Exhibit 10.1

 

2005 Omnibus Incentive Plan

 

NPS Pharmaceuticals, Inc.

 

As amended through May 7, 2013 (subject to stockholder approval)

 

Article 1. Establishment, Purpose, and Duration

 

1.1    Establishment.    NPS Pharmaceuticals, Inc., a Delaware corporation
(hereinafter referred to as the “Company”), establishes an incentive
compensation plan to be known as the NPS Pharmaceuticals, Inc. 2005 Omnibus
Incentive Plan (hereinafter referred to as the “Plan”), as set forth in this
document.

 

This Plan permits the grant of Nonqualified Stock Options, Incentive Stock
Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units,
Performance Shares, Performance Units, Cash-Based Awards, and Other Stock-Based
Awards.

 

This Plan was originally effective on May 12, 2005 (the “Effective Date”). The
Plan is hereby amended and restated effective March 26, 2013, provided, however,
that the amendments to Articles 4 and 12 shall be effective May 7, 2013 with
respect to Awards granted on or after such date, subject to stockholder approval
on such date. The Plan shall remain in effect as provided in Section 1.3 hereof.

 

1.2    Purpose of this Plan.    This Plan has been established by the Company to
provide a means by which Employees, Directors, and Third Party Service Providers
of the Company and its Subsidiaries and Affiliates may be given the opportunity
to benefit from increases in the value of Shares through the granting of Awards
under this Plan. The Company seeks to (a) retain the services of present
Employees, Directors, and Third Party Service Providers; (b) secure and retain
the services of new Employees, Directors, and Third Party Service Providers;
and, (c) provide incentives for such persons to exert maximum efforts for the
success of the Company and thereby promote the long-term interests of the
Company, including the growth in value of the Company’s equity and enhancement
of long-term stockholder return.

 

1.3    Duration of this Plan.    Unless sooner terminated as provided herein,
this Plan shall terminate ten (10) years from the Effective Date. After this
Plan is terminated, no Awards may be granted but Awards previously granted shall
remain outstanding in accordance with their applicable terms and conditions and
this Plan’s terms and conditions. Notwithstanding the foregoing, no Incentive
Stock Options may be granted more than ten (10) years after the earlier of
(a) adoption of this Plan by the Board, or (b) the Effective Date.

 

Article 2. Definitions

 

Whenever used in this Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized.

 

2.1   “Affiliate” shall mean any corporation or other entity (including, but not
limited to, a partnership or a limited liability company), that is affiliated
with the Company through stock or equity ownership or otherwise, and is
designated as an Affiliate for purposes of this Plan by the Committee.

 

2.2   “Annual Award Limit” or “Annual Award Limits” have the meaning set forth
in Section 4.3.

 

2.3   “Award” means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted Stock,
Restricted Stock Units, Performance Shares, Performance Units, Cash-Based
Awards, or Other Stock-Based Awards, in each case subject to the terms of this
Plan.

 

2.4   “Award Agreement” means either (i) a written agreement entered into by the
Company and a Participant setting forth the terms and provisions applicable to
an Award granted under this Plan, or (ii) a written or electronic statement
issued by the Company to a Participant describing the terms and provisions of
such Award, including any amendment or modification thereof. The Committee may

 

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provide for the use of electronic, internet or other non-paper Award Agreements,
and the use of electronic, internet or other non-paper means for the acceptance
thereof and actions thereunder by a Participant.

 

2.5   “Beneficial Owner” or “Beneficial Ownership” shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.

 

2.6   “Board” or “Board of Directors” means the Board of Directors of the
Company.

 

2.7   “Cash-Based Award” means an Award, denominated in cash, granted to a
Participant as described in Article 10.

 

2.8   “Cause” means (i) an act of material dishonesty by the Participant in
connection with the Participant’s responsibilities as an Employee, Director, or
Third Party Service Provider, (ii) the Participant’s conviction of, or plea of
nolo contendere to, a felony, (iii) the Participant’s gross misconduct in
connection with the Participant’s responsibilities as an Employee, Director, or
Third Party Service Provider, (iv) the Participant’s violation of the written
policies and procedures of the Company, a Subsidiary or an Affiliate, as
applicable; or (v) the Participant’s continued failure to perform his or her
responsibilities as an Employee, Director, or Third Party Service Provider after
the Participant has received a written demand for such performance.

 

2.9   “Change in Control” shall have the meaning ascribed to the term in
Article 18.

 

2.10 “Code” means the U.S. Internal Revenue Code of 1986, as amended from time
to time. For purposes of this Plan, references to sections of the Code shall be
deemed to include references to any applicable regulations thereunder and any
successor or similar provision.

 

2.11 “Committee” means the Compensation Committee of the Board or a subcommittee
thereof, or any other committee designated by the Board to administer this Plan.
The Committee shall be composed of not fewer than two members. If the Committee
does not exist or cannot function for any reason, the Board may take any action
under the Plan that would otherwise be the responsibility of the Committee.

 

2.12 “Company” means NPS Pharmaceuticals, Inc., a Delaware corporation, and any
successor thereto as provided in Article 19 herein.

 

2.13 “Covered Employee” means any salaried Employee who is or may become a
“Covered Employee,” as defined in Code Section 162(m), and who is designated,
either as an individual Employee or class of Employees, by the Committee within
the shorter of (i) ninety (90) days after the beginning of the Performance
Period, or (ii) twenty-five percent (25%) of the Performance Period has elapsed,
as a “Covered Employee” under this Plan for such applicable Performance Period.

 

2.14 “Director” means any individual who is a member of the Board of Directors
of the Company.

 

2.15 “Effective Date” has the meaning set forth in Section 1.1.

 

2.16 “Employee” means any person designated as an employee of the Company, its
Affiliates, and/or its Subsidiaries on the payroll records thereof. An Employee
shall not include any individual during any period he or she is classified or
treated by the Company, Affiliate, and/or Subsidiary as an independent
contractor, a consultant, or any employee of an employment, consulting, or
temporary agency or any other entity other than the Company, Affiliate, and/or
Subsidiary, without regard to whether such individual is subsequently determined
to have been, or is subsequently retroactively reclassified as a common-law
employee of the Company, Affiliate, and/or Subsidiary during such period.

 

2.17 “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time, or any successor act thereto.

 

2.18 “Fair Market Value” or “FMV” means a price that is based on the opening,
closing, actual, high, low, or average selling prices of a Share reported on the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation System (“Nasdaq”) or other established

 

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stock exchange (or exchanges) on the applicable date, the preceding trading day,
the next succeeding trading day, or an average of trading days, as determined by
the Committee in its discretion. Unless the Committee determines otherwise, Fair
Market Value shall be deemed to be equal to the closing price of a Share on the
most recent date on which Shares were publicly traded. In the event Shares are
not publicly traded at the time a determination of their value is required to be
made hereunder, the determination of their Fair Market Value shall be made by
the Committee in such manner as it deems appropriate. Such definition(s) of FMV
shall be specified in each Award Agreement and may differ depending on whether
FMV is in reference to the grant, exercise, vesting, settlement, or payout of an
Award.

 

2.19 “Freestanding SAR” means an SAR that is granted independently of any
Options, as described in Article 7.

 

2.20 “Full Value Award” means an Award other than in the form of an ISO, NQSO,
or SAR, and which is settled by the issuance of Shares.

 

2.21 “Grant Price” means the price established at the time of grant of a SAR
pursuant to Article 7, used to determine whether there is any payment due upon
exercise of the SAR.

 

2.22 “Incentive Stock Option” or “ISO” means an Option to purchase Shares
granted under Article 6 to an Employee and that is designated as an Incentive
Stock Option and that is intended to meet the requirements of Code Section 422,
or any successor provision.

 

2.23 “Insider” shall mean an individual who is, on the relevant date, an
officer, or Director of the Company, or a more than ten percent (10%) Beneficial
Owner of any class of the Company’s equity securities that is registered
pursuant to Section 12 of the Exchange Act, as determined by the Board in
accordance with Section 16 of the Exchange Act.

 

2.24 “Involuntary Termination” means the termination of employment or service of
the Participant after a Change in Control other than for Cause.

 

2.25 “Materially Altered” means without the Participant’s written consent, (i) a
material reduction in the Participant’s authority, duties or responsibilities
relative to the Participant’s authority, duties or responsibilities in effect
prior to such reduction where such reduction was imposed without Cause, (ii) a
material diminution in the Participant’s base compensation, where such reduction
was imposed without Cause, or (iii) a material change in the geographical
location at which the Participant must perform his or her duties as an Employee
of the Company. For the avoidance of doubt, “Materially Altered” shall only
apply to Employees.

 

2.26 “Nonemployee Director” means a Director who is not an Employee.

 

2.27 “Nonemployee Director Award” means any NQSO, SAR, or Full Value Award
granted, whether singly, in combination, or in tandem, to a Participant who is a
Nonemployee Director pursuant to such applicable terms, conditions, and
limitations as the Board or Committee may establish in accordance with this
Plan.

 

2.28 “Nonqualified Stock Option” or “NQSO” means an Option that is not intended
to meet the requirements of Code Section 422, or that otherwise does not meet
such requirements.

 

2.29 “Option” means an Incentive Stock Option or a Nonqualified Stock Option, as
described in Article 6.

 

2.30 “Option Price” means the price at which a Share may be purchased by a
Participant pursuant to an Option.

 

2.31 “Other Stock-Based Award” means an equity-based or equity-related Award not
otherwise described by the terms of this Plan, granted pursuant to Article 10.

 

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2.32 “Participant” means any eligible individual as set forth in Article 5 to
whom an Award is granted.

 

2.33 “Performance-Based Compensation” means compensation under an Award that is
intended to satisfy the requirements of Code Section 162(m) for certain
performance-based compensation paid to Covered Employees. Notwithstanding the
foregoing, nothing in this Plan shall be construed to mean that an Award which
does not satisfy the requirements for performance-based compensation under Code
Section 162(m) does not constitute performance-based compensation for other
purposes, including Code Section 409A.

 

2.34 “Performance Measures” means measures as described in Article 11 on which
the performance goals are based and which are approved by the Company’s
stockholders pursuant to this Plan in order to qualify Awards as
Performance-Based Compensation.

 

2.35 “Performance Period” means the period of time during which the performance
goals must be met in order to determine the degree of payout and/or vesting with
respect to an Award.

 

2.36 “Performance Share” means an Award under Article 9 herein and subject to
the terms of this Plan, denominated in Shares, the value of which at the time it
is payable is determined as a function of the extent to which corresponding
performance criteria have been achieved.

 

2.37 “Performance Unit” means an Award under Article 9 herein and subject to the
terms of this Plan, denominated in units, the value of which at the time it is
payable is determined as a function of the extent to which corresponding
performance criteria have been achieved.

 

2.38 “Period of Restriction” means the period when Restricted Stock or
Restricted Stock Units are subject to a substantial risk of forfeiture (based on
the passage of time, the achievement of performance goals, or upon the
occurrence of other events as determined by the Committee, in its discretion),
as provided in Article 8.

 

2.39 “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of
the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a
“group” as defined in Section 13(d) thereof.

 

2.40 “Plan” means the NPS Pharmaceuticals, Inc. 2005 Omnibus Incentive Plan.

 

2.41 “Plan Year” means the Company’s fiscal year.

 

2.42 “Restricted Stock” means an Award granted to a Participant pursuant to
Article 8.

 

2.43 “Restricted Stock Unit” means an Award granted to a Participant pursuant to
Article 8, except no Shares are actually awarded to the Participant on the date
of grant.

 

2.44 “Share” means a share of common stock of the Company, par value of $.001
per share.

 

2.45 “Stock Appreciation Right” or “SAR” means an Award, designated as a SAR,
pursuant to the terms of Article 7 herein.

 

2.46 “Subsidiary” means any corporation or other entity, whether domestic or
foreign, in which the Company has or obtains, directly or indirectly, a
proprietary interest of more than fifty percent (50%) by reason of stock
ownership or otherwise.

 

2.47 “Tandem SAR” means an SAR that is granted in connection with a related
Option pursuant to Article 7 herein, the exercise of which shall require
forfeiture of the right to purchase a Share under the related Option (and when a
Share is purchased under the Option, the Tandem SAR shall similarly be
canceled).

 

2.48 “Third Party Service Provider” means any consultant, agent, advisor, or
independent contractor who renders services to the Company, a Subsidiary, or an
Affiliate that (a) are not in

 

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connection with the offer and sale of the Company’s securities in a capital
raising transaction, and (b) do not directly or indirectly promote or maintain a
market for the Company’s securities.

 

Article 3. Administration

 

3.1    General.    The Plan shall be administered by or under the direction of
the Board unless and until the Board delegates administration to a Committee.
The Board may employ attorneys, consultants, accountants, agents, and other
individuals, any of whom may be an Employee, and the Board, the Company, and its
officers and Directors shall be entitled to rely upon the advice, opinions, or
valuations of any such individuals. All actions taken and all interpretations
and determinations made by the Board shall be final and binding upon the
Participants, the Company, and all other interested individuals.

 

3.2    Authority of the Board.    The Board shall have full and exclusive
discretionary power to interpret the terms and the intent of this Plan and any
Award Agreement or other agreement or document ancillary to or in connection
with this Plan, to determine eligibility for Awards and to adopt such rules,
regulations, forms, instruments, and guidelines for administering this Plan as
the Board may deem necessary or proper. Such authority shall include, but not be
limited to, selecting Award recipients, establishing all Award terms and
conditions, including the terms and conditions set forth in Award Agreements,
granting Awards as an alternative to or as the form of payment for grants or
rights earned or due under compensation plans or arrangements of the Company,
construing any ambiguous provision of the Plan or any Award Agreement, and,
subject to Article 16, adopting modifications and amendments to this Plan or any
Award Agreement, including without limitation, any that are necessary to comply
with the laws of the countries and other jurisdictions in which the Company, its
Affiliates, and/or its Subsidiaries operate.

 

3.3    Delegation.

 

(a)   The Board may delegate administration of the Plan to the Committee. All
members of the Committee shall be Nonemployee Directors, to the extent necessary
to comply with the applicable provisions of Rule 16b-3, Section 162(m) and the
listing requirements of the Nasdaq Stock Market. If administration is delegated
to a Committee, the Committee shall have, in connection with the administration
of the Plan, the powers theretofore possessed by the Board (and references in
this Plan to the Board shall in such event, be to the Committee), subject,
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. The Board may abolish the
Committee at any time and revest in the Board the administration of the Plan.

 

(b)   The Board may delegate to one or more of its members or to one or more
officers of the Company, and/or its Subsidiaries and Affiliates or to one or
more agents or advisors such administrative duties or powers as it may deem
advisable, and the Board or any individuals to whom it has delegated duties or
powers as aforesaid may employ one or more individuals to render advice with
respect to any responsibility the Board or such individuals may have under this
Plan. The Board may, by resolution, authorize one or more officers of the
Company to do one or both of the following on the same basis as can the Board:
(a) designate Employees to be recipients of Awards; and (b) determine the size
of any such Awards; provided, however, (i) the Board shall not delegate such
responsibilities to any such officer for Awards granted to an Employee who is
considered an Insider; (ii) the resolution providing such authorization sets
forth the total number of Awards such officer(s) may grant; and (iii) the
officer(s) shall report periodically to the Board regarding the nature and scope
of the Awards granted pursuant to the authority delegated.

 

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Article 4. Shares Subject to this Plan and Maximum Awards

 

4.1    Number of Shares Available for Awards.

 

(a)   Subject to adjustment as provided in Section 4.4 herein, the aggregate
number of Shares that may be issued or transferred to Participants under the
Plan shall be equal to the sum of the following: (i) three million five hundred
thousand (3,500,000) Shares, plus (ii) the number of Shares subject to
outstanding Awards under the Plan as of May 7, 2013, plus (iii) the number of
Shares remaining available for issuance under the Plan but not subject to
previously exercised, vested or paid Awards as of May 7, 2013; provided that in
no event shall the maximum aggregate number of Shares that may be issued or
transferred under the Plan exceed twelve million six hundred fifty thousand
(12,650,000) Shares (the “Share Authorization”).

 

(b)   The maximum number of Shares of the Share Authorization that may be issued
pursuant to ISOs under this Plan shall be twelve million six hundred fifty
thousand (12,650,000) Shares.

 

4.2    Share Usage.    For each Share that is actually issued pursuant to a Full
Value Award, the Share Authorization shall be reduced by one and one half Shares
(i.e., on a 1:1.5 ratio) and for each Share that is actually issued pursuant to
an Award other than a Full Value Award (other than an Award paid in cash), the
Share Authorization shall be reduced by one Share (i.e., on a 1:1 ratio). Any
Shares related to Awards which terminate by expiration, forfeiture,
cancellation, or otherwise without the issuance of such Shares, are settled in
cash in lieu of Shares (other than SARs settled in cash), or are exchanged with
the Board’s permission, prior to the issuance of Shares, for Awards not
involving Shares, shall be available again for grant under this Plan, taking
into account the ratios described above. Moreover, if the Option Price of any
Option granted under this Plan or the tax withholding requirements with respect
to any Award granted under this Plan are satisfied by tendering Shares already
owned by the Participant to the Company (by either actual delivery or by
attestation), only the number of Shares issued, taking into account the ratios
described above, net of Shares tendered, shall be deemed delivered for purposes
of determining the maximum number of Shares available for delivery under this
Plan. Shares surrendered or withheld in payment of the Option Price of an
Option, and Shares withheld or surrendered in satisfaction of any tax
withholding requirements with respect to any Award granted under this Plan,
shall be deemed delivered in addition to Shares actually issued with respect to
any such Award granted under the Plan, taking into account the ratios described
above, for purposes of determining the maximum number of Shares available for
delivery under this Plan. Upon the exercise of an Option through a net exercise
procedure or upon the exercise of an SAR, then both for purposes of calculating
the number of Shares remaining available for issuance under the Plan and the
number of Shares remaining available for exercise under such Option or SAR, the
number of such Shares shall be reduced by the gross number of Shares for which
the Option or SAR is exercised and without regard to any cash settlement of an
SAR. The Shares available for issuance under this Plan may be authorized and
unissued Shares or treasury Shares.

 

4.3    Annual Award Limits.    The limits in this Section 4.3 (each an “Annual
Award Limit” and, collectively, “Annual Award Limits”) shall apply to grants of
Awards under this Plan. The maximum aggregate number of Shares with respect to
which all Awards other than Cash-Based Awards or dividend equivalents that may
be granted under the Plan to any Participant during any Plan Year shall be
1,000,000 Shares, subject to adjustment as described in Section 4.4 below. Such
Share limit shall apply without regard to whether the Awards are to be paid in
Shares or cash. The maximum aggregate dollar value with respect to which
Cash-Based Awards that may be granted or dividend equivalents that may accrue to
any Participant during any Plan Year shall be $1,000,000.

 

4.4    Adjustments in Authorized Shares.    In the event of any corporate event
or transaction (including, but not limited to, a change in the Shares of the
Company or the capitalization of the Company) such as a merger, consolidation,
reorganization, recapitalization, separation, partial or complete liquidation,
stock dividend, stock split, reverse stock split, split up, spin-off, or other

 

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distribution of stock or property of the Company, combination of Shares,
exchange of Shares, dividend in kind, or other like change in capital structure,
number of outstanding Shares or distribution (other than normal cash dividends)
to stockholders of the Company, or any similar corporate event or transaction,
the Board, in order to prevent dilution or enlargement of Participants’ rights
under this Plan, shall substitute or adjust, as applicable, the number and kind
of Shares that may be issued under this Plan or under particular forms of
Awards, the number and kind of Shares subject to outstanding Awards, the Option
Price or Grant Price applicable to outstanding Awards, the Annual Award Limits,
and other value determinations applicable to outstanding Awards, as the Board
deems appropriate in its sole discretion. The Board, in its sole discretion, may
also make appropriate adjustments in the terms of any Awards under this Plan to
reflect or related to such changes or distributions and to modify any other
terms of outstanding Awards. The determination of the Board as to the foregoing
adjustments, if any, shall be conclusive and binding on Participants under this
Plan.

 

Subject to the provisions of Article 16 and notwithstanding anything else herein
to the contrary, without affecting the number of Shares reserved or available
hereunder, the Board may authorize the issuance or assumption of benefits under
this Plan in connection with any merger, consolidation, acquisition of property
or stock, or reorganization upon such terms and conditions as it may deem
appropriate (including, but not limited to, a conversion of equity awards into
Awards under this Plan in a manner consistent with paragraph 53 of FASB
Interpretation No. 44), subject to compliance with the rules under Code
Sections 409A, 422 and 424, as and where applicable.

 

Article 5. Eligibility and Participation

 

5.1    Eligibility.    Individuals eligible to participate in this Plan include
all Employees, Directors, and Third Party Service Providers.

 

5.2    Actual Participation.    Subject to the provisions of this Plan, the
Board may, from time to time, select from all eligible individuals, those
individuals to whom Awards shall be granted and shall determine, in its sole
discretion, the nature of, any and all terms permissible by law, and the amount
of each Award.

 

Article 6. Stock Options

 

6.1    Grant of Options.    Subject to the terms and provisions of this Plan,
Options may be granted to Participants in such number, and upon such terms, and
at any time and from time to time as shall be determined by the Board, in its
sole discretion; provided that ISOs may be granted only to eligible Employees of
the Company or of any parent or subsidiary corporation (as permitted under Code
Sections 422 and 424). However, an Employee who is employed by an Affiliate
and/or Subsidiary and is subject to Code Section 409A, may only be granted
Options to the extent the Affiliate and/or Subsidiary is part of the Company’s
consolidated group for United States federal tax purposes, if permitted under
Code Section 409A.

 

6.2    Award Agreement.    Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the maximum duration of the
Option, the number of Shares to which the Option pertains, the conditions upon
which an Option shall become vested and exercisable, and such other provisions
as the Board shall determine which are not inconsistent with the terms of this
Plan. The Award Agreement also shall specify whether the Option is intended to
be an ISO or a NQSO.

 

6.3    Option Price.    The Option Price for each grant of an Option under this
Plan shall be determined by the Board in its sole discretion and shall be
specified in the Award Agreement; provided, however, the Option Price on the
date of grant must be at least equal to one hundred percent (100%) of the FMV of
the Shares as determined on the date of grant. Notwithtstading the foregoing, an
ISO may not be granted to an Employee who, at the time of grant, owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, or any

 

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parent or subsidiary corporation of the Company, as defined in Code Section 424,
unless the Option Price per share is not less than 110% of the Fair Market Value
of a Share on the date of grant.

 

6.4    Term of Options.    Each Option granted to a Participant shall expire at
such time as the Board shall determine at the time of grant; provided, however,
no Option shall be exercisable later than the tenth (10th) anniversary date of
its grant. Notwithstanding the foregoing, for Nonqualified Stock Options granted
to Participants outside the United States, the Board has the authority to grant
Nonqualified Stock Options that have a term greater than ten (10) years. In
addition, no ISO that is granted to an Employee who, at the time of grant, owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company, or any parent or subsidiary corporation of the Company,
as defined in Code Section 424, shall be exercisable later than the fifth (5th)
anniversary of its date of grant.

 

6.5    Exercise of Options.    Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Board shall in each instance approve, which terms and restrictions need not
be the same for each grant or for each Participant.

 

6.6    Payment.    Options granted under this Article 6 shall be exercised by
the delivery of a notice of exercise to the Company or an agent designated by
the Company in a form specified or accepted by the Board, or by complying with
any alternative procedures which may be authorized by the Board, setting forth
the number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.

 

A condition of the issuance of the Shares as to which an Option shall be
exercised shall be the payment of the Option Price. The Option Price of any
Option shall be payable to the Company in full either: (a) in cash or its
equivalent; (b) by tendering (either by actual delivery or attestation)
previously acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the Option Price (provided that except as otherwise determined
by the Board, the Shares that are tendered must have been held by the
Participant for at least six (6) months (or such other period, if any, as the
Board may permit) prior to their tender to satisfy the Option Price if acquired
under this Plan or any other compensation plan maintained by the Company or have
been purchased on the open market); (c) pursuant to a broker-assisted exercise
same-day sales program; (d) by a combination of (a) (b), and (c); or (e) any
other method approved or accepted by the Board in its sole discretion.

 

Subject to any governing rules or regulations, as soon as practicable after
receipt of written notification of exercise and full payment (including
satisfaction of any applicable tax withholding), the Company shall deliver to
the Participant evidence of book entry Shares, or upon the Participant’s
request, Share certificates in an appropriate amount based upon the number of
Shares purchased under the Option(s).

 

Unless otherwise determined by the Board, all payments under all of the methods
indicated above shall be paid in United States dollars.

 

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6.7    Restrictions on Share Transferability.    The Board may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, minimum holding period requirements, restrictions under applicable
federal securities laws, under the requirements of any stock exchange or market
upon which such Shares are then listed and/or traded, or under any blue sky or
state securities laws applicable to such Shares.

 

6.8    Termination of Employment.    Each Participant’s Award Agreement shall
set forth the extent to which the Participant shall have the right to exercise
the Option following termination of the Participant’s employment or provision of
services to the Company, its Affiliates, and/or its Subsidiaries, as the case
may be. Such provisions shall be determined in the sole discretion of the Board,
shall be included in the Award Agreement entered into with each Participant,
need not be uniform among all Options issued pursuant to this Article 6, and may
reflect distinctions based on the reasons for termination.

 

6.9    Notification of Disqualifying Disposition.    If any Participant shall
make any disposition of Shares issued pursuant to the exercise of an ISO under
the circumstances described in Code Section 421(b) (relating to certain
disqualifying dispositions), such Participant shall notify the Company of such
disposition prior to the end of the calendar year in which such disposition
occurred.

 

6.10    Retirement of Participant.    Notwithstanding any contrary provision in
this Plan, in the event a Participant’s employment as an Employee, or service as
a Director or Third Party Service Provider terminates due to a Participant’s
Retirement, the Participant shall vest in that number of Shares subject to the
Option that would have vested had the Participant remained an Employee,
Director, or Third Party Service Provider for an additional two (2) years from
the date of Retirement. In addition, the Option shall remain exercisable until
the expiration of its term. For purposes of this paragraph, “Retirement” shall
mean the termination of service of a Participant with the Company, a Subsidiary,
or an Affiliate on or after the date on which the Participant’s number of
completed years of service with the Company, a Subsidiary, or Affiliate and age
equal or exceed seventy (70) (including termination due to death or Disability
after such time).

 

Article 7. Stock Appreciation Rights

 

7.1    Grant of SARs.    Subject to the terms and conditions of this Plan, SARs
may be granted to Participants at any time and from time to time as shall be
determined by the Board. The Board may grant Freestanding SARs, Tandem SARs, or
any combination of these forms of SARs. However, an Employee who is employed by
an Affiliate and/or Subsidiary and is subject to Code Section 409A, may only be
granted SARs to the extent the Affiliate and/or Subsidiary is part of the
Company’s consolidated group for United States federal tax purposes, if
permitted under Code Section 409A.

 

Subject to the terms and conditions of this Plan, the Board shall have complete
discretion in determining the number of SARs granted to each Participant and,
consistent with the provisions of this Plan, in determining the terms and
conditions pertaining to such SARs.

 

The Grant Price for each grant of a Freestanding SAR shall be determined by the
Board and shall be specified in the Award Agreement; provided, however, the
Grant Price on the date of grant must be at least equal to one hundred percent
(100%) of the FMV of the Shares as determined on the date of grant. The Grant
Price of Tandem SARs shall be equal to the Option Price of the related Option.

 

7.2    SAR Agreement.    Each SAR Award shall be evidenced by an Award Agreement
that shall specify the Grant Price, the term of the SAR, and such other
provisions as the Board shall determine.

 

7.3    Term of SAR.    The term of an SAR granted under this Plan shall be
determined by the Board, in its sole discretion, and except as determined
otherwise by the Board and specified in the SAR Award Agreement, no SAR shall be
exercisable later than the tenth (10th) anniversary date of its

 

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grant. Notwithstanding the foregoing, for SARs granted to Participants outside
the United States, the Board has the authority to grant SARs that have a term
greater than ten (10) years.

 

7.4    Exercise of Freestanding SARs.    Freestanding SARs may be exercised upon
whatever terms and conditions the Board, in its sole discretion, imposes.

 

7.5.    Exercise of Tandem SARs.    Tandem SARs may be exercised for all or part
of the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.

 

Notwithstanding any other provision of this Plan to the contrary, with respect
to a Tandem SAR granted in connection with an ISO: (a) the Tandem SAR will
expire no later than the expiration of the underlying ISO; (b) the value of the
payout with respect to the Tandem SAR may be for no more than one hundred
percent (100%) of the excess of the Fair Market Value of the Shares subject to
the underlying ISO at the time the Tandem SAR is exercised over the Option Price
of the underlying ISO; and (c) the Tandem SAR may be exercised only when the
Fair Market Value of the Shares subject to the ISO exceeds the Option Price of
the ISO.

 

7.6    Settlement of SAR Amount.    Upon the exercise of an SAR, a Participant
shall be entitled to receive payment from the Company in an amount determined by
multiplying:

 

(a)   The excess of the Fair Market Value of a Share on the date of exercise
over the Grant Price; by

 

(b)   The number of Shares with respect to which the SAR is exercised.

 

At the discretion of the Board, the payment upon SAR exercise may be in cash,
Shares, or any combination thereof, or in any other manner approved by the Board
in its sole discretion. The Board’s determination regarding the form of SAR
payout shall be set forth in the Award Agreement pertaining to the grant of the
SAR.

 

7.7    Termination of Employment.    Each Award Agreement shall set forth the
extent to which the Participant shall have the right to exercise the SAR
following termination of the Participant’s employment with or provision of
services to the Company, its Affiliates, and/or its Subsidiaries, as the case
may be. Such provisions shall be determined in the sole discretion of the Board,
shall be included in the Award Agreement entered into with Participants, need
not be uniform among all SARs issued pursuant to this Plan, and may reflect
distinctions based on the reasons for termination.

 

7.8    Other Restrictions.    The Board shall impose such other conditions
and/or restrictions on any Shares received upon exercise of a SAR granted
pursuant to this Plan as it may deem advisable or desirable. These restrictions
may include, but shall not be limited to, a requirement that the Participant
hold the Shares received upon exercise of a SAR for a specified period of time.

 

Article 8. Restricted Stock and Restricted Stock Units

 

8.1    Grant of Restricted Stock or Restricted Stock Units.    Subject to the
terms and provisions of this Plan, the Board, at any time and from time to time,
may grant Shares of Restricted Stock and/or Restricted Stock Units to
Participants in such amounts as the Board shall determine. Restricted Stock
Units shall be similar to Restricted Stock except that no Shares are actually
awarded to the Participant on the date of grant.

 

8.2    Restricted Stock or Restricted Stock Unit Agreement.    Each Restricted
Stock and/or Restricted Stock Unit grant shall be evidenced by an Award
Agreement that shall specify the Period(s) of Restriction, if any, the number of
Shares of Restricted Stock or the number of Restricted Stock Units granted, and
such other provisions as the Board shall determine.

 

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8.3    Other Restrictions.    The Board shall impose such other conditions
and/or restrictions, if any, on any Shares of Restricted Stock or Restricted
Stock Units granted pursuant to this Plan as it may deem advisable including,
without limitation, a requirement that Participants pay a stipulated purchase
price for each Share of Restricted Stock or each Restricted Stock Unit,
restrictions based upon the achievement of specific performance goals,
time-based restrictions on vesting following the attainment of the performance
goals, time-based restrictions, and/or restrictions under applicable laws or
under the requirements of any stock exchange or market upon which such Shares
are listed or traded, or holding requirements or sale restrictions placed on the
Shares by the Company upon vesting of such Restricted Stock or Restricted Stock
Units.

 

To the extent deemed appropriate by the Board, the Company may retain the
certificates representing Shares of Restricted Stock in the Company’s possession
until such time as all conditions and/or restrictions applicable to such Shares
have been satisfied or lapse.

 

Except as otherwise provided in this Article 8, Shares of Restricted Stock
covered by each Restricted Stock Award shall become freely transferable by the
Participant after all conditions and restrictions applicable to such Shares have
been satisfied or lapse (including satisfaction of any applicable tax
withholding obligations), and Restricted Stock Units shall be paid in cash,
Shares, or a combination of cash and Shares as the Board, in its sole discretion
shall determine.

 

8.4    Certificate Legend.    In addition to any legends placed on certificates
pursuant to Section 8.3, each certificate representing Shares of Restricted
Stock granted pursuant to this Plan may bear a legend such as the following or
as otherwise determined by the Board in its sole discretion:

 

THE SALE OR TRANSFER OF SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE, WHETHER
VOLUNTARY, INVOLUNTARY, OR BY OPERATION OF LAW, IS SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AS SET FORTH IN THE NPS PHARMACEUTICALS, INC. 2005
OMNIBUS INCENTIVE PLAN, AND IN THE ASSOCIATED AWARD AGREEMENT. A COPY OF THIS
PLAN AND SUCH AWARD AGREEMENT MAY BE OBTAINED FROM NPS PHARMACEUTICALS, INC.

 

8.5    Voting Rights.    Unless otherwise determined by the Board and set forth
in a Participant’s Award Agreement, to the extent permitted or required by law,
as determined by the Board, Participants holding Shares of Restricted Stock
granted hereunder may be granted the right to exercise full voting rights with
respect to those Shares during the Period of Restriction. A Participant shall
have no voting rights with respect to any Restricted Stock Units granted
hereunder.

 

8.6    Termination of Employment.    Each Award Agreement shall set forth the
extent to which the Participant shall have the right to retain Restricted Stock
and/or Restricted Stock Units following termination of the Participant’s
employment with or provision of services to the Company, its Affiliates, and/or
its Subsidiaries, as the case may be. Such provisions shall be determined in the
sole discretion of the Board, shall be included in the Award Agreement entered
into with each Participant, need not be uniform among all Shares of Restricted
Stock or Restricted Stock Units issued pursuant to this Plan, and may reflect
distinctions based on the reasons for termination.

 

8.7    Section 83(b) Election.    The Board may provide in an Award Agreement
that the Award of Restricted Stock is conditioned upon the Participant making or
refraining from making an election with respect to the Award under Code
Section 83(b). If a Participant makes an election pursuant to Code
Section 83(b) concerning a Restricted Stock Award, the Participant shall be
required to file promptly a copy of such election with the Company.

 

11

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Article 9. Performance Units/Performance Shares

 

9.1    Grant of Performance Units/Performance Shares.    Subject to the terms
and provisions of this Plan, the Board, at any time and from time to time, may
grant Performance Units and/or Performance Shares to Participants in such
amounts and upon such terms as the Board shall determine.

 

9.2    Value of Performance Units/Performance Shares.    Each Performance Unit
shall have an initial value that is established by the Board at the time of
grant. Each Performance Share shall have an initial value equal to the Fair
Market Value of a Share on the date of grant. The Board shall set performance
goals in its discretion which, depending on the extent to which they are met,
will determine the value and/or number of Performance Units/Performance Shares
that will be paid out to the Participant.

 

9.3    Earning of Performance Units/Performance Shares.    Subject to the terms
of this Plan, after the applicable Performance Period has ended, the holder of
Performance Units/Performance Shares shall be entitled to receive payout on the
value and number of Performance Units/Performance Shares earned by the
Participant over the Performance Period, to be determined as a function of the
extent to which the corresponding performance goals have been achieved.

 

9.4    Form and Timing of Payment of Performance Units/Performance
Shares.    Payment of earned Performance Units/Performance Shares shall be as
determined by the Board and as evidenced in the Award Agreement. Subject to the
terms of this Plan, the Board, in its sole discretion, may pay earned
Performance Units/Performance Shares in the form of cash or in Shares (or in a
combination thereof) equal to the value of the earned Performance
Units/Performance Shares at the close of the applicable Performance Period, or
as soon as practicable after the end of the Performance Period. Any Shares may
be granted subject to any restrictions deemed appropriate by the Board. The
determination of the Board with respect to the form of payout of such Awards
shall be set forth in the Award Agreement pertaining to the grant of the Award.

 

9.5    Termination of Employment.    Each Award Agreement shall set forth the
extent to which the Participant shall have the right to retain Performance Units
and/or Performance Shares following termination of the Participant’s employment
with or provision of services to the Company, its Affiliates, and/or its
Subsidiaries, as the case may be. Such provisions shall be determined in the
sole discretion of the Board, shall be included in the Award Agreement entered
into with each Participant, need not be uniform among all Awards of Performance
Units or Performance Shares issued pursuant to this Plan, and may reflect
distinctions based on the reasons for termination.

 

Article 10. Cash-Based Awards and Other Stock-Based Awards

 

10.1    Grant of Cash-Based Awards.    Subject to the terms and provisions of
the Plan, the Board, at any time and from time to time, may grant Cash-Based
Awards to Participants in such amounts and upon such terms as the Board may
determine.

 

10.2    Other Stock-Based Awards.    The Board may grant other types of
equity-based or equity-related Awards not otherwise described by the terms of
this Plan (including the grant or offer for sale of unrestricted Shares) in such
amounts and subject to such terms and conditions, as the Board shall determine.
Such Awards may involve the transfer of actual Shares to Participants, or
payment in cash or otherwise of amounts based on the value of Shares and may
include, without limitation, Awards designed to comply with or take advantage of
the applicable local laws of jurisdictions other than the United States.

 

10.3    Value of Cash-Based and Other Stock-Based Awards.    Each Cash-Based
Award shall specify a payment amount or payment range as determined by the
Board. Each Other Stock-Based Award shall be expressed in terms of Shares or
units based on Shares, as determined by the Board. The Board may establish
performance goals in its discretion. If the Board exercises its discretion to
establish

 

12

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performance goals, the number and/or value of Cash-Based Awards or Other
Stock-Based Awards that will be paid out to the Participant will depend on the
extent to which the performance goals are met.

 

10.4    Payment of Cash-Based Awards and Other Stock-Based Awards.    Payment,
if any, with respect to a Cash-Based Award or an Other Stock-Based Award shall
be made in accordance with the terms of the Award, in cash or Shares as the
Board determines.

 

10.5    Termination of Employment.    The Board shall determine the extent to
which the Participant shall have the right to receive Cash-Based Awards or Other
Stock-Based Awards following termination of the Participant’s employment with or
provision of services to the Company, its Affiliates, and/or its Subsidiaries,
as the case may be. Such provisions shall be determined in the sole discretion
of the Board, such provisions may be included in an agreement entered into with
each Participant, but need not be uniform among all Awards of Cash-Based Awards
or Other Stock-Based Awards issued pursuant to the Plan, and may reflect
distinctions based on the reasons for termination.

 

Article 11. Transferability of Awards

 

11.1    Transferability.    Except as provided in Section 11.2 below, during a
Participant’s lifetime, his or her Awards shall be exercisable only by the
Participant. Awards shall not be transferable other than by will or the laws of
descent and distribution; no Awards shall be subject, in whole or in part, to
attachment, execution, or levy of any kind; and any purported transfer in
violation hereof shall be null and void. The Board may establish such procedures
as it deems appropriate for a Participant to designate a beneficiary to whom any
amounts payable or Shares deliverable in the event of, or following, the
Participant’s death, may be provided.

 

11.2    Board Action.    The Board may, in its discretion, determine that
notwithstanding Section 11.1, any or all Awards (other than ISOs) shall be
transferable to and exercisable by such transferees, and subject to such terms
and conditions, as the Board may deem appropriate; provided, however, no Award
may be transferred for value (as defined in the General Instructions to Form S-8
under the Securities Act of 1933, as amended).

 

11.3    Domestic Relations Orders.    Without limiting the generality of
Section 11.1, and notwithstanding Section 11.2, no domestic relations order
purporting to authorize a transfer of an Award shall be recognized as valid.

 

Article 12. Performance Measures

 

12.1    Performance Measures.    The performance goals upon which the payment or
vesting of an Award to a Covered Employee that is intended to qualify as
Performance-Based Compensation shall be limited to the following Performance
Measures:

 

(a)   Net earnings or net income (before or after taxes);

 

(b)   Earnings per share;

 

(c)   Net sales or revenue growth;

 

(d)   Net operating profit;

 

(e)   Return measures (including, but not limited to, return on assets, capital,
invested capital, equity, sales, or revenue);

 

(f)    Cash flow (including, but not limited to, operating cash flow, free cash
flow, cash flow return on equity, and cash flow return on investment);

 

(g)   Earnings before or after taxes, interest, depreciation, and/or
amortization;

 

(h)   Gross or operating margins;

 

13

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(i)    Productivity ratios;

 

(j)    Share price (including, but not limited to, growth measures and total
shareholder return);

 

(k)   Expense targets;

 

(l)    Margins;

 

(m)  Operating efficiency;

 

(n)   Market share;

 

(o)   Customer satisfaction;

 

(p)   Working capital targets;

 

(q)   Economic value added or EVA® (net operating profit after tax minus the sum
of capital multiplied by the cost of capital);

 

(r)   Product development;

 

(s)   Growth in assets;

 

(t)    Inventory;

 

(u)   Strategic business measures consisting of one or more objectives based on
meeting specified revenue goals, market penetration goals, geographic business
expansion goals or cost targets; and

 

(v)   Goals relating to mergers, acquisitions or divestitures within time
deadlines and other parameters set by the Board.

 

Any Performance Measure(s) may be used to measure the performance of the
Company, Subsidiary, and/or Affiliate as a whole or any business unit of the
Company, Subsidiary, and/or Affiliate or any combination thereof, as the Board
may deem appropriate, or any of the above Performance Measures as compared to
the performance of a group of comparator companies, or published or special
index that the Board, in its sole discretion, deems appropriate, or the Company
may select Performance Measure (j) above as compared to various stock market
indices. The Board also has the authority to provide for accelerated vesting of
any Award based on the achievement of performance goals pursuant to the
Performance Measures specified in this Article 12.

 

12.2    Evaluation of Performance.    The Board may provide in any such Award
that any evaluation of performance may include or exclude any of the following
events that occurs during a Performance Period: (a) asset write-downs,
(b) litigation or claim judgments or settlements, (c) the effect of changes in
tax laws, accounting principles, or other laws or provisions affecting reported
results, (d) any reorganization and restructuring programs, (e) extraordinary
nonrecurring items as described in Accounting Principles Board Opinion No. 30
and/or in management’s discussion and analysis of financial condition and
results of operations appearing in the Company’s annual report to stockholders
for the applicable year, (f) acquisitions or divestitures, and (g) foreign
exchange gains and losses. To the extent such inclusions or exclusions affect
Awards to Covered Employees, they shall be prescribed in a form that meets the
requirements of Code Section 162(m) for deductibility.

 

12.3    Adjustment of Performance-Based Compensation.    Awards that are
intended to qualify as Performance-Based Compensation may not be adjusted
upward. The Board shall retain the discretion to adjust such Awards downward,
either on a formula or discretionary basis or any combination, as the Board
determines.

 

12.4    Board Discretion.    In the event that applicable tax and/or securities
laws change to permit Board discretion to alter the governing Performance
Measures without obtaining stockholder approval

 

14

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of such changes, the Board shall have sole discretion to make such changes
without obtaining stockholder approval. In addition, in the event that the Board
determines that it is advisable to grant Awards that shall not qualify as
Performance-Based Compensation, the Board may make such grants without
satisfying the requirements of Code Section 162(m) and base vesting on
Performance Measures other than those set forth in Section 12.1.

 

Article 13. Dividend Equivalents

 

Any Participant selected by the Board may be granted dividend equivalents based
on the dividends declared on Shares that are subject to any Award, to be
credited as of dividend payment dates, during the period between the date the
Award is granted and the date the Award is exercised, vests or expires, as
determined by the Board. Such dividend equivalents shall be converted to cash or
additional Shares by such formula and at such time and subject to such
limitations as may be determined by the Board.

 

Article 14. Beneficiary Designation

 

Each Participant under this Plan may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under this Plan is to be paid in case of his death before he receives
any or all of such benefit. Each such designation shall revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Board, and will be effective only when filed by the Participant in writing with
the Company during the Participant’s lifetime. In the absence of any such
beneficiary designation, benefits remaining unpaid or rights remaining
unexercised at the Participant’s death shall be paid or exercised by the
Participant’s executor, administrator, or legal representative.

 

Article 15. Rights of Participants

 

15.1    Employment.    Nothing in this Plan or an Award Agreement shall
interfere with or limit in any way the right of the Company, its Affiliates,
and/or its Subsidiaries, to terminate any Participant’s employment or service on
the Board or to the Company at any time or for any reason not prohibited by law,
nor confer upon any Participant any right to continue his employment or service
as a Director or Third Party Service Provider for any specified period of time.

 

Neither an Award nor any benefits arising under this Plan shall constitute an
employment contract with the Company, its Affiliates, and/or its Subsidiaries
and, accordingly, subject to Articles 3 and 16, this Plan and the benefits
hereunder may be terminated at any time in the sole and exclusive discretion of
the Board without giving rise to any liability on the part of the Company, its
Affiliates, and/or its Subsidiaries.

 

15.2    Participation.    No individual shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.

 

15.3    Rights as a Stockholder.    Except as otherwise provided herein, a
Participant shall have none of the rights of a stockholder with respect to
Shares covered by any Award until the Participant becomes the record holder of
such Shares.

 

Article 16. Amendment, Modification, Suspension, and Termination

 

16.1    Amendment, Modification, Suspension, and Termination.    Subject to
Section 16.3, the Board may, at any time and from time to time, alter, amend,
modify, suspend, or terminate this Plan and any Award Agreement in whole or in
part; provided, however, that, without the prior approval of the Company’s
stockholders and except as provided in Section 4.4, Options or SARs issued under
this Plan will not be repriced, replaced, or regranted through cancellation, or
by lowering the Option Price of a previously granted Option or the Grant Price
of a previously granted SAR, and no material amendment of this Plan shall be
made without stockholder approval if stockholder approval is required by law,
regulation, or stock exchange rule.

 

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16.2    Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events.    The Board may 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
Section 4.4 hereof) affecting the Company or the financial statements of the
Company or of changes in applicable laws, regulations, or accounting principles,
whenever the Board determines that such adjustments are appropriate in order to
prevent unintended dilution or enlargement of the benefits or potential benefits
intended to be made available under this Plan. The determination of the Board as
to the foregoing adjustments, if any, shall be conclusive and binding on
Participants under this Plan.

 

16.3    Awards Previously Granted.    Notwithstanding any other provision of
this Plan to the contrary (other than Section 16.4), no termination, amendment,
suspension, or modification of this Plan or an Award Agreement shall adversely
affect in any material way any Award previously granted under this Plan, without
the written consent of the Participant holding such Award.

 

16.4    Amendment to Conform to Law.    Notwithstanding any other provision of
this Plan to the contrary, the Board of Directors may amend the Plan or an Award
Agreement, to take effect retroactively or otherwise, as deemed necessary or
advisable for the purpose of conforming the Plan or an Award Agreement to any
present or future law relating to plans of this or similar nature (including,
but not limited to, Code Section 409A), and to the administrative regulations
and rulings promulgated thereunder.

 

Article 17. Withholding

 

17.1    Withholding Generally.    The Company shall have the power and the right
to deduct or withhold, or require a Participant to remit to the Company, the
minimum statutory amount to satisfy federal, state, and local taxes, domestic or
foreign, required by law or regulation to be withheld with respect to any
taxable event arising as a result of this Plan.

 

17.2    Stock Withholding.    When, under applicable tax laws, a Participant
incurs tax liability in connection with the vesting of any Award that is subject
to tax withholding and the Participant is obligated to pay the Company the
amount required to be withheld, the Board shall, subject to compliance with all
applicable laws and regulations, allow the Participant to satisfy the minimum
withholding tax obligation by electing to have the Company withhold from the
Shares to be issued upon vesting of the Award that number of Shares having a
Fair Market Value equal to the minimum amount required to be withheld,
determined on the date that the amount of tax to be withheld is to be
determined. All elections by a Participant to have Shares withheld for this
purpose will be made in accordance with the requirements established by the
Board and be in writing in a form acceptable to the Board.

 

Article 18. Corporate Transactions

 

18.1    Awards Granted prior to February 13, 2013.    In the event of (a) a
merger or consolidation in which the Company is not the surviving corporation;
(b) a reverse merger in which the Company is the surviving corporation but the
shares of the Company’s common stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash, or otherwise; (c) a strategic corporate event, such as
a merger or acquisition, where the Company is technically the surviving entity,
but where other elements of a change of control are present, i.e., change in
management team or Board composition; (d) a transaction which the Board
determines in its sole discretion to constitute a change in control of the
Company; or (e) any capital reorganization in which fifty percent (50%) of the
Shares of the Company entitled to vote are exchanged (the foregoing in this
Section 18.1, a “Change in Control”), then, the time during which Awards
outstanding under the Plan become vested shall be accelerated and all
outstanding Awards shall become immediately exercisable upon such event and such
Awards shall continue to be exercisable

 

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until the later of (i) twenty-four (24) months from the effective date of such
event, or (ii) the time specified in the Award Agreement during which the Award
is exercisable following a Participant’s termination of service; provided,
however, that in no event shall the Award be exercisable after the expiration of
its term.

 

18.2    Awards Granted on or after February 13, 2013.    In the event of (x) a
Change in Control and (y) (1) a Participant’s job prospects are Materially
Altered followed by the termination of the Participant’s employment in
accordance with the notice and cure requirements set forth below in this
Section 18.2, or (2) the Participant’s employment is Involuntarily Terminated,
other than for Cause or death or permanent disability, then, the time during
which Awards outstanding under the Plan become vested shall be accelerated and
all outstanding Awards shall become immediately exercisable upon such event and
such Awards shall continue to be exercisable until the later of (i) twenty-four
(24) months from the effective date of such event, or (ii) the time specified in
the Award Agreement during which the Award is exercisable following a
Participant’s termination of service; provided, however, that in no event shall
the Award be exercisable after the expiration of its term.

 

In the instance of the Participant’s job prospects being Materially Altered, the
Participant must exercise his or her rights under the Plan by providing the
Participant’s employer with written notice that his or her job prospects have
been Materially Altered within ninety (90) days of the date of such Material
Alteration, upon the notice of which the employer will be provided a period of
thirty (30) days during which it may remedy the condition giving rise to the
Material Alteration of the Participant’s job prospects. In such instance, the
Participant’s employment with the employer shall terminate following the
expiration of the thirty (30) day cure period without the employer remedying the
condition giving rise to the Material Alteration of the Covered Employee’s job
prospects, following which, the Participant must sign and not revoke a release
of claims in the form approved by his or her employer in a timely manner.

 

Article 19. Successors

 

All obligations of the Company under this Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.

 

Article 20. General Provisions

 

20.1    Forfeiture Events.

 

(a)   The Board may specify in an Award Agreement that the Participant’s rights,
payments, and benefits with respect to an Award shall be subject to reduction,
cancellation, forfeiture, or recoupment upon the occurrence of certain specified
events, in addition to any otherwise applicable vesting or performance
conditions of an Award. Such events may include, but shall not be limited to,
termination of employment for Cause, termination of the Participant’s provision
of services to the Company, Affiliate, and/or Subsidiary, violation of material
Company, Affiliate, and/or Subsidiary policies, breach of noncompetition,
confidentiality, or other restrictive covenants that may apply to the
Participant, or other conduct by the Participant that is detrimental to the
business or reputation of the Company, its Affiliates, and/or its Subsidiaries.

 

(b)   If the Company is required to prepare an accounting restatement due to the
material noncompliance of the Company, as a result of misconduct, with any
financial reporting requirement under the securities laws, if the Participant
knowingly or grossly negligently engaged in the misconduct, or knowingly or
grossly negligently failed to prevent the misconduct, or if the Participant is
one of the individuals subject to automatic forfeiture under Section 304 of the
Sarbanes-Oxley Act of 2002, the Participant shall reimburse the Company the
amount of any payment in settlement of an Award earned

 

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or accrued during the twelve (12) month period following the first public
issuance or filing with the United States Securities and Exchange Commission
(whichever just occurred) of the financial document embodying such financial
reporting requirement.

 

20.2    Legend.    The certificates for Shares may include any legend which the
Board deems appropriate to reflect any restrictions on transfer of such Shares.

 

20.3    Gender and Number.    Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.

 

20.4    Severability.    In the event any provision of this Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of this Plan, and this Plan shall be construed and enforced
as if the illegal or invalid provision had not been included.

 

20.5    Requirements of Law.    The granting of Awards and the issuance of
Shares under this Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

 

20.6    Delivery of Title.    The Company shall have no obligation to issue or
deliver evidence of title for Shares issued under this Plan prior to:

 

(a)   Obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable; and

 

(b)   Completion of any registration or other qualification of the Shares under
any applicable national or foreign law or ruling of any governmental body that
the Company determines to be necessary or advisable.

 

20.7    Inability to Obtain Authority.    The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company’s counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

 

20.8    Investment Representations.    The Board may require any individual
receiving Shares pursuant to an Award under this Plan to represent and warrant
in writing that the individual is acquiring the Shares for investment and
without any present intention to sell or distribute such Shares.

 

20.9    Employees Based Outside of the United States.    Notwithstanding any
provision of this Plan to the contrary, in order to comply with the laws in
other countries in which the Company, its Affiliates, and/or its Subsidiaries
operate or have Employees, Directors, or Third Party Service Providers, the
Board, in its sole discretion, shall have the power and authority to:

 

(a)   Determine which Affiliates and Subsidiaries shall be covered by this Plan;

 

(b)   Determine which Employees and/or Directors or Third Party Service
Providers outside the United States are eligible to participate in this Plan;

 

(c)   Modify the terms and conditions of any Award granted to Employees \and/or
Directors or Third Party Service Providers outside the United States to comply
with applicable foreign laws;

 

(d)   Establish subplans and modify exercise procedures and other terms and
procedures, to the extent such actions may be necessary or advisable. Any
subplans and modifications to Plan terms and procedures established under this
Section 20.9 by the Board shall be attached to this Plan document as appendices;
and

 

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(e)   Take any action, before or after an Award is made, that it deems advisable
to obtain approval or comply with any necessary local government regulatory
exemptions or approvals.

 

Notwithstanding the above, the Board may not take any actions hereunder, and no
Awards shall be granted, that would violate applicable law.

 

20.10    Uncertificated Shares.    To the extent that this Plan provides for
issuance of certificates to reflect the transfer of Shares, the transfer of such
Shares may be effected on a noncertificated basis, to the extent not prohibited
by applicable law or the rules of any stock exchange.

 

20.11    Unfunded Plan.    Participants shall have no right, title, or interest
whatsoever in or to any investments that the Company, and/or its Subsidiaries,
and/or its Affiliates may make to aid it in meeting its obligations under this
Plan. Nothing contained in this Plan, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and any Participant, beneficiary,
legal representative, or any other individual. To the extent that any person
acquires a right to receive payments from the Company, its Subsidiaries, and/or
its Affiliates under this Plan, such right shall be no greater than the right of
an unsecured general creditor of the Company, a Subsidiary, or an Affiliate, as
the case may be. All payments to be made hereunder shall be paid from the
general funds of the Company, a Subsidiary, or an Affiliate, as the case may be
and no special or separate fund shall be established and no segregation of
assets shall be made to assure payment of such amounts except as expressly set
forth in this Plan.

 

20.12    No Fractional Shares.    No fractional Shares shall be issued or
delivered pursuant to this Plan or any Award. The Board shall determine whether
cash, Awards, or other property shall be issued or paid in lieu of fractional
Shares or whether such fractional Shares or any rights thereto shall be
forfeited or otherwise eliminated.

 

20.13    Retirement and Welfare Plans.    Neither Awards made under this Plan
nor Shares or cash paid pursuant to such Awards, except pursuant to Covered
Employee Annual Incentive Awards, may be included as “compensation” for purposes
of computing the benefits payable to any Participant under the Company’s or any
Subsidiary’s or Affiliate’s retirement plans (both qualified and non-qualified)
or welfare benefit plans unless such other plan expressly provides that such
compensation shall be taken into account in computing a Participant’s benefit.

 

20.14    Deferred Compensation.    No deferral of compensation (as defined under
Code Section 409A or guidance thereto) is intended under this Plan.
Notwithstanding this intent, if any Award would be considered deferred
compensation as defined under Code Section 409A and if the Plan fails to meet
the requirements of Code Section 409A with respect to such Award, then such
Award shall be null and void. However, the Board may permit deferrals of
compensation pursuant to the terms of a Participant’s Award Agreement, a
separate plan or a subplan which meets the requirements of Code Section 409A and
any related guidance. To the extent any Award is subject to Code Section 409A,
notwithstanding any provision herein to the contrary, the Plan does not permit
the acceleration of the time or schedule of any distribution related to such
Award, except as permitted by Code Section 409A, the regulations thereunder,
and/or the Secretary of the United States Treasury. Any Award that is subject to
Code Section 409A and that is to be distributed to a Key Employee (as defined
below) upon a Participant’s “separation from service” (as defined under Code
Section 409A) shall be administered so that any distribution with respect to
such Award shall be postponed for six (6) months following the date of the
Participant’s separation from service, if required by Code Section 409A. The
determination of Key Employees, including the number and identity of persons
considered Key Employees and the identification date, shall be made by the Board
or its delegate each year in accordance with Code Section 416(i) and the
“specified employee” requirements of Code Section 409A. Additionally, to the
extent an Award is subject to Code Section 409A, in no event may the
Participant, directly or indirectly, designate the calendar year in which a
distribution is made except in accordance with Code Section 409A.
Notwithstanding anything in the Plan or any Award Agreement

 

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to the contrary, each Participant shall be solely responsible for the tax
consequences of Awards under the Plan, and in no event shall the Company have
any responsibility or liability if an Award does not meet any applicable
requirements of Code Section 409A. Although the Company intends to administer
the Plan to prevent taxation under section Code Section 409A, the Company does
not represent or warrant that the Plan or any Award complies with any provision
of federal, state, local or other tax law.

 

20.15    Nonexclusivity of this Plan.    The adoption of this Plan shall not be
construed as creating any limitations on the power of the Board or Board to
adopt such other compensation arrangements as it may deem desirable for any
Participant.

 

20.16    No Constraint on Corporate Action.    Nothing in this Plan shall be
construed to: (i) limit, impair, or otherwise affect the Company’s or a
Subsidiary’s or an Affiliate’s right or power to make adjustments,
reclassifications, reorganizations, or changes of its capital or business
structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer
all or any part of its business or assets; or, (ii) limit the right or power of
the Company or a Subsidiary or an Affiliate to take any action which such entity
deems to be necessary or appropriate.

 

20.17    Governing Law.    The Plan and each Award Agreement shall be governed
by the laws of the State of Delaware, excluding any conflicts or choice of law
rule or principle that might otherwise refer construction or interpretation of
this Plan to the substantive law of another jurisdiction. Unless otherwise
provided in the Award Agreement, recipients of an Award under this Plan are
deemed to submit to the exclusive jurisdiction and venue of the federal or state
courts of Delaware, to resolve any and all issues that may arise out of or
relate to this Plan or any related Award Agreement.

 

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