Exhibit 10.15

 

INVIVO THERAPEUTICS HOLDINGS CORP.

 

2015 EQUITY INCENTIVE PLAN

 

 

INVIVO THERAPEUTICS HOLDINGS CORP.

2015 EQUITY INCENTIVE PLAN

 

 

1.

Purpose

3

 

 

 

2.

Definitions

3

 

 

 

3.

Administration.

7

 

 

 

4.

Shares Subject to Plan.

8

 

 

 

5.

Eligibility; Per-Participant Limitations

9

 

 

 

6.

Specific Terms of Awards.

9

 

 

 

7.

Certain Provisions Applicable to Awards.

15

 

 

 

8.

Code Section 162(m) Provisions.

17

 

 

 

9.

Change in Control.

19

 

 

 

10.

General Provisions.

21

 

 

2

 

INVIVO THERAPEUTICS HOLDINGS CORP.

2015 EQUITY INCENTIVE PLAN

 

1.  Purpose.  The purpose of this INVIVO THERAPEUTICS HOLDINGS CORP. 2015 EQUITY
INCENTIVE PLAN (the “Plan”) is to assist INVIVO THERAPEUTICS HOLDINGS CORP., a
Nevada corporation (the “Company”), and its Related Entities (as defined below)
in attracting, motivating, retaining and rewarding high-quality executives and
other employees, officers, directors and consultants to the Company or its
Related Entities by enabling such persons to acquire or increase a proprietary
interest in the Company in order to strengthen the mutuality of interests
between such persons and the Company’s shareholders, and providing such persons
with performance incentives to expend their maximum efforts in the creation of
shareholder value.

 

2.  Definitions.  For purposes of the Plan, the following terms shall be defined
as set forth below, in addition to such terms defined in Section 1 and elsewhere
herein.

 

(a)          “Award” means any Option, Stock Appreciation Right, Restricted
Stock Award, Restricted Stock Unit Award, Share granted as a bonus or in lieu of
another Award, Dividend Equivalent, Other Stock-Based Award or Performance
Award, together with any other right or interest relating to Shares or other
property (including cash), granted to a Participant under the Plan.

 

(b)          “Award Agreement” means any written agreement, contract or other
instrument or document evidencing any Award granted by the Committee hereunder.

 

(c)          “Beneficial Owner” and “Beneficial Ownership” shall have the
meaning ascribed to such term in Rule 13d-3 under the Exchange Act and any
successor to such Rule.

 

(d)          “Beneficiary” means the person, persons, trust or trusts that have
been designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under the
Plan upon such Participant’s death or to which Awards or other rights are
transferred if and to the extent permitted under Section 10(b) hereof. If, upon
a Participant’s death, there is no designated Beneficiary or surviving
designated Beneficiary, then the term Beneficiary means the person, persons,
trust or trusts entitled by will or the laws of descent and distribution to
receive such benefits.

 

(e)          “Board” means the Company’s Board of Directors.

 

(f)           “Cause” shall, with respect to any Participant, have the meaning
specified in the Award Agreement. In the absence of any definition in the Award
Agreement, “Cause” shall have the equivalent meaning or the same meaning as
“cause” or “for cause” set forth in any employment, consulting, or other
agreement for the performance of services between the Participant and the
Company or a Related Entity or, in the absence of any such agreement or any such
definition in such agreement, such term shall mean (i) the failure by the
Participant to perform, in a reasonable manner, his or her duties as assigned by
the Company or a Related Entity; (ii) any violation or breach by the Participant
of his or her employment, consulting or other similar agreement with the Company
or a Related Entity, if any; (iii) any violation or breach by the Participant of
any non-competition, non-solicitation, non- disclosure and/or other similar
agreement with the Company or a Related Entity; (iv) any act by the Participant
of dishonesty or bad faith with respect to the Company or a Related Entity;
(v) any material violation or breach by the Participant of the Company’s or
Related Entity’s policy for employee conduct, if any; (vi) use of alcohol, drugs
or other similar substances in a manner that adversely affects the Participant’s
work performance, or (vii) the commission by the Participant of any act,
misdemeanor, or crime reflecting unfavorably upon the Participant or the Company
or any Related Entity. The good faith determination by the Committee of whether
the Participant’s Continuous Service was terminated by the Company for “Cause”
shall be final and binding for all purposes hereunder.

 

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(g)          “Change in Control” means a Change in Control as defined in
Section 9(b) hereof.

 

(h)          “Code” means the Internal Revenue Code of 1986, as amended from
time to time, including regulations thereunder and successor provisions and
regulations thereto.

 

(i)           “Committee” means the Governance, Nominating and Compensation
Committee of the Board, a subcommittee thereof formed by the such committee to
act as the Committee under this Plan, or such other committee as the Board of
Directors shall appoint from time to time; provided, however, that if the Board
fails to designate a committee or if there are no longer any members on the
committee so designated by the Board, or for any other reason determined by the
Board, then the Board shall serve as the Committee. While it is intended that
the Committee shall consist of at least two directors, each of whom shall be
(i) a “non-employee director” within the meaning of Rule 16b-3 (or any successor
rule) under the Exchange Act, unless administration of the Plan by “non-employee
directors” is not then required in order for exemptions under Rule 16b-3 to
apply to transactions under the Plan, (ii) an “outside director” within the
meaning of Section 162(m) of the Code, and (iii) “Independent,” the failure of
the Committee to be so comprised shall not invalidate any Award that otherwise
satisfies the terms of the Plan.

 

(j)           “Consultant” means any consultant or advisor who is a natural
person and who provides services to the Company or any Related Entity, so long
as such person (i) renders bona fide services that are not in connection with
the offer and sale of the Company’s securities in a capital- raising
transaction, (ii) does not directly or indirectly promote or maintain a market
for the Company’s securities and (iii) otherwise qualifies as a de facto
employee or consultant under the applicable rules of the SEC for registration of
shares of stock on a Form S-8 registration statement.

 

(k)          “Continuous Service” means the uninterrupted provision of services
to the Company or any Related Entity in any capacity of Employee, Director or
Consultant. Continuous Service shall not be considered to be interrupted in the
case of (i) any approved leave of absence, (ii) transfers among the Company, any
Related Entities, or any successor entities, in any capacity of Employee,
Director or Consultant, or (iii) any change in status as long as the individual
remains in the service of the Company or a Related Entity in any capacity of
Employee, Director or Consultant (except as otherwise provided in the Award
Agreement). An approved leave of absence shall include sick leave, military
leave, or any other authorized personal leave.

 

(l)           “Covered Employee” means the Person who, as of the end of the
taxable year, either is the principal executive officer of the Company or is
serving as the acting principal executive officer of the Company, and each other
Person whose compensation is required to be disclosed in the Company’s filings
with the SEC by reason of that person being among the three highest compensated
officers of the Company (other than the chief financial officer) as of the end
of a taxable year, or such other person as shall be considered a “covered
employee” for purposes of Section 162(m) of the Code.

 

(m)         “Director” means a member of the Board or the board of directors of
any Related Entity.

 

(n)          “Disability” means a Participant’s eligibility to receive long-term
disability benefits under a plan sponsored by the Company or a Related Entity,
or if no such plan is applicable, a Participant’s inability to perform the
essential functions of his or her duties due to a medically- determinable
physical or mental impairment, illness or injury, which can be expected to
result in death or to be of long-continued and indefinite duration as determined
in the sole discretion of the Committee. Notwithstanding the foregoing, in the
case of any Option that is an Incentive Stock Option, if and to the extent
required in order for the Option to satisfy the requirements of Section 422 of
the Code, the term “Disability” means disabled within the meaning of
Section 22(e)(3) of the Code.

 

4

 

(o)          “Dividend Equivalent” means a right, granted to a Participant under
Section 6(g) hereof, to receive cash, Shares, other Awards or other property
equal in value to dividends paid with respect to a specified number of Shares,
or other periodic payments.

 

(p)          “Effective Date” means the effective date of the Plan, which shall
be April 16, 2015.

 

(q)          “Eligible Person” means each officer, Director, Employee or
Consultant to the Company or any Related Entity. The foregoing notwithstanding,
only Employees of the Company, or any parent corporation or subsidiary
corporation of the Company (as those terms are defined in Sections 424(e) and
(f) of the Code, respectively), shall be Eligible Persons for purposes of
receiving any Incentive Stock Options. An Employee on leave of absence may, in
the discretion of the Committee, be considered as still in the employ of the
Company or a Related Entity for purposes of eligibility for participation in the
Plan.

 

(r)           “Employee” means any person, including an officer or Director, who
is an employee of the Company or any Related Entity, or is a prospective
employee of the Company or any Related Entity (conditioned upon and effective
not earlier than such person becoming an employee of the Company or any Related
Entity). The payment of a director’s fee by the Company or a Related Entity
shall not be sufficient to constitute “employment” by the Company.

 

(s)           “Exchange Act” means the Securities Exchange Act of 1934, as
amended from time to time, including rules thereunder and successor provisions
and rules thereto.

 

(t)           “Fair Market Value” means the fair market value of Shares, Awards
or other property as determined by the Committee, or under procedures
established by the Committee. Unless otherwise determined by the Committee, the
Fair Market Value of a Share as of any given date shall be the closing sale
price per Share reported on a consolidated basis for stock listed on the
principal stock exchange or market on which Shares are traded on the date as of
which such value is being determined (or as of such later measurement date as
determined by the Committee on the date the Award is authorized by the
Committee), or, if there is no sale on that date, then on the last previous day
on which a sale was reported.

 

(u)          “Good Reason” shall, with respect to any Participant, have the
meaning specified in the Award Agreement. In the absence of any definition in
the Award Agreement, “Good Reason” shall have the equivalent meaning or the same
meaning as “good reason” or “for good reason” set forth in any employment,
consulting or other agreement for the performance of services between the
Participant and the Company or a Related Entity or, in the absence of any such
agreement or any such definition in such agreement, such term shall mean (i) the
assignment to the Participant of any duties inconsistent in any material respect
with the Participant’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as assigned by the Company
or Related Entity, or any other action by the Company or a Related Entity which
results in a material diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
or a Related Entity promptly after receipt of notice thereof given by the
Participant; (ii) any material failure by the Company or a Related Entity to
comply with its obligations to the Participant as agreed upon, other than an
isolated, insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company or a Related Entity promptly after receipt of
notice thereof given by the Participant; (iii) the Company’s or Related Entity’s
requiring the Participant to be based at any office or location outside of 50
miles from the location of employment or service as of the date of Award, except
for travel reasonably required in the performance of the Participant’s
responsibilities; (iv) any purported termination by the Company or Related
Entity of the Participant’s Continuous Service other than for Cause, death or by
reason of the Participant’s Disability, or (v) any material reduction in the
Participant’s base

 

 

5

 

salary (unless such reduction is part of a Company-wide reduction that affects a
majority of the persons of comparable level to the Participant).

 

(v)          “Incentive Stock Option” means any Option intended to be designated
as an incentive stock option within the meaning of Section 422 of the Code or
any successor provision thereto.

 

(w)         “Incumbent Board” means the Incumbent Board as defined in
Section 9(b)(ii) hereof.

 

(x)          “Independent”, when referring to either the Board or members of the
Committee, shall have the same meaning as used in the rules of the Listing
Market or, if the Listing Market does not have such rules, the rules of The
NASDAQ Stock Market, LLC.

 

(y)          “Listing Market” means the principal stock exchange or market on
which Shares are then traded.

 

(z)          “Option” means a right granted to a Participant under
Section 6(b) hereof, to purchase Shares or other Awards at a specified price
during specified time periods.

 

(aa)         “Optionee” means a person to whom an Option is granted under this
Plan or any person who succeeds to the rights of such person under this Plan.

 

(bb)        “Other Stock-Based Awards” means Awards granted to a Participant
under Section 6(i) hereof.

 

(cc)         “Participant” means a person who has been granted an Award under
the Plan which remains outstanding, including a person who is no longer an
Eligible Person.

 

(dd)        “Performance Award” means any Award of Performance Shares or
Performance Units granted pursuant to Section 6(h) hereof.

 

(ee)         “Performance Period” means the period established by the Committee
at the time any Performance Award is granted or at any time thereafter during
which any performance goals specified by the Committee with respect to such
Award are to be measured.

 

(ff)         “Performance Share” means any grant pursuant to Section 6(h) hereof
of a unit valued by reference to a designated number of Shares, which value may
be paid to the Participant by delivery of such property as the Committee shall
determine, including cash, Shares, other property, or any combination thereof,
upon achievement of such performance goals during the Performance Period as the
Committee shall establish at the time of such grant or thereafter.

 

(gg)        “Performance Unit” means any grant pursuant to Section 6(h) hereof
of a unit valued by reference to a designated amount of property (including
cash) other than Shares, which value may be paid to the Participant by delivery
of such property as the Committee shall determine, including cash, Shares, other
property, or any combination thereof, upon achievement of such performance goals
during the Performance Period as the Committee shall establish at the time of
such grant or thereafter.

 

(hh)        “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, and shall include a “group” as defined in Section 13(d) thereof.

 

(ii)          “Prior Plan” means the InVivo Therapeutics Holdings Corp. 2010
Equity Incentive Plan, as amended from time to time.

 

(jj)          “Related Entity” means any Subsidiary, and any business,
corporation, partnership, limited liability company or other entity designated
by the Board, in which the Company or a Subsidiary holds a substantial ownership
interest, directly or indirectly.

 

6

 

(kk)        “Restricted Stock” means any Share issued with such risks of
forfeiture and other restrictions as the Committee, in its sole discretion, may
impose (including any restriction on the right to vote such Share and the right
to receive any dividends), which restrictions may lapse separately or in
combination at such time or times, in installments or otherwise, as the
Committee may deem appropriate.

 

(ll)          “Restricted Stock Award” means an Award granted to a Participant
under Section 6(d) hereof.

 

(mm)      “Restricted Stock Unit” means a right to receive Shares, including
Restricted Stock, cash measured based upon the value of Shares or a combination
thereof, at the end of a specified deferral period.

 

(nn)        “Restricted Stock Unit Award” means an Award of Restricted Stock
Unit granted to a Participant under Section 6(e) hereof.

 

(oo)        “Restriction Period” means the period of time specified by the
Committee that Restricted Stock Awards shall be subject to such restrictions on
transferability, risk of forfeiture and other restrictions, if any, as the
Committee may impose.

 

(pp)        “Rule 16b-3” means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the SEC under Section 16
of the Exchange Act.

 

(qq)        “SEC” means the United States Securities and Exchange Commission.

 

(rr)         “Shares” means the shares of common stock of the Company, and such
other securities as may be substituted (or resubstituted) for Shares pursuant to
Section 10(c) hereof.

 

(ss)         “Stock Appreciation Right” means a right granted to a Participant
under Section 6(c) hereof.

 

(tt)          “Subsidiary” means any corporation or other entity in which the
Company has a direct or indirect ownership interest of 50% or more of the total
combined voting power of the then outstanding securities or interests of such
corporation or other entity entitled to vote generally in the election of
directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% or more of the assets on liquidation or
dissolution.

 

(uu)        “Substitute Awards” means Awards granted or Shares issued by the
Company in assumption of, or in substitution or exchange for, Awards previously
granted, or the right or obligation to make future Awards, by an entity,
(i) acquired by the Company or any Related Entity, (ii) which becomes a Related
Entity after the date hereof, or (iii) with which the Company or any Related
Entity combines.

 

3.  Administration.

 

(a)  Authority of the Committee.  The Plan shall be administered by the
Committee, except to the extent (and subject to the limitations imposed by
Section 3(b) hereof) the Board elects to administer the Plan, in which case the
Plan shall be administered by only those members of the Board who are
Independent members of the Board, in which case references herein to the
“Committee” shall be deemed to include references to the Independent members of
the Board. The Committee shall have full and final authority, subject to and
consistent with the provisions of the Plan, to select Eligible Persons to become
Participants, grant Awards, determine the type, number and other terms and
conditions of, and all other matters relating to, Awards, prescribe Award
Agreements (which need not be identical for each Participant) and rules and
regulations for the administration of the Plan, construe and interpret the Plan
and Award Agreements and correct defects, supply omissions or reconcile
inconsistencies therein, and to make all other decisions and determinations as
the Committee may deem necessary or advisable for the administration of the

 

7

 

Plan. In exercising any discretion granted to the Committee under the Plan or
pursuant to any Award, the Committee shall not be required to follow past
practices, act in a manner consistent with past practices, or treat any Eligible
Person or Participant in a manner consistent with the treatment of any other
Eligible Persons or Participants. Decisions of the Committee shall be final,
conclusive and binding on all persons or entities, including the Company, any
Subsidiary or any Participant or Beneficiary, or any transferee under
Section 10(b) hereof or any other person claiming rights from or through any of
the foregoing persons or entities.

 

(b)  Manner of Exercise of Committee Authority.  The Committee, and not the
Board, shall exercise sole and exclusive discretion (i) on any matter relating
to a Participant then subject to Section 16 of the Exchange Act with respect to
the Company to the extent necessary in order that transactions by such
Participant shall be exempt under Rule 16b-3 under the Exchange Act or (ii) with
respect to any Award that is intended to qualify as “performance-based
compensation” under Section 162(m), to the extent necessary in order for such
Award to so qualify. The express grant of any specific power to the Committee,
and the taking of any action by the Committee, shall not be construed as
limiting any power or authority of the Committee. The Committee may delegate to
members of the Board, or officers or managers of the Company or any Related
Entity, or committees thereof, the authority, subject to such terms and
limitations as the Committee shall determine, to perform such functions,
including administrative functions as the Committee may determine to the extent
that such delegation will not result in the loss of an exemption under
Rule 16b-3(d)(1) for Awards granted to Participants subject to Section 16 of the
Exchange Act in respect of the Company and will not cause Awards intended to
qualify as “performance-based compensation” under Code Section 162(m) to fail to
so qualify. The Committee may appoint agents to assist it in administering the
Plan.

 

(c)  Limitation of Liability.  The Committee and the Board, and each member
thereof, shall be entitled to, in good faith, rely or act upon any report or
other information furnished to him or her by any officer or Employee, the
Company’s independent auditors, Consultants or any other agents assisting in the
administration of the Plan. Members of the Committee and the Board, and any
officer or Employee acting at the direction or on behalf of the Committee or the
Board, shall not be personally liable for any action or determination taken or
made in good faith with respect to the Plan, and shall, to the extent permitted
by law, be fully indemnified and protected by the Company with respect to any
such action or determination

 

4.  Shares Subject to Plan.

 

(a)  Limitation on Overall Number of Shares Available for Delivery Under
Plan.  Subject to adjustment as provided in Section 10(c) hereof, the total
number of Shares reserved and available for delivery under the Plan shall be
equal to (i) 32,000, plus (ii) any Shares that become available in connection
with the cancellation, forfeiture, or expiration of awards issued and
outstanding as of the Effective Date under the Prior Plan, plus (iii) any Shares
remaining available for delivery under the Prior Plan on the Effective Date of
the Plan. Any Shares delivered under the Plan may consist, in whole or in part,
of authorized and unissued shares or treasury shares.

 

(b)  Application of Limitation to Grants of Awards.  No Award may be granted if
the number of Shares to be delivered in connection with such an Award exceeds
the number of Shares remaining available for delivery under the Plan, minus the
number of Shares deliverable in settlement of or relating to then outstanding
Awards. The Committee may adopt reasonable counting procedures to ensure
appropriate counting, avoid double counting (as, for example, in the case of
tandem or substitute awards) and make adjustments if the number of Shares
actually delivered differs from the number of Shares previously counted in
connection with an Award.

 

 

8

 

(c)  Availability of Shares Not Delivered under Awards and Adjustments to
Limits.

 

(i)           If any Shares subject to an Award are forfeited, expire or
otherwise terminate without issuance of such Shares, or an Award is settled for
cash or otherwise does not result in the issuance of all or a portion of the
Shares subject to such Award, then such Shares shall, to the extent of such
forfeiture, expiration, termination, non-issuance or cash settlement, again be
available for delivery with respect to Awards under the Plan.

 

(ii)          Substitute Awards shall not reduce the Shares authorized for
delivery under the Plan or authorized for delivery to a Participant in any
period. Additionally, in the event that an entity acquired by the Company or any
Related Entity or with which the Company or any Related Entity combined has
shares available under a pre-existing plan approved by its shareholders and not
adopted in contemplation of such acquisition or combination, the shares
available for delivery pursuant to the terms of such pre-existing plan (as
adjusted, to the extent appropriate, using the exchange ratio or other
adjustment or valuation ratio or formula used in such acquisition or combination
to determine the consideration payable to the holders of common stock of the
entities party to such acquisition or combination) may be used for Awards under
the Plan and shall not reduce the Shares authorized for delivery under the Plan
if and to the extent that the use of such Shares would not require approval of
the Company’s shareholders under the rules of the Listing Market.

 

(iii)         Any Share that again becomes available for delivery pursuant to
this Section 4(c) shall be added back as one Share.

 

(iv)         Notwithstanding anything in this Section 4(c) to the contrary but
subject to adjustment as provided in Section 10(c) hereof, the maximum aggregate
number of Shares that may be delivered under the Plan as a result of the
exercise of the Incentive Stock Options shall be 32,000 Shares.

 

(v)          Notwithstanding anything in this Section 4 to the contrary, but
subject to adjustment as provided in Section 10(c) hereof, in any fiscal year of
the Company during any part of which the Plan is in effect, no Participant who
is a Director but is not also an Employee or Consultant may be granted any
Awards that have a “fair value” as of the date of grant, as determined in
accordance with FASB ASC Topic 718 (or any other applicable accounting
guidance), that exceed $1,000,000 in the aggregate.

 

(d)  No Further Awards Under Prior Plan.  In light of the adoption of this Plan,
no further awards shall be made under the Prior Plan on and after the Effective
Date.

 

5.  Eligibility; Per-Participant Limitations.  Awards may be granted under the
Plan only to Eligible Persons. Subject to adjustment as provided in
Section 10(c) of this Plan, in any fiscal year of the Company during any part of
which the Plan is in effect, no Participant may be granted (i) Options and/or
Stock Appreciation Rights with respect to more than 32,000 Shares or
(ii) Restricted Stock, Restricted Stock Units, Performance Shares and/or Other
Stock-Based Awards denominated in or valued by reference to a designated number
of Shares and that are subject to Section 8 hereof, with respect to more than
32,000 Shares. In addition, the maximum dollar value payable to any one
Participant with respect to Performance Units that are subject to Section 8
hereof is (x) $2,000,000 with respect to any 12 month Performance Period
(pro-rated for any Performance Period that is less than 12 months based upon the
ratio of the number of days in the Performance Period as compared to 365), and
(y) with respect to any Performance Period that is more than 12 months,
$2,000,000.

 

6.  Specific Terms of Awards.

 

(a)  General.  Awards may be granted on the terms and conditions set forth in
this Section 6. In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant

 

 

9

 

or thereafter (subject to Section 10(e) hereof), such additional terms and
conditions, not inconsistent with the provisions of the Plan, as the Committee
shall determine, including terms requiring forfeiture of Awards in the event of
termination of the Participant’s Continuous Service and terms permitting a
Participant to make elections relating to his or her Award. Except as otherwise
expressly provided herein, the Committee shall retain full power and discretion
to accelerate, waive or modify, at any time, any term or condition of an Award
that is not mandatory under the Plan. Except in cases in which the Committee is
authorized to require other forms of consideration under the Plan, or to the
extent other forms of consideration must be paid to satisfy the requirements of
Nevada law, no consideration other than services may be required for the grant
(as opposed to the exercise) of any Award.

 

(b)  Options.  The Committee is authorized to grant Options to any Eligible
Person on the following terms and conditions:

 

(i)    Exercise Price.  Other than in connection with Substitute Awards, the
exercise price per Share purchasable under an Option shall be determined by the
Committee, provided that such exercise price shall not be less than 100% of the
Fair Market Value of a Share on the date of grant of the Option and shall not,
in any event, be less than the par value of a Share on the date of grant of the
Option. If an Employee owns or is deemed to own (by reason of the attribution
rules applicable under Section 424(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Company (or any parent corporation
or subsidiary corporation of the Company, as those terms are defined in
Sections 424(e) and (f) of the Code, respectively) and an Incentive Stock Option
is granted to such Employee, the exercise price of such Incentive Stock Option
(to the extent required by the Code at the time of grant) shall be no less than
110% of the Fair Market Value of a Share on the date such Incentive Stock Option
is granted. Other than pursuant to Section 10(c)(i) and (ii) hereof, the
Committee shall not be permitted to (A) lower the exercise price per Share of an
Option after it is granted, (B) cancel an Option when the exercise price per
Share exceeds the Fair Market Value of the underlying Shares in exchange for
cash or another Award, (C) cancel an outstanding Option in exchange for an
Option with an exercise price that is less than the exercise price of the
original Options or (D) take any other action with respect to an Option that may
be treated as a repricing pursuant to the applicable rules of the Listing
Market, without approval of the Company’s shareholders.

 

(ii)   Time and Method of Exercise.  The Committee shall determine the time or
times at which or the circumstances under which an Option may be exercised in
whole or in part (including based on achievement of performance goals or future
service requirements), the time or times at which Options shall cease to be or
become exercisable following termination of Continuous Service or upon other
conditions, the methods by which the exercise price may be paid or deemed to be
paid (including in the discretion of the Committee a cashless exercise
procedure), the form of such payment, including, without limitation, cash,
Shares (including without limitation the withholding of Shares otherwise
deliverable pursuant to the Award), other Awards or awards granted under other
plans of the Company or a Related Entity, or other property (including notes or
other contractual obligations of Participants to make payment on a deferred
basis provided that such deferred payments are not in violation of
Section 13(k) of the Exchange Act, or any rule or regulation adopted thereunder
or any other applicable law), and the methods by or forms in which Shares will
be delivered or deemed to be delivered to Participants.

 

(iii)  Incentive Stock Options.  The terms of any Incentive Stock Option granted
under the Plan shall comply in all respects with the provisions of Section 422
of the Code. Anything in the Plan to the contrary notwithstanding, no term of
the Plan relating to Incentive Stock Options (including any Stock Appreciation
Right issued in tandem therewith) shall be

 

10

 

interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be exercised, so as to disqualify either the Plan or any
Incentive Stock Option under Section 422 of the Code, unless the Participant has
first requested, or consents to, the change that will result in such
disqualification. Thus, if and to the extent required to comply with Section 422
of the Code, Options granted as Incentive Stock Options shall be subject to the
following special terms and conditions:

 

(A)  the Option shall not be exercisable for more than ten years after the date
such Incentive Stock Option is granted; provided, however, that if a Participant
owns or is deemed to own (by reason of the attribution rules of
Section 424(d) of the Code) more than 10% of the combined voting power of all
classes of stock of the Company (or any parent corporation or subsidiary
corporation of the Company, as those terms are defined in Sections 424(e) and
(f) of the Code, respectively) and the Incentive Stock Option is granted to such
Participant, the term of the Incentive Stock Option shall be (to the extent
required by the Code at the time of the grant) for no more than five years from
the date of grant;

 

(B)  The aggregate Fair Market Value (determined as of the date the Incentive
Stock Option is granted) of the Shares with respect to which Incentive Stock
Options granted under the Plan and all other option plans of the Company (and
any parent corporation or subsidiary corporation of the Company, as those terms
are defined in Sections 424(e) and (f) of the Code, respectively) that become
exercisable for the first time by the Participant during any calendar year shall
not (to the extent required by the Code at the time of the grant) exceed
$100,000; and

 

(C)  if shares acquired by exercise of an Incentive Stock Option are disposed of
within two years following the date the Incentive Stock Option is granted or one
year following the transfer of such Shares to the Participant upon exercise, the
Participant shall, promptly following such disposition, notify the Company in
writing of the date and terms of such disposition and provide such other
information regarding the disposition as the Committee may reasonably require.

 

(c)  Stock Appreciation Rights.  The Committee may grant Stock Appreciation
Rights to any Eligible Person in conjunction with all or part of any Option
granted under the Plan or at any subsequent time during the term of such Option
(a “Tandem Stock Appreciation Right”), or without regard to any Option (a
“Freestanding Stock Appreciation Right”), in each case upon such terms and
conditions as the Committee may establish in its sole discretion, not
inconsistent with the provisions of the Plan, including the following:

 

(i)    Right to Payment.  A Stock Appreciation Right shall confer on the
Participant to whom it is granted a right to receive, upon exercise thereof, the
excess of (A) the Fair Market Value of one Share on the date of exercise over
(B) the grant price of the Stock Appreciation Right as determined by the
Committee. The grant price of a Stock Appreciation Right shall not be less than
100% of the Fair Market Value of a Share on the date of grant; provided,
however, that if and to the extent that it would not violate Section 409A of the
Code, the grant price for a Stock Appreciation Right that is granted as a
Substitute Award for an outstanding Option may be lower than 100% of the Fair
Market Value of a Share on the date of grant of the Stock Appreciation Right if
it is not less than the exercise price of the Option for which it is
substituted. Other than pursuant to Section 10(c)(i) and (ii) of this Plan, the
Committee shall not be permitted to (A) lower the grant price per Share of a
Stock Appreciation Right after it is granted, (B) cancel a Stock Appreciation
Right when the grant price per Share exceeds the Fair Market Value of the
underlying Shares in exchange for cash or another Award, (C) cancel an
outstanding Stock Appreciation Right in exchange for a

 

11

 

Stock Appreciation Right with a grant price that is less than the grant price of
the original Stock Appreciation Right, or (D) take any other action with respect
to a Stock Appreciation Right that may be treated as a repricing pursuant to the
applicable rules of the Listing Market, without shareholder approval.

 

(ii)   Other Terms.  The Committee shall determine at the date of grant or
thereafter, the time or times at which and the circumstances under which a Stock
Appreciation Right may be exercised in whole or in part (including based on
achievement of performance goals or future service requirements), the time or
times at which Stock Appreciation Rights shall cease to be or become exercisable
following termination of Continuous Service or upon other conditions, the method
of exercise, method of settlement, form of consideration payable in settlement,
method by or forms in which Shares will be delivered or deemed to be delivered
to Participants, whether or not a Stock Appreciation Right shall be in tandem or
in combination with any other Award, and any other terms and conditions of any
Stock Appreciation Right.

 

(iii)  Tandem Stock Appreciation Rights.  Any Tandem Stock Appreciation Right
may be granted at the same time as or subsequently to the related Option is
granted. Any Tandem Stock Appreciation Right related to an Option may be
exercised only when the related Option would be exercisable and the Fair Market
Value of the Shares subject to the related Option exceeds the exercise price at
which Shares can be acquired pursuant to the Option. In addition, if a Tandem
Stock Appreciation Right exists with respect to less than the full number of
Shares covered by a related Option, then an exercise or termination of such
Option shall not reduce the number of Shares to which the Tandem Stock
Appreciation Right applies until the number of Shares then exercisable under
such Option equals the number of Shares to which the Tandem Stock Appreciation
Right applies. Any Option related to a Tandem Stock Appreciation Right shall no
longer be exercisable to the extent the Tandem Stock Appreciation Right has been
exercised, and any Tandem Stock Appreciation Right shall no longer be
exercisable to the extent the related Option has been exercised.

 

(d)  Restricted Stock Awards.  The Committee is authorized to grant Restricted
Stock Awards to any Eligible Person on the following terms and conditions:

 

(i)    Grant and Restrictions.  Restricted Stock Awards shall be subject to such
restrictions on transferability, risk of forfeiture and other restrictions, if
any, as the Committee may impose, or as otherwise provided in this Plan during
the Restriction Period. The terms of any Restricted Stock Award granted under
the Plan shall be set forth in a written Award Agreement which shall contain
provisions determined by the Committee and not inconsistent with the Plan. The
restrictions may lapse separately or in combination at such times, under such
circumstances (including based on achievement of performance goals and/or future
service requirements), in such installments or otherwise, as the Committee may
determine at the date of grant or thereafter. Except to the extent restricted
under the terms of the Plan and any Award Agreement relating to a Restricted
Stock Award, a Participant granted Restricted Stock shall have all of the rights
of a shareholder, including the right to vote the Restricted Stock and the right
to receive dividends thereon (subject to any mandatory reinvestment or other
requirement imposed by the Committee). During the period that the Restricted
Stock Award is subject to a risk of forfeiture, subject to Section 10(b) hereof
and except as otherwise provided in the Award Agreement, the Restricted Stock
may not be sold, transferred, pledged, hypothecated, margined or otherwise
encumbered by the Participant or Beneficiary.

 

(ii)   Forfeiture.  Except as otherwise determined by the Committee, upon
termination of a Participant’s Continuous Service during the applicable
Restriction Period, the Participant’s Restricted Stock that is at that time
subject to a risk of forfeiture that has not lapsed or

 

12

 

otherwise been satisfied shall be forfeited and reacquired by the Company;
provided that the Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case, that forfeiture conditions
relating to Restricted Stock Awards shall be waived in whole or in part in the
event of terminations resulting from specified causes, and the Committee may in
other cases waive in whole or in part the forfeiture of Restricted Stock.

 

(iii)  Certificates for Stock.  Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee shall determine. If certificates
representing Restricted Stock are registered in the name of the Participant, the
Committee may require that such certificates bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such
Restricted Stock, that the Company retain physical possession of the
certificates, and that the Participant deliver a stock power to the Company,
endorsed in blank, relating to the Restricted Stock.

 

(iv)  Dividends and Splits.  As a condition to the grant of a Restricted Stock
Award, the Committee may require or permit a Participant to elect that any cash
dividends paid on a Share of Restricted Stock be automatically reinvested in
additional Shares of Restricted Stock or applied to the purchase of additional
Awards under the Plan, or except as otherwise provided in the last sentence of
Section 6(h) hereof, may require that payment be delayed (with or without
interest at such rate, if any, as the Committee shall determine) and remain
subject to restrictions and a risk of forfeiture to the same extent as the
Restricted Stock with respect to which such cash dividend is payable, in each
case in a manner that does not violate the requirements of Section 409A of the
Code. Unless otherwise determined by the Committee, Shares distributed in
connection with a stock split or stock dividend, and other property distributed
as a dividend, shall be subject to restrictions and a risk of forfeiture to the
same extent as the Restricted Stock with respect to which such Shares or other
property have been distributed.

 

(e)  Restricted Stock Unit Award.  The Committee is authorized to grant
Restricted Stock Unit Awards to any Eligible Person on the following terms and
conditions:

 

(i)    Award and Restrictions.  Satisfaction of a Restricted Stock Unit Award
shall occur upon expiration of the deferral period specified for such Restricted
Stock Unit Award by the Committee (or, if permitted by the Committee, as elected
by the Participant in a manner that does not violate the requirements of
Section 409A of the Code). In addition, a Restricted Stock Unit Award shall be
subject to such restrictions (which may include a risk of forfeiture) as the
Committee may impose, if any, which restrictions may lapse at the expiration of
the deferral period or at other specified times (including based on achievement
of performance goals and/or future service requirements), separately or in
combination, in installments or otherwise, as the Committee may determine. A
Restricted Stock Unit Award may be satisfied by delivery of Shares, cash equal
to the Fair Market Value of the specified number of Shares covered by the
Restricted Stock Units, or a combination thereof, as determined by the Committee
at the date of grant or thereafter. Prior to satisfaction of a Restricted Stock
Unit Award, a Restricted Stock Unit Award carries no voting or dividend or other
rights associated with Share ownership. Prior to satisfaction of a Restricted
Stock Unit Award, except as otherwise provided in an Award Agreement and as
permitted under Section 409A of the Code, a Restricted Stock Unit Award may not
be sold, transferred, pledged, hypothecated, margined or otherwise encumbered by
the Participant or any Beneficiary.

 

(ii)   Forfeiture.  Except as otherwise determined by the Committee, upon
termination of a Participant’s Continuous Service during the applicable deferral
period or portion thereof to which forfeiture conditions apply (as provided in
the Award Agreement evidencing the Restricted Stock Unit Award), the
Participant’s Restricted Stock Unit Award that is at that

 

13

 

time subject to a risk of forfeiture that has not lapsed or otherwise been
satisfied shall be forfeited; provided that the Committee may provide, by
resolution or action or in any Award Agreement, or may determine in any
individual case, that forfeiture conditions relating to a Restricted Stock Unit
Award shall be waived in whole or in part in the event of terminations resulting
from specified causes, and the Committee may in other cases waive in whole or in
part the forfeiture of any Restricted Stock Unit Award.

 

(iii)  Dividend Equivalents.  Unless otherwise determined by the Committee at
the date of grant, and except as otherwise provided in the last sentence of
Section 6(h) hereof, any Dividend Equivalents that are granted with respect to
any Restricted Stock Unit Award shall be either (A) paid with respect to such
Restricted Stock Unit Award at the dividend payment date in cash or in Shares of
unrestricted stock having a Fair Market Value equal to the amount of such
dividends, or (B) deferred with respect to such Restricted Stock Unit Award and
whether the amount or value thereof shall be automatically deemed reinvested in
additional Restricted Stock Units or other Awards, or if not so reinvested shall
earn interest and at what rate for the period deferred, as the Committee shall
determine or permit the Participant to elect. The applicable Award Agreement
shall specify whether any Dividend Equivalents shall be paid at the dividend
payment date, deferred or deferred at the election of the Participant. If the
Participant may elect to defer the Dividend Equivalents, such election shall be
made at such other times prescribed by the Committee as shall not result in a
violation of Section 409A of the Code.

 

(f)  Bonus Stock and Awards in Lieu of Obligations.  The Committee is authorized
to grant Shares to any Eligible Persons as a bonus, or to grant Shares or other
Awards in lieu of obligations to pay cash or deliver other property under the
Plan or under other plans or compensatory arrangements, provided that, in the
case of Eligible Persons subject to Section 16 of the Exchange Act, the amount
of such grants remains within the discretion of the Committee to the extent
necessary to ensure that acquisitions of Shares or other Awards are exempt from
liability under Section 16(b) of the Exchange Act. Shares or Awards granted
hereunder shall be subject to such other terms as shall be determined by the
Committee.

 

(g)  Dividend Equivalents.  The Committee is authorized to grant Dividend
Equivalents to any Eligible Person entitling the Eligible Person to receive
cash, Shares, other Awards, or other property equal in value to the dividends
paid with respect to a specified number of Shares, or other periodic payments.
Dividend Equivalents may be awarded on a free-standing basis or in connection
with another Award. Except as otherwise provided in the last sentence of
Section 6(h) hereof, the Committee may provide that Dividend Equivalents shall
be paid or distributed when accrued or at some later date, or whether such
Dividend Equivalents shall be deemed to have been reinvested in additional
Shares, Awards, or other investment vehicles, and subject to such restrictions
on transferability and risks of forfeiture, as the Committee may specify.
Notwithstanding the foregoing, Dividend Equivalents credited in connection with
an Award that vests based on the achievement of performance goals shall be
subject to restrictions and risk of forfeiture to the same extent as the Award
with respect to which such Dividend Equivalents have been credited.

 

(h)  Performance Awards.  The Committee is authorized to grant Performance
Awards to any Eligible Person payable in cash, Shares, or other Awards, on terms
and conditions established by the Committee, subject to the provisions of
Section 8 hereof if and to the extent that the Committee shall, in its sole
discretion, determine that an Award shall be subject to those provisions. The
performance criteria to be achieved during any Performance Period and the length
of the Performance Period shall be determined by the Committee upon the grant of
each Performance Award; provided, however, that a Performance Period shall not
be shorter than 12 months nor longer than 5 years. Except as provided in
Section 9 or as may be provided in an

 

14

 

Award Agreement, Performance Awards will be distributed only after the end of
the relevant Performance Period. The performance goals to be achieved for each
Performance Period shall be conclusively determined by the Committee and may be
based upon the criteria set forth in Section 8(b) hereof, or in the case of an
Award that the Committee determines shall not be subject to Section 8 hereof,
any other criteria that the Committee, in its sole discretion, shall determine
should be used for that purpose. The amount of the Award to be distributed shall
be conclusively determined by the Committee. Performance Awards may be paid in a
lump sum or in installments following the close of the Performance Period or, in
accordance with procedures established by the Committee, on a deferred basis in
a manner that does not violate the requirements of Section 409A of the Code.
Notwithstanding any other provision of this Plan to the contrary, cash
dividends, Shares, and any other property (other than cash) distributed as a
dividend or otherwise with respect to any Performance Awards or any other Awards
that are subject to satisfaction of performance goals, shall either (i) not be
paid or credited, or (ii) be accumulated, shall be subject to satisfaction of
the same performance goals to which the vesting of the underlying Award is
subject, and shall be paid at the time such restrictions and risk of forfeiture
lapses.

 

(i)  Other Stock-Based Awards.  The Committee is authorized, subject to
limitations under applicable law, to grant to any Eligible Person such other
Awards that may be denominated or payable in, valued in whole or in part by
reference to, or otherwise based on, or related to, Shares, as deemed by the
Committee to be consistent with the purposes of the Plan. Other Stock-Based
Awards may be granted to Participants either alone or in addition to other
Awards granted under the Plan, and such Other Stock-Based Awards shall also be
available as a form of payment in the settlement of other Awards granted under
the Plan. The Committee shall determine the terms and conditions of such Awards.
Shares delivered pursuant to an Award in the nature of a purchase right granted
under this Section 6(i) shall be purchased for such consideration, (including
without limitation loans from the Company or a Related Entity provided that such
loans are not in violation of Section 13(k) of the Exchange Act, or any rule or
regulation adopted thereunder or any other applicable law) paid for at such
times, by such methods, and in such forms, including, without limitation, cash,
Shares, other Awards or other property, as the Committee shall determine.

 

7.  Certain Provisions Applicable to Awards.

 

(a)  Stand-Alone, Additional, Tandem, and Substitute Awards.  Awards granted
under the Plan may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with, or in substitution or exchange for, any other
Award or any award granted under another plan of the Company, any Related
Entity, or any business entity to be acquired by the Company or a Related
Entity, or any other right of a Participant to receive payment from the Company
or any Related Entity. Such additional, tandem, and substitute or exchange
Awards may be granted at any time. If an Award is granted in substitution or
exchange for another Award or award, the Committee shall require the surrender
of such other Award or award in consideration for the grant of the new Award. In
addition, Awards may be granted in lieu of cash compensation, including in lieu
of cash amounts payable under other plans of the Company or any Related Entity,
in which the value of Shares subject to the Award is equivalent in value to the
cash compensation (for example, Restricted Stock or Restricted Stock Units), or
in which the exercise price, grant price or purchase price of the Award in the
nature of a right that may be exercised is equal to the Fair Market Value of the
underlying Shares minus the value of the cash compensation surrendered (for
example, Options or Stock Appreciation Right granted with an exercise price or
grant price “discounted” by the amount of the cash compensation surrendered),
provided that any such determination to grant an Award in lieu of cash
compensation must be made in a manner intended to comply with Section 409A of
the Code.

 

15

 

(b)  Term of Awards.  The term of each Award shall be for such period as may be
determined by the Committee. The term of any Option or Stock Appreciation Right
shall not exceed a period of ten years (or in the case of an Incentive Stock
Option such shorter term as may be required under Section 422 of the Code);
provided, however, that in the event that on the last day of the term of an
Option or a Stock Appreciation Right, other than an Incentive Stock Option,
(i) the exercise of the Option or Stock Appreciation Right is prohibited by
applicable law, or (ii) Shares may not be purchased, or sold by certain
employees or directors of the Company due to the “black-out period” of a Company
policy or a “lock-up” agreement undertaken in connection with an issuance of
securities by the Company, the term of the Option or Stock Appreciation Right
shall be extended for a period of 30 days following the end of the legal
prohibition, black-out period or lock-up agreement, provided that such extension
of the term of the Option or Stock Appreciation Right would not cause the Option
or Stock Appreciation Right to violate the requirements of Section 409A of the
Code.

 

(c)  Form and Timing of Payment Under Awards; Deferrals.  Subject to the terms
of the Plan and any applicable Award Agreement, payments to be made by the
Company or a Related Entity upon the exercise of an Option or other Award or
settlement of an Award may be made in such forms as the Committee shall
determine, including, without limitation, cash, Shares, other Awards or other
property, and may be made in a single payment or transfer, in installments, or
on a deferred basis, provided that any determination to pay in installments or
on a deferred basis shall be made by the Committee at the date of grant. Any
installment or deferral provided for in the preceding sentence shall, however,
be subject to the Company’s compliance with applicable law and all applicable
rules of the Listing Market, and in a manner intended to be exempt from or
otherwise satisfy the requirements of Section 409A of the Code. Subject to
Section 7(e) hereof, the settlement of any Award may be accelerated, and cash
paid in lieu of Shares in connection with such settlement, in the sole
discretion of the Committee or upon occurrence of one or more specified events
(in addition to a Change in Control). Any such settlement shall be at a value
determined by the Committee in its sole discretion, which, without limitation,
may in the case of an Option or Stock Appreciation Right be limited to the
amount if any by which the Fair Market Value of a Share on the settlement date
exceeds the exercise or grant price. Installment or deferred payments may be
required by the Committee (subject to Section 7(e) of the Plan, including the
consent provisions thereof in the case of any deferral of an outstanding Award
not provided for in the original Award Agreement) or permitted at the election
of the Participant on terms and conditions established by the Committee. The
acceleration of the settlement of any Award, and the payment of any Award in
installments or on a deferred basis, all shall be done in a manner that is
intended to be exempt from or otherwise satisfy the requirements of Section 409A
of the Code. The Committee may, without limitation, make provision for the
payment or crediting of a reasonable interest rate on installment or deferred
payments or the grant or crediting of Dividend Equivalents or other amounts in
respect of installment or deferred payments denominated in Shares.

 

(d)  Exemptions from Section 16(b) Liability.  It is the intent of the Company
that the grant of any Awards to or other transaction by a Participant who is
subject to Section 16 of the Exchange Act shall be exempt from Section 16
pursuant to an applicable exemption (except for transactions acknowledged in
writing to be non-exempt by such Participant). Accordingly, if any provision of
this Plan or any Award Agreement does not comply with the requirements of
Rule 16b-3 then applicable to any such transaction, such provision shall be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 so that such Participant shall avoid liability under
Section 16(b).

 

16

 

(e)  Code Section 409A.

 

(i) The Award Agreement for any Award that the Committee reasonably determines
to constitute a “nonqualified deferred compensation plan” under Section 409A of
the Code (a “Section 409A Plan”), and the provisions of the Section 409A Plan
applicable to that Award, shall be construed in a manner consistent with the
applicable requirements of Section 409A of the Code, and the Committee, in its
sole discretion and without the consent of any Participant, may amend any Award
Agreement (and the provisions of the Plan applicable thereto) if and to the
extent that the Committee determines that such amendment is necessary or
appropriate to comply with the requirements of Section 409A of the Code.

 

(ii)  If any Award constitutes a Section 409A Plan, then the Award shall be
subject to the following additional requirements, if and to the extent required
to comply with Section 409A of the Code:

 

(A) Payments under the Section 409A Plan may be made only upon (1) the
Participant’s “separation from service,” (2) the date the Participant becomes
“disabled,” (3) the Participant’s death, (4) a “specified time (or pursuant to a
fixed schedule)” specified in the Award Agreement at the date of the deferral of
such compensation, (5) a “change in the ownership or effective control of the
corporation, or in the ownership of a substantial portion of the assets” of the
Company, or (6) the occurrence of an “unforeseeable emergency”;

 

(B)  The time or schedule for any payment of the deferred compensation may not
be accelerated, except to the extent provided in applicable Treasury Regulations
or other applicable guidance issued by the Internal Revenue Service;

 

(C)  Any elections with respect to the deferral of such compensation or the time
and form of distribution of such deferred compensation shall comply with the
requirements of Section 409A(a)(4) of the Code; and

 

(D)  In the case of any Participant who is “specified employee,” a distribution
on account of a “separation from service” may not be made before the date which
is six months after the date of the Participant’s “separation from service” (or,
if earlier, the date of the Participant’s death).

 

For purposes of the foregoing, the terms in quotations shall have the same
meanings as those terms have for purposes of Section 409A of the Code, and the
limitations set forth herein shall be applied in such manner (and only to the
extent) as shall be necessary to comply with any requirements of Section 409A of
the Code that are applicable to the Award.

 

(iii)  Notwithstanding the foregoing, or any provision of this Plan or any Award
Agreement, the Company does not make any representation to any Participant or
Beneficiary that any Awards made pursuant to this Plan are exempt from, or
satisfy, the requirements of, Section 409A of the Code, and the Company shall
have no liability or other obligation to indemnify or hold harmless the
Participant or any Beneficiary for any tax, additional tax, interest or
penalties that the Participant or any Beneficiary may incur in the event that
any provision of this Plan, or any Award Agreement, or any amendment or
modification thereof, or any other action taken with respect thereto, is deemed
to violate any of the requirements of Section 409A of the Code.

 

8.  Code Section 162(m) Provisions.

 

(a)  Covered Employees.  The provisions of this Section 8 shall be applicable to
any Restricted Stock Award, Restricted Stock Unit Award, Performance Award, or
Other Stock-Based Award if it is granted to an Eligible Person who is, or is
likely to be, as of the end of the tax year in which the

 

17

 

Company would claim a tax deduction in connection with such Award, a Covered
Employee, and is intended to qualify as “performance-based compensation” that is
exempt from the deduction limitations imposed under Section 162(m) of the Code.

 

(b)  Performance Criteria.  If an Award is subject to this Section 8, then the
payment or distribution thereof or the lapsing of restrictions thereon and the
distribution of cash, Shares or other property pursuant thereto, as applicable,
shall be contingent upon achievement of one or more objective performance goals.
Performance goals shall be objective and shall otherwise meet the requirements
of Section 162(m) of the Code and regulations thereunder including the
requirement that the level or levels of performance targeted by the Committee
result in the achievement of performance goals being “substantially uncertain.”
One or more of the following business criteria for the Company, on a
consolidated basis, and/or for Related Entities, or for business or geographical
units of the Company and/or a Related Entity (except with respect to the total
shareholder return and earnings per share criteria), shall be used by the
Committee in establishing performance goals for such Awards: (1) earnings per
share; (2) achievement of domestic and international regulatory milestones,
including the submission of filings required to advance products, services and
technologies in clinical development and the achievement of approvals by
regulatory authorities relating to the commercialization of products, services
and technologies; (3) the achievement of discovery, preclinical and clinical
stage scientific objectives, discoveries or inventions for products, services
and technologies under research and development; (4) the entry into or
completion of a phase of clinical development for any product, service or
technology; (5) specified levels of product sales; (6) earnings before or after
discontinued operations, interest, taxes, depreciation and/or amortization,
operating profit before or after discontinued operations and/or taxes, sales,
sales growth, earnings growth, cash flow or cash position, gross margins or
working capital; (7) stock price, (8) return on sales, assets, equity or
investment; (9) operating income or income from operations after excluding
extraordinary or special items (including, without limitation, stock-based
compensation, goodwill impairments, building and other significant asset sales,
asset write-downs, plant closures and related layoffs, and/or amortization of
intangibles); (10) net income; (11) management of fixed costs or variable costs;
(12) identification or consummation of investment opportunities or completion of
specified projects in accordance with corporate business plans, including
financings, strategic mergers, acquisitions or divestitures; (13) total
shareholder return; (14) debt reduction; (15) market share; (16) entry into new
markets, either geographically or by business unit; and/or (17) the Fair Market
Value of a Share. Any of the above goals may be determined on an absolute or
relative basis or as compared to the performance of a published or special index
deemed applicable by the Committee including, but not limited to, the NASDAQ
Composite Index, the NASDAQ Biotechnology Index or a group of companies that are
comparable to the Company. In determining the achievement of the performance
goals, the Committee may, at the time the performance goals are set, require
that those goals be determined by excluding the impact of (i) restructurings,
discontinued operations, and extraordinary items (as defined pursuant to
generally accepted accounting principles), and other unusual or non-recurring
charges, (ii) change in accounting standards required by generally accepted
accounting principles; or (iii) such other exclusions or adjustments as the
Committee specifies at the time the Award is granted.

 

(c)  Performance Period; Timing For Establishing Performance Goals.  Achievement
of performance goals in respect of Performance Awards shall be measured over a
Performance Period no shorter than 12 months and no longer than 5 years, as
specified by the Committee. Performance goals shall be established not later
than 90 days after the beginning of any Performance Period applicable to such
Performance Awards, or at such other date as may be required or permitted for
“performance-based compensation” under Section 162(m) of the Code.

 

18

 

(d)  Adjustments.  The Committee may, in its discretion, reduce the amount of a
settlement otherwise to be made in connection with Awards subject to this
Section 8, but may not exercise discretion to increase any such amount payable
to a Covered Employee in respect of an Award subject to this Section 8. The
Committee shall specify the circumstances in which such Awards shall be paid or
forfeited in the event of termination of Continuous Service by the Participant
prior to the end of a Performance Period or settlement of Awards.

 

(e)  Committee Certification.  No Participant shall receive any payment under
the Plan that is subject to this Section 8 unless the Committee has certified,
by resolution or other appropriate action in writing, that the performance
criteria and any other material terms previously established by the Committee or
set forth in the Plan, have been satisfied to the extent necessary to qualify as
“performance based compensation” under Section 162(m) of the Code.

 

9.  Change in Control.

 

(a)  Effect of “Change in Control.”  If and only to the extent provided in any
employment or other agreement between the Participant and the Company or any
Related Entity, or in any Award Agreement, or to the extent otherwise determined
by the Committee in its sole discretion and without any requirement that each
Participant be treated consistently, upon the occurrence of a “Change in
Control,” as defined in Section 9(b):

 

(i)  Any Option or Stock Appreciation Right that was not previously vested and
exercisable as of the time of the Change in Control, shall become immediately
vested and exercisable, subject to applicable restrictions set forth in
Section 10(a) hereof.

 

(ii)  Any restrictions, deferral of settlement, and forfeiture conditions
applicable to a Restricted Stock Award, Restricted Stock Unit Award or an Other
Stock-Based Award subject only to future service requirements granted under the
Plan shall lapse and such Awards shall be deemed fully vested as of the time of
the Change in Control, except to the extent of any waiver by the Participant and
subject to applicable restrictions set forth in Section 10(a) hereof.

 

(iii)  With respect to any outstanding Award subject to achievement of
performance goals and conditions under the Plan, the Committee may, in its
discretion, consider such Awards to have been earned and payable based on
achievement of performance goals or based upon target performance (either in
full or pro-rata based on the portion of the Performance Period completed as of
the Change in Control).

 

(iv)  Notwithstanding the foregoing or any provision in any Award Agreement to
the contrary, and unless the Committee otherwise determines in a specific
instance, or as is provided in any employment or other agreement between the
Participant and the Company any Subsidiary, and unless the Committee otherwise
determines in a specific instance, each outstanding Option, Stock Appreciation
Right, Restricted Stock Award, Restricted Stock Unit Award, Performance Award or
Other Stock-Based Award shall not be accelerated as described in
Sections 9(a)(i), (ii) and (iii), if either (A) the Company is the surviving
entity in the Change in Control and the Option, Stock Appreciation Right,
Restricted Stock Award, Restricted Stock Unit Award, Performance Award or Other
Stock-Based Award continues to be outstanding after the Change in Control on
substantially the same terms and conditions as were applicable immediately prior
to the Change in Control or (B) the successor company or its parent company
assumes or substitutes for the applicable Award, as determined in accordance
with Section 10(c)(ii) hereof. For the purposes of this Agreement, an Option,
Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or
Other Stock-Based Award shall be considered assumed or substituted for if
following the Change in Control the Award confers the right to purchase or
receive, for each Share subject to the

 

19

 

Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit
Award or Other Stock-Based Award immediately prior to the Change in Control, on
substantially the same vesting and other terms and conditions as were applicable
to the Award immediately prior to the Change in Control, the consideration
(whether stock, cash or other securities or property) received in the
transaction constituting a Change in Control by holders of Shares for each Share
held on the effective date of such transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares); provided, however, that if such
consideration received in the transaction constituting a Change in Control is
not solely common stock of the successor company or its parent or subsidiary,
the Committee may, with the consent of the successor company or its parent or
subsidiary, provide that the consideration to be received upon the exercise or
vesting of an Option, Stock Appreciation Right, Restricted Stock Award,
Restricted Stock Unit Award or Other Stock-Based Award, for each Share subject
thereto, will be solely common stock of the successor company or its parent or
subsidiary substantially equal in fair market value to the per share
consideration received by holders of Shares in the transaction constituting a
Change in Control. The determination of such substantial equality of value of
consideration shall be made by the Committee in its sole discretion and its
determination shall be conclusive and binding.

 

(b)  Definition of “Change in Control”.  Unless otherwise specified in any
employment or other agreement for services between the Participant and the
Company or any Related Entity, or in an Award Agreement, a “Change in Control”
shall mean the occurrence of any of the following:

 

(i) The acquisition by any Person of Beneficial Ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of more than 50% of either
(A) the value of then outstanding equity securities of the Company (the
“Outstanding Company Stock”) or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”) (the
foregoing Beneficial Ownership hereinafter being referred to as a “Controlling
Interest”); provided, however, that for purposes of this Section 9(b), the
following acquisitions shall not constitute or result in a Change in Control:
(1) any acquisition by the Company; (2) any acquisition by any Person that as of
the Effective Date owns Beneficial Ownership of a Controlling Interest; (3) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Related Entity; or (4) any acquisition by any
entity pursuant to a transaction which complies with clauses (A), (B) and (C) of
subsection (iii) below; or

 

(ii) During any period of two consecutive years (not including any period prior
to the Effective Date) individuals who constitute the Board on the Effective
Date (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the Effective Date whose election, or nomination for
election by the Company’s shareholders, 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 individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or

 

20

 

(iii)  Consummation of (A) a reorganization, merger, statutory share exchange or
consolidation or similar transaction involving (1) the Company or (2) any of its
Subsidiaries, but in the case of this clause (2) only if equity securities of
the Company are issued or issuable in connection with the transaction (each of
the events referred to in this clause (A) being hereinafter referred to as a
“Business Reorganization”), or (B) a sale or other disposition of all or
substantially all of the assets of the Company, or the acquisition of assets or
equity of another entity by the Company or any of its Subsidiaries (each an
“Asset Sale”), in each case, unless, following such Business Reorganization or
Asset Sale, (1) all or substantially all of the individuals and entities who
were the Beneficial Owners, respectively, of the Outstanding Company Stock and
Outstanding Company Voting Securities immediately prior to such Business
Reorganization or Asset Sale beneficially own, directly or indirectly, more than
50% of the value of the then outstanding equity securities and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of members of the board of directors (or comparable
governing body of an entity that does not have such a board), as the case may
be, of the entity resulting from such Business Reorganization or Asset Sale
(including, without limitation, an entity which as a result of such transaction
owns the Company or all or substantially all of the Company’s assets either
directly or through one or more subsidiaries) (the “Continuing Entity”) in
substantially the same proportions as their ownership, immediately prior to such
Business Reorganization or Asset Sale, of the Outstanding Company Stock and
Outstanding Company Voting Securities, as the case may be (excluding any
outstanding equity or voting securities of the Continuing Entity that such
Beneficial Owners hold immediately following the consummation of the Business
Reorganization or Asset Sale as a result of their ownership, prior to such
consummation, of equity or voting securities of any company or other entity
involved in or forming part of such Business Reorganization or Asset Sale other
than the Company), (2) no Person (excluding any employee benefit plan (or
related trust) of the Company or any Continuing Entity or any entity controlled
by the Continuing Corporation or any Person that as of the Effective Date owns
Beneficial Ownership of a Controlling Interest) beneficially owns, directly or
indirectly, 50% or more of the value of the then outstanding equity securities
of the Continuing Entity or the combined voting power of the then outstanding
voting securities of the Continuing Entity except to the extent that such
ownership existed prior to the Business Reorganization or Asset Sale and (3) at
least a majority of the members of the Board of Directors or other governing
body of the Continuing Entity were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the Board, providing
for such Business Reorganization or Asset Sale.

 

10.   General Provisions.

 

(a)  Compliance With Legal and Other Requirements.  The Company may, to the
extent deemed necessary or advisable by the Committee, postpone the issuance or
delivery of Shares or payment of other benefits under any Award until completion
of such registration or qualification of such Shares or other required action
under any federal or state law, rule or regulation, listing or other required
action with respect to the Listing Market, or compliance with any other
obligation of the Company, as the Committee, may consider appropriate, and may
require any Participant to make such representations, furnish such information
and comply with or be subject to such other conditions as it may consider
appropriate in connection with the issuance or delivery of Shares or payment of
other benefits in compliance with applicable laws, rules, and regulations,
listing requirements, or other obligations.

 

(b)  Limits on Transferability; Beneficiaries.  No Award or other right or
interest granted under the Plan shall be pledged, hypothecated or otherwise
encumbered or subject to any lien, obligation or liability of such Participant
to any party, or assigned or transferred by such

 

21

 

Participant otherwise than by will or the laws of descent and distribution or to
a Beneficiary upon the death of a Participant, and such Awards or rights that
may be exercisable shall be exercised during the lifetime of the Participant
only by the Participant or his or her guardian or legal representative, except
that Awards and other rights (other than Incentive Stock Options and Stock
Appreciation Rights in tandem therewith) may be transferred to one or more
Beneficiaries or other transferees during the lifetime of the Participant, and
may be exercised by such transferees in accordance with the terms of such Award,
but only if and to the extent such transfers are permitted by the Committee
pursuant to the express terms of an Award Agreement (subject to any terms and
conditions which the Committee may impose thereon), are by gift or pursuant to a
domestic relations order, and are to a “Permitted Assignee” that is a
permissible transferee under the applicable rules of the SEC for registration of
shares of stock on a Form S-8 registration statement. For this purpose, a
Permitted Assignee shall mean (i) the Participant’s spouse, children or
grandchildren (including any adopted and step children or grandchildren),
parents, grandparents or siblings, (ii) a trust for the benefit of one or more
of the Participant or the persons referred to in clause (i), (iii) a
partnership, limited liability company or corporation in which the Participant
or the persons referred to in clause (i) are the only partners, members or
shareholders, or (iv) a foundation in which any person or entity designated in
clauses (i), (ii) or (iii) above control the management of assets. A
Beneficiary, transferee, or other person claiming any rights under the Plan from
or through any Participant shall be subject to all terms and conditions of the
Plan and any Award Agreement applicable to such Participant, except as otherwise
determined by the Committee, and to any additional terms and conditions deemed
necessary or appropriate by the Committee.

 

(c)   Adjustments.

 

(i)  Adjustments to Awards.  In the event that any extraordinary dividend or
other distribution (whether in the form of cash, Shares, or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange, liquidation,
dissolution or other similar corporate transaction or event affects the Shares
and/or such other securities of the Company or any other issuer, then the
Committee shall, in such manner as it may deem equitable, substitute, exchange
or adjust any or all of (A) the number and kind of Shares which may be delivered
in connection with Awards granted thereafter, (B) the number and kind of Shares
by which annual per-person Award limitations are measured under Section 4
hereof, (C) the number and kind of Shares subject to or deliverable in respect
of outstanding Awards, (D) the exercise price, grant price or purchase price
relating to any Award and/or make provision for payment of cash or other
property in respect of any outstanding Award, and (E) any other aspect of any
Award that the Committee determines to be appropriate.

 

(ii)  Adjustments in Case of Certain Transactions.  In the event of any merger,
consolidation or other reorganization in which the Company does not survive, or
in the event of any Change in Control (and subject to the provisions of
Section 9 of this Plan relating to vesting of Awards in the event of any Change
in Control), any outstanding Awards may be dealt with in accordance with any of
the following approaches, without the requirement of obtaining any consent or
agreement of a Participant as such, as determined by the agreement effectuating
the transaction or, if and to the extent not so determined, as determined by the
Committee: (A) the continuation of the outstanding Awards by the Company, if the
Company is a surviving entity, (B) the assumption or substitution for, as those
terms are defined below, the outstanding Awards by the surviving entity or its
parent or subsidiary, (C) full exercisability or vesting and accelerated
expiration of the outstanding Awards, or (D) settlement of the value of the
outstanding Awards in cash or cash equivalents or other property followed by
cancellation of such Awards (which value, in the case of Options or

 

22

 

Stock Appreciation Rights, shall be measured by the amount, if any, by which the
Fair Market Value of a Share exceeds the exercise or grant price of the Option
or Stock Appreciation Right as of the effective date of the transaction). For
the purposes of this Agreement, an Option, Stock Appreciation Right, Restricted
Stock Award, Restricted Stock Unit Award or Other Stock-Based Award shall be
considered assumed or substituted for if following the Change in Control the
Award confers the right to purchase or receive, for each Share subject to the
Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit
Award or Other Stock-Based Award immediately prior to the Change in Control, on
substantially the same vesting and other terms and conditions as were applicable
to the Award immediately prior to the Change in Control, the consideration
(whether stock, cash or other securities or property) received in the
transaction constituting a Change in Control by holders of Shares for each Share
held on the effective date of such transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares); provided, however, that if such
consideration received in the transaction constituting a Change in Control is
not solely common stock of the successor company or its parent or subsidiary,
the Committee may, with the consent of the successor company or its parent or
subsidiary, provide that the consideration to be received upon the exercise or
vesting of an Option, Stock Appreciation Right, Restricted Stock Award,
Restricted Stock Unit Award or Other Stock-Based Award, for each Share subject
thereto, will be solely common stock of the successor company or its parent or
subsidiary substantially equal in fair market value to the per share
consideration received by holders of Shares in the transaction constituting a
Change in Control. The determination of such substantial equality of value of
consideration shall be made by the Committee in its sole discretion and its
determination shall be conclusive and binding. The Committee shall give written
notice of any proposed transaction referred to in this Section 10(c)(ii) at a
reasonable period of time prior to the closing date for such transaction (which
notice may be given either before or after the approval of such transaction), in
order that Participants may have a reasonable period of time prior to the
closing date of such transaction within which to exercise any Awards that are
then exercisable (including any Awards that may become exercisable upon the
closing date of such transaction). A Participant may condition his exercise of
any Awards upon the consummation of the transaction.

 

(iii)  Other Adjustments.  The Committee (and the Board if and only to the
extent such authority is not required to be exercised by the Committee to comply
with Section 162(m) of the Code) is authorized to make adjustments in the terms
and conditions of, and the criteria included in, Awards (including Awards
subject to satisfaction of performance goals, or performance goals and
conditions relating thereto) in recognition of unusual or nonrecurring events
(including, without limitation, acquisitions and dispositions of businesses and
assets) affecting the Company, any Subsidiary or any business unit, or the
financial statements of the Company or any Subsidiary, or in response to changes
in applicable laws, regulations, accounting principles, tax rates and
regulations or business conditions or in view of the Committee’s assessment of
the business strategy of the Company, any Subsidiary or business unit thereof,
performance of comparable organizations, economic and business conditions,
personal performance of a Participant, and any other circumstances deemed
relevant; provided that no such adjustment shall be authorized or made if and to
the extent that such authority or the making of such adjustment would cause
Awards granted pursuant to Section 8(b) hereof to Participants designated by the
Committee as Covered Employees and intended to qualify as “performance-based
compensation” under Code Section 162(m) and the regulations thereunder to
otherwise fail to qualify as “performance-based compensation” under Code
Section 162(m) and regulations thereunder. Adjustments permitted hereby may
include, without limitation, increasing the exercise price of Options and Stock
Appreciation Rights,

 

 

23

 

increasing performance goals, or other adjustments that may be adverse to the
Participant. Notwithstanding the foregoing, no adjustments may be made with
respect to any Awards subject to Section 8 hereof if and to the extent that such
adjustment would cause the Award to fail to qualify as “performance-based
compensation” under Section 162(m) of the Code.

 

(d)  Award Agreements.  Each Award Agreement shall either be (i) in writing in a
form approved by the Committee and executed by the Company by an officer duly
authorized to act on its behalf, or (ii) an electronic notice in a form approved
by the Committee and recorded by the Company (or its designee) in an electronic
recordkeeping system used for the purpose of tracking one or more types of
Awards as the Committee may provide; in each case and if required by the
Committee, the Award Agreement shall be executed or otherwise electronically
accepted by the recipient of the Award in such form and manner as the Committee
may require. The Committee may authorize any officer of the Company to execute
any or all Award Agreements on behalf of the Company. The Award Agreement shall
set forth the material terms and conditions of the Award as established by the
Committee consistent with the provisions of the Plan.

 

(e)  Taxes.  The Company and any Related Entity are authorized to withhold from
any Award granted, any payment relating to an Award under the Plan, including
from a distribution of Shares, or any payroll or other payment to a Participant,
amounts of withholding and other taxes due or potentially payable in connection
with any transaction involving an Award, and to take such other action as the
Committee may deem advisable to enable the Company or any Related Entity and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Shares or other property and to make cash
payments in respect thereof in satisfaction of a Participant’s tax obligations,
either on a mandatory or elective basis in the discretion of the Committee.

 

(f)  Changes to the Plan and Awards.  The Board may amend, alter, suspend,
discontinue or terminate the Plan, or the Committee’s authority to grant Awards
under the Plan, without the consent of shareholders or Participants, except that
any amendment or alteration to the Plan shall be subject to the approval of the
Company’s shareholders not later than the annual meeting next following such
Board action if such shareholder approval is required by any federal or state
law or regulation (including, without limitation, Rule 16b-3 or Code
Section 162(m)) or the rules of the Listing Market, and the Board may otherwise,
in its discretion, determine to submit other such changes to the Plan to
shareholders for approval; provided that, except as otherwise permitted by the
Plan or Award Agreement, without the consent of an affected Participant, no such
Board action may materially and adversely affect the rights of such Participant
under the terms of any previously granted and outstanding Award. The Committee
may waive any conditions or rights under, or amend, alter, suspend, discontinue
or terminate any Award theretofore granted and any Award Agreement relating
thereto, except as otherwise provided in the Plan; provided that, except as
otherwise permitted by the Plan or Award Agreement, without the consent of an
affected Participant, no such Committee or the Board action may materially and
adversely affect the rights of such Participant under terms of such Award.

 

(g)  Limitation on Rights Conferred Under Plan.  Neither the Plan nor any action
taken hereunder or under any Award shall be construed as (i) giving any Eligible
Person or Participant the right to continue as an Eligible Person or Participant
or in the employ or service of the Company or a Related Entity; (ii) interfering
in any way with the right of the Company or a Related Entity to terminate any
Eligible Person’s or Participant’s Continuous Service at any time, (iii) giving
an Eligible Person or Participant any claim to be granted any Award under the
Plan or to be treated uniformly with other Participants and Employees, or
(iv) conferring on a Participant any of the rights of a shareholder of the
Company or any Related Entity including, without limitation, any right to
receive dividends or distributions, any right to vote or act by written

 

24

 

consent, any right to attend meetings of shareholders or any right to receive
any information concerning the Company’s or any Related Entity’s business,
financial condition, results of operation or prospects, unless and until such
time as the Participant is duly issued Shares on the stock books of the Company
or any Related Entity in accordance with the terms of an Award. None of the
Company, its officers or its directors shall have any fiduciary obligation to
the Participant with respect to any Awards unless and until the Participant is
duly issued Shares pursuant to the Award on the stock books of the Company in
accordance with the terms of an Award. Neither the Company, nor any Related
Entity, nor any of the their respective officers, directors, representatives or
agents is granting any rights under the Plan to the Participant whatsoever, oral
or written, express or implied, other than those rights expressly set forth in
this Plan or the Award Agreement.

 

(h)  Clawback of Benefits.

 

(i)    The Company may (A) cause the cancellation of any Award, (B) require
reimbursement of any Award by a Participant or Beneficiary, and (C) effect any
other right of recoupment of equity or other compensation provided under this
Plan or otherwise in accordance with any Company policies that currently exist
or that may from time to time be adopted or modified in the future by the
Company or applicable law (each, a “Clawback Policy”), provided that the
following conditions are satisfied: (1) there is an accounting restatement of
the Company’s financial statements or results and (2) the restatement results
from a noncompliance by the Company with any requirements under or related to
the federal securities laws. In such an event, the claw back will be in an
amount of up to the total economic gain from any stock-based grants within the
five-year period preceding the restatement. By accepting an Award, a Participant
is also agreeing to be bound by any existing or future Clawback Policy adopted
by the Company, or any amendments that may from time to time be made to the
Clawback Policy in the future by the Company in its discretion (including
without limitation any Clawback Policy adopted or amended to comply with
applicable laws or stock exchange requirements) and is further agreeing that all
of the Participant’s Award Agreements may be unilaterally amended by the
Company, without the Participant’s consent, to the extent that the Company in
its discretion determines to be necessary or appropriate to comply with any
Clawback Policy.

 

(ii)   If the Participant, without the consent of the Company, while employed by
or providing services to the Company or any Subsidiary or after termination of
such employment or service, violates a non-competition, non-solicitation or
non-disclosure covenant or agreement or otherwise engages in activity that is in
conflict with Company’s Corporate Governance Guidelines, Code of Business
Conduct and Ethics or any other corporate governance materials specified by the
SEC or exchange on which common stock of the Company is listed, then (A) any
outstanding, vested or unvested, earned or unearned portion of the Award may, at
the Committee’s discretion, be canceled and (B) the Committee, in its
discretion, may require the Participant or other person to whom any payment has
been made or Shares or other property have been transferred in connection with
the Award to forfeit and pay over to the Company, on demand, all or any portion
of the gain (whether or not taxable) realized upon the exercise of any Option or
Stock Appreciation Right and the value realized (whether or not taxable) on the
vesting or payment of any other Award during the time period specified in the
Award Agreement or otherwise specified by the Committee.

 

(i)  Unfunded Status of Awards; Creation of Trusts.  The Plan is intended to
constitute an “unfunded” plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant or obligation to deliver
Shares pursuant to an Award, nothing contained in the Plan or any Award
Agreement shall give any such Participant any rights that are greater than those
of a general creditor of the Company or Related Entity that issues the Award;
provided that

 

25

 

the Committee may authorize the creation of trusts and deposit therein cash,
Shares, other Awards or other property, or make other arrangements to meet the
obligations of the Company or Related Entity under the Plan. Such trusts or
other arrangements shall be consistent with the “unfunded” status of the Plan
unless the Committee otherwise determines with the consent of each affected
Participant. The trustee of such trusts may be authorized to dispose of trust
assets and reinvest the proceeds in alternative investments, subject to such
terms and conditions as the Committee may specify and in accordance with
applicable law.

 

(j)  Nonexclusivity of the Plan.  Neither the adoption of the Plan by the Board
nor its submission to the shareholders of the Company for approval shall be
construed as creating any limitations on the power of the Board or a committee
thereof to adopt such other incentive arrangements as it may deem desirable
including incentive arrangements and awards which do not qualify under
Section 162(m) of the Code.

 

(k)  Payments in the Event of Forfeitures; Fractional Shares.  Unless otherwise
determined by the Committee, in the event of a forfeiture of an Award with
respect to which a Participant paid cash or other consideration, the Participant
shall be repaid the amount of such cash or other consideration. No fractional
Shares shall be issued or delivered pursuant to the Plan or any Award. The
Committee shall determine whether cash, other Awards or other property shall be
issued or paid in lieu of such fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise eliminated.

 

(l)  Governing Law.  Except as otherwise provided in any Award Agreement, the
validity, construction and effect of the Plan, any rules and regulations under
the Plan, and any Award Agreement shall be determined in accordance with the
laws of the State of Nevada without giving effect to principles of conflict of
laws, and applicable federal law.

 

(m)  Non-U.S. Laws.  The Committee shall have the authority to adopt such
modifications, procedures, and subplans as may be necessary or desirable to
comply with provisions of the laws of foreign countries in which the Company or
its Related Entities may operate to assure the viability of the benefits from
Awards granted to Participants performing services in such countries and to meet
the objectives of the Plan.

 

(n)  Construction and Interpretation.  Whenever used herein, nouns in the
singular shall include the plural, and the masculine pronoun shall include the
feminine gender. Headings of Articles and Sections hereof are inserted for
convenience and reference and constitute no part of the Plan.

 

(o)  Severability.  If any provision of the Plan or any Award Agreement shall be
determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.

 

(p)  Plan Effective Date and Shareholder Approval; Termination of Plan.  The
Plan shall become effective on the Effective Date, subject to subsequent
approval, within 12 months of its adoption by the Board, by shareholders of the
Company eligible to vote in the election of directors, by a vote sufficient to
meet the requirements of Code Sections 162(m) (if applicable) and 422,
Rule 16b-3 under the Exchange Act (if applicable), applicable requirements under
the rules of any stock exchange or automated quotation system on which the
Shares may be listed or quoted, and other laws, regulations, and obligations of
the Company applicable to the Plan. Awards may be granted subject to shareholder
approval, but may not be exercised or otherwise settled in the event the
shareholder approval is not obtained. The Plan shall terminate at the earliest
of (a) such time as no Shares remain available for issuance under the Plan,
(b) termination of this Plan by the Board, or (c) the tenth anniversary of the
Effective Date. Awards outstanding upon expiration of the Plan shall remain in
effect until they have been exercised or terminated, or have expired.

 

The Plan reflects the 1-for-25 reverse stock split effective April 16, 2018 and
the 1-for-30 reverse stock split effective February 11, 2020.

 

 

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