Exhibit 10.1

 

CUBIST PHARMACEUTICALS, INC.

 

2010 EQUITY INCENTIVE PLAN

 

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TABLE OF CONTENTS

 

 

Page

 

 

1. PURPOSE

1

 

 

2. DEFINITIONS

1

 

 

3. TERM OF THE PLAN

5

 

 

4. STOCK SUBJECT TO THE PLAN

5

 

 

5. ADMINISTRATION

6

 

 

6. AUTHORIZATION OF GRANTS

6

 

 

7. SPECIFIC TERMS OF AWARDS

8

 

 

8. ADJUSTMENT PROVISIONS

14

 

 

9. SETTLEMENT OF AWARDS

15

 

 

10. LIMITATION OF RIGHTS IN STOCK; NO SPECIAL SERVICE RIGHTS

17

 

 

11. UNFUNDED STATUS OF PLAN AND SECTION 409A

18

 

 

12. NONEXCLUSIVITY OF THE PLAN

18

 

 

13. TERMINATION AND AMENDMENT OF THE PLAN

18

 

 

14. CORPORATE ARTICLES AND BYLAWS; OTHER COMPANY POLICIES

19

 

 

15. NOTICES AND OTHER COMMUNICATIONS

20

 

 

16. GOVERNING LAW

20

 

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CUBIST PHARMACEUTICALS, INC.

 

2010 EQUITY INCENTIVE PLAN

 

1.                                      Purpose

 

This Plan is intended to encourage ownership of Stock by employees, consultants
and directors of the Company and its Affiliates and to provide additional
incentive for them to promote the success of the Company’s business through the
grant of Awards of or pertaining to shares of the Company’s Stock.  The Plan is
intended to be an incentive stock option plan within the meaning of Section 422
of the Code, but not all Awards are required to be Incentive Options.

 

2.                                      Definitions

 

As used in this Plan, the following terms shall have the following meanings:

 

2.1.                              Accelerate, Accelerated, and Acceleration,
means: (a) when used with respect to an Option or Stock Appreciation Right, that
as of the time of reference the Option or Stock Appreciation Right will become
exercisable with respect to some or all of the shares of Stock for which it was
not then otherwise exercisable by its terms; (b) when used with respect to
Restricted Stock or Restricted Stock Units, that the Risk of Forfeiture
otherwise applicable to the Restricted Stock or Restricted Stock Units shall
expire with respect to some or all of the shares of Restricted Stock or
Restricted Stock Units then still otherwise subject to the Risk of Forfeiture;
and (c) when used with respect to Performance Units, that the applicable
Performance Goals shall be deemed to have been met as to some or all of the
Units.

 

2.2.                              Affiliate means any corporation, partnership,
limited liability company, business trust, or other entity controlling,
controlled by or under common control with the Company.

 

2.3.                              Award means any grant or sale pursuant to the
Plan of Options, Stock Appreciation Rights, Performance Units, Restricted Stock,
Restricted Stock Units, or Stock Grants.

 

2.4.                              Award Agreement means an agreement between the
Company and the recipient of an Award, setting forth the terms and conditions of
the Award.

 

2.5.                              Board means the Company’s Board of Directors.

 

2.6.                              Change of Control means (1) the closing of (A)
any consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of Stock would
be converted into cash, securities or other property, other than a merger or
consolidation in which the holders of Stock immediately prior to the merger or
consolidation will have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger or consolidation as before
the merger or consolidation, or (B) any sale, lease, exchange or other transfer
in a single transaction or a series of related transactions of all or
substantially all of the assets of the Company, or (2) the date on which any
“person” (as defined in Section 13(d) of the Exchange Act), other than the
Company or a Subsidiary or employee benefit plan or trust maintained by the
Company or any of its Subsidiaries shall become (together with its “affiliates”
and “associates,” as defined in Rule 12b-2

 

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under the Exchange Act) the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of 50% of the Stock outstanding at
the time, with the prior approval of the Board, or (3) a Hostile Change of
Control.

 

2.7.                              Code means the Internal Revenue Code of 1986,
as amended from time to time, or any successor statute thereto, and any
regulations issued from time to time thereunder.

 

2.8.                              Committee means the Compensation Committee of
the Board, which in general is responsible for the administration of the Plan,
as provided in Section 5.  For any period during which no such committee is in
existence “Committee” shall mean the Board and all authority and responsibility
assigned to the Committee under the Plan shall be exercised, if at all, by the
Board.

 

2.9.                              Company means Cubist Pharmaceuticals, Inc., a
corporation organized under the laws of the State of Delaware.

 

2.10.                        Covered Employee means an employee who is a
“covered employee” within the meaning of Section 162(m) of the Code.

 

2.11.                        Exchange Act means the Securities and Exchange Act
of 1934.

 

2.12.                        For Cause means dishonesty with respect to the
Company or any Affiliate, insubordination, substantial malfeasance or
non-feasance of duty, intentional and unauthorized disclosure of confidential
information, material breach by a Participant of any provision of any
employment, nondisclosure, non-competition or similar agreement between the
Participant and the Company or any Affiliate, conduct substantially prejudicial
to the business of the Company or an Affiliate, and any other type of conduct
that is similar to that described in this sentence. The determination of the
Company as to the existence of circumstances warranting a termination For Cause
shall be conclusive. Notwithstanding the foregoing, in the event that the
Participant is a party to an effective employment, retention or similar
agreement with the Company or an Affiliate which contains a “cause” definition,
such definition shall be controlling for purposes of the Plan.

 

2.13                           Grant Date means the date as of which an Award is
granted, as determined under Section 6.2.

 

2.14                           Hostile Change of Control means (1) the date on
which any “person” (as defined in Section 13(d) of the Exchange Act), other than
the Company or a Subsidiary or employee benefit plan or trust maintained by the
company of any of its Subsidiaries shall become (together with its “affiliates”
and “associates,” as defined in Rule 12b-2 under the Exchange Act) the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of more than 25% of the Stock outstanding at the time, without
the prior approval of the Board; or (2) over a period of 36 consecutive months
or less, there is a change in the composition of the Board such that a majority
of the Board members (rounded up to the next whole number, if a fraction)
ceases, by reason of one or more proxy contests for the election of Board
members, to be composed of individuals who either (i) have been Board members
continuously since the beginning of that period, or (ii) have been elected or
nominated for election as Board members during such period by at least a
majority of the Board members described in the preceding clause (i) who were
still in office at the time that election or nomination was approved by the
Board.

 

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2.15                           Incentive Option means an Option which by its
terms is to be treated as an “incentive stock option” within the meaning of
Section 422 of the Code.

 

2.16                           Incumbent Directors means, following a Hostile
Change of Control, those Board members who were members of the Board immediately
prior to such Hostile Change of Control.

 

2.17                           Market Value means the value of a share of Stock
on a particular date determined by such methods or procedures as may be
established by the Committee.  Unless otherwise determined by the Committee, the
Market Value of Stock as of any date is the closing price for the Stock as
reported on the NASDAQ Stock Market (or on any other national securities
exchange on which the Stock is then listed) for that date or, if no closing
price is reported for that date, the closing price on the next preceding date
for which a closing price was reported.

 

2.18                           Nonstatutory Option means any Option that is not
an Incentive Option.

 

2.19                           Officer means any employee of the Company who,
from time to time, is subject to the reporting requirements of Section 16 of the
Exchange Act.

 

2.20                           Option means an option to purchase shares of
Stock.

 

2.21                           Optionee means a Participant to whom an Option
shall have been granted under the Plan.

 

2.22                           Participant means any holder of an outstanding
Award under the Plan.

 

2.23                           Performance Criteria means the criteria that the
Committee selects for purposes of establishing the Performance Goal or
Performance Goals under an Award for the Performance Period applicable to such
Award.  Performance Goals will be based on objectively determinable measures of
performance relating to any of or to any combination of the following (measured
either absolutely or by reference to an index or indices and determined either
on a consolidated basis or, as the context permits, on a divisional, functional,
subsidiary, line of business, project or geographical basis or in combinations
thereof) and will be limited to: sales; revenues; assets; expenses; earnings or
earnings per share; return on equity, investment, capital or assets; one or more
operating ratios; borrowing levels, leverage ratios or credit rating; market
share; capital expenditures; cash flow; stock price; stockholder return; income,
pre-tax income, net income, operating income, pre-tax profit, operating profit,
net operating profit or economic profit; gross margin, operating margin, profit
margin, return on operating revenue, return on operating assets, cash from
operations, operating ratio or operating revenue; market capitalization;
expenses or certain types of expenses; sales of particular products or services;
customer acquisition, expansion or retention; acquisitions and divestitures (in
whole or in part) and/or integration activities related thereto; joint ventures,
collaborations, licenses and strategic alliances, and/or the management and
performance of such relationships; spin-offs, split-ups or similar transactions;
reorganizations; recapitalizations, restructurings, financings (issuance of debt
or equity) or refinancings; achievement of clinical trial or research
objectives; achievement of manufacturing and/or supply chain objectives;
achievement of litigation-related objectives and/or objectives related to
litigation expenses; achievement of human resource, organizational and/or
personnel objectives; achievement of information technology or information
services objectives; or achievement of real estate, facilities or space planning
objectives.

 

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2.24                           Performance Goals means, for a Performance
Period, the written goal or goals established by the Committee for the
Performance Period based upon the Performance Criteria selected by the
Committee.  The Performance Goals may be expressed in terms of overall Company
performance or the performance of a division, business unit, subsidiary, or an
individual, either individually, alternatively or in any combination, applied to
either the Company as a whole or to a business unit or Affiliate, either
individually, alternatively or in any combination, and measured either
quarterly, annually or cumulatively over a period of years, on an absolute basis
or relative to a pre-established target, to previous years’ results or to a
designated comparison group, in each case as specified by the Committee. The
Committee will, in the manner and within the time prescribed by Section 162(m)
of the Code in the case of Qualified Performance-Based Awards, objectively
define the manner of calculating the Performance Goal or Goals it selects to use
for such Performance Period for such Participant.  To the extent consistent with
the requirements of the performance-based compensation exception under Section
162(m) of the Code, the Committee may determine that one or more of the
Performance Goals applicable to such Award will be adjusted in an objectively
determinable manner to reflect events (for example, but without limitation,
acquisitions or dispositions) occurring during the Performance Period that
affect the applicable Performance Goal or Goals.

 

2.25                           Performance Period means one or more periods of
time, which may be of varying and overlapping durations, selected by the
Committee, over which the attainment of one or more Performance Goals or other
business objectives will be measured for purposes of determining a Participant’s
right to, and the payment of, a Qualified Performance-Based Award.

 

2.26                           Performance Unit means a right granted to a
Participant, to receive cash, Stock or other Awards, the payment of which is
contingent on achieving Performance Goals or other business objectives
established by the Committee.

 

2.27                           Plan means this 2010 Equity Incentive Plan of the
Company, as amended from time to time, and including any attachments or addenda
hereto.

 

2.28                           Qualified Performance-Based Awards means Awards
intended to qualify as “performance-based compensation” under Section 162(m) of
the Code.

 

2.29                           Restricted Stock means shares of Stock that are
subject to a Risk of Forfeiture.

 

2.30                           Restricted Stock Unit means a right to receive
shares of Stock at the close of a Restriction Period, subject to a Risk of
Forfeiture.

 

2.31                           Restriction Period means the period of time,
established by the Committee in connection with an Award of Restricted Stock or
Restricted Stock Units, during which the shares of Restricted Stock or
Restricted Stock Units are subject to a Risk of Forfeiture described in the
applicable Award Agreement.

 

2.32                           Retirement or Retire means, (a) with respect to
any Participant who is an employee of the Company or any of its Affiliates, such
person’s termination of employment with the Company and its Affiliates after
reaching age 65 with at least five (5) years of service as an employee of the
Company or its Affiliates, but not including any termination of employment For
Cause or for insufficient performance, as determined by the Company; and (b)
with respect to any Participant who is a director of the Company, such person’s
retirement from the Board after reaching age 65 and serving the number of full
terms that are specified from time to time by the

 

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Board in writing, and in effect at the time of such termination, as being the
number of full terms that a Director should serve before being considered
retired,

 

2.33                           Risk of Forfeiture means a limitation on the
right of the Participant to retain Restricted Stock or Restricted Stock Units,
including a right of the Company to reacquire shares of Restricted Stock at less
than their then Market Value, arising because of the occurrence or
non-occurrence of specified events or conditions.

 

2.34                           Stock means common stock, par value $0.001 per
share, of the Company, and such other securities as may be substituted for Stock
pursuant to Section 8.

 

2.35                           Stock Appreciation Right means a right to receive
any excess in the Market Value of shares of Stock over a specified exercise
price.

 

2.36                           Stock Grant means the grant of shares of Stock
not subject to restrictions or other forfeiture conditions.

 

2.37                           Subsidiary means any corporation which qualifies
as a subsidiary of the Company under the definition of “subsidiary corporation”
in Section 424(f) of the Code.

 

2.38                           Ten Percent Owner means a person who owns, or is
deemed within the meaning of Section 422(b)(6) of the Code to own, stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company (or any parent corporation of the Company, as defined in
Section 424(e) of the Code, or any Subsidiary).  Whether a person is a Ten
Percent Owner shall be determined with respect to an Option based on the facts
existing immediately prior to the Grant Date of the Option.

 

3.                                      Term of the Plan

 

Unless the Plan shall have been earlier terminated by the Board, Awards may be
granted under this Plan at any time in the period commencing on the date of
approval of the Plan by the Board and ending on December 31, 2020, provided,
however, that in no event may an Incentive Option be granted under this Plan
after the date immediately prior to the tenth anniversary of the adoption of the
Plan by the Board.  Awards granted pursuant to the Plan during its term shall
not expire solely by reason of the termination of the Plan.

 

4.                                      Stock Subject to the Plan

 

At no time shall the number of shares of Stock issued pursuant to outstanding
Awards granted under the Plan (including Incentive Options) exceed six million
(6,000,000) plus the number of shares of Stock subject to stock options and
restricted stock units granted under the Company’s Amended and Restated 2000
Equity Incentive Plan (the “2000 Plan”) which become available for additional
awards thereunder by reason of the forfeiture, cancellation, expiration or
termination of those awards, subject, however, to the provisions of this Section
4 and Section 8 of the Plan.  Each Stock Grant Award and each Award of
Restricted Stock, Restricted Stock Units and Performance Units shall reduce the
number of shares of Stock available for Awards by two shares for every one share
of Stock underlying the Award; each other Award shall reduce the number of
shares of Stock available for Awards by one share for every one share of Stock
underlying the Award.  When a Stock Appreciation Right is settled for shares of
Stock upon exercise, the total number of shares of Stock underlying the Award
shall be counted against the

 

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number of shares of Stock available for issuance under the Plan, regardless of
the number of shares of Stock used to settle the Stock Appreciation Right upon
exercise.  Except for Stock Appreciation Rights that are settled for shares of
Stock upon exercise prior to expiration, termination or cancellation, in which
case the terms of the preceding sentence shall apply, if any Option or Stock
Appreciation Right expires, terminates or is cancelled for any reason without
having been exercised in full, or if any other Award is forfeited by the
recipient, the shares of Stock underlying such Award which are not purchased by
the Participant or which are forfeited by the Participant shall again be
available for Awards to be granted under the Plan to the same extent that the
grant of such Award reduced the number of shares of Stock available for Awards
under the Plan. If any stock option granted under the 2000 Plan expires,
terminates, or is cancelled for any reason without having been exercised in
full, or if any award of restricted stock units under the 2000 plan is forfeited
by the recipient, the shares of Stock underlying such award not purchased by the
Participant or which are forfeited by the Participant shall become available for
Awards to be granted under the Plan to the same extent that the grant of such
award reduced the number of shares of Stock available for awards under the 2000
Plan.  Shares of Stock issued pursuant to the Plan may be either authorized but
unissued shares or shares held by the Company in its treasury.

 

5.                                      Administration

 

The Plan shall be administered by the Committee; provided, however, that at any
time and on any one or more occasions the Board may itself exercise any of the
powers and responsibilities assigned to the Committee under the Plan and when so
acting, the Board shall have the benefit of all of the provisions of the Plan
pertaining to the Committee’s exercise of its authorities hereunder; and
provided further, however, that the Committee may delegate to the Company’s
Chief Executive Officer and other employees of the Company who are at or above
the level of Vice President the authority to grant Awards hereunder to employees
who are not Officers, and to consultants, in accordance with such guidelines as
the Committee shall set forth at any time or from time to time (but in no event
to any non-employee member of the Board or of any board of directors (or similar
governing authority) of any Affiliate or to the employee (at or above the level
of Vice President) granting the Award. Subject to the provisions of the Plan,
the Committee shall have complete authority, in its discretion, to make or to
select the manner of making all determinations with respect to each Award to be
granted by the Company under the Plan including the employee, consultant or
director to receive the Award and the form of Award.  In making such
determinations, the Committee may take into account the nature of the services
rendered by the respective employee, consultant, and director, their present and
potential contributions to the success of the Company and its Affiliates, and
such other factors as the Committee in its discretion shall deem relevant. 
Subject to the provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to it, to determine the terms and provisions of the
respective Award Agreements (which need not be identical), and to make all other
determinations necessary or advisable, in the Committee’s discretion, for the
administration of the Plan.  The Committee’s determinations made in good faith
on matters referred to in the Plan shall be final, binding and conclusive on all
persons having or claiming any interest under the Plan or an Award made pursuant
hereto.

 

6.                                      Authorization of Grants

 

6.1.                              Eligibility.  The Committee may grant from
time to time and at any time prior to the termination of the Plan one or more
Awards, either alone or in combination with any other

 

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Awards, to any employee of or consultant to one or more of the Company and its
Affiliates or to any non-employee member of the Board or of any board of
directors (or similar governing authority) of any Affiliate. However, only
employees of the Company and of any parent corporation of the Company, as
defined in Section 424(e) of the Code, or any Subsidiary, shall be eligible for
the grant of an Incentive Option.  Further, in no event shall the number of
shares of Stock issued pursuant to Options and other Awards granted to any one
person in any one calendar year exceed 750,000 shares of Stock (subject to the
provisions of Section 8 of the Plan, but only to the extent consistent with
Section 162(m) of the Code).

 

6.2.                              Date of Grant.  The granting of an Award shall
take place at the time specified in the Award Agreement.  Only if expressly so
provided in the applicable Award Agreement shall the Grant Date be the date on
which the Award Agreement shall have been duly executed and delivered by the
Company and the Participant.

 

6.3.                              General Terms of Awards.  Each grant of an
Award shall be subject to all applicable terms and conditions of the Plan
(including but not limited to any specific terms and conditions applicable to
that type of Award set out in the following Sections), and such other terms and
conditions, not inconsistent with the terms of the Plan, as the Committee may
prescribe.  No Participant shall have any rights with respect to an Award,
unless and until such Participant shall have complied with the applicable terms
and conditions of such Award (including if applicable delivering to the Company
or its designated broker a fully executed copy of an Award Agreement evidencing
an Award).   In addition, a Participant will forfeit an Award if the receipt of
the Award is subject to the Participant accepting an Award Agreement and the
Participant does not accept the Award Agreement in the manner and within the
time period after the Award date that the Company and/or its designated broker
specifies in writing.

 

6.4.                              Effect of Termination of Employment, Etc.

 

(a)                                  Unless the Committee shall provide
otherwise with respect to any Award, and except as otherwise provided in this
Section 6.4, if the Participant’s employment or other association with the
Company and its Affiliates ends for any reason other than Retirement or death of
such Participant, including because of the Participant’s employer ceasing to be
an Affiliate, (a) any outstanding Option or Stock Appreciation Right of the
Participant shall cease to be exercisable in any respect not later than ninety
(90) days following that event and, for the period it remains exercisable
following that event, shall be exercisable only to the extent exercisable at the
date of that event, and (b) any other outstanding Award of the Participant
shall, to the extent subject to a Risk of Forfeiture, vesting requirements or
other similar restrictions, be forfeited or otherwise subject to return to or
repurchase by the Company on the terms specified in the applicable Award
Agreement.   Military or sick leave or other bona fide leave shall not be deemed
a termination of employment or other association for purposes of the Plan,
provided that it does not exceed the longer of ninety (90) days or the period
during which the absent Participant’s reemployment rights, if any, are
guaranteed by statute or by contract.

 

(b)                                 Unless the Committee shall provide otherwise
with respect to any Award, and except as otherwise provided in this Section 6.4,
if a Participant Retires or dies, any Option or Stock Appreciation Right held by
such Participant or such Participant’s legal representative may be exercised by
the Participant or such Participant’s legal representative at any time within
the shorter of the applicable option period, as defined in the Award Agreement
consistent with Section 7.1(b), or 12 months after the date of the Participant’s
Retirement or death, but only to the extent exercisable at the time of such
Participant’s Retirement or death.

 

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(c)                                  Solely with respect to an Incentive Option,
(i) if a Participant’s employment or other association with the Company and its
Affiliates ends because the Participant dies, such Incentive Option held by such
Participant may be exercised by such Participant’s legal representative at any
time within the shorter of the applicable option period, as defined in the Award
Agreement consistent with Section 7.1(b), or 12 months after the date of the
Participant’s death, but only to the extent exercisable at the time of such
Participant’s death, and (ii) if the Participant’s employment or other
association with the Company and its Affiliates ends for any reason other than
death, including Retirement or because of the Participant’s employer ceasing to
be an Affiliate, such Incentive Option shall cease to be exercisable in any
respect not later than ninety (90) days following that event and, for the period
it remains exercisable, shall be exercisable only to the extent exercisable at
the date of that event.

 

6.5.                              Non-Transferability of Awards.  Except as
otherwise provided in this Section 6.5, Awards shall not be transferable, and no
Award or interest therein may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution.  All of a Participant’s rights in any Award may be
exercised during the life of the Participant only by the Participant or the
Participant’s legal representative.  However, the Committee may, at or after the
grant of an Award other than an Incentive Option, provide that such Award may be
transferred by the recipient to a “family member” (as defined below); provided,
however, that any such transfer is without payment of any consideration
whatsoever and that no transfer shall be valid unless first approved by the
Committee, acting in its sole discretion.  For this purpose, “family member”
means 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 employee’s household (other than a tenant
or employee), a trust in which the foregoing persons have more than 50% of the
beneficial interests, a foundation in which the foregoing persons (or the
Participant) control the management of assets, and any other entity in which
these persons (or the Participant) own more than 50% of the voting interests.

 

7.                                      Specific Terms of Awards

 

7.1.                              Options.

 

(a)                                  Exercise Price.  The price at which shares
of Stock may be acquired under each Option shall be not less than 100% of the
Market Value of Stock on the Grant Date, or not less than 110% of the Market
Value of Stock on the Grant Date in the case of an Incentive Option if the
Optionee is a Ten Percent Owner.

 

(b)                                 Option Period.  No Option may be exercised
on or after the earlier of (a) the Option expiration date, as specified in
Section 6.4, or (b) the tenth anniversary of the Grant Date, or on or after the
fifth anniversary of the Grant Date in the case of an Incentive Option if the
Optionee is a Ten Percent Owner.  In the event that the last date to exercise an
Option by its terms falls on a date when the primary stock exchange or national
market on which the Company’s Stock is listed (the “Primary Stock Exchange”) is
closed, then the expiration date and time for the Option shall be the closing
time of the regular market hours for the Primary Stock Exchange on the last date
prior to the expiration date that the Primary Stock Exchange is open.

 

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(c)                                  Exercisability.  An Option may be
immediately exercisable or become exercisable in such installments, cumulative
or non-cumulative, as the Committee may determine.  In the case of an Option not
otherwise immediately exercisable in full, the Committee may Accelerate such
Option in whole or in part at any time; provided, however, that in the case of
an Incentive Option, any such Acceleration of the Option would not cause the
Option to fail to comply with the provisions of Section 422 of the Code or the
Optionee consents to the Acceleration.

 

(d)                                 Method of Exercise.  An Option may be
exercised by the Optionee giving written notice, in the manner provided in
Section 15.2, specifying the number of shares of Stock with respect to which the
Option is then being exercised.  The notice shall be accompanied by payment in
the form of cash or check payable to the order of the Company in an amount equal
to the exercise price of the shares of Stock to be purchased or, subject in each
instance to the Committee’s prior approval, acting in its sole discretion, and
to such conditions, if any, as the Committee may deem necessary to avoid adverse
accounting effects to the Company,

 

(i) by delivery to the Company of shares of Stock having a Market Value equal to
the exercise price of the shares to be purchased, or

 

(ii) by surrender of the Option as to all or part of the shares of Stock for
which the Option is then exercisable in exchange for shares of Stock having an
aggregate Market Value equal to the difference between (1) the aggregate Market
Value of the surrendered portion of the Option, and (2) the aggregate exercise
price under the Option for the surrendered portion of the Option, or

 

(iii) if the Stock is traded on an established market, payment through and under
the terms and conditions of a formal cashless exercise program, if any,
authorized by the Company entailing the sale of the Stock subject to an Option
in a brokered transaction (other than to the Company).

 

Receipt by the Company or its designated broker of such notice and payment in
any authorized or combination of authorized means shall constitute the exercise
of the Option.  Within thirty (30) days thereafter but subject to the remaining
provisions of the Plan, the Company shall deliver or cause to be delivered to
the Optionee or his agent a certificate or certificates for the number of shares
then being purchased, or shall cause its transfer agent to register such shares
in book entry form in the name of the Optionee.  Such shares of Stock shall be
fully paid and nonassessable.

 

(e)                                  Limit on Incentive Option
Characterization.  An Incentive Option shall be considered to be an Incentive
Option only to the extent that the number of shares of Stock for which the
Option first becomes exercisable in a calendar year do not have an aggregate
Market Value (as of the date of the grant of the Option) in excess of the
“current limit”.  The current limit for any Optionee for any calendar year shall
be $100,000 minus the aggregate Market Value at the date of grant of the number
of shares of Stock available for purchase for the first time in the same year
under each other Incentive Option previously granted to the Optionee under the
Plan, and under each other incentive stock option previously granted to the
Optionee under any other incentive stock option plan of the Company and its
Affiliates, after December 31, 1986.  Any shares of Stock which would cause the
foregoing limit to be violated shall be deemed to have

 

9

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been granted under a separate Nonstatutory Option, otherwise identical in its
terms to those of the Incentive Option.

 

(f)                                    Notification of Disposition.  Each person
exercising any Incentive Option granted under the Plan shall be deemed to have
covenanted with the Company to report to the Company any disposition of the
shares of Stock issued upon such exercise prior to the expiration of the holding
periods specified by Section 422(a)(1) of the Code and, if and to the extent
that the realization of income in such a disposition imposes upon the Company
federal, state, local or other withholding tax requirements, or any such
withholding is required to secure for the Company an otherwise available tax
deduction, to remit to the Company an amount in cash sufficient to satisfy those
requirements.

 

7.2.                              Stock Appreciation Rights.

 

(a)                                  Tandem or Stand-Alone.  Stock Appreciation
Rights may be granted in tandem with an Option (at or, in the case of a
Nonstatutory Option, after the award of the Option), or alone and unrelated to
an Option.  Stock Appreciation Rights in tandem with an Option shall terminate
to the extent that the related Option is exercised, and the related Option shall
terminate to the extent that the tandem Stock Appreciation Rights are exercised.

 

(b)                                 Exercise Price.  Stock Appreciation Rights
shall have an exercise price of not less than 100% of the Market Value of the
Stock on the Grant Date, or in the case of Stock Appreciation Rights awarded in
tandem with Options, the exercise price of the related Option.

 

(c)                                  Period.  No Stock Appreciation Right may be
exercised on or after the earlier of (i) the tenth anniversary of the Grant
Date, (ii) the date set forth in the Award Agreement, or (iii) in the case of
Stock Appreciation Rights awarded in tandem with Options, the expiration date of
the related Option.  In the event that the last date to exercise a Stock
Appreciation Right, whether issued alone or in tandem with an Option, by its
terms falls on a date when the Primary Stock Exchange is closed, then the
expiration date and time for the Stock Appreciation Right shall be the closing
time of the regular market hours for the Primary Stock Exchange on the last date
prior to the expiration date that the Primary Stock Exchange is open.

 

(d)                                 Other Terms.  Except as the Committee may
deem inappropriate or inapplicable in the circumstances, Stock Appreciation
Rights shall be subject to terms and conditions substantially similar to those
applicable to a Nonstatutory Option.

 

7.3.                              Restricted Stock.

 

(a)                                  Purchase Price.  Shares of Restricted Stock
shall be issued under the Plan for such consideration, in cash, other property
or services, or any combination thereof, as is determined by the Committee.

 

(b)                                 Issuance of Shares.  Each Participant
receiving a Restricted Stock Award, subject to subsection (c) below, shall be
issued, in the Company’s discretion, in either certificate or book entry form,
the shares of Restricted Stock underlying such Award.  Such shares shall be
registered in the name of such Participant, and, if applicable, shall bear an
appropriate legend or a notation on the records of the Company’s transfer agent
referring to the terms, conditions, and restrictions applicable to such Award

 

10

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(c)                                  Escrow of Shares.  The Committee may
require that the stock certificates evidencing shares (if any) of Restricted
Stock be held in custody by a designated escrow agent (which may but need not be
the Company) until the restrictions thereon shall have lapsed, and that the
Participant deliver a stock power, endorsed in blank, relating to the Stock
underlying such Award.

 

(d)                                 Restrictions and Restriction Period.  During
the Restriction Period applicable to shares of Restricted Stock, such shares
shall be subject to limitations on transferability and a Risk of Forfeiture
arising on the basis of such conditions related to the performance of services,
Company or Affiliate performance or otherwise as the Committee may determine and
provide for in the applicable Award Agreement.  Any such Risk of Forfeiture may
be waived or terminated, or the Restriction Period shortened, at any time by the
Committee on such basis as it deems appropriate.

 

(e)                                  Rights Pending Lapse of Risk of Forfeiture
or Forfeiture of Award.  Except as otherwise provided in the Plan or the
applicable Award Agreement, at all times prior to the lapse of any Risk of
Forfeiture applicable to, or forfeiture of, an Award of Restricted Stock, the
Participant shall have all of the rights of a stockholder of the Company,
including the right to vote and the right to receive any dividends with respect
to the shares of Restricted Stock (but any dividends or other distributions
payable in shares of Stock or other securities of the Company shall constitute
additional Restricted Stock, subject to the same Risk of Forfeiture as the
shares of Restricted Stock in respect of which such shares of Stock or other
securities are paid), provided, however that with respect to Awards that vest or
have a Risk of Forfeiture that lapses based on achievement of pre-established
performance goals, any dividends otherwise payable during the Restriction Period
shall be paid only if, as, and to the extent the Award vests or the Risk of
Forfeiture lapses.  Unless the Committee shall have provided otherwise, any such
dividend shall be paid, if at all, without interest or other earnings.

 

(f)                                    Lapse of Restrictions.  If and when the
Restriction Period expires without a prior forfeiture of the Restricted Stock,
the Risk of Forfeiture shall be removed from the shares of Stock underlying the
Award of Restricted Stock and the shares of Stock shall be delivered to the
Participant promptly if not theretofore so delivered.

 

7.4.                              Restricted Stock Units.

 

(a)                                  Character.  Each Restricted Stock Unit
shall entitle the recipient to such shares of Stock at a close of such
Restriction Period as the Committee may establish and subject to a Risk of
Forfeiture arising on the basis of such conditions relating to the performance
of services, Company or Affiliate performance or otherwise as the Committee may
determine and provide for in the applicable Award Agreement.  Any such Risk of
Forfeiture may be waived or terminated, or the Restriction Period shortened, at
any time by the Committee on such basis as it deems appropriate.

 

(b)                                 Form and Timing of Payment.  Settlement of
earned Restricted Stock Units shall be made in a single lump sum following the
close of the applicable Restriction Period.  At the discretion of the Committee,
Participants may be entitled to receive payments equivalent to any dividends
declared with respect to Stock underlying the Awards of Restricted Stock Units
but only following the close of the applicable Restriction Period and then only
if the underlying Stock shall have been earned.  Unless the Committee shall
provide otherwise, any such dividend equivalents shall be paid, if at all,
without interest or other earnings.

 

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7.5.                              Performance Units.

 

(a)           Character. Each Performance Unit shall entitle the recipient to
the value of a specified number of shares of Stock, over the initial value for
such number of shares, if any, established by the Committee as of the Grant
Date, at the close of a specified Performance Period to the extent specified
business objectives, including but not limited to Performance Goals, shall have
been achieved.

 

(b)                                 Earning of Performance Units. The Committee
shall set Performance Goals or other business objectives in its discretion
which, depending on the extent to which they are met within the applicable
Performance Period, will determine the number of shares of Stock underlying the
Performance Units that the increase of value of which will be paid out to the
Participant after the applicable Performance Period has ended.

 

(c)                                  Form and Timing of Payment.  Payment of the
value of earned Performance Units shall be made in a single lump sum following
the close of the applicable Performance Period.  At the discretion of the
Committee, Participants may be entitled to receive any dividends declared with
respect to Stock which has been earned in connection with grants of Performance
Units which have been earned, but not yet distributed to Participants.  The
Committee may permit or, if it so provided as of the Grant Date, require a
Participant to defer such Participant’s receipt of the payment of cash or the
delivery of Stock that would otherwise be due to such Participant by virtue of
the satisfaction of any requirements or goals with respect to Performance Units,
to the extent consistent with Section 409A of the Code, if applicable.  If any
such deferral election is required or permitted, the Committee shall establish
rules and procedures for such payment deferrals.

 

7.6.                              Stock Grants. Stock Grants shall be awarded
solely in recognition of significant prior or expected contributions to the
success of the Company or its Affiliates, as an inducement to employment, in
lieu of compensation otherwise already due and in such other limited
circumstances as the Committee deems appropriate.  Stock Grants shall be made
without forfeiture conditions of any kind.  A Stock Grant shall be issued in
exchange for such consideration as the Committee shall deem satisfactory
pursuant to the Delaware General Corporation Law.

 

7.7.                              Qualified Performance-Based Awards.

 

(a)                                  Purpose.  The purpose of this Section 7.7
is to provide the Committee the ability to qualify Awards as “performance-based
compensation” under Section 162(m) of the Code.  If the Committee, in its
discretion, decides to grant an Award as a Qualified Performance-Based Award,
the provisions of this Section 7.7 will control over any contrary provision
contained in the Plan.  In the course of granting any Award, the Committee may
specifically designate the Award as intended to qualify as a Qualified
Performance-Based Award.  However, no Award shall be considered to have failed
to qualify as a Qualified Performance-Based Award solely because the Award is
not expressly designated as a Qualified Performance-Based Award, if the Award
otherwise satisfies the provisions of this Section 7.7 and the requirements of
Section 162(m) of the Code and the regulations promulgated thereunder applicable
to “performance-based compensation.”

 

(b)                                 Authority.  All grants of Awards intended to
qualify as Qualified Performance-Based Awards and determination of terms
applicable thereto shall be made by the

 

12

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Committee or, if not all of the members thereof qualify as “outside directors”
within the meaning of applicable IRS regulations under Section 162 of the Code,
a subcommittee of the Committee consisting of such of the members of the
Committee as do so qualify.  Any action by such a subcommittee shall be
considered the action of the Committee for purposes of the Plan.

 

(c)                                  Applicability.  This Section 7.7 will apply
only to those Covered Employees, or to those persons who the Committee
determines are reasonably likely to become Covered Employees in the period
covered by an Award, selected by the Committee to receive Qualified
Performance-Based Awards.  The Committee may, in its discretion, grant Awards to
Covered Employees that do not satisfy the requirements of this Section 7.7.

 

(d)                                 Discretion of Committee with Respect to
Qualified Performance-Based Awards.  Options may be granted as Qualified
Performance-Based Awards in accordance with Section 7.1, except that the
exercise price of any Option intended to qualify as a Qualified
Performance-Based Award shall in no event be less that the Market Value of the
Stock on the Grant Date.  Each Award intended to qualify as a Qualified
Performance-Based Award, such as Restricted Stock, Restricted Stock Units, or
Performance Units, shall be subject to satisfaction of one or more Performance
Goals.  The Committee will have full discretion to select the length of any
applicable Restriction Period or Performance Period, the kind and/or level of
the applicable Performance Goal, and whether the Performance Goal is to apply to
the Company, a subsidiary of the Company or any division or business unit or to
the individual.  Any Performance Goal or Goals applicable to Qualified
Performance-Based Awards shall be objective, shall be established not later than
ninety (90) days after the beginning of any applicable Performance Period (or at
such other date as may be required or permitted for “performance-based
compensation” under Section 162(m) of the Code) and shall otherwise meet the
requirements of Section 162(m) of the Code, including the requirement that the
outcome of the Performance Goal or Goals be substantially uncertain (as defined
in the regulations under Section 162(m) of the Code) at the time established.

 

(e)                                  Payment of Qualified Performance-Based
Awards.  A Participant will be eligible to receive payment under a Qualified
Performance-Based Award which is subject to achievement of a Performance Goal or
Goals only if the applicable Performance Goal or Goals are achieved within the
applicable Performance Period, as determined by the Committee.  In determining
the actual size of an individual Qualified Performance-Based Award, the
Committee may reduce or eliminate the amount of the Qualified Performance-Based
Award earned for the Performance Period if the Committee determines, in its sole
and absolute discretion, that such reduction or elimination is appropriate.

 

(f)                                    Maximum Award Payable.  The maximum
Qualified Performance-Based Award payment to any one Participant under the Plan
for a Performance Period is the number of shares of Stock set forth in the last
sentence of Section 6.1, or if the Qualified Performance-Based Award is paid in
cash, that number of shares multiplied by the Market Value of the Stock as of
the Grant Date of the Qualified Performance-Based Award.

 

(g)                                 Limitation on Adjustments for Certain
Events.  No adjustment of any Qualified Performance-Based Award pursuant to
Section 8 shall be made except on such basis, if any, as will not cause such
Award to provide other than “performance-based compensation” within the meaning
of Section 162(m) of the Code.

 

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7.8.                              Awards to Participants Outside the United
States.  The Committee may modify the terms of any Award under the Plan granted
to a Participant who is, as of the Grant Date or during the term of the Award,
resident or primarily employed outside of the United States in any manner deemed
by the Committee to be necessary or appropriate in order that the Award shall
conform to laws, regulations, and customs of the country in which the
Participant is then resident or primarily employed or so that the value and
other benefits of the Award to the Participant, as affected by foreign tax laws
and other restrictions applicable as a result of the Participant’s residence or
employment abroad, shall be comparable to the value that such an Award would
have to a Participant who is resident or primarily employed in the United
States.  The Committee may establish supplements to, or amendments,
restatements, or alternative versions of the Plan for the purpose of granting
and administrating any such modified Award.  No such modification, supplement,
amendment, restatement or alternative version may increase the share limit of
Section 4.

 

8.                                      Adjustment Provisions

 

8.1.                              Adjustment for Corporate Actions. All of the
share numbers set forth in the Plan reflect the capital structure of the Company
as of March 24, 2010.  If subsequent to that date the outstanding shares of
Stock (or any other securities covered by the Plan by reason of the prior
application of this Section) are increased, decreased, or exchanged for a
different number or kind of shares or other securities, or if additional shares
or new or different shares or other securities are distributed with respect to
shares of Stock, as a result of a reorganization, recapitalization,
reclassification, extraordinary dividend of cash or other property, stock
dividend, stock split, reverse stock split, or other similar distribution with
respect to such shares of Stock, an appropriate and proportionate adjustment
will be made in (i) the maximum numbers and kinds of shares of Stock provided in
Section 4, (ii) the numbers and kinds of shares of Stock or other securities
underlying the then outstanding Awards, (iii) the exercise price for each share
or other unit of any other securities subject to then outstanding Options and
Stock Appreciation Rights (without change in the aggregate purchase price for
the shares of Stock as to which such Options or Stock Appreciation Rights remain
exercisable), and (iv) the repurchase price of each share of Restricted Stock
then subject to a Risk of Forfeiture in the form of a Company repurchase right.

 

8.2.                              Adjustment of Awards Upon the Occurrence of
Certain Unusual or Nonrecurring Events. In the event of any corporate action not
specifically covered by the preceding Section, including but not limited to an
extraordinary cash distribution on Stock, a corporate separation or other
reorganization or liquidation, the Committee may make such adjustment of
outstanding Awards and their terms, if any, as it, in its sole discretion, may
deem equitable and appropriate in the circumstances.  The Committee shall make
adjustments in the terms and conditions of, and the criteria included in, Awards
in recognition of unusual or nonrecurring events (including, without limitation,
the events described in this Section) affecting the Company or the financial
statements of the Company or of changes in applicable laws, regulations, or
accounting principles, whenever the Committee determines that such adjustments
are appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.

 

8.3.                              Related Matters.  Any adjustment in Awards
made pursuant to Sections 8.1 or 8.2  shall be determined and made, if at all,
by the Committee, acting in its sole discretion, and shall include any
correlative modification of terms, including of Option exercise prices, rates of
vesting or exercisability, Risks of Forfeiture, applicable repurchase prices for
Restricted Stock, and Performance Goals and other financial objectives which the
Committee may deem necessary or

 

14

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appropriate so as to ensure the rights of the Participants in their respective
Awards are not substantially diminished nor enlarged as a result of the
adjustment and corporate action other than as expressly contemplated in this
Section 8.  The Committee, in its discretion, may determine that no fraction of
a share of Stock shall be purchasable or deliverable upon exercise, and in that
event if any adjustment hereunder of the number of shares of Stock underlying an
Award would cause such number to include a fraction of a share of Stock, such
number of shares of Stock shall be adjusted to the nearest smaller whole number
of shares. No adjustment of an Option exercise price per share pursuant to
Sections 8.1 or 8.2 shall result in an exercise price which is less than the par
value of the Stock.

 

8.4.                              Change of Control.  Subject to any provisions
of then outstanding Awards granting greater rights to the holders thereof, in
the event of a Change of Control any then outstanding Awards shall Accelerate in
full.  For the purposes of the preceding sentence (i) in the case of a Change of
Control that is not a Hostile Change of Control, the Board (and not the
Committee, notwithstanding the responsibilities assigned to the Committee
pursuant to Section 5) shall have the discretion to exclude any such Change of
Control from the application of the provisions of the immediately preceding
sentence, and (ii) in the case of a Hostile Change of Control, a majority of the
Incumbent Directors shall have the discretion to exclude any such Change of
Control from the application of the provisions of the immediately preceding
sentence.  To the extent Awards are not assumed, substituted or replaced upon a
Change of Control that is not a Hostile Change of Control, the Board (and not
the Committee, notwithstanding the responsibilities assigned to the Committee
pursuant to Section 5) shall have the discretion to terminate such outstanding
Awards to the extent not exercised prior to or simultaneously with such Change
of Control and to terminate such other outstanding Awards to the extent not
vested prior to or simultaneously with such Change of Control.  Upon a Change of
Control, each outstanding Award will be appropriately adjusted simultaneously
with such Change of Control in accordance with Section 8.1.

 

9.                                      Settlement of Awards

 

9.1.                              In General.  Options and Restricted Stock
shall be settled in accordance with the terms of the applicable Award
Agreement.  All other Awards may be settled in cash, Stock, or other Awards, or
a combination thereof, as determined by the Committee at or after grant and
subject to any contrary Award Agreement.  The Committee may not require
settlement of any Award in Stock pursuant to the immediately preceding sentence
to the extent issuance of such Stock would be prohibited or unreasonably delayed
by reason of any other provision of the Plan.

 

9.2.                              Violation of Law.  Notwithstanding any other
provision of the Plan or the relevant Award Agreement, if, at any time, in the
reasonable opinion of the Company, the issuance of shares of Stock underlying an
Award may constitute a violation of law, then the Company may delay such
issuance and the delivery of a certificate for such shares until (i) approval of
the Award shall have been obtained from such governmental agencies, other than
the Securities and Exchange Commission, as may be required under any applicable
law, rule, or regulation and (ii) in the case where such issuance would
constitute a violation of a law administered by or a regulation of the
Securities and Exchange Commission, one of the following conditions shall have
been satisfied:

 

(a)           the shares of Stock are at the time of the issue of such shares
effectively registered under the Securities Act of 1933, as amended; or

 

15

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(b)                                 the Company shall have determined, on such
basis as it deems appropriate (including an opinion of counsel in form and
substance satisfactory to the Company) that the sale, transfer, assignment,
pledge, encumbrance or other disposition of such shares does not require
registration under the Securities Act of 1933, as amended, or any applicable
state securities laws.

 

9.3.                              Corporate Restrictions on Rights in Stock. Any
Stock to be issued pursuant to Awards granted under the Plan shall be subject to
all restrictions upon the transfer thereof which may be now or hereafter imposed
by the charter, certificate or articles, and by-laws, of the Company.

 

9.4.                              Investment Representations.  The Company shall
be under no obligation to issue any shares of Stock underlying any Award unless
the shares to be issued pursuant to Awards granted under the Plan have been
effectively registered under the Securities Act of 1933, as amended, or the
Participant shall have made such written representations to the Company (upon
which the Company believes it may reasonably rely) as the Company may deem
necessary or appropriate for purposes of confirming that the issuance of such
shares will be exempt from the registration requirements of that Act and any
applicable state securities laws and otherwise in compliance with all applicable
laws, rules and regulations, including but not limited to that the Participant
is acquiring the shares for his or her own account for the purpose of investment
and not with a view to, or for sale in connection with, the distribution of any
such shares.

 

9.5.                              Registration.  If the Company shall deem it
necessary or desirable to register under the Securities Act of 1933, as amended,
or other applicable statutes any shares of Stock issued or to be issued pursuant
to Awards granted under the Plan, or to qualify any such shares of Stock for
exemption from the Securities Act of 1933, as amended or other applicable
statutes, then the Company shall take such action at its own expense.  The
Company may require from each recipient of an Award, or each holder of shares of
Stock acquired pursuant to the Plan, such information in writing for use in any
registration statement, prospectus, preliminary prospectus or offering circular
as is reasonably necessary for that purpose and may require reasonable indemnity
to the Company and its Officers and directors from that holder against all
losses, claims, damage and liabilities arising from use of the information so
furnished and caused by any untrue statement of any material fact therein or
caused by the omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made.  In addition, the Company may require
of any such person that he or she agree that, without the prior written consent
of the Company or the managing underwriter in any public offering of shares of
Stock, he or she will not sell, make any short sale of, loan, grant any option
for the purchase of, pledge or otherwise encumber, or otherwise dispose of, any
shares of Stock during the one hundred eighty (180) day period commencing on the
effective date of the registration statement relating to the underwritten public
offering of securities. Without limiting the generality of the foregoing
provisions of this Section 9.5, if in connection with any underwritten public
offering of securities of the Company the managing underwriter of such offering
requires that the Company’s directors and Officers enter into a lock-up
agreement containing provisions that are more restrictive than the provisions
set forth in the preceding sentence, then (a) each holder of shares of Stock
acquired pursuant to the Plan (regardless of whether such person has complied or
complies with the provisions of clause (b) below) shall be bound by, and shall
be deemed to have agreed to, the same lock-up terms as those to which the
Company’s directors and Officers are required to adhere; and (b) at the request
of the Company or such managing underwriter, each such person shall execute and
deliver a lock-

 

16

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up agreement in form and substance equivalent to that which is required to be
executed by the Company’s directors and Officers.

 

9.6.                              Placement of Legends; Stop Orders; etc.  Each
share of Stock to be issued pursuant to Awards granted under the Plan may bear a
reference to the investment representation made in accordance with Section 9.4
in addition to any other applicable restriction under the Plan, and the terms of
the Award, and to the fact that no registration statement has been filed with
the Securities and Exchange Commission in respect to such shares of Stock.  All
shares of Stock or other securities delivered under the Plan (in book entry form
or otherwise) shall be subject to such stock transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations,
and other requirements of any stock exchange upon which the Stock is then
listed, and any applicable federal or state securities law, and the Committee
may cause a legend or legends to be put on any such certificates or a notation
to be on the books of the Company’s transfer agent to make appropriate reference
to such restrictions.

 

9.7.                              Tax Withholding. Whenever shares of Stock are
issued or to be issued pursuant to Awards granted under the Plan, the Company
shall have the right to require the recipient to remit to the Company an amount
sufficient to satisfy federal, state, local or other withholding tax
requirements if, when, and to the extent required by law (whether so required to
secure for the Company an otherwise available tax deduction or otherwise) prior
to the delivery of any such shares.  The obligations of the Company under the
Plan shall be conditional on satisfaction of all such withholding obligations
and 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 recipient of an
Award.  However, in such cases Participants may elect, subject to the approval
of the Committee, acting in its sole discretion, to satisfy an applicable
withholding requirement, in whole or in part, by having the Company withhold
shares of Stock to satisfy their tax obligations.  Participants may only elect
to have shares of Stock withheld having a Market Value on the date the tax is to
be determined equal to the minimum statutory total tax which could be imposed on
the transaction.  All elections shall be irrevocable, made in writing, signed by
the Participant, and shall be subject to any restrictions or limitations that
the Committee deems appropriate.

 

10.                               Limitation of Rights in Stock; No Special
Service Rights

 

A Participant shall not be deemed for any purpose to be a stockholder of the
Company with respect to any of the shares of Stock subject to an Award, unless
and until a certificate shall have been issued therefor and delivered to the
Participant or his agent, or such shares shall have been registered in the
Participant’s name in book entry form by the Company’s transfer agent (including
for these purposes shares of Stock held for the benefit of the Participant by an
escrow agent).  Nothing contained in the Plan or in any Award Agreement shall
confer upon any recipient of an Award any right with respect to the continuation
of his or her employment or other association with the Company (or any
Affiliate), or interfere in any way with the right of the Company (or any
Affiliate), subject to the terms of any separate employment or consulting
agreement or provision of law or corporate articles or by-laws to the contrary,
at any time to terminate such employment or consulting agreement or to increase
or decrease, or otherwise adjust, the other terms and conditions of the
recipient’s employment or other association with the Company and its Affiliates.

 

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11.                               Unfunded Status of Plan and Section 409A

 

The Plan is intended to constitute an “unfunded” plan for incentive
compensation, and the Plan is not intended to constitute a plan subject to the
provisions of the Employee Retirement Income Security Act of 1974, as amended. 
With respect to any payments not yet made to a Participant by the Company,
nothing contained herein shall give any such Participant any rights that are
greater than those of a general creditor of the Company.  In its sole
discretion, the Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver Stock or
payments with respect to Options, Stock Appreciation Rights and other Awards
hereunder, provided, however, that the existence of such trusts or other
arrangements is consistent with the unfunded status of the Plan.

 

This Plan and Awards granted hereunder are intended to either comply with, or be
exempt from, Section 409A of the Code.  Notwithstanding anything to the contrary
contained in this Plan or in any Award agreement, to the extent that the
Committee determines that the Plan or any Award is subject to Section 409A of
the Code and fails to comply with the requirements of Section 409A, the
Committee reserves the right to amend or terminate the Plan and/or amend,
restructure, terminate or replace the Award in order to cause the Award to
either not be subject to Section 409A of the Code or to comply with the
applicable provisions of such section.  Notwithstanding any provision of this
Plan to the contrary, in no event shall the Company or any Affiliate be liable
to a Participant on account of an Award’s failure to (i) qualify for favorable
federal, state or other tax treatment; or (ii) avoid adverse tax treatment under
federal, state or other law, including, without limitation, Section 409A of the
Code.

 

12.                               Nonexclusivity of the Plan

 

Neither the adoption of the Plan by the Board nor the submission of the Plan to
the stockholders of the Company shall be construed as creating any limitations
on the power of the Board to adopt such other incentive arrangements as it may
deem desirable, including without limitation, the granting of stock options,
restricted stock and other forms of equity-based compensation other than under
the Plan, and such arrangements may be either applicable generally or only in
specific cases.

 

13.                               Termination and Amendment of the Plan

 

13.1.                        Termination or Amendment of the Plan. The Board may
at any time terminate the Plan or make such modifications of the Plan as it
shall deem advisable.  Unless the Board otherwise expressly provides, no
amendment of the Plan shall affect the terms of any Award outstanding on the
date of such amendment.

 

13.2.                        Termination or Amendment of Outstanding Awards. The
Committee may amend the terms of any Award theretofore granted, prospectively or
retroactively, provided that the Award as amended is consistent with the terms
of the Plan.  Also within the limitations of the Plan, the Committee may modify,
extend or assume outstanding Awards or may accept the cancellation of
outstanding Awards or of outstanding stock options or other equity-based
compensation awards granted by another issuer in return for the grant of new
Awards for the same or a different number of shares of Stock and on the same or
different terms and conditions (including but not limited to the exercise price
of any Option).  Furthermore, subject to the terms of this Plan, the Committee
may at any time (a) offer to buy out for a payment in cash or cash equivalents
an Award previously granted, or (b) authorize the recipient of an Award to elect
to

 

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cash out an Award previously granted, in either case at such time and based upon
such terms and conditions as the Committee shall establish.

 

13.3.                        Limitations on Amendments, Etc. The Board may not
amend the Plan to (i) materially increase the benefits accruing to Participants
under the Plan, (ii) increase the number of shares of Stock which may be issued
under the Plan, except as necessary to carry out the provisions of Section 8
(concerning certain adjustments attributable to corporate actions and other
events), (iii) change the description of the persons eligible for Awards under
the Plan, or (iv) effect any other change for which shareholder approval is
required by law or the rules of any relevant stock exchanges, without
shareholder approval.  Neither the Board nor the Committee may reprice any
outstanding Award, whether by amendment, by cancellation and regrant, or by
reacquiring any outstanding Award in consideration of the grant of a new Award
or the payment of other compensation without shareholder approval.  For this
purpose, the term “reprice” shall mean any of the following or any other action
that has the same effect:  (a) to lower the exercise price of an Option after it
is granted, (b) to buy out an outstanding Option at a time when its exercise
price exceeds the Fair Market Value of the Stock for cash or shares, (c) to take
any other action that is treated as a repricing under generally accepted
accounting principles, or (d) to cancel an Option at a time when its exercise
price exceeds the Fair Market Value of the Stock in exchange for another Option,
or any other Award or Company equity, unless such cancellation and exchange
occurs in connection with a Change of Control.  Notwithstanding the foregoing,
no amendment or modification of the Plan by the Board or of an outstanding Award
by the Committee shall, without the consent of any Participant with an Award
outstanding on the date of such amendment or modification of such Award, (1)
reduce the number of shares of Stock subject to such Award, (2) increase the
exercise price or the purchase price, as the case may be, of such Award, (3)
change the vesting schedule or the Risk of Forfeiture, as the case may be, of
such Award in a manner that adversely affects the rights of the Participant, or
(4) otherwise impair the rights of the Participant; provided, however, that no
such consent shall be required if (A) the Board or Committee, as the case may
be, determines in its sole discretion and prior to the date of any Change of
Control that such amendment or alteration either is required or advisable in
order for the Company, the Plan or the Award to satisfy any law or regulation,
including without limitation the provisions of Section 409A of the Code, or to
meet the requirements of or avoid adverse financial accounting consequences
under any accounting standard, or (B) the Board or Committee, as the case may
be, determines in its sole discretion and prior to the date of any Change of
Control that such amendment or alteration is not reasonably likely to
significantly diminish the benefits provided under the Award, or that any such
diminution has been adequately compensated.

 

14.                               Corporate Articles and Bylaws; Other Company
Policies.

 

This Plan and all Awards granted hereunder are subject to the corporate articles
and by-laws of the Company, as they may be amended from time to time, and all
other Company policies duly adopted by the Board, the Committee or any other
committee of the Board and as in effect from time to time regarding the
acquisition, ownership or sale of Stock by employees and other service
providers, including without limitation policies intended to limit the potential
for insider trading and to avoid or recover compensation payable or paid on the
basis of inaccurate financial results or statements, employee conduct, and other
similar events.

 

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15.                               Notices and Other Communications

 

15.1                           Notices and Other Communications (other than
notices to the Company under Section 7.1(d) and in connection with the exercise
of Stock Appreciation Rights).  Any notice, demand, request or other
communication hereunder to any party shall be in such form as the Company may
determine from time to time, and if required in writing, shall be deemed to be
sufficient if contained in a written instrument delivered in person or duly sent
by first class registered, certified or overnight mail, postage prepaid, or sent
by facsimile or electronic mail transmission with a confirmation copy by
regular, certified or overnight mail, addressed or facsimilied, as the case may
be, (i) if to a Participant, at his or her residence or electronic mail address
or facsimile number last filed with the Company, and (ii) if to the Company,
except for written notices required to be delivered under Section 7.1(d) and in
connection with the exercise of Stock Appreciation Rights, at its principal
place of business, addressed to the attention of its Secretary, or to such other
addressee, address, electronic mail address or facsimile number, as the case may
be, as the Company may have designated by notice in accordance with this Section
15.1.  All such notices, requests, demands and other communications shall be
deemed to have been received: (i) in the case of personal delivery, on the date
of such delivery; (ii) in the case of mailing, when received by the addressee;
and (iii) in the case of facsimile transmission, when confirmed by facsimile
machine report.

 

15.2                        Notices to the Company under Section 7.1(d) and in
connection with the exercise of Stock Appreciation Rights.  Unless otherwise
determined by the Company, notices required under Section 7.1(d) and in
connection with the exercise of Stock Appreciation Rights shall be sent to the
third party broker designated by the Company to administer the Company’s equity
incentive programs (as of the initial effective date of the Plan, Merrill
Lynch).  Notices shall be sent to the Company’s designated broker in such manner
as the broker may designate in any communications or notifications sent to
Participants by mail or electronic mail and/or as set forth on the
Company-dedicated website provided and maintained by the Company’s designated
broker.

 

16.                               Governing Law

 

The Plan, all Awards and all Award Agreements and actions taken thereunder shall
be governed, interpreted and enforced in accordance with the laws of the State
of Delaware, without regard to the conflict of laws principles thereof.

 

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