement and by surrendering the applicable portion of the related Stock
Option. Upon such exercise and surrender, the Holder shall be entitled to
receive a number of shares of Common Stock equal to the SAR Value divided by the
Fair Market Value on the date the Stock Appreciation Right is exercised.

(d) Shares Affected Upon Plan. The granting of a Stock Appreciation Right shall
not affect the number of shares of Common Stock available under for awards under
the Plan. The number of shares Available for awards under the Plan will,
however, be reduced by the number of shares of Common Stock acquirable upon
exercise of the Stock Option to which such Stock Appreciation Right relates.

Section 7. Restricted Stock.

7.1. Grant. Shares of Restricted Stock may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall determine
the eligible persons to whom, and the time or times at which, grants of
Restricted Stock will be awarded, the number of shares to be awarded, the price
(if any) to be paid by the Holder, the time or times within which such awards
may be subject to forfeiture (“Restriction Period”), the vesting schedule and
rights to acceleration thereof and all other terms and conditions of the awards.

7.2. Terms and Conditions. Each Restricted Stock award shall be subject to the
following terms and conditions:

(a) Certificates. Restricted Stock, when issued, will be represented by a stock
certificate or certificates registered in the name of the Holder to whom such
Restricted Stock shall have been awarded. During the Restriction Period,
certificates representing

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the Restricted Stock and any securities constituting Retained Distributions (as
defined below) shall bear a legend to the effect that ownership of the
Restricted Stock (and such Retained Distributions) and the enjoyment of all
rights appurtenant thereto are subject to the restrictions, terms and conditions
provided in the Plan and the Agreement. Such certificates shall be deposited by
the Holder with the Company, together with stock powers or other instruments of
assignment, each endorsed in blank, which will permit transfer to the Company of
all or any portion of the Restricted Stock and any securities constituting
Retained Distributions that shall be forfeited or that shall not become vested
in accordance with the Plan and the Agreement.

(b) Rights of Holder. Restricted Stock shall constitute issued and outstanding
shares of Common Stock for all corporate purposes. The Holder will have the
right to vote such Restricted Stock, to receive and retain all regular cash
dividends and other cash equivalent distributions as the Board may in its sole
discretion designate, pay or distribute on such Restricted Stock and to exercise
all other rights, powers and privileges of a holder of Common Stock with respect
to such Restricted Stock, with the exceptions that (i) the Holder will not be
entitled to delivery of the stock certificate or certificates representing such
Restricted Stock until the Restriction Period shall have expired and unless all
other vesting requirements with respect thereto shall have been fulfilled; (ii)
the Company will retain custody of the stock certificate or certificates
representing the Restricted Stock during the Restriction Period; (iii) other
than regular cash dividends and other cash equivalent distributions as the Board
may in its sole discretion designate, pay or distribute, the Company will retain
custody of all distributions (“Retained Distributions”) made or declared with
respect to the Restricted Stock (and such Retained Distributions will be subject
to the same restrictions, terms and conditions as are applicable to the
Restricted Stock) until such time, if ever, as the Restricted Stock with respect
to which such Retained Distributions shall have been made, paid or declared
shall have become vested and with respect to which the Restriction Period shall
have expired; (iv) a breach of any of the restrictions, terms or conditions
contained in this Plan or the Agreement or otherwise established by the
Committee with respect to any Restricted Stock or Retained Distributions will
cause a forfeiture of such Restricted Stock and any Retained Distributions with
respect thereto.

(c) Vesting; Forfeiture. Upon the expiration of the Restriction Period with
respect to each award of Restricted Stock and the satisfaction of any other
applicable restrictions, terms and conditions (i) all or part of such Restricted
Stock shall become vested in accordance with the terms of the Agreement, subject
to Section 10, below, and (ii) any Retained Distributions with respect to such
Restricted Stock shall become vested to the extent that the Restricted Stock
related thereto shall have become vested, subject to Section 10, below. Any such
Restricted Stock and Retained Distributions that do not vest shall be forfeited
to the Company and the Holder shall not thereafter have any rights with respect
to such Restricted Stock and Retained Distributions that shall have been so
forfeited.

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Section 8. Deferred Stock.

8.1. Grant. Shares of Deferred Stock may be awarded either alone or in addition
to other awards granted under the Plan. The Committee shall determine the
eligible persons to whom and the time or times at which grants of Deferred Stock
will be awarded, the number of shares of Deferred Stock to be awarded to any
person, the duration of the period (“Deferral Period”) during which, and the
conditions under which, receipt of the shares will be deferred, and all the
other terms and conditions of the awards.

8.2. Terms and Conditions. Each Deferred Stock award shall be subject to the
following terms and conditions:

(a) Certificates. At the expiration of the Deferral Period (or the Additional
Deferral Period referred to in Section 8.2 (d) below, where applicable), share
certificates shall be issued and delivered to the Holder, or his legal
representative, representing the number equal to the shares covered by the
Deferred Stock award.

(b) Rights of Holder. A person entitled to receive Deferred Stock shall not have
any rights of a Stockholder by virtue of such award until the expiration of the
applicable Deferral Period and the issuance and delivery of the certificates
representing such Common Stock. The shares of Common Stock issuable upon
expiration of the Deferral Period shall not be deemed outstanding by the Company
until the expiration of such Deferral Period and the issuance and delivery of
such Common Stock to the Holder.

(c) Vesting; Forfeiture. Upon the expiration of the Deferral Period with respect
to each award of Deferred Stock and the satisfaction of any other applicable
restrictions, terms and conditions all or part of such Deferred Stock shall
become vested in accordance with the terms of the Agreement, subject to Section
10, below. Any such Deferred Stock that does not vest shall be forfeited to the
Company and the Holder shall not thereafter have any rights with respect to such
Deferred Stock.

(d) Additional Deferral Period. A Holder may request to, and the Committee may
at any time, defer the receipt of an award (or an installment of an award) for
an additional specified period or until a specified event (“Additional Deferral
Period”). Subject to any exceptions adopted by the Committee, such request must
generally be made at least one year prior to expiration of the Deferral Period
for such Deferred Stock award (or such installment).

Section 9. Other Stock-Based Awards.

Other Stock-Based Awards may be awarded, subject to limitations under applicable
law, that are denominated or payable in, valued in whole or in part by reference
to, or otherwise based on or related to, shares of Common Stock, as deemed by
the Committee to be consistent with the purposes of the Plan, including, without

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limitation, purchase rights, shares of Common Stock awarded which are not
subject to any restrictions or conditions, convertible or exchangeable
debentures, or other rights convertible into shares of Common Stock and awards
valued by reference to the value of securities of or the performance of
specified Subsidiaries. Other Stock-Based Awards may be awarded either alone or
in addition to or in tandem with any other awards under this Plan or any other
plan of the Company. Each other Stock-Based Award shall be subject to such terms
and conditions as may be determined by the Committee.

Section 10. Accelerated Vesting and Exercisability.

10.1 Fundamental Transactions. If the Company merges with another entity in a
transaction in which the Company is not the surviving entity or if, as a result
of any other transaction or event, other securities are substituted for the
Shares or Shares may no longer be issued (each a “Fundamental Transaction”),
then, notwithstanding any other provision of this Plan, the Committee shall do
one or more of the following contingent on the closing or completion of the
Fundamental Transaction: (a) arrange for the substitution of Awards on equity
securities other than Shares (including, if appropriate, equity securities of an
entity other than the Company) in exchange for such Awards, (b) accelerate the
vesting and termination of outstanding Options so that Options can be exercised
in full before or otherwise in connection with the closing or completion of the
transaction or event but then terminate, (c) terminate the Restriction Period or
Deferral Period applicable to any outstanding Awards, and (d) cancel Awards in
exchange for cash payments to Award holders. The Committee need not adopt the
same rules for each Award or each Award holder.

10.2 Changes of Control. The Committee may also, but need not, specify that
other transactions or events constitute a “Change of Control”. The Committee may
do that either before or after the transaction or event occurs. Examples of
transactions or events that the Committee may treat as Changes of Control are:
(a) the Company or an “Affiliate” (as defined in Regulation D of the Securities
Act) is a party to a merger, consolidation, amalgamation, or other transaction
in which the beneficial shareholders of the Company, immediately before the
transaction, beneficially own securities representing 50% or less of the total
combined voting power or value of the Company immediately after the transaction,
(b) any person or entity, including a “group” as contemplated by Section
13(d)(3) of the Exchange Act, acquires securities holding 30% or more of the
total combined voting power or value of the Company, or (c) as a result of or in
connection with a contested election of Company Directors, the persons who were
Company Directors immediately before the election cease to constitute a majority
of the Board. In connection with a Change of Control, notwithstanding any other
provision of this Plan, the Committee may take any one or more of the actions
described in Section 10.1. In addition, the Committee may extend the date for
the exercise of Options (but not beyond their original Expiration Date). The
Committee need not adopt the same rules for each Award or each Award holder.

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10.3 Divestiture. If the Company or an Affiliate sells or otherwise transfers
equity securities of an Affiliate to a person or entity other than the Company
or an Affiliate, or leases, exchanges or transfers all or any portion of its
assets to such a person or entity, then the Committee, in its sole and absolute
discretion, may specify that such transaction or event constitutes a
“Divestiture”. In connection with a Divestiture, notwithstanding any other
provision of this Plan, the Committee may take one or more of the actions
described in Section 10.1 or 10.2 with respect to Options or Option Shares held
by, for example, Employees, Directors or Consultants for whom that transaction
or event results in a Termination. The Committee need not adopt the same rules
for each Option or each Optionee.

10.4 Dissolution. If the Company adopts a plan of dissolution, the Committee
may, in its sole and absolute discretion, cause Options to be fully vested and
exercisable (but not after their Expiration Date) before the dissolution is
completed but contingent on its completion and may cause the Company’s
repurchase rights on Option Shares to lapse upon completion of the dissolution.
To the extent not exercised before the earlier of the completion of the
dissolution or their Expiration Date, Options shall terminate just before the
dissolution is completed. The Committee need not adopt the same rules for each
Option or each Optionee.

10.5 Cut-Back to Preserve Benefits. If the Administrator determines that the net
after-tax amount to be realized by any Award holder, taking into account any
accelerated vesting, termination of Restriction or Deferral Periods, or cash
payments to that Award holder in connection with any transaction or event
addressed in this Section 10 would be greater if one or more of those steps were
not taken with respect to that Award holder’s Award, then and to that extent one
or more of those steps shall not be taken.

Section 11. Amendment and Termination.

The Board may at any time, and from time to time, amend alter, suspend or
discontinue any of the provisions of the Plan, but no amendment, alteration,
suspension or discontinuance shall be made that would impair the rights of a
Holder under any Agreement theretofore entered into hereunder, without the
Holder’s consent.

Section 12. Term of Plan.

12.1. Effective Date. The Plan shall be effective as of October 1, 2001, subject
to the approval of the Plan by the Company’s stockholders within one year after
the Effective Date. Any awards granted under the Plan prior to such approval
shall be effective when made (unless otherwise specified by the Committee at the
time of grant), but shall be conditioned upon, and subject to, such approval of
the Plan by the Company’s stockholders and no awards shall vest or otherwise
become free of restrictions prior to such approval.

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12.2. Termination Date. Unless terminated by the Board, this Plan shall continue
to remain effective until such time as no further awards may be granted and all
awards granted under the Plan are no longer outstanding. Notwithstanding the
foregoing, grants of Incentive Stock Options may be made only during the ten
year period following the Effective Date.

Section 13. General Provisions.

13.1. Written Agreements. Each award granted under the Plan shall be confirmed
by, and shall be subject to the terms of, the Agreement executed by the Company
and the Holder, or such other document as may be determined by the Committee.
The Committee may terminate any award made under the Plan if the Agreement
relating thereto is not executed and returned to the Company within 10 days
after the Agreement has been delivered to the Holder for his or her execution.

13.2. Unfunded Status of Plan. The Plan is intended to constitute an “unfunded”
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Holder by the Company, nothing contained herein shall give any
such Holder any rights that are greater than those of a general creditor of the
Company.

13.3. Employees.

(a) Termination for Cause.  If a Holder’s Termination is due to cause, the
Committee may, in its sole discretion, take action to cause all of the Holder’s
Options to terminate and cease to be exercisable at the time of termination. 
“Cause” means (i) the willful and continued failure by the Holder to
substantially perform his or her duties and obligations (other than any such
failure resulting from his or her incapacity due to physical or mental illness)
after there has been delivered to the Holder a written demand for performance
from the Company which describes the basis for the Company’s belief that the
Holder has not substantially performed his or her duties; or (ii) the
perpetration by the Holder of a material dishonest act or fraud against the
Company or its respective subsidiaries; or (iii) the willful engaging by the
Holder in misconduct which is materially injurious to the Company or any of its
subsidiaries, monetarily or otherwise, including but not limited to, disclosure
or misuse of any confidential information, intoxication during the performance
of Company duties, or use of unlawful controlled substances or unlawful use of
lawful controlled substances; or (iv) the Holder’s conviction of a felony not
disclosed to the Company prior to initiation of service for the Company which
the Committee reasonably believes has had or will have a material detrimental
effect on the Company’s reputation or business.  For purposes of this paragraph,
no act, or failure to act, on Holder’s part shall be considered “willful” unless
done, or omitted to be done, by the Holder in bad faith and without reasonable
belief that the action or omission was in the best interests of the Company and
its subsidiaries.

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(b) No Right of Employment. Nothing contained in the Plan or in any award
hereunder shall be deemed to confer upon any Holder who is an employee of the
Company or any Subsidiary any right to continued employment with the Company or
any Subsidiary, nor shall it interfere in any way with the right of the Company
or any Subsidiary to terminate the employment of any Holder who is an employee
at any time.

13.4. Investment Representations; Company Policy. The Committee may require each
person acquiring shares of Common Stock pursuant to a Stock Option or other
award under the Plan to represent to and agree with the Company in writing that
the Holder is acquiring the shares for investment without a view to distribution
thereof. Each person acquiring shares of Common Stock pursuant to a Stock Option
or other award under the Plan shall be required to abide by all policies of the
Company in effect at the time of such acquisition and thereafter with respect to
the ownership and trading of the Company’s securities.

13.5. Additional Incentive Arrangements. Nothing contained in the Plan shall
prevent the Board from adopting such other or additional incentive arrangements
as it may deem desirable, including, but not limited to, the granting of Stock
Options and the awarding of Common Stock and cash otherwise than under the Plan;
and such arrangements may be either generally applicable or applicable only in
specific cases.

13.6. Withholding Taxes. Not later than the date as of which an amount must
first be included in the gross income of the Holder for Federal income tax
purposes with respect to any Stock Option or other award under the Plan, the
Holder shall pay to the Company, or make arrangements satisfactory to the
Committee regarding the payment of, any Federal, state and local taxes of any
kind required by law to be withheld or paid with respect to such amount. If
permitted by the Committee, tax withholding or payment obligations may be
settled with Common Stock, including Common Stock that is part of the award that
gives rise to the withholding requirement. The obligations of the Company under
the Plan shall be conditioned upon such payment or arrangements and the Company
or the Holder’s employer (if not the Company) shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of any kind
otherwise due to the Holder from the Company or any Subsidiary.

13.7. Governing Law. The Plan and all awards made and actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
Delaware (without regard to choice of law provisions).

13.8. Other Benefit Plans. Any award granted under the Plan shall not be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or any Subsidiary and shall not affect any benefits under any other
benefit plan now or subsequently in effect under which the availability or
amount of benefits is related to the level of compensation (unless required by
specific reference in any such other plan to awards under this Plan).

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13.9. Non-Transferability. Except as otherwise expressly provided in the Plan or
the Agreement, no right or benefit under the Plan may be alienated, sold,
assigned, hypothecated, pledged, exchanged, transferred, encumbranced or
charged, and any attempt to alienate, sell, assign, hypothecate, pledge,
exchange, transfer, encumber or charge the same shall be void.

13.10. Applicable Laws. The obligations of the Company with respect to all Stock
Options and awards under the Plan shall be subject to (i) all applicable laws,
rules and regulations and such approvals by any governmental agencies as may be
required, including, without limitation, the Securities Act of 1933 (the
“Securities Act”), as amended, and (ii) the rules and regulations of any
securities exchange on which the Common Stock may be listed.

13.11. Conflicts. If any of the terms or provisions of the Plan or an Agreement
conflict with the requirements of Section 422 of the Code, then such terms or
provisions shall be deemed inoperative to the extent they so conflict with such
requirements. Additionally, if this Plan or any Agreement does not contain any
provision required to be included herein under Section 422 of the Code, such
provision shall be deemed to be incorporated herein and therein with the same
force and effect as if such provision had been set out at length herein and
therein. If any of the terms or provisions of any Agreement conflict with any
terms or provisions of the Plan, then such terms or provisions shall be deemed
inoperative to the extent they so conflict with the requirements of the Plan.
Additionally, if any Agreement does not contain any provision required to be
included therein under the Plan, such provision shall be deemed to be
incorporated therein with the same force and effect as if such provision had
been set out at length therein.

[END OF DOCUMENT]

 

 

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