Exhibit 10.1

FOREST LABORATORIES, INC.
2007 EQUITY INCENTIVE PLAN
(as amended May 17, 2010)(1)

1.  The Plan.  This 2007 Equity Incentive Plan (the “Plan”) is intended to
encourage ownership of stock or stock equivalents of Forest Laboratories, Inc.
(the “Company”) by employees and non-employee directors of the Company and its
subsidiaries and to provide additional incentive for them to promote the success
of the business of the Company.

2.  Types of Awards.  The following types of awards (each, an “Award”) may be
granted: (a) options intended to qualify as incentive stock options (“ISOs”)
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”), (b) options not intended to qualify as ISOs (“NSOs” and
together with ISOs, “Options”), (c) stock appreciation rights (“SARs”),
(d) restricted stock grants (“Stock Grants”), and (e) stock equivalent units
(“Stock Units”).

3.  Stock Subject to the Plan.  Subject to the provisions of Section 12 hereof,
the total number of shares of Common Stock, par value $.10 per share, of the
Company (the “Stock”) which may be issued pursuant to Awards issued under the
Plan is 28,950,000.  Upon approval of the Plan, no further options will be
available for grant under the Company’s 2004, 2000 or 1998 Option Plans.  Shares
of Stock issued under the Plan may be authorized but unissued shares of Stock or
Stock held as treasury stock.  The following shares of Stock may also be used
for issuance of Awards under the Plan:  (i) shares of Stock which have been
forfeited under a Stock Grant; and (ii) shares of Stock which are allocable to
the unexercised portion of an Option issued under the Plan which has expired or
been terminated.  Subject to the provisions of Section 12, no more than
17,000,000 shares of Stock may be issued upon the exercise of ISOs issued under
the Plan.  Each share of Stock issuable upon exercise of an Option or subject to
a Stock Grant and each share of Stock as to which an SAR or a Stock Unit is
associated shall be counted as one share of Stock at the time of grant for
purposes of the limit set forth under this Section and the limit set forth under
Section 7(b).  With respect to the combination of a Tandem SAR and an Option,
where the exercise of the Tandem SAR or the Option results in the cancellation
of the other, each share of Stock associated with a Tandem SAR and the
associated Option will only count as one share of Stock at the time of grant for
purposes of the limits set forth in this Section and in Section 7(b).

4.  Administration.  The Plan shall be administered by a committee (the
“Committee”) composed of no fewer than three (3) members of the Board of
Directors of the Company (the “Board”) each of whom meets the definition of
“outside director” under the provisions of Section 162(m) of the Code and the
definition of “non-employee director” under the provisions of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) or rules and regulations
promulgated thereunder.  Except as otherwise provided herein, the Committee
shall have plenary authority in its discretion, among other things, to determine
to whom among the eligible persons Awards shall be granted, the number of shares
of Stock covered by or associated with an Award, the terms of each Award, and
whether any Option is intended to be an ISO or an NSO.  The Committee shall have
plenary authority, subject to the express provisions of the Plan, to interpret
the Plan, to prescribe, amend and rescind any rules and regulations relating to
the Plan and to take such other action in connection with the Plan as it deems
necessary or advisable.  The interpretation, construction and administration by
the Committee of any provisions of the Plan or of any Award granted hereunder
shall be final and binding on recipients of Awards hereunder.

5.  Eligibility.  All employees (including, except for purposes of the last
sentence of Section 7(a), persons who have accepted offers of employment) and
non-employee directors of the Company and its subsidiaries (including
subsidiaries which become such after adoption of the Plan) shall be eligible for
Awards under the Plan.  In making the determination as to employees to whom
Awards shall be granted and as to the number of shares of Stock to be covered by
or associated with such Awards, the Committee shall take into account the duties
of the respective employees, their present and potential contributions to the
success of the Company and such other factors as the Committee shall deem
relevant in connection with accomplishing the purpose of the Plan.  The adoption
of the Plan shall not be deemed to give any employee any right to an Award,
except to the extent and upon such terms and conditions as may be determined by
the Committee.  Neither the Plan nor any Award granted hereunder is intended to
or shall confer upon any Grantee any right with respect to continuation of
employment by the Company or any of its subsidiaries.

         

(1) This copy of the 2007 Equity Incentive Plan incorporates amendments adopted
by the Company’s stockholders at the 2010 Annual Meeting and is effective as of
May 17, 2010, the date on which the Board of Directors approved such amendments.

 
1

--------------------------------------------------------------------------------

 

6.  Grant of Options and Stock Grants to Non-Employee Directors.

(a)  Grant upon Initial Election.  Options to purchase 20,000 shares of Stock,
or such number as may hereafter be approved by the Board of Directors, shall
automatically be granted under the Plan to each non-employee director who is
first appointed or elected to the Board on or after the Effective Date (as such
term is defined in Section 13 below) and prior to the expiration of the Plan on
the date of such appointment or election of such non-employee director.  Subject
to Section 8(g), each Option grant pursuant to this Section 6(a) shall be
exercisable as to 25% of the number of shares of Stock covered thereby on the
six-month anniversary of the grant date and as to an additional 25% of the
number of shares of Stock covered thereby on each of the first, second and third
annual anniversaries of the date of the Option grant.

(b)  Annual Grant.  Annually on the date of his election or re-election to the
Board, each then serving non-employee member of the Board shall automatically be
granted under the Plan (1) that number of Options having a value of $75,000
calculated on the grant date in accordance with the Black-Scholes option pricing
model (utilizing the same assumptions that the Company utilizes in preparation
of its financial statements), with the number of Options rounded up to the
nearest whole share, and (2) a Stock Grant covering that number of shares of
Stock having a Fair Market Value of $75,000 on the grant date, with the number
of shares rounded up to the nearest whole share.  Subject to Section 8(g), each
Option granted pursuant to this Section 6(b) shall be exercisable as to all
shares of Stock covered thereby on the six-month anniversary of the grant
date.  Subject to Section 10(f), each Stock Grant pursuant to this Section 6(b)
shall vest in four installments (in equal amounts as nearly as practicable) over
a three year period with the first installment vesting on the six-month
anniversary of the grant date and the remaining three installments vesting on
each of the first, second and third annual anniversary of the grant date.

(c)  Termination of Non-Employee Director Provisions of Existing Plan. The
provisions of this Section 6 shall supersede and replace provisions for the
automatic grant of options to the Company's non-employee directors contained in
the Company's 2004 Stock Option Plan, and no options shall be granted pursuant
to the provisions of such plan on or after the Effective Date.

7.  Certain Limits on Awards.

(a)  Limit on ISOs.  The aggregate Fair Market Value (determined as of the date
of the Option grant) of Stock with respect to which ISOs granted to an employee
(whether under the Plan or under any other stock option plan of the Company or
its subsidiaries) become exercisable for the first time in any calendar year may
not exceed $100,000 (or such other amount as the Internal Revenue Service may
decide from time to time for purposes of Section 422 of the Code). If any grant
of Options is made to a Grantee in excess of the limits provided in the Code,
the excess shall automatically be treated as an NSO.  Only employees of the
Company or any of its subsidiaries shall be eligible to receive the grant of an
ISO.

(b)  Limit on all Awards.  The number of shares of Stock with respect to which
an employee may be granted Awards under the Plan during any calendar year shall
not exceed 600,000, subject to the provisions of Section 12.

8.  Terms and Conditions of Options.   The Committee may in its discretion grant
Options, which shall be subject to the following terms and conditions and such
other terms and conditions as the Committee may prescribe:

(a)  Form of Option.  Each Option granted pursuant to the Plan shall be
evidenced by an agreement (the “Option Agreement”) which shall clearly identify
the status of the Option granted (i.e., whether an ISO or an NSO) and which
shall be in such form as the Committee shall from time to time approve.  The
Option Agreement shall comply in all respects with the terms and conditions of
the Plan and may contain such additional provisions, including, without
limitation, restrictions upon the exercise of the Option as the Committee shall
deem advisable.

(b)  Stated Term.  The term of each Option granted to an employee shall be for a
maximum of ten years from the date of granting thereof, or a maximum of five
years in the case of an ISO granted to a 10% Holder (as such term is defined in
Section 17), but may be for a lesser period or be subject to earlier termination
as provided by the Committee, the provisions of the Plan or the Option
Agreement.  The term of each Option granted to a non-employee director shall be
ten years from the date of granting thereof.

(c)  Option Exercise Price.  Each Option shall state a per share option exercise
price, which shall be not less than 100% of the Fair Market Value of a share of
Stock on the date of the Option grant, nor less than 110% of such Fair Market
Value in the case of an ISO granted to an individual who, at the time the Option
is granted, is a 10% Holder.  The Fair Market Value of shares of Stock shall be
determined by the Committee based upon (i) the average of the high and low
prices of the Stock on the New York Stock Exchange on the date of the granting
of the Award, or (ii) such other measure of fair market value as may reasonably
be determined by the Board (but consistent with the rules under Section 409A of
the Code).  “Fair Market Value” as used throughout the Plan shall mean the fair
market value as determined in accordance with this Section.

 
2

--------------------------------------------------------------------------------

 

(d)  Exercise of Options.  An Option may be exercised from time to time as to
any part or all of the Stock as to which it is then exercisable in accordance
with its terms, provided, however, that an Option may not be exercised as to
fewer than 100 shares at any time (or for the remaining shares then purchasable
under the Option, if fewer than 100 shares).  In addition, except as otherwise
provided by the Committee, Options granted to employees may not be exercised
prior to the expiration of six months from the date of Option grant.  The Option
exercise price shall be paid in full at the time of the exercise thereof (i) in
cash, (ii) by shares of Stock (including by withholding shares of Stock
deliverable upon exercise of the Option) with a Fair Market Value equal to such
exercise price, or (iii) by a combination of cash and shares of Stock pursuant
to clause (ii) above, provided that (A) the withholding of shares of Stock
deliverable upon exercise of the Option shall not be permitted with respect to
the exercise of any Option intended to qualify as an ISO and (B) any shares of
Stock used in payment of the exercise price of an ISO outstanding on December 8,
2008 must have been owned by the Grantee for at least six months.  The holder of
an Option shall not have any rights as a stockholder with respect to the Stock
issuable upon exercise of an Option prior to the date of exercise.

(e)  Non-Transferability of Options.  Except as provided in the following
sentence, an Option shall not be transferable other than by will or the laws of
descent and distribution and shall be exercisable during the lifetime of the
Grantee only by him or his legal representative.  NSOs may be transferred by the
Grantee by gift to members of the Grantee's immediate family, including trusts
for the benefit of such family members and partnerships or limited liability
companies in which such family members are the only owners.  A transferred NSO
shall be subject to all of the same terms and conditions of the Plan and the
Option Agreement as if such NSO had not been transferred.

(f)  Termination of Employment.

(i)  Employment Termination Date.  For purposes of the Plan, the date on which a
Grantee ceases to be employed by the Company or any of its subsidiaries for any
reason following the grant of the Award is referred to as the “Employment
Termination Date.”

(ii)  Disability or Death of Grantee.  In the event of an Employment Termination
Date as a result of a Grantee’s Disability, the Option granted to such Grantee
shall continue to vest in accordance with its terms as if such Grantee continued
to provide services to the Company and shall remain exercisable for the balance
of its stated term, provided that such Grantee provided services to the Company
or any of its subsidiaries for a period of at least one year following the grant
of the Option and prior to the Employment Termination Date or as otherwise
determined by the Committee.  In the event of a Grantee’s death (A) while
providing services to the Company or any of its subsidiaries as an employee or
(B) following a termination of employment due to Disability, the Option shall
become fully exercisable by the Grantee’s estate upon such Grantee’s death and
shall remain exercisable for a period of twelve (12) months following the
Grantee’s death (or, if shorter, the remainder of the Option term as set forth
in the Option Agreement), provided that such Grantee was employed by the Company
or any of its subsidiaries for a period of at least one year following the grant
of the Option and prior to the Employment Termination Date or as otherwise
determined by the Committee.

(iii)  Other Terminations of Employment.  Except as set forth in clause (ii)
above or as otherwise determined by the Committee, the number of shares of Stock
which may be purchased upon the exercise of an Option granted to an employee
shall not exceed the number of shares of Stock as to which such Option was
exercisable pursuant to the Plan and the Option Agreement as of the Employment
Termination Date.  If the Grantee’s cessation of employment was as a result of
the Grantee’s Retirement, the Option shall remain exercisable for the balance of
its stated term, provided that such Grantee was employed by the Company or any
of its subsidiaries for a period of at least one year following the grant of the
Option and prior to the Employment Termination Date or as otherwise determined
by the Committee.  Except as otherwise set forth in this Section 8(f) or in the
Option Agreement, an Option granted to an employee shall remain exercisable for
three (3) months (or, if shorter, the remainder of the Option term as set forth
in the Option Agreement) following the Employment Termination Date.  For
purposes of the previous sentence only, with respect to NSO grants only, an
employee who continues to provide services to the Company as a non-employee
director of the Company or as a consultant to the Company following termination
of his employment by the Company or its subsidiary shall be deemed to continue
to be an employee of the Company for the period of such provision of services or
consultancy.

(iv)  Other Limitations.  Notwithstanding anything to the contrary in this
Section 8(f), if the employment of a Grantee is terminated by the Company or any
of its subsidiaries for gross misconduct, including without limitation,
violations of applicable Company policies or legal or ethical standards, all
rights under the Option shall terminate on the Employment Termination Date.  In
addition to the foregoing, the Committee may impose such other limitations and
restrictions on the exercise of an Option following the Employment Termination
Date as it deems appropriate, including a provision for the termination of an
Option in the event of the breach by the Grantee of any of his contractual or
other obligations to the Company.

 
3

--------------------------------------------------------------------------------

 

(v)  Certain Definitions used herein.  The term “Retirement” as used herein
shall mean the termination of the employment of a Grantee with the Company or
its subsidiary (other than as a result of death or Disability or willful
misconduct or activity deemed detrimental to the interests of the Company as
determined by the Company) on or after (A) the Grantee’s 65th birthday or (B)
the Grantee’s 55th birthday if the Grantee has completed ten years of service
with the Company or any of its subsidiaries.  The term “Disability” as used
herein shall have the meaning ascribed to “permanent and total disability” as
set forth in Section 22(e)(3) of the Code.

(g)  Termination of Service of a Non-Employee Director.  The number of shares of
Stock which may be purchased upon the exercise of an Option granted to a
non-employee director pursuant to Section 6 shall not exceed the number of
shares of Stock as to which such Option was exercisable pursuant to the Plan and
the Option Agreement as of the date on which the Grantee ceased to serve as a
director of the Company.  Options exercisable in accordance with the previous
sentence shall remain exercisable for the remainder of the Option term as set
forth in the Option Agreement.

9.  Terms and Conditions of Stock Appreciation Rights.  The Committee may in its
discretion grant a right to receive the appreciation in the Fair Market Value of
shares of Stock (a “Stock Appreciation Right” or “SAR”), which shall be subject
to the following terms and conditions and such other terms and conditions as the
Committee may prescribe:

(a)  Form of SAR.  Each SAR granted pursuant to the Plan shall be evidenced by
an agreement (the “SAR Agreement”) which shall be in such form as the Committee
shall from time to time approve.  SARs may be granted alone (a “Freestanding
SAR”) or in combination with an Option (a “Tandem SAR”).

(b)  Grant and Term of SARs.  The term of each Freestanding SAR shall be for a
maximum of ten years from the date of granting thereof, but may be for a lesser
period or be subject to earlier termination as provided by the Committee or the
provisions of the Plan or SAR Agreement.  Any Tandem SAR must be granted at the
same time as the related Option is granted, and such Tandem SAR or applicable
portion thereof shall terminate and no longer be exercisable upon the
termination or exercise of the related Option, except that a Tandem SAR granted
with respect to less than the full number of shares of Stock covered by the
related Option shall not be reduced until the number of shares of Stock then
issuable upon exercise of the related Option is equal to or less than the number
of shares of Stock covered by the Tandem SAR.

(c)  SAR Exercise Price.  Each SAR Agreement shall state a per share exercise
price, which shall be not less than 100% of the Fair Market Value of a share of
Stock on the date of the SAR grant.

(d)  Exercise and Value of SARs.  An SAR may be exercised from time to time to
the extent it is then exercisable in accordance with its terms.  No SAR shall be
exercised prior to the expiration of six months from the date of the SAR
grant.  Upon exercise of a Freestanding SAR, the holder will be entitled to
receive an amount in cash or shares of Stock, as set forth in the SAR Agreement,
equal to the excess of the Fair Market Value of a share of Stock on the date of
the exercise less the exercise price, multiplied by the number of shares of
Stock covered by such Freestanding SAR.  Upon the exercise of a Tandem SAR, the
holder may surrender any related Option or portion thereof which is then
exercisable and elect to receive in exchange therefor cash or shares of Stock,
as set forth in the SAR Agreement, in an amount equal to the excess of the Fair
Market Value of such share of Stock on the date of the exercise less the
exercise price, multiplied by the number of shares of Stock covered by the
related Option or the portion thereof which is so surrendered.  Any Option
related to a Tandem SAR shall no longer be exercisable to the extent the related
Tandem SAR has been exercised.  No fractional shares of Stock shall be issued
hereunder.

(e)  Payment of Stock Appreciation Right.  Payment of an SAR shall be in the
form of shares of Stock, cash or any combination of shares of Stock and cash.
The form of payment upon exercise of such a right shall be determined by the
Committee either at the time of grant of the SAR or at the time of exercise of
the SAR.  All shares of Stock issued upon the exercise of an SAR shall be valued
at the Fair Market Value of such Stock at the time of the exercise of the SAR.

(f)  Transfer of SARs.  All SARs shall be subject to the same restrictions on
transfer as are applicable to NSOs pursuant to Section 8(e), provided that
Tandem SARs will not be transferable separately from the related Option, and
provided further, that Tandem SARs associated with ISOs will not be transferable
other than by will or the laws of descent and distribution.

(g)  Termination of Employment.  The terms and conditions relating to the
treatment of Options following Termination of Employment set forth in Section
8(f) shall apply to SARs, and the holders of SARs shall have the same rights and
be subject to the same restrictions and limitations as Grantees pursuant to such
Section.

(h)  No Dividends or Dividend Equivalents.  Notwithstanding anything to the
contrary herein, no dividends or dividend equivalents will be payable with
respect to outstanding SARs.

 
4

--------------------------------------------------------------------------------

 

10.  Terms and Conditions of Stock Grants.  The Committee may in its discretion
grant Stock Grants, which shall be made subject to the following terms and
conditions and such other terms and conditions as the Committee may prescribe:

(a)  Form of Grant.  Each Stock Grant shall be evidenced by an agreement (the
“Restricted Stock Agreement”) executed by the Company and the Grantee, in such
form as the Committee shall approve, which Agreement shall be subject to the
terms and conditions set forth in this Section 10 and shall contain such
additional terms and conditions not inconsistent with the Plan as the Committee
shall prescribe.

(b)  Number of Shares Subject to an Award; Consideration.  The Restricted Stock
Agreement shall specify the number of shares of Stock subject to the Stock
Grant.  A Stock Grant shall be issued for such consideration as the Committee
may determine appropriate and may be issued for no cash consideration or for
such minimum cash consideration as may be required by applicable law.

(c)  Conditions.  Each Stock Grant shall be subject to such conditions as the
Committee shall establish (the “Conditions”), which may include, but not be
limited to, conditions which are based upon the continued employment of the
Grantee over a specified period of time, or upon the attainment by the Company
of one or more measures of the Company’s operating performance, such as
earnings, revenue, operating or net cash flows, financial return ratios, total
stockholder return or such other measures as may be determined by the Committee
(the “Performance Conditions”), or upon a combination of such factors.  Measures
of operating performance may be based upon the performance of the Company or
upon the performance of a defined business unit or function for which the
Grantee has responsibility or over which the Grantee has influence.  The Grantee
shall have a vested right to the Stock subject to the Stock Grant to the extent
that the Conditions applicable to such Stock Grant have been satisfied.  A
Grantee shall forfeit all of his right, title and interest in and to any Stock
subject to a Stock Grant in the event that (and to the extent that) such
Conditions are not satisfied.

(d)  Limitations on Transferability.  As used herein, the term “Restricted
Period” means, with respect to any shares of Stock subject to a Stock Grant, the
period beginning on the Award Date and ending on the date on which the
Conditions applicable to the Stock Grant have been met.  During the Restricted
Period, the Grantee will not be permitted to sell, transfer, exchange, pledge,
assign or otherwise dispose of any shares of Stock subject to the Stock Grant
(except for shares of Stock as to which the Grantee’s rights have vested);
provided, however, that the Committee in its discretion may permit the transfer
by the Grantee by gift of such shares of Stock to members of the Grantee’s
immediate family, including trusts for the benefit of such family members and
partnerships or limited liability companies in which such family members are the
only owners, it being understood that any shares of Stock so transferred shall
remain subject to all of the terms and conditions of the Plan and the applicable
Restricted Stock Agreement as if the shares of Stock had not been
transferred.  Except as provided in the preceding sentence, any attempt to
transfer shares of Stock subject to a Stock Grant prior to the Conditions
applicable to such Stock Grant being satisfied shall be ineffective.

(e)  Termination of Employment.

(i)  Disability or Death of Grantee.  In the event of an Employment Termination
Date during the Restricted Period as a result of a Grantee’s Disability or
death, provided the Grantee was employed by the Company or any of its
subsidiaries for a period of at least one year following receipt of the Stock
Grant and prior to the Employment Termination Date or as otherwise determined by
the Committee, all remaining time-based restrictions shall be accelerated and be
deemed to have been satisfied as of the Employment Termination Date, and all
stock underlying a Stock Grant subject to Performance Conditions which have not
been satisfied shall be forfeited and shall be retired by the Company and resume
the status of treasury shares as of the Employment Termination Date.

(ii)  Other Terminations of Employment.  Upon termination of employment during
the Restricted Period for any reason other than as set forth in Section 10(e)(i)
above, all shares of Stock subject to a Stock Grant as to which the Conditions
have not lapsed or been satisfied or waived shall be forfeited by the Grantee
and shall be retired by the Company and shall resume the status of treasury
shares as of the Employment Termination Date.  In the event of the Grantee’s
cessation of employment for any reason, the Committee may, in its sole
discretion when it finds that such an action would be in the best interests of
the Company, accelerate or waive in whole or in part any or all time-based or
continuous service Conditions or Performance Conditions with respect to all or
part of such Grantee’s Stock Grant, except as to any Stock Grant that is
intended to constitute “performance-based compensation” under Section 162(m) of
the Code, and provided the Committee may not exercise such discretion in
connection with a termination of employment for gross misconduct, including
without limitation, violations of applicable Company policies or legal or
ethical standards.

 
5

--------------------------------------------------------------------------------

 

(f)  Termination of Service of a Non-Employee Director.  With respect to Stock
Grants to non-employee directors pursuant to Section 6(b), in the event of a
termination of service as director of a Grantee as a result of such Grantee’s
death, provided the Grantee had served as a director to the Company or any of
its subsidiaries for a period of at least one year following receipt of the
Stock Grant and prior to the date of such Grantee’s termination of service, all
remaining time-based restrictions shall be accelerated and be deemed to have
been satisfied as of the date of such director’s termination of service.  Upon
termination of service during the Restricted Period in any other case, all
shares of Stock subject to a Stock Grant to a non-employee director pursuant to
Section 6(b) as to which the Conditions have not lapsed shall be forfeited by
the Grantee and shall be retired by the Company and shall resume the status of
treasury shares as of the termination date.

(g)  Rights as a Stockholder.  Except as otherwise provided herein or as the
Committee may otherwise determine, a Grantee of a Stock Grant shall have all of
the rights of a stockholder of the Company, including the right to vote the
shares subject to a Stock Grant and to receive dividends and other distributions
thereon, provided that distributions in the form of stock shall be subject to
all of the terms and conditions of the Plan and the Restricted Stock Agreement.

11.  Terms and Conditions of Stock Equivalent Units.  The Committee may in its
discretion grant a right to receive the Fair Market Value of shares of Stock
upon the Settlement Date (as defined below) subject to satisfaction of
applicable Conditions (a “Stock Unit”), which shall be made subject to the
following terms and conditions and such other terms and conditions as the
Committee may prescribe:
 (a)  Form of Grant.  Each Stock Unit shall be evidenced by an agreement (the
“Stock Unit Agreement”) executed by the Company and the Grantee, in such form as
the Committee shall approve, which Agreement shall be subject to the terms and
conditions set forth in this Section 11 and shall contain such additional terms
and conditions not inconsistent with the Plan as the Committee shall prescribe.

(b)  Number of Shares Subject to an Award; Consideration.  The Stock Unit
Agreement shall specify the number of shares of Stock associated with the Stock
Unit.  A Stock Unit shall be issued for such consideration as the Committee may
determine appropriate and may be issued for no cash consideration or for such
minimum cash consideration as may be required by applicable law.

(c)  Term and Conditions.  The term of each Stock Unit shall be for a maximum of
ten years from the date of granting thereof, but may be for a lesser period or
be subject to earlier termination as provided by the Committee, the provisions
of the Plan or the Stock Unit Agreement.  Each Stock Unit shall be subject to
such Conditions as the Committee shall establish, including time-based and
Performance Conditions.

(d)  Value and Payment.  The value of a Stock Unit shall be determined based on
the Fair Market Value of a share of Stock on the Settlement Date, multiplied by
the number of shares of Stock associated with the Stock Unit.  The “Settlement
Date” shall be the earlier of the date designated as the “Payment Date” in the
Stock Unit Agreement or the Grantee’s Employment Termination Date.  Settlement
shall be completed by the Company as soon as practicable, but no later than
seventy-five days following the Settlement Date, subject however, to the
provisions of Section 11(h) below. Stock Units may be settled in shares of Stock
or in cash or any combination of the two, or in any other form of consideration
as determined by the Committee and set forth in the Stock Unit Agreement.

(e)  Limitations on Transferability.  The Grantee may not assign the Stock Unit
Agreement or transfer, pledge, assign or otherwise dispose of any of his rights
under the Stock Unit Agreement, except that the Committee in its discretion may
permit the Grantee to transfer the Agreement by gift to members of the Grantee’s
immediate family, including trusts for the benefit of such family members and
partnerships or limited liability companies in which such family members are
owners, it being understood that any Agreement so transferred shall remain
subject to all of the terms and conditions of the Plan as if such Agreement had
not been transferred.  Except as provided in the preceding sentence, any attempt
to transfer the Stock Unit Agreement or transfer the Grantee’s rights thereunder
shall be ineffective.

(f)  Other Limitations.  If the employment of a Grantee is terminated by the
Company or any of its subsidiaries for gross misconduct, including without
limitation, violations of applicable Company policies or legal or ethical
standards, as determined by the Company, all rights under the Stock Unit shall
terminate on the date of such termination of employment.

(g)  No Dividends or Dividend Equivalents.  No dividends or dividend equivalents
will be paid with respect to Stock Units.

 
6

--------------------------------------------------------------------------------

 

(h)  Delay in Payment.  Notwithstanding anything to the contrary contained in
this Section 11, so long as a payment with respect to a Stock Unit constitutes
“non-qualified deferred compensation” for purposes of Section 409A of the Code,
no payment will be made with respect to any Stock Unit Award  to any person who,
on the Settlement Date, is a “specified employee” of the Company or its
subsidiaries (within the meaning of Section 409A(a)(2)(B)(i) of the Code and as
determined by the Committee) on account of such Grantee’s Employment Termination
Date until the date which is six months after the Settlement Date (or, if
earlier than the end of such six month period, the date of  such Grantee’s
death).  In lieu of designating specified employees for purposes of Section 409A
of the Code, the Board in its discretion may identify all employees of the
Company and its subsidiaries as “specified employees” for purposes of this
provision.  The provisions of this Section 11(h) will not apply to payments
under a Stock Unit Award that occur pursuant to a Change in Control (as defined
in Section 12(c) below) or in connection with the dissolution of the Company.

12.  Changes in Capitalization, Dissolutions and Change in Control.

(a) Changes in Capitalization. In the event of a change in the outstanding stock
of the Company (including but not limited to changes in either the number of
shares or the value of shares) by reason of any stock split, reverse stock
split, dividend or other distribution (whether in the form of shares, other
securities or other property, but not including regular cash dividends),
extraordinary cash dividend, recapitalization, merger in which the stockholders
of the Company immediately prior to the merger continue to own a majority of the
voting securities of the successor entity immediately after the merger,
consolidation, split-up, spin-off, reorganization, combination, repurchase or
exchange of shares or other securities, or other similar corporate transaction
or event, if the Committee shall determine in its sole discretion that, in order
to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, such transaction or event
equitably requires an adjustment in the aggregate number and/or class of shares
of Stock available under the Plan (including for this purpose the number of
shares of Stock available for issuance under the Plan or limit under Section
7(b)) or in the number, class and/or price of shares of Stock subject to
outstanding Options and/or Awards), such adjustment shall be made by the
Committee and shall be conclusive and binding for all purposes under the
Plan.  A participant holding an outstanding award has a legal right to an
adjustment that preserves without enlarging the value of such award, with the
terms and manner of such adjustment to be determined by the Committee.

(b)  Dissolution.  Notwithstanding any other provision of this Plan or any Award
Agreement entered into pursuant to the Plan, to the extent permitted by
applicable law, upon a dissolution of the Company: (i) all Options and SARs then
outstanding under the Plan shall become fully exercisable as of the effective
date of the dissolution; and (ii) all Conditions of all Stock Grants and Stock
Units then outstanding shall be deemed satisfied as of the effective date of the
dissolution.  In addition, the Board may in its discretion cancel all or any
portion of a Grantee’s then outstanding Options, SARs and Stock Units, and in
consideration of such cancellation, shall cause to be paid to such Grantee
pursuant to the plan of dissolution, an amount in cash equal to the difference
between the value of the consideration (as determined by the Board) received by
the stockholders of the Company for a share of Stock under the plan of
dissolution and any applicable exercise price.  Options, SARs and Stock Units
not exercised or cancelled prior to or upon a dissolution shall be terminated.

(c)  Change in Control.

(i)  If Awards issued pursuant to the Plan continue to be outstanding following
the effective date of a Change in Control, then in the event of a Qualified
Termination of a Grantee’s employment with the Company or any of its
subsidiaries during the three (3) year period following a Change in Control and
prior to the full vesting of an Award granted under the Plan prior to the Change
in Control, all outstanding unvested Awards granted to such Grantee prior to the
Change in Control shall immediately become fully vested and exercisable to the
extent permitted by law, notwithstanding any provisions of the Plan or of the
applicable Award Agreement to the contrary.

(ii)  If Awards issued pursuant to the Plan do not continue to be outstanding
following the effective date of a Change in Control, then to the extent Awards
are not substituted or replaced with Qualified Substitute Awards, (A) any
Options and SARs not so substituted or replaced shall become fully exercisable
as of the date of the Change in Control; and (B) the Conditions of any Stock
Grants and Stock Units not so substituted or replaced shall be deemed satisfied
as of the effective date of the Change in Control.  In addition, the Board
(constituted immediately prior to the effectiveness of such Change in Control)
may in its discretion cancel all or any portion of a Grantee’s then outstanding
Options, SARs and Stock Units, and in consideration of such cancellation, shall
cause to be paid to such Grantee upon the effectiveness of such Change in
Control, an amount in cash equal to the difference between the value of the
consideration (as determined by the Board) received by the stockholders of the
Company for a share of Stock in the Change in Control and any applicable
exercise price.  Options, SARs and Stock Units described in this clause (ii)
that are not substituted or replaced with Qualified Substitute Awards and are
not exercised or cancelled prior to or upon a Change in Control shall be
terminated.

 
7

--------------------------------------------------------------------------------

 

(iii)  For the purpose of this Section 12(c), the following terms shall have the
following meanings:

(A)  A “Change in Control” shall mean:

(1)  The acquisition (other than from the Company) by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), (excluding, for this
purpose, the Company or its affiliates, or any employee benefit plan of the
Company or its affiliates which acquires beneficial ownership of the Company) (a
“Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of more than 50% of either the then outstanding stock of
the Company or the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors of the Company; or

(2)  Individuals who, as of June 29, 2007, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board;
provided that any person becoming a director subsequent to such date whose
election or nomination for election was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding for this purpose any such person whose initial assumption of office as
a member of the Board occurs as a result of an actual or threatened election
contest or other actual or threatened solicitation of proxies or consents; or

(3)  Consummation of a reorganization, merger or consolidation, or sale or other
disposition of all or substantially all of the assets of the Company (a
“Business Consolidation”), in each case unless immediately following such
Business Combination, persons and entities who were the beneficial owners of at
least 50% of the outstanding stock of the Company immediately prior to such
Business Combination beneficially own, directly or indirectly, at least 50% of
the combined voting power entitled to vote generally in the election of
directors of the corporation resulting from such Business Combination.

(B)  A “Qualified Termination” shall mean:

(1)  A termination by the Company of a Grantee’s employment with the Company or
any of its subsidiaries for any reason other than the Grantee’s death,
Disability, willful misconduct or activity deemed detrimental to the interests
of the Company, provided the Grantee executes a general release in favor of the
Company; or

(2)  A resignation by the Grantee from employment with the Company or any of its
subsidiaries with good reason, which includes (i) a substantial adverse change
in the nature or status of the Grantee’s responsibilities, (ii) a reduction in
the Grantee’s base salary and/or levels of entitlement or participation under
any incentive plan or employee benefit program without the substitution or
implementation of an alternative arrangement of substantially equal value, or
(iii) the Company requiring the Grantee to relocate to a work location more than
fifty (50) miles from his work location prior to the Change in Control.

(C)  A “Qualified Substitute Award” shall mean an Award which has substantially
the same value and is subject to terms and conditions, including vesting, no
less favorable to the Grantee than the vesting and other terms and conditions
for which such Award was substituted, and which Award provides for immediate
vesting upon a Qualified Termination of the Grantee’s employment by the
successor employer within the three (3) year period following the date of grant
of such Qualified Substitute Award.

(d)  No Constraint on Corporate Action.  Nothing in the Plan shall be construed
(i) to limit or impair or otherwise affect the Company’s right or power to make
adjustments, reclassifications, reorganizations or changes to its capital or
business structure, or to merge or consolidate, dissolve or sell or transfer all
or any part of its business or assets, or (ii) except as provided in Section 15,
to limit the right or power of the Company or any subsidiary to take any action
which such entity deems to be necessary or appropriate.

(e)  Limitation on Adjustments under Section 162(m).  Notwithstanding anything
to the contrary in this Section 12, no adjustments shall be made under this
Section 12 with respect to an Award to an employee covered under Section 162(m)
of the Code to the extent such adjustment would cause an Award intended to
qualify as “performance-based compensation” under that Section of the Code to
fail to so qualify.

13.  Stockholder Approval.  The Plan is subject to the approval by the
affirmative vote of a majority of the shares of Stock present in person or
represented by proxy at a duly held meeting of the stockholders of the Company
within twelve months after the date of the adoption of the Plan by the Board
(the date of which approval is the “Effective Date”).  No Award granted under
the Plan shall vest or be exercisable prior to the Effective Date.  If the
Effective Date shall not occur on or before June 19, 2008, the Plan and all then
outstanding Awards made hereunder shall automatically terminate and be of no
further force and effect.

 
8

--------------------------------------------------------------------------------

 

14.  Term of Plan.  The Plan, if approved by the Company’s stockholders, will be
effective June 20, 2007.  The Plan shall terminate on June 19, 2017 and no
Awards shall be granted after such date, provided that the Board may at any time
terminate the Plan prior thereto.  Except as provided in Section 12, the
termination of the Plan shall not affect the rights of Grantees under Awards
previously granted to them and all Awards shall continue in full force and
effect after termination of the Plan, except as such Awards may lapse or be
terminated by the terms of the Plan or the Award Agreement.

15.  Amendment of the Plan.  The Board shall have complete power and authority
to modify or amend the Plan (including the forms of Award Agreements) from time
to time in such respects as it shall deem advisable; provided, however, that the
Board shall not, without approval by the affirmative vote of a majority of the
shares of Stock present in person or represented by proxy at a duly held meeting
of the stockholders of the Company, (i) increase the maximum number of shares of
Stock which in the aggregate are subject to Awards or which may be granted
pursuant to Options under the Plan (except as provided by Section 12), (ii)
extend the term of the Plan or the period during which Awards may be granted or
exercised, (iii) reduce the Option or SAR exercise price below 100% (110% in the
case of an ISO granted to a 10% Holder) of the Fair Market Value of the Stock
issuable upon exercise of the Option or to which the SAR relates, as applicable,
at the time of the granting thereof, other than to change the manner of
determining the Fair Market Value thereof (consistent with the rules under
Section 409A of the Code), (iv) except as provided by Section 12, increase the
maximum number of shares of Stock for which an employee may be granted an Award
during any calendar year under the Plan pursuant to Section 7(b), (v) except as
provided by Section 6(a), materially increase the benefits accruing to
participants under the Plan, (vi) change the designation or class of employees
eligible to receive Awards under the Plan, or (vii) with respect to Options
which are intended to qualify as ISOs, amend the Plan in any respect which would
cause such Options to no longer qualify for ISO treatment pursuant to the
Code.  No amendment of the Plan shall, without the consent of the Grantee,
adversely affect the rights of such Grantee under any outstanding Award
Agreement.

The Plan is intended to comply with the requirements of Section 409A of the
Code, without triggering the imposition of any tax penalty thereunder.  To the
extent necessary or advisable, the Board may amend the Plan or any Award
Agreement to delete any conflicting provision and to add such other provisions
as are required to fully comply with the applicable provisions of Section 409A
of the Code and any other legislative or regulatory requirements applicable to
the Plan.

16.  Taxes.  The Company may make such provisions as it deems appropriate for
the withholding of any income, employment or other taxes which it determines is
required in connection with any Award made under the Plan, including requiring
the Grantee to make a cash payment to the Company equal to the Company’s
withholding obligation or deducting such amount from any payment of any kind
otherwise due to the Grantee.  The Company may further require notification from
the Grantee upon any disposition of Stock acquired pursuant to the exercise of
Options granted hereunder.

17.  Code References and Definitions.  Whenever reference is made in the Plan to
a Section of the Code, the reference shall be to such section as it is now in
force or as it may hereafter be amended.  The term “subsidiary” shall have the
meaning given to the term “subsidiary corporation” by Section 424(f) of the
Code.  The terms “Incentive Stock Option” and “ISO” shall have the meanings
given to them by Section 422 of the Code.  The term “10% Holder” shall mean any
person who, for purposes of Section 422 of the Code, beneficially owns more than
10% of the total combined voting power of all classes of stock of the Company or
of any subsidiary of the Company.  The term “Grantee” means the holder of an
Option, an SAR, a Stock Grant or a Stock Unit granted hereunder.  The term
“Award Agreement” as used herein means an Option Agreement, SAR Agreement,
Restricted Stock Agreement or Stock Unit Agreement.

  

 
9

--------------------------------------------------------------------------------