Exhibit 10.1

CELSION CORPORATION

2007 STOCK INCENTIVE PLAN

EFFECTIVE: JUNE 13, 2007

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TABLE OF CONTENTS

 

     Page 1.      Establishment, Purpose and Types of Awards    1
2.      Definitions    1 3.      Administration    4          (a) Procedure    4
         (b) Secondary Committees and Sub-Plans    5          (c) Powers of the
Committee    5          (d) Limited Liability    7          (e) Indemnification
   7          (f) Effect of Committee’s Decision    7          (g) Apprising the
Board    7 4.      Stock Available Under the Plan; Maximum Awards    7
         (a) Stock Available Under the Plan    7          (b) Maximum Awards to
Covered Employees    8 5.      Participation    8 6.      Stock Options    8
         (a) Grant of Option    9          (b) Exercise Price    9          (c)
Payment    9          (d) Term of Options    9          (e) Restrictions on
Incentive Stock Options    9          (f) Other Terms and Conditions    10
7.      Restricted Stock and Restricted Stock Units    10          (a) In
General    10          (b) Vesting Conditions and Other Restrictions    11
         (c) Stock Issuance and Stockholder Rights    11 8.      Stock
Appreciation Rights    12          (a) Award of Stock Appreciation Rights    12
         (b) Restrictions of Tandem SARs    12          (c) Amount of Payment
upon Exercise of SARs    12          (d) Form of Payment upon Exercise of SARs
   12 9.      Phantom Stock    13 10.    Performance Awards    13          (a)
In General    13          (b) Covered Employee Targets    13 11.    Withholding
and Reporting of Taxes    14 12.    Transferability    14 13.    Adjustments;
Business Combinations    15          (a) Adjustments    15          (b) Change
in Control    15          (c) Dissolution and Liquidation    15          (d)
Other Adjustments    16

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14.    Termination and Amendment    16          (a) Amendment or Termination by
the Board    16          (b) Amendments by the Committee    17          (c)
Approval of Grantees    17 15.    Non-Guarantee of Employment    17
16.    Termination of Employment    17 17.    Written Agreement    17
18.    Non-Uniform Determinations    17 19.    Limitation on Benefits    18
20.    Listing and Registration    18 21.    Compliance with Securities Law   
18 22.    No Trust or Fund Created    19 23.    No Limit on Other Compensation
Arrangements    19 24.    No Restriction of Corporate Action    19
25.    Governing Law    19 26.    Plan Subject to Charter and Bylaws    20
27.    Effective Date; Termination Date    20

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CELSION CORPORATION

2007 STOCK INCENTIVE PLAN

 

1. Establishment, Purpose and Types of Awards

Celsion Corporation, a Delaware corporation (the Company), hereby establishes
the Celsion Corporation 2007 Stock Incentive Plan (the “Plan”). The purpose of
the Plan is to promote the long-term growth and profitability of the “Company”
by (i) providing incentives to improve stockholder value and to contribute to
the growth and financial success of the Company, and (ii) enabling the Company
to attract, retain and reward the best available persons for positions of
substantial responsibility.

The Plan permits the granting of Awards in the form of Incentive Stock Options,
Nonqualified Stock Options, Restricted Stock, Restricted Stock Units, Stock
Appreciation Rights, Phantom Stock, and Performance Awards, in each case as such
term is defined below, and any combination of the foregoing.

 

2. Definitions

Under this Plan, except where the context otherwise indicates, the following
definitions apply:

(a) “Affiliate” shall mean any entity other than a Subsidiary, if the Company
and/or one or more Subsidiaries own directly or indirectly not less than fifty
percent (50%) of such entity.

(b) “Awards” shall mean Incentive Stock Options, Nonqualified Stock Options,
Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Phantom
Stock, and Performance Awards, and any combination of the foregoing.

(c) “Board” shall mean the Board of Directors of the Company.

(d) “Change in Control” shall mean:

(i) The consummation of an amalgamation, merger or consolidation of the Company
with or into another entity or any other corporate reorganization of the
Company, if more than fifty percent (50%) of the combined voting power of the
continuing or surviving entity’s securities outstanding immediately after such
amalgamation, merger, consolidation or other reorganization (or, if applicable,
more than fifty percent (50%) of the combined voting power of the ultimate
parent company that directly or indirectly has beneficial ownership of the
securities of such continuing or surviving entity) is not owned directly or
indirectly by persons who were holders of the Company’s then-outstanding voting
securities immediately prior to such amalgamation, merger, consolidation or
other reorganization;

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(ii) The sale, transfer or other disposition of all or substantially all of the
Company’s assets to an entity that is not a Parent, a Subsidiary or an Affiliate
of the Company;

(iii) Any transaction as a result of which any person becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing at least fifty percent
(50%) of the total voting power represented by the Company’s then-outstanding
voting securities. For purposes of this subsection, the term “person” shall have
the same meaning as when used in sections 13(d) and 14(d) of the Exchange Act
but shall exclude: (A) any Parent, Subsidiary or Affiliate of the Company,
(B) any employee benefit plan (or related trust) sponsored or maintained by the
Company, a Parent, or any Subsidiary or Affiliate, and (C) any underwriter
temporarily holding securities pursuant to an offering of such securities; or

(iv) A change in the composition of the Board over a period of twenty four
(24) consecutive months or less as a result of which individuals who, at the
beginning of such period, constitute the Board (the “Incumbent Board”) cease for
any reason to constitute at least a majority of the Board; provided, however,
that any individual subsequently becoming a director whose election, or
nomination for election by the Company’s Stockholders, was approved by a vote of
at least a majority of the directors then comprising the Board (either by a
specific vote or by approval of the proxy statement of the Company in which such
person is named as a nominee for director, without written objection to such
nomination) shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an actual or
threatened solicitation of proxies or consents by or on behalf of a person other
than the Board.

(e) “Code” shall mean the Internal Revenue Code of 1986, as amended, and any
regulations issued thereunder.

(f) “Committee” shall mean the Board or a committee of the Board appointed
pursuant to Section 3 of the Plan to administer the Plan.

(g) “Committee Delegate” shall mean the Chief Executive Officer or other senior
officer of the Company to whom duties and powers of the Board or Committee
hereunder have been delegated pursuant to Section 3(c).

(h) “Covered Employee” shall mean an employee of the Company or any Parent,
Subsidiary or Affiliate who is subject to Code Section 162(m).

(i) “Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as
amended and any rules or regulations promulgated thereunder.

 

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(j) “Fair Market Value” of the Stock for any purpose on a particular date shall
mean:

(i) if the Stock is traded on a public securities exchange or a national
automated quotation system, the closing price for Stock on the relevant date, or
(if there were no sales on such date) the closing price on the nearest day
before the relevant date, as reported in The Wall Street Journal or a similar
publication selected by the Committee; or

(ii) if the Stock is not traded on a public securities exchange or a national
quotation system on such date, the price determined in a manner such as the
Committee shall in good faith determine to be appropriate.

(k) “Grant Agreement” shall mean a written agreement between the Company and a
grantee memorializing the terms and conditions of an Award granted pursuant to
the Plan.

(l) “Grant Date” shall mean the date on which the Committee formally acts to
grant an Award to a grantee or such other date as the Committee shall so
designate at the time of taking such formal action.

(m) “Incentive Stock Options” shall mean Stock options that meet the
requirements of Code Section 422.

(n) “Nonqualified Stock Options” shall mean Stock options that do not meet the
requirements of Code Section 422.

(o) “Parent” shall mean a company, whether now or hereafter existing, within the
meaning of the definition of “parent company” provided in Section 424(e) of the
Code, or any successor thereto of similar import.

(p) “Participant” shall mean a director, officer, employee or consultant of the
Company, or any Parent, Subsidiary or Affiliate, who is granted an Award under
the Plan.

(q) “Performance Award” shall mean an Award under Section 9 hereof.

(r) “Performance Measure” shall mean one or more of the following criteria
selected by the Committee to measure performance of the Company or any Parent,
Subsidiary or Affiliate or other business division of same for a Performance
Period, whether in absolute or relative terms: basic or diluted earnings per
share of Stock; earnings per share of Stock growth; revenue; operating income;
net income (either before or after taxes); earnings and/or net income before
interest and taxes; earnings and/or net income before interest, taxes,
depreciation and amortization; return on capital; return on equity; return on
assets; net cash provided by operations; free cash flow; Stock price; economic
profit; economic value; total stockholder return; gross margins and costs. Each
such measure shall be determined in accordance with generally accepted
accounting

 

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principles as consistently applied and, if so determined by the Committee and,
in the case of a Performance Award to a Covered Employee, to the extent
permitted under Code Section 162(m), adjusted to omit the effects of
extraordinary items, gain or loss on the disposal of a business segment, unusual
or infrequently occurring events and transactions and cumulative effects of
changes in accounting principles.

(s) “Performance Period” means a period of not less than one year over which the
achievement of targets for Performance Measures is determined.

(t) “Phantom Stock” shall mean Awards under Section 9.

(u) “Restricted Stock” and “Restricted Stock Units” shall mean Awards under
Section 7.

(v) “Rule 16b-3” shall mean Rule 16b-3 as in effect under the Exchange Act on
the effective date of the Plan, or any successor provision prescribing
conditions necessary to exempt the issuance of securities under the Plan (and
further transactions in such securities) from Section 16(b) of the Exchange Act.

(w) “Securities Act” shall mean the U.S. Securities Act of 1933, as amended and
any rules or regulations promulgated thereunder.

(x) “Stock” shall mean common stock of the Company, par value $0.01 per share.

(y) “Stock Appreciation Rights” shall mean Awards under Section 8(a) to (d).

(z) “Subsidiary” and “Subsidiaries” shall mean only a company or companies,
whether now or hereafter existing, within the meaning of the definition of
“subsidiary company” provided in Section 424(f) of the Code, or any successor
thereto of similar import.

(aa) “2001 Plan” shall mean the 2001 Celsion Corporation Stock Option Plan.

(bb) “2004 Plan” shall mean the Celsion Corporation 2004 Stock Incentive Plan.

 

3. Administration

(a) Procedure. The Plan shall be administered by the Board. In the alternative,
the Board may delegate authority to a Committee to administer the Plan on behalf
of the Board, subject to such terms and conditions as the Board may prescribe.
Such Committee shall consist of not less than two (2) members of the Board each
of whom is a “non-employee director” within the meaning of Rule 16b-3 under the
Exchange Act, or any successor rule of similar import, and an “outside director”
within the meaning of Section 162(m) of the Code and the regulations promulgated
thereunder.

 

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Once appointed, the Committee shall continue to serve until otherwise directed
by the Board. From time to time, the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies,
however caused, and remove all members of the Committee and, thereafter,
directly administer the Plan. In the event that the Board is the administrator
of the Plan in lieu of a Committee, the term “Committee” as used herein shall be
deemed to mean the Board.

Members of the Board or Committee who are either eligible for Awards or have
been granted Awards may vote on any matters affecting the administration of the
Plan or the grant of Awards pursuant to the Plan, except that no such member
shall act upon the granting of an Award to himself or herself, but any such
member may be counted in determining the existence of a quorum at any meeting of
the Board or the Committee during which action is taken with respect to the
granting of an Award to him or her.

The Committee shall meet at such times and places and upon such notice as it may
determine. A majority of the Committee shall constitute a quorum. Any acts by
the Committee may be taken at any meeting at which a quorum is present and shall
be by majority vote of those members entitled to vote. Additionally, any acts
reduced to writing or approved in writing by all of the members of the Committee
shall be valid acts of the Committee.

(b) Secondary Committees and Sub-Plans. The Board may, in its sole discretion,
divide the duties and powers of the Committee by establishing one or more
secondary Committees to which certain duties and powers of the Board hereunder
are delegated (each of which shall be regarded as a “Committee” under the Plan
with respect to such duties and powers), or delegate all of its duties and
powers hereunder to a single Committee. Additionally, if permitted by applicable
law, the Board or Committee may delegate any or all of its duties and powers
hereunder to the Chief Executive Officer and/or to other senior officers of the
Company subject to such conditions and limitations as the Board or Committee
shall prescribe. However, only the Committee described under Subsection 3(a) may
designate and grant Awards to Participants who are subject to Section 16 of the
Exchange Act or Section 162(m) of the Code. The Committee shall also have the
power to establish sub-plans (which may be included as appendices to the Plan or
the respective Grant Agreements), which may constitute separate schemes, for the
purpose of establishing schemes which meet any special tax or regulatory
requirements of jurisdictions other than the United States and its subdivisions.
Any such interpretations, rules, administration and sub-plans shall be
consistent with the basic purposes of the Plan.

(c) Powers of the Committee. The Committee shall have all the powers vested in
it by the terms of the Plan, such powers to include authority, in its sole and
absolute discretion, to grant Awards under the Plan, prescribe Grant Agreements
evidencing such Awards and establish programs for granting Awards. The Committee
shall have full power and authority to take all other actions necessary to carry
out the purpose and intent of the Plan, including, but not limited to, the
authority to:

(i) determine the Participants to whom, and the time or times at which, Awards
shall be granted,

 

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(ii) determine the types of Awards to be granted,

(iii) determine the number of shares of Stock and/or amount of cash to be
covered by or used for reference purposes for each Award,

(iv) impose such terms, limitations, vesting schedules, restrictions and
conditions upon any such Award as the Committee shall deem appropriate,
including without limitation establishing, in its discretion, Performance
Measures that must be satisfied before an Award vests and/or becomes payable,
the term during which an Award is exercisable, the purchase price, if any, under
an Award and the period, if any, following a grantee’s termination of employment
or service with the Company or any Parent, Subsidiary or Affiliate during which
the Award shall remain exercisable,

(v) modify, extend or renew outstanding Awards, accept the surrender of
outstanding Awards and substitute new Awards, provided that no such action shall
be taken with respect to any outstanding Award that would materially, adversely
affect the grantee without the grantee’s consent, or constitute a repricing of
stock options without the consent of the holders of the Company’s voting
securities under (vi) below,

(vi) only with the approval of the holders of the voting securities of the
Company to the extent that such approval is required by applicable law, the
regulation or the rules of an national securities exchange or automated
quotation system to which the Company is subject, reprice Incentive Stock
Options and Nonqualified Stock Options either by amendment to lower the exercise
price or by accepting such stock options for cancellation and issuing
replacement stock options with a lower exercise price or through any other
mechanism,

(vii) accelerate the time in which an Award may be exercised or in which an
Award becomes payable and waive or accelerate the lapse, in whole or in part, of
any restriction or condition with respect to an Award,

(viii) establish objectives and conditions, including targets for Performance
Measures, if any, for earning Awards and determining whether Awards will be paid
after the end of a Performance Period, and

(ix) permit the deferral of, or require a Participant to defer such
Participant’s receipt of, the delivery of Stock and/or cash under an Award that
would otherwise be due to such Participant and establish rules and procedures
for such payment deferrals, provided the requirements of Code Section 409A are
met with respect to any such deferral.

 

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The Committee shall have full power and authority to administer and interpret
the Plan and to adopt such rules, regulations, agreements, guidelines and
instruments for the administration of the Plan as the Committee deems necessary,
desirable or appropriate in accordance with the Bylaws of the Company.

(d) Limited Liability. To the maximum extent permitted by law, no member of the
Board or Committee or a Committee Delegate shall be liable for any action taken
or decision made in good faith relating to the Plan or any Award thereunder.

(e) Indemnification. The members of the Board and Committee and any Committee
Delegate shall be indemnified by the Company in respect of all their activities
under the Plan in accordance with the procedures and terms and conditions set
forth in the Certificate of Incorporation Bylaws of the Company as in effect
from time to time. The foregoing right of indemnification shall not be exclusive
of any other rights of indemnification to which such persons may be entitled
under the Company’s Certificate of Incorporation, as a matter of law, or
otherwise.

(f) Effect of Committee’s Decision. All actions taken and decisions and
determinations made by the Committee or a Committee Delegate on all matters
relating to the Plan pursuant to the powers vested in it hereunder shall be in
the Committee’s or Committee Delegate’s sole and absolute discretion and shall
be conclusive and binding on all parties concerned, including the Company, its
stockholders, any Participants in the Plan and any other employee of the
Company, and their respective successors in interest.

(g) Apprising the Board. The Committee will inform the Board regarding its
activities under the Plan not less frequently than at each scheduled Board
meeting and at such other times as the Board may request.

 

4. Stock Available Under the Plan; Maximum Awards

(a) Stock Available Under the Plan.

(i) Subject to adjustments as provided in Section 13 of the Plan, the Stock that
may be delivered or purchased or used for reference purposes (with respect to
Stock Appreciation Rights, or Phantom Stock) with respect to Awards granted
under the Plan, including with respect to Incentive Stock Options, shall not
exceed an aggregate of one million (1,000,000) shares of Stock, plus the number
of shares of Stock available from the 2001 Plan and 2004 Plan as provided in
Subsection 4(a)(ii) below. Stock available under the Plan may be, in any
combination, authorized but unissued Stock, treasury Stock and Stock that is
repurchased, in the market, and canceled by the Company. The Company shall
reserve said number of shares of Stock for Awards under the Plan, subject to
adjustments as provided in Section 13 of the Plan. If any Award, or portion of
an Award, issued under the Plan, expires or terminates unexercised, becomes
unexercisable or is forfeited or otherwise terminated, surrendered or canceled
as

 

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to any shares of Stock without the delivery by the Company (or, in the case of
Restricted Shares, without vesting) of Stock or other consideration, the Stock
subject to such Award shall thereafter be available for further Awards under the
Plan.

(ii) There shall be available for issuance under the Plan the sum of (A) the
number of shares of Stock remaining available for issuance under the 2004 Plan
at the effective date of this Plan, plus (B) shares of Stock subject to any
stock options issued under the 2001 Plan or 2004 Plan to the extent such stock
options subsequently expire or terminate unexercised, become unexercisable or
are forfeited or otherwise terminated, surrendered or canceled, without delivery
of shares of Stock or other consideration to the holder.

(b) Maximum Awards to Covered Employees. The maximum number of shares of Stock
subject to Awards that may be granted during any one calendar year to any one
Covered Employee shall be limited to two million (200,000). To the extent
required by Section 162(m) of the Code and so long as Section 162(m) of the Code
is applicable to persons eligible to participate in the Plan, shares of Stock
subject to the foregoing maximum with respect to which the related Award is
terminated, surrendered or canceled shall nonetheless continue to be taken into
account with respect to such maximum for the calendar year in which granted.

 

5. Participation

Participation in the Plan shall be open to all directors, officers, employees
and consultants of the Company, or of any Parent, Subsidiary or Affiliate of the
Company, as may be selected by the Committee from time to time. Notwithstanding
the foregoing, participation in the Plan with respect to Awards of Incentive
Stock Options shall be limited to employees of the Company or of any Parent or
Subsidiary of the Company.

Awards may be granted to such Participants and for or with respect to such
number of shares of Stock as the Committee shall determine, subject to the
limitations in Section 4 of the Plan. A grant of any type of Award made in any
one year to a Participant shall neither guarantee nor preclude a further grant
of that or any other type of Award to such person in that year or subsequent
years.

 

6. Stock Options

Subject to the other applicable provisions of the Plan, the Committee may from
time to time grant to Participants Awards of Nonqualified Stock Options and/or
Incentive Stock Options. The stock option Awards granted shall be subject to the
following terms and conditions.

 

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(a) Grant of Option. The grant of a stock option shall be evidenced by a Grant
Agreement, executed by the Company and the grantee, stating the number of shares
of Stock subject to the stock option evidenced thereby, the exercise price and
the terms and conditions of such stock option, in such form as the Committee may
from time to time determine.

(b) Exercise Price. The price per share payable upon the exercise of each stock
option shall be determined by the Committee, but shall not be less than the Fair
Market Value of the shares on the Grant Date, unless the stock option complies
with Section 409A of the Code.

(c) Payment. Stock options may be exercised in whole or in part by payment of
the exercise price of the Stock to be acquired in accordance with the provisions
of the Grant Agreement, and/or such rules and regulations as the Committee may
have prescribed, and/or such determinations, orders, or decisions as the
Committee may have made. Payment may be made in cash (or cash equivalents
acceptable to the Committee) or, if provided in the Grant Agreement and
permitted by applicable law, in shares of Stock which have been held by grantee
for at least six (6) months, or a combination of cash and such Stock, or by such
other means as the Committee may prescribe. The Fair Market Value of Stock
delivered on exercise of stock options shall be determined as of the date of
exercise.

If the Stock is registered under Section 12(b) or 12(g) of the Exchange Act, the
Committee, subject to such limitations as it may determine, may authorize
payment of the exercise price, in whole or in part, by delivery of a properly
executed exercise notice, together with irrevocable instructions, to: (i) a
brokerage firm to deliver promptly to the Company the aggregate amount of sale
or loan proceeds to pay the exercise price and any withholding tax obligations
that may arise in connection with the exercise, and (ii) the Company to deliver
the certificates for such purchased Stock directly to such brokerage firm.

(d) Term of Options. The term during which each stock option may be exercised
shall be determined by the Committee; provided, however, that in no event shall
a stock option be exercisable more than ten years from the date it is granted.
Prior to the exercise of the stock option and delivery of the Stock certificates
represented thereby, the grantee shall have none of the rights of a stockholder
with respect to any Stock represented by an outstanding stock option.

(e) Restrictions on Incentive Stock Options. Incentive Stock Option Awards
granted under the Plan shall comply in all respects with Code Section 422 and,
as such, shall meet the following additional requirements:

(i) Grant Date. An Incentive Stock Option must be granted within ten (10) years
of the earlier of the Plan’s adoption by the Board of Directors or approval by
the Company’s stockholders.

 

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(ii) Exercise Price and Term. The exercise price of an Incentive Stock Option
shall not be less than one hundred percent (100%) of the Fair Market Value of
the Stock on the date the stock option is granted and the term of the stock
option shall not exceed ten (10) years. Also, the exercise price of any
Incentive Stock Option granted to a grantee who owns (within the meaning of
Section 422(b)(6) of the Code, after the application of the attribution rules in
Section 424(d) of the Code) more than ten percent (10%) of the total combined
voting power of all classes of shares of Stock of the Company or any Parent or
Subsidiary of the Company shall be not less than one hundred ten percent
(110%) of the Fair Market Value of the Stock on the grant date and the term of
such stock option shall not exceed five (5) years.

(iii) Maximum Grant. The aggregate Fair Market Value (determined as of the Grant
Date) of Stock of the Company with respect to which all Incentive Stock Options
first become exercisable by any grantee in any calendar year under this or any
other plan of the Company and its Parent and Subsidiaries may not exceed One
Hundred Thousand Dollars ($100,000) or such other amount as may be permitted
from time to time under Section 422 of the Code. To the extent that such
aggregate Fair Market Value shall exceed One Hundred Thousand Dollars
($100,000), or other applicable amount, such stock options to the extent of the
Stock in excess of such limit shall be treated as Nonqualified Stock Options. In
such case, the Company may designate the shares of Stock that are to be treated
as Stock acquired pursuant to the exercise of an Incentive Stock Option.

(iv) Grantee. Incentive Stock Options shall only be issued to employees of the
Company or of a Parent, Subsidiary or Affiliate of the Company.

(v) Designation. No stock option shall be an Incentive Stock Option unless so
designated by the Committee at the time of grant or in the Grant Agreement
evidencing such stock option.

(vi) Stockholder Approval. No stock option issued under the Plan shall be an
Incentive Stock Option unless the Plan is approved by the stockholders of the
Company within twelve (12) months of its adoption by the Board in accordance
with the Bylaws of the Company and governing law relating to such matters.

(f) Other Terms and Conditions. Stock options may contain such other provisions,
not inconsistent with the provisions of the Plan, as the Committee shall
determine appropriate from time to time.

 

7. Restricted Stock and Restricted Stock Units

(a) In General. Subject to the other applicable provisions of the Plan and
applicable law, the Committee may at any time and from time to time grant
Restricted Stock or Restricted Stock Units to Participants, in such amounts and
subject to such

 

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vesting conditions, other restrictions and conditions for removal of
restrictions as it determines. Unless determined otherwise by the Committee,
Participants receiving Restricted Stock or Restricted Stock Units are not
required to pay the Company cash consideration therefor (except as may be
required for applicable tax withholding).

(b) Vesting Conditions and Other Restrictions. Each Award for Restricted Stock
and Restricted Stock Units shall be evidenced by a Grant Agreement that
specifies the applicable vesting conditions and other restrictions, if any, on
such Award, the duration of such restrictions, and the time or times at which
such restrictions shall lapse with respect to all or a specified number of the
shares of Stock that are part of the Award. Notwithstanding the foregoing, the
Committee may reduce or shorten the duration of any vesting or other restriction
applicable to any Restricted Stock or Restricted Stock Units awarded to any
grantee under the Plan.

(c) Stock Issuance and Stockholder Rights.

(i) Restricted Stock. Stock certificates with respect to Stock granted pursuant
to a Restricted Stock Award shall be issued, and/or Stock shall be registered,
at the time of grant of the Restricted Stock Award, subject to forfeiture if the
Restricted Stock does not vest or other restrictions do not lapse. Any Stock
certificates shall bear an appropriate legend with respect to the restrictions
applicable to such Restricted Stock Award and the grantee may be required to
deposit the certificates with the Company during the period of any restriction
thereon and to execute a blank stock power or other instrument of transfer
therefor. Except as otherwise provided by the Committee, during the period of
restriction following issuance of Restricted Stock certificates, the grantee
shall have all of the rights of a holder of Stock, including but not limited to
the rights to receive dividends (or amounts equivalent to dividends) and to vote
with respect to the Restricted Stock. The Committee, in its discretion, may
provide that any dividends or distributions paid with respect to Stock subject
to the unvested portion of a Restricted Stock Award will be subject to the same
restrictions as the Restricted Stock to which such dividends or distributions
relate.

(ii) Restricted Stock Units. Stock certificates for the shares of Stock subject
to a Restricted Stock Unit shall be issued, and/or Stock shall be registered,
upon vesting and lapse of any other restrictions with respect to the issuance of
Stock under such Award. The grantee will not be entitled to vote such Stock or
to any of the other rights of stockholders during the period prior to issuance
of the certificates for such Stock and/or the registration of the Stock. An
Award of Restricted Stock Units may provide the Participant with the right to
receive amounts equivalent to dividends and distributions paid with respect to
Stock subject to the Award while the Award is outstanding, which payments may,
in the Committee’s discretion, either be made currently or credited to an
account for the Participant, and may be settled in cash or Stock, all as
determined by the Committee. Unless otherwise determined by the Committee with
respect to a particular Award, each outstanding Restricted Stock Unit shall
accrue such

 

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dividend equivalents, deferred as equivalent amounts of additional Restricted
Stock Units, which amounts will be paid only when and if the Restricted Stock
Unit (on which such dividend equivalents were accrued) vests and becomes
payable. To the extent that a Restricted Stock Unit does not vest or is
otherwise forfeited, any accrued and unpaid dividend equivalents shall be
forfeited.

 

8. Stock Appreciation Rights

(a) Award of Stock Appreciation Rights. Subject to the other applicable
provisions of the Plan, the Committee may at any time and from time to time
grant Stock Appreciation Rights (“SARs”) to Participants, either on a
free-standing basis (without regard to or in addition to the grant of a stock
option) or on a tandem basis (related to the grant of an underlying stock
option), as it determines. SARs granted in tandem with or in addition to a stock
option may be granted either at the same time as the stock option or at a later
time; provided, however, that a tandem SAR shall not be granted with respect to
any outstanding Incentive Stock Option Award without the consent of the grantee.
SARs shall be evidenced by Grant Agreements, executed by the Company and the
grantee, stating the number of shares of Stock subject to the SAR evidenced
thereby and the terms and conditions of such SAR, in such form as the Committee
may from time to time determine. The term during which each SAR may be exercised
shall be determined by the Committee. In no event shall a SAR be exercisable
more than ten years from the date it is granted. The grantee shall have none of
the rights of a stockholder with respect to any Stock represented by a SAR.

(b) Restrictions of Tandem SARs. No Incentive Stock Option may be surrendered in
connection with the exercise of a tandem SAR unless the Fair Market Value of the
Stock subject to the Incentive Stock Option is greater than the exercise price
for such Incentive Stock Option. SARs granted in tandem with stock options shall
be exercisable only to the same extent and subject to the same conditions as the
stock options related thereto are exercisable. The Committee may, in its
discretion, prescribe additional conditions to the exercise of any such tandem
SAR.

(c) Amount of Payment upon Exercise of SARs. A SAR shall entitle the grantee to
receive, subject to the provisions of the Plan and the Grant Agreement, a
payment having an aggregate value equal to the product of (i) the excess of
(A) the Fair Market Value on the exercise date of one share of Stock over
(B) the base price per share of Stock specified in the Grant Agreement, times
(ii) the number of shares of Stock specified by the SAR, or portion thereof,
that is exercised. In the case of exercise of a tandem SAR, such payment shall
be made in exchange for the surrender of the unexercised related stock option
(or any portion or portions thereof which the grantee from time to time
determines to surrender for this purpose). The base price per share under a SAR
shall not be less than the Fair Market Value of a share of Stock on the Grant
Date, unless the SAR complies with Section 409A of the Code.

(d) Form of Payment upon Exercise of SARs. Payment by the Company of the amount
receivable upon any exercise of a SAR may be made by the delivery of Stock or

 

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cash, or any combination of Stock and cash, as determined in the sole discretion
of the Committee from time to time. If upon settlement of the exercise of a SAR
a grantee is to receive a portion of such payment in Stock, the number of shares
of Stock shall be determined by dividing such portion by the Fair Market Value
of a share of Stock on the exercise date. No fractional shares shall be used for
such payment and the Committee shall determine whether cash shall be given in
lieu of such fractional shares or whether such fractional shares shall be
eliminated.

 

9. Phantom Stock

The grant of Phantom Stock shall be evidenced by a Grant Agreement, executed by
the Company and the grantee, that incorporates the terms of the Plan and states
the number of shares of Phantom Stock evidenced thereby and the terms and
conditions of such Phantom Stock in such form as the Committee may from time to
time determine. Phantom Stock granted to a Participant shall be credited to a
bookkeeping reserve account solely for accounting purposes and shall not require
a segregation of any of the Company’s assets. Each share of Phantom Stock shall
represent the value of one share of Stock. Phantom Stock shall become payable in
whole or in part in such form, at such time or times and pursuant to such
conditions in accordance with the provisions of the Grant Agreement, and/or such
rules and regulations as the Committee may prescribe, and/or such
determinations, orders or decisions as the Committee may make. Except as
otherwise provided in the applicable Grant Agreement, the grantee shall have
none of the rights of a stockholder with respect to any shares represented by
Phantom Stock as a result of the grant of Phantom Stock to the grantee. Phantom
Stock may contain such other provisions, not inconsistent with the provisions of
the Plan, as the Committee shall determine desirable or appropriate from time to
time.

 

10. Performance Awards

(a) In General. The Committee, in its discretion, may establish targets for
Performance Measures for selected Participants and authorize the granting,
vesting, payment and/or delivery of Performance Awards in the form of Incentive
Stock Options, Nonqualified Stock Options, Restricted Stock, Restricted Stock
Units, Stock Appreciation Rights, and/or Phantom Stock to such Participants upon
achievement of such targets for Performance Measures during a Performance
Period. The Committee, in its discretion, shall determine the Participants
eligible for Performance Awards, the targets for Performance Measures to be
achieved during each Performance Period, and the type, amount, and terms and
conditions of any Performance Awards. Performance Awards may be granted either
alone or in addition to other Awards made under the Plan.

(b) Covered Employee Targets. After the Company is subject to Code
Section 162(m), in connection with any Performance Awards granted to a Covered
Employee, the Committee shall (i) establish in the applicable Grant Agreement
the specific targets relative to the Performance Measures which must be attained
before the respective Performance Award is granted, vests, or is otherwise paid
or delivered, (ii) provide in the applicable Grant Agreement the method for
computing the portion of the Performance

 

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Award which shall be granted, vested, paid and/or delivered if the target or
targets are attained in full or part, and (iii) at the end of the relevant
Performance Period and prior to any such grant, vesting, payment or delivery
certify the extent to which the applicable target or targets were achieved and
whether any other material terms were in fact satisfied. The specific targets
and the method for computing the portion of such Performance Award which shall
be granted, vested, paid or delivered to any Covered Employee shall be
established by the Committee prior to the earlier to occur of (A) ninety
(90) days after the commencement of the Performance Period to which the
Performance Measure applies and (B) the elapse of twenty-five percent (25%) of
the Performance Period and in any event while the outcome is substantially
uncertain. In interpreting Plan provisions applicable to Performance Measures
and Performance Awards with respect to Covered Employees, it is the intent of
the Plan to conform with the standards of Section 162(m) of the Code and
Treasury Regulations Section 1.162-27(e)(2)(i), and the Committee in
interpreting the Plan shall be guided by such provisions.

 

11. Withholding and Reporting of Taxes

The Company may require, as a condition to the grant of any Award under the
Plan, vesting or exercise pursuant to such Award or to the delivery of
certificates for shares of Stock issued or payments of cash to a grantee
pursuant to the Plan or a Grant Agreement, that the grantee pay to the Company,
in cash or, if approved by the Company, in Stock, including Stock acquired upon
grant of the Award or exercise of the Award, valued at Fair Market Value on the
date as of which the withholding tax liability is determined, any federal, state
or local taxes of any kind or any applicable taxes or other required withholding
of any other jurisdiction required by law to be withheld with respect to any
taxable event under the Plan. The Company, to the extent permitted or required
by law, shall have the right to deduct from any payment of any kind (including
salary or bonus) otherwise due to a grantee any federal, state or local taxes of
any kind or any applicable taxes or other required withholding of any other
jurisdiction required by law to be withheld with respect to the grant, vesting,
exercise or payment of or under any Award under the Plan or a Grant Agreement,
or to retain or sell a sufficient number of the shares of Stock to be issued to
such grantee to cover any such taxes. The Company or any Parent, Subsidiary or
Affiliate shall comply with any applicable tax reporting requirements of any
jurisdiction imposed on it by law with respect to the granting, vesting,
exercise and/or payment of Awards.

 

12. Transferability

No Award granted under the Plan shall be transferable by a grantee otherwise
than by will or the laws of descent and distribution. Unless otherwise
determined by the Committee in accordance with the provisions of the immediately
preceding sentence, an Award may be exercised during the lifetime of the grantee
only by the grantee or, during the period the grantee is under a legal
disability, by the grantee’s guardian or legal representative. Notwithstanding
the foregoing, an Award other than an Incentive Stock Option may, in the
Committee’s sole discretion, be transferable by gift or domestic relations order
to (i) the grantee’s child, stepchild, grandchild, parent, stepparent,

 

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grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, daughter-in-law, son-in-law, brother-in-law or sister-in-law,
including adoptive relationships (such persons, “Family Members”), (ii) a
company, partnership, limited liability company or other business entity whose
only stockholders, partners or members, as applicable are the grantee and/or
Family Members, or (iii) a trust in which the Grantee and/or Family Members have
all of the beneficial interests, and subsequent to any such transfer any Award
may be exercised by any such transferee.

 

13. Adjustments; Business Combinations

(a) Adjustments. In the event of a reclassification, recapitalization, stock
split, reverse stock split, stock dividend, combination of shares or other
similar event, the maximum number and kind of shares reserved for issuance or
with respect to which Awards may be granted under the Plan as provided in
Section 4 shall be adjusted to reflect such event, and the Committee shall make
such adjustments as it deems appropriate and equitable in the number, kind and
price of shares covered by outstanding Awards made under the Plan, and in any
other matters that relate to Awards and that are affected by the changes in the
shares referred to above.

(b) Change in Control. In the event of any proposed Change in Control under
Section 2(d)(i), (ii) or (iii), the Committee shall take such action as it deems
appropriate and equitable to effectuate the purposes of this Plan and to protect
the grantees of Awards, which action may include, without limitation, any one or
more of the following, provided such action is in compliance with Code
Section 409A if applicable: (i) acceleration or change of the exercise and/or
expiration dates of any Award to require that exercise be made, if at all, prior
to the Change in Control; (ii) cancellation of any Award upon payment to the
holder in cash of the Fair Market Value of the Stock subject to such Award as of
the date of (and, to the extent applicable, as established for purposes of) the
Change in Control, less the aggregate exercise price, if any, of the Award; and
(iii) in any case where equity securities of another entity are proposed to be
delivered in exchange for or with respect to Stock of the Company, arrangements
to have such other entity replace the Awards granted hereunder with awards with
respect to such other securities, with appropriate adjustments in the number of
shares subject to, and the exercise prices under, the Award.

(c) Dissolution and Liquidation. In the event the Company dissolves and
liquidates (other than pursuant to a plan of amalgamation, merger or
reorganization), then notwithstanding any restrictions on exercise set forth in
this Plan or any Grant Agreement, or other agreement evidencing a stock option,
Stock Appreciation Right, Phantom Stock, Restricted Stock or Restricted Stock
Unit Award, provided such action is in compliance with Code Section 409A if
applicable: (i) each grantee shall have the right to exercise his stock option,
Stock Appreciation Right, or Phantom Stock or to require delivery of Stock
certificates, and/or registration of the Stock, representing any such Restricted
Stock or Restricted Stock Unit Award, at any time up to ten (10) days prior to
the effective date of such liquidation and dissolution; and (ii) the Committee
may make arrangements with the grantees for the payment of appropriate
consideration to them for

 

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the cancellation and surrender of any stock option, Stock Appreciation Right,
Phantom Stock, Restricted Stock or Restricted Stock Unit Award that is so
canceled or surrendered at any time up to ten (10) days prior to the effective
date of such liquidation and dissolution. The Committee may establish a
different period (and different conditions) for such exercise, delivery,
cancellation or surrender to avoid subjecting the grantee to liability under
Section 16(b) of the Exchange Act. Any stock option, Stock Appreciation Right or
Phantom Stock not so exercised, canceled or surrendered shall terminate on the
last day for exercise prior to such effective date; and any Restricted Stock or
Restricted Stock Units as to which there has not been such delivery of Stock
certificates or that has not been so canceled or surrendered, shall be forfeited
on the last day prior to such effective date. The Committee shall give to each
grantee written notice of the commencement of any proceedings for such
liquidation and dissolution of the Company and the grantee’s rights with respect
to his outstanding Award.

(d) Other Adjustments. The Committee is authorized to 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 the preceding paragraphs of this Section 13) affecting the Company,
or the financial statements of the Company or any Parent, Subsidiary or
Affiliate, 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.

Except as hereinbefore expressly provided, issuance by the Company of stock of
any class or securities convertible into stock of any class, for cash, property,
labor or services, upon direct sale, upon the exercise of rights or warranty to
subscribe therefor, or upon conversion of stock or obligations of the Company
convertible into such stock or other securities, and in any case whether or not
for fair value, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number of shares of Stock subject to Awards
theretofore granted or the purchase price per share of Stock subject to Awards.

 

14. Termination and Amendment

(a) Amendment or Termination by the Board. The Board, without further approval
of the stockholders, may amend or terminate the Plan or any portion thereof at
any time, except that no amendment shall become effective without prior approval
of the stockholders of the Company to increase the number of shares of Stock
subject to the Plan or if stockholder approval is necessary to comply with any
tax or regulatory requirement or rule of any exchange or national automated
quotation system upon which the Stock is listed or quoted (including for this
purpose stockholder approval that is required for continued compliance with Rule
16b-3 or stockholder approval that is required to enable the Committee to grant
Incentive Stock Options pursuant to the Plan).

 

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(b) Amendments by the Committee. The Committee shall be authorized to make minor
or administrative amendments to the Plan as well as amendments to the Plan that
may be dictated by requirements of U.S. federal or state laws applicable to the
Company or that may be authorized or made desirable by such laws. The Committee
may amend any outstanding Award in any manner as provided in Sections 3(c) and
(d) and to the extent that the Committee would have had the authority to make
such Award as so amended.

(c) Approval of Grantees. No amendment to the Plan or any Award may be made that
would materially adversely affect any outstanding Award previously made under
the Plan without the approval of the grantee. Further, no amendment to the Plan
or an Award shall be made which would cause any Award to fail to either comply
with or meet an exception from Code Section 409A.

 

15. Non-Guarantee of Employment

Nothing in the Plan or in any Grant Agreement thereunder shall confer any right
on an employee to continue in the employ of the Company or any Parent,
Subsidiary or Affiliate or shall interfere in any way with the right of the
Company or any Parent, Subsidiary or Affiliate to terminate an employee at any
time.

 

16. Termination of Employment

For purposes of maintaining a grantee’s continuous status as an employee and
accrual of rights under any Award, transfer of an employee among the Company and
the Company’s Parent, Subsidiaries or Affiliates shall not be considered a
termination of employment. Nor shall it be considered a termination of
employment for such purposes if an employee is placed on military or sick leave
or such other leave of absence that is considered as continuing intact the
employment relationship; in such a case, the employment relationship shall be
continued until the date when an employee’s right to reemployment shall no
longer be guaranteed either by law or contract.

 

17. Written Agreement

Each Grant Agreement entered into between the Company and a grantee with respect
to an Award granted under the Plan shall incorporate the terms of this Plan and
shall contain such provisions, consistent with the provisions of the Plan, as
may be established by the Committee.

 

18. Non-Uniform Determinations

The Committee’s determinations under the Plan (including without limitation
determinations of the persons to receive Awards, the form, amount and time of
such Awards, the terms and provisions of such Awards and the agreements
evidencing same) need not be uniform and may be made by it selectively among
persons who receive, or are eligible to receive, Awards under the Plan, whether
or not such persons are similarly situated.

 

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19. Limitation on Benefits

With respect to persons subject to Section 16 of the Exchange Act, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3. To the extent any provision of the Plan or action by the Committee fails
to so comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Committee.

 

20. Listing and Registration

If the Company determines that the listing, registration or qualification upon
any securities exchange or upon any listing or quotation system established by
the National Association of Securities Dealers, Inc. or under any law of Stock
subject to any Award is necessary or desirable as a condition of, or in
connection with, the granting of same or the issue or purchase of Stock
thereunder, no such Award may be exercised in whole or in part and no
restrictions on such Award shall lapse, unless such listing, registration or
qualification is effected free of any conditions not acceptable to the Company.

 

21. Compliance with Securities Law

The Company may require that a grantee, as a condition to exercise of an Award,
and as a condition to the delivery of any Stock certificate, provide to the
Company, at the time of each such exercise and each such delivery, a written
representation that the Stock being acquired shall be acquired by the grantee
solely for investment and will not be sold or transferred without registration
or the availability of an exemption from registration under the Securities Act
and applicable state securities laws. The Company may also require that a
grantee submit other written representations that will permit the Company to
comply with applicable federal and state securities laws in connection with the
issuance of the Stock, including representations as to the knowledge and
experience in financial and business matters of the grantee and the grantee’s
ability to bear the economic risk of the grantee’s investment. The Company may
require that the grantee obtain a “purchaser representative” as that term is
defined in applicable federal and state securities laws. Any Stock certificates
for shares issued pursuant to this Plan may bear a legend restricting
transferability of the Stock unless such shares are registered or an exemption
from registration is available under the Securities Act and applicable
securities laws of the states of the U.S. The Company may notify its transfer
agent to stop any transfer of Stock not made in compliance with these
restrictions. Stock shall not be issued with respect to an Award granted under
the Plan unless the exercise of such Award and the issuance and delivery of
Stock certificates for such shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act,
the Exchange Act, the rules and regulations promulgated thereunder and the
requirements of any national securities exchange or Nasdaq System upon which the
Stock may then be listed or quoted, and shall be further subject to the approval
of counsel for the Company with respect to such compliance to the extent such
approval is sought by the Committee.

 

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22. No Trust or Fund Created

Neither the Plan nor any Award shall create or be construed to create a trust or
separate fund of any kind or a fiduciary relationship between the Company and a
grantee or any other person. To the extent that any grantee or other person
acquires a right to receive payments from the Company pursuant to an Award, such
right shall be no greater than the right of any unsecured general creditor of
the Company.

 

23. No Limit on Other Compensation Arrangements

Nothing contained in the Plan shall prevent the Company or any Parent,
Subsidiary or Affiliate from adopting or continuing in effect other compensation
arrangements (whether such arrangements be generally applicable or applicable
only in specific cases), including without limitation the granting of stock
options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights or
Phantom Stock Units otherwise than under the Plan.

 

24. No Restriction of Corporate Action

Nothing contained in the Plan shall be construed to limit or impair the power of
the Company or any Parent, Subsidiary or Affiliate to make adjustments,
reclassifications, reorganizations, or changes in its capital or business
structure, or to amalgamate, merge or consolidate, liquidate, sell or transfer
all or any part of its business or assets or, except as otherwise provided
herein, or in a Grant Agreement, to take other actions which it deems to be
necessary or appropriate. No employee, beneficiary or other person shall have
any claim against the Company or any Parent, Subsidiary or Affiliate as a result
of such action.

 

25. Governing Law

The validity, construction and effect of the Plan, of Grant Agreements entered
into pursuant to the Plan, and of any rules, regulations, determinations or
decisions made by the Board or Committee relating to the Plan or such Grant
Agreements, and the rights of any and all persons having or claiming to have any
interest therein or thereunder, shall be determined in accordance with
applicable federal laws and the laws of the State of Maryland. Unless otherwise
provided in the Award Agreement, recipients of an Award under the Plan are
deemed to submit to the exclusive jurisdiction and venue of the federal or local
courts of the State of Maryland, to resolve any and all issues that may arise
out of or relate to the Plan or any related Grant Agreement. The Awards under
the Plan are intended to either comply with or meet an exception from Code
Section 409A and shall be so interpreted.

 

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26. Plan Subject to Charter and Bylaws

This Plan is subject to the Certificate of Incorporation and Bylaws of the
Company, as they may be in effect from time to time.

 

27. Effective Date; Termination Date

The Plan is effective as of the date on which the Plan is approved by the
stockholders of the Company. No Award shall be granted under the Plan after the
close of business on the day immediately preceding the tenth (10th) anniversary
of the effective date of the Plan. Subject to other applicable provisions of the
Plan, all Awards made under the Plan prior to such termination of the Plan shall
remain in effect until such Awards have been satisfied or terminated in
accordance with the Plan and the terms of such Awards.

Date Approved by the Board: March 12, 2007

Date Approved by the Stockholders: June 13, 2007

 

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