Exhibit 10.3

 

AVANT IMMUNOTHERAPEUTICS, INC.

 

2008 STOCK OPTION AND INCENTIVE PLAN

 

SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS

 

The name of the plan is the AVANT Immunotherapeutics, Inc. 2008 Stock Option and
Incentive Plan (the “Plan”). The purpose of the Plan is to encourage and enable
the officers, employees, Non-Employee Directors and other key persons (including
consultants and prospective employees) of AVANT Immunotherapeutics, Inc. (the
“Company”) and its Subsidiaries upon whose judgment, initiative and efforts the
Company largely depends for the successful conduct of its business to acquire a
proprietary interest in the Company. It is anticipated that providing such
persons with a direct stake in the Company’s welfare will assure a closer
identification of their interests with those of the Company and its
stockholders, thereby stimulating their efforts on the Company’s behalf and
strengthening their desire to remain with the Company.

 

The following terms shall be defined as set forth below:

 

“Act” means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.

 

“Administrator” means either the Board or the compensation committee of the
Board or a similar committee performing the functions of the compensation
committee and which is comprised of not less than two Non-Employee Directors who
are independent.

 

“Award” or “Awards,” except where referring to a particular category of grant
under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Deferred Stock Awards, Restricted Stock
Awards, Unrestricted Stock Awards, Cash-Based Awards, Performance Share Awards
and Dividend Equivalent Rights.

 

“Award Agreement” means a written or electronic agreement setting forth the
terms and provisions applicable to an Award granted under the Plan. Each Award
Agreement is subject to the terms and conditions of the Plan.

 

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

 

“Cash-Based Award” means an Award entitling the recipient to receive a
cash-denominated payment.

 

“Change of Control” is defined in Section 20.

 

“Code” means the Internal Revenue Code of 1986, as amended, and any successor
Code, and related rules, regulations and interpretations.

 

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

 

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“Deferred Stock Award” means an Award of phantom stock units to a grantee.

 

“Dividend Equivalent Right” means an Award entitling the grantee to receive
credits based on cash dividends that would have been paid on the shares of Stock
specified in the Dividend Equivalent Right (or other award to which it relates)
if such shares had been issued to and held by the grantee.

 

“Effective Date” means the date on which the Plan is approved by stockholders as
set forth in Section 22.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.

 

“Fair Market Value” of the Stock on any given date means the fair market value
of the Stock determined in good faith by the Administrator; provided, however,
that if the Stock is admitted to quotation on the National Association of
Securities Dealers Automated Quotation System (“NASDAQ”), NASDAQ Capital Market
or another national securities exchange, the determination shall be made by
reference to market quotations. If there are no market quotations for such date,
the determination shall be made by reference to the last date preceding such
date for which there are market quotations.

 

“Incentive Stock Option” means any Stock Option designated and qualified as an
“incentive stock option” as defined in Section 422 of the Code.

 

 “Non-Employee Director” means a member of the Board who is not also an employee
of the Company or any Subsidiary.

 

“Non-Qualified Stock Option” means any Stock Option that is not an Incentive
Stock Option.

 

“Option” or “Stock Option” means any option to purchase shares of Stock granted
pursuant to Section 5.

 

“Performance-Based Award” means any Restricted Stock Award, Deferred Stock
Award, Performance Share Award or Cash-Based Award granted to a Covered Employee
that is intended to qualify as “performance-based compensation” under Section
162(m) of the Code and the regulations promulgated thereunder.

 

“Performance Criteria” means the performance criteria used in performance goals
governing Performance-based Awards granted to Covered Employees which may
include any or all of the following:  (i) the Company’s return on equity,
assets, capital or investment, (ii) pre-tax or after-tax profit levels of the
Company or any Subsidiary, a division, an operating unit or a business segment
of the Company, or any combination of the foregoing; (iii) cash flow, funds from
operations, year-end cash and equivalents balance or similar measure; (iv) total
shareholder return; (v) changes in the market price of the Stock; (vi) sales or
market share; (vii) earnings per share; (viii) partnerships, collaborations,
joint ventures, alliances and similar arrangements involving the Company; (ix)
mergers, acquisitions and business combinations of or by the Company; or (x) the
Company’s rights to intellectual property and scientific discoveries.

 

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“Performance Cycle” means one or more periods of time, which may be of varying
and overlapping durations, as the Administrator may select, over which the
attainment of one or more Performance Criteria will be measured for the purpose
of determining a grantee’s right to and the payment of a Restricted Stock Award,
Deferred Stock Award, Performance Share Award or Cash-Based Award.

 

“Performance Goals” means, for a Performance Cycle, the specific goals
established in writing by the Administrator for a Performance Cycle based upon
the Performance Criteria.

 

“Performance Share Award” means an Award entitling the recipient to acquire
shares of Stock upon the attainment of specified Performance Goals.

 

“Restricted Stock Award” means an Award entitling the recipient to acquire, at
such purchase price (which may be zero) as determined by the Administrator,
shares of Stock subject to such restrictions and conditions as the Administrator
may determine at the time of grant.

 

“Sale Event” shall mean (i) the sale of all or substantially all of the assets
of the Company on a consolidated basis to an unrelated person or entity, (ii) a
merger, reorganization or consolidation in which the outstanding shares of Stock
are converted into or exchanged for securities of the successor entity and the
holders of the Company’s outstanding voting power immediately prior to such
transaction do not own a majority of the outstanding voting power of the
successor entity immediately upon completion of such transaction, or (iii) the
sale of all of the Stock of the Company to an unrelated person or entity.

 

“Sale Price” means the value as determined by the Administrator of the
consideration payable, or otherwise to be received by stockholders, per share of
Stock pursuant to a Sale Event.

 

“Section 409A” means Section 409A of the Code and the regulations and other
guidance promulgated thereunder.

 

“Stock” means the Common Stock, par value $.01 per share, of the Company,
subject to adjustments pursuant to Section 3.

 

“Stock Appreciation Right” means an Award entitling the recipient to receive
shares of Stock having a value equal to the excess of the Fair Market Value of
the Stock on the date of exercise over the exercise price of the Stock
Appreciation Right multiplied by the number of shares of Stock with respect to
which the Stock Appreciation Right shall have been exercised.

 

“Subsidiary” means any corporation or other entity (other than the Company) in
which the Company has at least a 50 percent interest, either directly or
indirectly.

 

“Ten Percent Owner” means an employee who owns or is deemed to own (by reason of
the attribution rules of Section 424(d) of the Code) more than 10 percent of the
combined voting power of all classes of stock of the Company or any parent or
subsidiary corporation.

 

“Unrestricted Stock Award” means an Award of shares of Stock free of any
restrictions.

 

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SECTION 2. ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES
AND DETERMINE AWARDS

 

(A)                                  ADMINISTRATION OF PLAN. THE PLAN SHALL BE
ADMINISTERED BY THE ADMINISTRATOR.

 

(B)                                 POWERS OF ADMINISTRATOR. THE ADMINISTRATOR
SHALL HAVE THE POWER AND AUTHORITY TO GRANT AWARDS CONSISTENT WITH THE TERMS OF
THE PLAN, INCLUDING THE POWER AND AUTHORITY:

 

(I)                                     TO SELECT THE INDIVIDUALS TO WHOM AWARDS
MAY FROM TIME TO TIME BE GRANTED;

 

(II)                                  TO DETERMINE THE TIME OR TIMES OF GRANT,
AND THE EXTENT, IF ANY, OF INCENTIVE STOCK OPTIONS, NON-QUALIFIED STOCK OPTIONS,
STOCK APPRECIATION RIGHTS, RESTRICTED STOCK AWARDS, DEFERRED STOCK AWARDS,
UNRESTRICTED STOCK AWARDS, CASH-BASED AWARDS, PERFORMANCE SHARE AWARDS AND
DIVIDEND EQUIVALENT RIGHTS, OR ANY COMBINATION OF THE FOREGOING, GRANTED TO ANY
ONE OR MORE GRANTEES;

 

(III)                               TO DETERMINE THE NUMBER OF SHARES OF STOCK
TO BE COVERED BY ANY AWARD;

 

(IV)                              TO DETERMINE AND MODIFY FROM TIME TO TIME THE
TERMS AND CONDITIONS, INCLUDING RESTRICTIONS, NOT INCONSISTENT WITH THE TERMS OF
THE PLAN, OF ANY AWARD, WHICH TERMS AND CONDITIONS MAY DIFFER AMONG INDIVIDUAL
AWARDS AND GRANTEES, AND TO APPROVE THE FORM OF WRITTEN INSTRUMENTS EVIDENCING
THE AWARDS;

 

(V)                                 TO ACCELERATE AT ANY TIME THE EXERCISABILITY
OR VESTING OF ALL OR ANY PORTION OF ANY AWARD;

 

(VI)                              SUBJECT TO THE PROVISIONS OF SECTION 5(A)(II),
TO EXTEND AT ANY TIME THE PERIOD IN WHICH STOCK OPTIONS MAY BE EXERCISED; AND

 

(VII)                           AT ANY TIME TO ADOPT, ALTER AND REPEAL SUCH
RULES, GUIDELINES AND PRACTICES FOR ADMINISTRATION OF THE PLAN AND FOR ITS OWN
ACTS AND PROCEEDINGS AS IT SHALL DEEM ADVISABLE; TO INTERPRET THE TERMS AND
PROVISIONS OF THE PLAN AND ANY AWARD (INCLUDING RELATED WRITTEN INSTRUMENTS); TO
MAKE ALL DETERMINATIONS IT DEEMS ADVISABLE FOR THE ADMINISTRATION OF THE PLAN;
TO DECIDE ALL DISPUTES ARISING IN CONNECTION WITH THE PLAN; AND TO OTHERWISE
SUPERVISE THE ADMINISTRATION OF THE PLAN.

 

All decisions and interpretations of the Administrator shall be binding on all
persons, including the Company and Plan grantees.

 

(C)                                  DELEGATION OF AUTHORITY TO GRANT OPTIONS.
SUBJECT TO APPLICABLE LAW, THE ADMINISTRATOR, IN ITS DISCRETION, MAY DELEGATE TO
THE CHIEF EXECUTIVE OFFICER OF THE COMPANY ALL OR PART OF THE ADMINISTRATOR’S
AUTHORITY AND DUTIES WITH RESPECT TO THE GRANTING OF OPTIONS, TO INDIVIDUALS WHO
ARE (I) NOT SUBJECT TO THE REPORTING AND OTHER PROVISIONS OF SECTION 16 OF THE
EXCHANGE ACT AND (II) NOT COVERED EMPLOYEES. ANY SUCH DELEGATION BY THE
ADMINISTRATOR SHALL INCLUDE A LIMITATION AS TO THE AMOUNT OF OPTIONS THAT MAY BE
GRANTED DURING THE PERIOD OF THE DELEGATION AND SHALL CONTAIN GUIDELINES AS TO
THE DETERMINATION OF THE EXERCISE PRICE AND THE VESTING CRITERIA. THE
ADMINISTRATOR MAY REVOKE OR AMEND THE TERMS OF A DELEGATION AT ANY TIME

 

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BUT SUCH ACTION SHALL NOT INVALIDATE ANY PRIOR ACTIONS OF THE ADMINISTRATOR’S
DELEGATE OR DELEGATES THAT WERE CONSISTENT WITH THE TERMS OF THE PLAN.

 

(D)                                 AWARD AGREEMENT. AWARDS UNDER THE PLAN SHALL
BE EVIDENCED BY AWARD AGREEMENTS THAT SET FORTH THE TERMS, CONDITIONS AND
LIMITATIONS FOR EACH AWARD WHICH MAY INCLUDE, WITHOUT LIMITATION, THE TERM OF AN
AWARD, THE PROVISIONS APPLICABLE IN THE EVENT EMPLOYMENT OR SERVICE TERMINATES,
AND THE COMPANY’S AUTHORITY TO UNILATERALLY OR BILATERALLY AMEND, MODIFY,
SUSPEND, CANCEL OR RESCIND AN AWARD.

 

(E)                                  INDEMNIFICATION. NEITHER THE BOARD NOR THE
ADMINISTRATOR, NOR ANY MEMBER OF EITHER OR ANY DELEGATE THEREOF, SHALL BE LIABLE
FOR ANY ACT, OMISSION, INTERPRETATION, CONSTRUCTION OR DETERMINATION MADE IN
GOOD FAITH IN CONNECTION WITH THE PLAN, AND THE MEMBERS OF THE BOARD AND THE
ADMINISTRATOR (AND ANY DELEGATE THEREOF) SHALL BE ENTITLED IN ALL CASES TO
INDEMNIFICATION AND REIMBURSEMENT BY THE COMPANY IN RESPECT OF ANY CLAIM, LOSS,
DAMAGE OR EXPENSE (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES)
ARISING OR RESULTING THEREFROM TO THE FULLEST EXTENT PERMITTED BY LAW AND/OR
UNDER THE COMPANY’S ARTICLES OR BYLAWS OR ANY DIRECTORS’ AND OFFICERS’ LIABILITY
INSURANCE COVERAGE WHICH MAY BE IN EFFECT FROM TIME TO TIME AND/OR ANY
INDEMNIFICATION AGREEMENT BETWEEN SUCH INDIVIDUAL AND THE COMPANY.

 

SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION

 

(A)                                  STOCK ISSUABLE. THE MAXIMUM NUMBER OF
SHARES OF STOCK RESERVED AND AVAILABLE FOR ISSUANCE UNDER THE PLAN SHALL BE
18,000,000 SHARES, SUBJECT TO ADJUSTMENT AS PROVIDED IN SECTION 3(B); PROVIDED
THAT NOT MORE THAN 4,500,000 SHARES SHALL BE ISSUED IN THE FORM OF UNRESTRICTED
STOCK AWARDS, RESTRICTED STOCK AWARDS, DEFERRED STOCK AWARDS OR PERFORMANCE
SHARE AWARDS. FOR PURPOSES OF THIS LIMITATION, THE SHARES OF STOCK UNDERLYING
THE AWARDS GRANTED UNDER THE PLAN THAT ARE FORFEITED, CANCELED OR OTHERWISE
TERMINATED (OTHER THAN BY EXERCISE) SHALL BE ADDED BACK TO THE SHARES OF STOCK
AVAILABLE FOR ISSUANCE UNDER THE PLAN. SUBJECT TO SUCH OVERALL LIMITATIONS,
SHARES OF STOCK MAY BE ISSUED UP TO SUCH MAXIMUM NUMBER PURSUANT TO ANY TYPE OR
TYPES OF AWARD; PROVIDED, HOWEVER, THAT STOCK OPTIONS OR STOCK APPRECIATION
RIGHTS WITH RESPECT TO NO MORE THAN 4,00,000 SHARES OF STOCK MAY BE GRANTED TO
ANY ONE INDIVIDUAL GRANTEE DURING ANY ONE CALENDAR YEAR PERIOD. THE SHARES
AVAILABLE FOR ISSUANCE UNDER THE PLAN MAY BE AUTHORIZED BUT UNISSUED SHARES OF
STOCK OR SHARES OF STOCK REACQUIRED BY THE COMPANY.

 

(B)                                 CHANGES IN STOCK. SUBJECT TO SECTION 3(C)
HEREOF, IF, AS A RESULT OF ANY REORGANIZATION, RECAPITALIZATION,
RECLASSIFICATION, STOCK DIVIDEND, STOCK SPLIT, REVERSE STOCK SPLIT OR OTHER
SIMILAR CHANGE IN THE COMPANY’S CAPITAL STOCK, THE OUTSTANDING SHARES OF STOCK
ARE INCREASED OR DECREASED OR ARE EXCHANGED FOR A DIFFERENT NUMBER OR KIND OF
SHARES OR OTHER SECURITIES OF THE COMPANY, OR ADDITIONAL SHARES OR NEW OR
DIFFERENT SHARES OR OTHER SECURITIES OF THE COMPANY OR OTHER NON-CASH ASSETS ARE
DISTRIBUTED WITH RESPECT TO SUCH SHARES OF STOCK OR OTHER SECURITIES, OR, IF, AS
A RESULT OF ANY MERGER OR CONSOLIDATION, SALE OF ALL OR SUBSTANTIALLY ALL OF THE
ASSETS OF THE COMPANY, THE OUTSTANDING SHARES OF STOCK ARE CONVERTED INTO OR
EXCHANGED FOR SECURITIES OF THE COMPANY OR ANY SUCCESSOR ENTITY (OR A PARENT OR
SUBSIDIARY THEREOF), THE ADMINISTRATOR SHALL MAKE AN APPROPRIATE OR
PROPORTIONATE ADJUSTMENT IN (I) THE MAXIMUM NUMBER OF SHARES RESERVED FOR
ISSUANCE UNDER THE PLAN, INCLUDING THE MAXIMUM NUMBER OF SHARES THAT MAY BE
ISSUED IN THE FORM OF UNRESTRICTED STOCK AWARDS, RESTRICTED STOCK AWARDS,
DEFERRED

 

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STOCK AWARDS OR PERFORMANCE SHARE AWARDS, (II) THE NUMBER OF STOCK OPTIONS OR
STOCK APPRECIATION RIGHTS THAT CAN BE GRANTED TO ANY ONE INDIVIDUAL GRANTEE AND
THE MAXIMUM NUMBER OF SHARES THAT MAY BE GRANTED UNDER A PERFORMANCE-BASED
AWARD, (III) THE NUMBER AND KIND OF SHARES OR OTHER SECURITIES SUBJECT TO ANY
THEN OUTSTANDING AWARDS UNDER THE PLAN, (IV) THE REPURCHASE PRICE, IF ANY, PER
SHARE SUBJECT TO EACH OUTSTANDING RESTRICTED STOCK AWARD, AND (V) THE PRICE FOR
EACH SHARE SUBJECT TO ANY THEN OUTSTANDING STOCK OPTIONS AND STOCK APPRECIATION
RIGHTS UNDER THE PLAN, WITHOUT CHANGING THE AGGREGATE EXERCISE PRICE (I.E., THE
EXERCISE PRICE MULTIPLIED BY THE NUMBER OF STOCK OPTIONS AND STOCK APPRECIATION
RIGHTS) AS TO WHICH SUCH STOCK OPTIONS AND STOCK APPRECIATION RIGHTS REMAIN
EXERCISABLE. THE ADMINISTRATOR SHALL ALSO MAKE EQUITABLE OR PROPORTIONATE
ADJUSTMENTS IN THE NUMBER OF SHARES SUBJECT TO OUTSTANDING AWARDS AND THE
EXERCISE PRICE AND THE TERMS OF OUTSTANDING AWARDS TO TAKE INTO CONSIDERATION
CASH DIVIDENDS PAID OTHER THAN IN THE ORDINARY COURSE OR ANY OTHER EXTRAORDINARY
CORPORATE EVENT. THE ADJUSTMENT BY THE ADMINISTRATOR SHALL BE FINAL, BINDING AND
CONCLUSIVE. NO FRACTIONAL SHARES OF STOCK SHALL BE ISSUED UNDER THE PLAN
RESULTING FROM ANY SUCH ADJUSTMENT, BUT THE ADMINISTRATOR IN ITS DISCRETION MAY
MAKE A CASH PAYMENT IN LIEU OF FRACTIONAL SHARES.

 

(C)                                  MERGERS AND OTHER TRANSACTIONS. UPON THE
EFFECTIVE TIME OF THE SALE EVENT, THE PLAN AND ALL OUTSTANDING AWARDS GRANTED
HEREUNDER SHALL TERMINATE, UNLESS PROVISION IS MADE IN CONNECTION WITH THE SALE
EVENT IN THE SOLE DISCRETION OF THE PARTIES THERETO FOR THE ASSUMPTION OR
CONTINUATION OF AWARDS THERETOFORE GRANTED BY THE SUCCESSOR ENTITY, OR THE
SUBSTITUTION OF SUCH AWARDS WITH NEW AWARDS OF THE SUCCESSOR ENTITY OR PARENT
THEREOF, WITH APPROPRIATE ADJUSTMENT AS TO THE NUMBER AND KIND OF SHARES AND, IF
APPROPRIATE, THE PER SHARE EXERCISE PRICES, AS SUCH PARTIES SHALL AGREE (AFTER
TAKING INTO ACCOUNT ANY ACCELERATION HEREUNDER). IN THE EVENT OF SUCH
TERMINATION, (I) THE COMPANY SHALL HAVE THE OPTION (IN ITS SOLE DISCRETION) TO
MAKE OR PROVIDE FOR A CASH PAYMENT TO THE GRANTEES HOLDING OPTIONS AND STOCK
APPRECIATION RIGHTS, IN EXCHANGE FOR THE CANCELLATION THEREOF, IN AN AMOUNT
EQUAL TO THE DIFFERENCE BETWEEN (A) THE SALE PRICE MULTIPLIED BY THE NUMBER OF
SHARES OF STOCK SUBJECT TO OUTSTANDING OPTIONS AND STOCK APPRECIATION RIGHTS (TO
THE EXTENT THEN EXERCISABLE (AFTER TAKING INTO ACCOUNT ANY ACCELERATION
HEREUNDER) AT PRICES NOT IN EXCESS OF THE SALE PRICE) AND (B) THE AGGREGATE
EXERCISE PRICE OF ALL SUCH OUTSTANDING OPTIONS AND STOCK APPRECIATION RIGHTS; OR
(II) EACH GRANTEE SHALL BE PERMITTED, WITHIN A SPECIFIED PERIOD OF TIME PRIOR TO
THE CONSUMMATION OF THE SALE EVENT AS DETERMINED BY THE ADMINISTRATOR, TO
EXERCISE ALL OUTSTANDING OPTIONS AND STOCK APPRECIATION RIGHTS HELD BY SUCH
GRANTEE.

 

(D)                                 SUBSTITUTE AWARDS. THE ADMINISTRATOR MAY
GRANT AWARDS UNDER THE PLAN IN SUBSTITUTION FOR STOCK AND STOCK BASED AWARDS
HELD BY EMPLOYEES, DIRECTORS OR OTHER KEY PERSONS OF ANOTHER CORPORATION IN
CONNECTION WITH THE MERGER OR CONSOLIDATION OF THE EMPLOYING CORPORATION WITH
THE COMPANY OR A SUBSIDIARY OR THE ACQUISITION BY THE COMPANY OR A SUBSIDIARY OF
PROPERTY OR STOCK OF THE EMPLOYING CORPORATION. THE ADMINISTRATOR MAY DIRECT
THAT THE SUBSTITUTE AWARDS BE GRANTED ON SUCH TERMS AND CONDITIONS AS THE
ADMINISTRATOR CONSIDERS APPROPRIATE IN THE CIRCUMSTANCES. ANY SUBSTITUTE AWARDS
GRANTED UNDER THE PLAN SHALL NOT COUNT AGAINST THE SHARE LIMITATION SET FORTH IN
SECTION 3(A).

 

SECTION 4. ELIGIBILITY

 

Grantees under the Plan will be such full or part-time officers and other
employees, Non-Employee Directors and key persons (including consultants and
prospective employees) of the

 

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Company and its Subsidiaries as are selected from time to time by the
Administrator in its sole discretion.

 

SECTION 5. STOCK OPTIONS

 

Any Stock Option granted under the Plan shall be in such form as the
Administrator may from time to time approve.

 

Stock Options granted under the Plan may be either Incentive Stock Options or
Non-Qualified Stock Options. Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a “subsidiary corporation”
within the meaning of Section 424(f) of the Code. To the extent that any Option
does not qualify as an Incentive Stock Option, it shall be deemed a
Non-Qualified Stock Option.

 

STOCK OPTIONS GRANTED PURSUANT TO THIS SECTION 5 SHALL BE SUBJECT TO THE
FOLLOWING TERMS AND CONDITIONS AND SHALL CONTAIN SUCH ADDITIONAL TERMS AND
CONDITIONS, NOT INCONSISTENT WITH THE TERMS OF THE PLAN, AS THE ADMINISTRATOR
SHALL DEEM DESIRABLE.

 

(A)                                  EXERCISE PRICE. THE EXERCISE PRICE PER
SHARE FOR THE STOCK COVERED BY A STOCK OPTION GRANTED PURSUANT TO THIS SECTION 5
SHALL BE DETERMINED BY THE ADMINISTRATOR AT THE TIME OF GRANT BUT SHALL NOT BE
LESS THAN 100 PERCENT OF THE FAIR MARKET VALUE ON THE DATE OF GRANT. IN THE CASE
OF AN INCENTIVE STOCK OPTION THAT IS GRANTED TO A TEN PERCENT OWNER, THE OPTION
PRICE OF SUCH INCENTIVE STOCK OPTION SHALL BE NOT LESS THAN 110 PERCENT OF THE
FAIR MARKET VALUE ON THE GRANT DATE.

 

(B)                                 OPTION TERM. THE TERM OF EACH STOCK OPTION
SHALL BE FIXED BY THE ADMINISTRATOR, BUT NO STOCK OPTION SHALL BE EXERCISABLE
MORE THAN TEN YEARS AFTER THE DATE THE STOCK OPTION IS GRANTED. IN THE CASE OF
AN INCENTIVE STOCK OPTION THAT IS GRANTED TO A TEN PERCENT OWNER, THE TERM OF
SUCH STOCK OPTION SHALL BE NO MORE THAN FIVE YEARS FROM THE DATE OF GRANT.

 

(C)                                  EXERCISABILITY; RIGHTS OF A STOCKHOLDER.
STOCK OPTIONS SHALL BECOME EXERCISABLE AT SUCH TIME OR TIMES, WHETHER OR NOT IN
INSTALLMENTS, AS SHALL BE DETERMINED BY THE ADMINISTRATOR AT OR AFTER THE GRANT
DATE. THE ADMINISTRATOR MAY AT ANY TIME ACCELERATE THE EXERCISABILITY OF ALL OR
ANY PORTION OF ANY STOCK OPTION. AN OPTIONEE SHALL HAVE THE RIGHTS OF A
STOCKHOLDER ONLY AS TO SHARES ACQUIRED UPON THE EXERCISE OF A STOCK OPTION AND
NOT AS TO UNEXERCISED STOCK OPTIONS.

 

(D)                                 METHOD OF EXERCISE. STOCK OPTIONS MAY BE
EXERCISED IN WHOLE OR IN PART, BY GIVING WRITTEN NOTICE OF EXERCISE TO THE
COMPANY, SPECIFYING THE NUMBER OF SHARES TO BE PURCHASED. PAYMENT OF THE
PURCHASE PRICE MAY BE MADE BY ONE OR MORE OF THE FOLLOWING METHODS TO THE EXTENT
PROVIDED IN THE OPTION AWARD AGREEMENT:

 

(I)                                     IN CASH, BY CERTIFIED OR BANK CHECK OR
OTHER INSTRUMENT ACCEPTABLE TO THE ADMINISTRATOR;

 

(II)                                  THROUGH THE DELIVERY (OR ATTESTATION TO
THE OWNERSHIP) OF SHARES OF STOCK THAT HAVE BEEN PURCHASED BY THE OPTIONEE ON
THE OPEN MARKET OR THAT ARE BENEFICIALLY OWNED BY THE OPTIONEE AND ARE NOT THEN
SUBJECT TO RESTRICTIONS UNDER ANY COMPANY PLAN. SUCH SURRENDERED SHARES SHALL BE
VALUED AT FAIR MARKET VALUE ON THE EXERCISE DATE. TO THE EXTENT REQUIRED TO
AVOID

 

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VARIABLE ACCOUNTING TREATMENT UNDER FAS 123R OR OTHER APPLICABLE ACCOUNTING
RULES, SUCH SURRENDERED SHARES SHALL HAVE BEEN OWNED BY THE OPTIONEE FOR AT
LEAST SIX MONTHS; OR

 

(III)                               BY THE OPTIONEE DELIVERING TO THE COMPANY A
PROPERLY EXECUTED EXERCISE NOTICE TOGETHER WITH IRREVOCABLE INSTRUCTIONS TO A
BROKER TO PROMPTLY DELIVER TO THE COMPANY CASH OR A CHECK PAYABLE AND ACCEPTABLE
TO THE COMPANY FOR THE PURCHASE PRICE; PROVIDED THAT IN THE EVENT THE OPTIONEE
CHOOSES TO PAY THE PURCHASE PRICE AS SO PROVIDED, THE OPTIONEE AND THE BROKER
SHALL COMPLY WITH SUCH PROCEDURES AND ENTER INTO SUCH AGREEMENTS OF INDEMNITY
AND OTHER AGREEMENTS AS THE ADMINISTRATOR SHALL PRESCRIBE AS A CONDITION OF SUCH
PAYMENT PROCEDURE.

 

Payment instruments will be received subject to collection. The transfer to the
optionee on the records of the Company or of the transfer agent of the shares of
Stock to be purchased pursuant to the exercise of a Stock Option will be
contingent upon receipt from the optionee (or a purchaser acting in his stead in
accordance with the provisions of the Stock Option) by the Company of the full
purchase price for such shares and the fulfillment of any other requirements
contained in the Option Award Agreement or applicable provisions of laws
(including the satisfaction of any withholding taxes that the Company is
obligated to withhold with respect to the optionee). In the event an optionee
chooses to pay the purchase price by previously-owned shares of Stock through
the attestation method, the number of shares of Stock transferred to the
optionee upon the exercise of the Stock Option shall be net of the number of
attested shares. In the event that the Company establishes, for itself or using
the services of a third party, an automated system for the exercise of Stock
Options, such as a system using an internet website or interactive voice
response, then the paperless exercise of Stock Options may be permitted through
the use of such an automated system.

 

(IV)                              ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. TO
THE EXTENT REQUIRED FOR “INCENTIVE STOCK OPTION” TREATMENT UNDER SECTION 422 OF
THE CODE, THE AGGREGATE FAIR MARKET VALUE (DETERMINED AS OF THE TIME OF GRANT)
OF THE SHARES OF STOCK WITH RESPECT TO WHICH INCENTIVE STOCK OPTIONS GRANTED
UNDER THIS PLAN AND ANY OTHER PLAN OF THE COMPANY OR ITS PARENT AND SUBSIDIARY
CORPORATIONS BECOME EXERCISABLE FOR THE FIRST TIME BY AN OPTIONEE DURING ANY
CALENDAR YEAR SHALL NOT EXCEED $100,000. TO THE EXTENT THAT ANY STOCK OPTION
EXCEEDS THIS LIMIT, IT SHALL CONSTITUTE A NON-QUALIFIED STOCK OPTION.

 

SECTION 6. STOCK APPRECIATION RIGHTS

 

(A)                                  EXERCISE PRICE OF STOCK APPRECIATION
RIGHTS. THE EXERCISE PRICE OF A STOCK APPRECIATION RIGHT SHALL NOT BE LESS THAN
100 PERCENT OF THE FAIR MARKET VALUE OF THE STOCK ON THE DATE OF GRANT.

 

(B)                                 GRANT AND EXERCISE OF STOCK APPRECIATION
RIGHTS. STOCK APPRECIATION RIGHTS MAY BE GRANTED BY THE ADMINISTRATOR
INDEPENDENTLY OF ANY STOCK OPTION GRANTED PURSUANT TO SECTION 5 OF THE PLAN.

 

(C)                                  TERMS AND CONDITIONS OF STOCK APPRECIATION
RIGHTS. STOCK APPRECIATION RIGHTS SHALL BE SUBJECT TO SUCH TERMS AND CONDITIONS
AS SHALL BE DETERMINED FROM TIME TO TIME BY THE ADMINISTRATOR.

 

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SECTION 7. RESTRICTED STOCK AWARDS

 

(A)                                  NATURE OF RESTRICTED STOCK AWARDS. THE
ADMINISTRATOR SHALL DETERMINE THE RESTRICTIONS AND CONDITIONS APPLICABLE TO EACH
RESTRICTED STOCK AWARD AT THE TIME OF GRANT. CONDITIONS MAY BE BASED ON
CONTINUING EMPLOYMENT (OR OTHER SERVICE RELATIONSHIP) AND/OR ACHIEVEMENT OF
PRE-ESTABLISHED PERFORMANCE GOALS AND OBJECTIVES. THE GRANT OF A RESTRICTED
STOCK AWARD IS CONTINGENT ON THE GRANTEE EXECUTING THE RESTRICTED STOCK AWARD
AGREEMENT. THE TERMS AND CONDITIONS OF EACH SUCH AWARD AGREEMENT SHALL BE
DETERMINED BY THE ADMINISTRATOR, AND SUCH TERMS AND CONDITIONS MAY DIFFER AMONG
INDIVIDUAL AWARDS AND GRANTEES.

 

(B)                                 RIGHTS AS A STOCKHOLDER. UPON EXECUTION OF
THE RESTRICTED STOCK AWARD AGREEMENT AND PAYMENT OF ANY APPLICABLE PURCHASE
PRICE, A GRANTEE SHALL HAVE THE RIGHTS OF A STOCKHOLDER WITH RESPECT TO THE
VOTING OF THE RESTRICTED STOCK, SUBJECT TO SUCH CONDITIONS CONTAINED IN THE
RESTRICTED STOCK AWARD AGREEMENT. UNLESS THE ADMINISTRATOR SHALL OTHERWISE
DETERMINE, (I) UNCERTIFICATED RESTRICTED STOCK SHALL BE ACCOMPANIED BY A
NOTATION ON THE RECORDS OF THE COMPANY OR THE TRANSFER AGENT TO THE EFFECT THAT
THEY ARE SUBJECT TO FORFEITURE UNTIL SUCH RESTRICTED STOCK ARE VESTED AS
PROVIDED IN SECTION 7(D) BELOW, AND (II) CERTIFICATED RESTRICTED STOCK SHALL
REMAIN IN THE POSSESSION OF THE COMPANY UNTIL SUCH RESTRICTED STOCK IS VESTED AS
PROVIDED IN SECTION 7(D) BELOW, AND THE GRANTEE SHALL BE REQUIRED, AS A
CONDITION OF THE GRANT, TO DELIVER TO THE COMPANY SUCH INSTRUMENTS OF TRANSFER
AS THE ADMINISTRATOR MAY PRESCRIBE.

 

(C)                                  RESTRICTIONS. RESTRICTED STOCK MAY NOT BE
SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE ENCUMBERED OR DISPOSED OF
EXCEPT AS SPECIFICALLY PROVIDED HEREIN OR IN THE RESTRICTED STOCK AWARD
AGREEMENT. EXCEPT AS MAY OTHERWISE BE PROVIDED BY THE ADMINISTRATOR EITHER IN
THE AWARD AGREEMENT OR, SUBJECT TO SECTION 18 BELOW, IN WRITING AFTER THE AWARD
AGREEMENT IS ISSUED IF A GRANTEE’S EMPLOYMENT (OR OTHER SERVICE RELATIONSHIP)
WITH THE COMPANY AND ITS SUBSIDIARIES TERMINATES FOR ANY REASON, ANY RESTRICTED
STOCK THAT HAS NOT VESTED AT THE TIME OF TERMINATION SHALL AUTOMATICALLY AND
WITHOUT ANY REQUIREMENT OF NOTICE TO SUCH GRANTEE FROM OR OTHER ACTION BY OR ON
BEHALF OF, THE COMPANY BE DEEMED TO HAVE BEEN REACQUIRED BY THE COMPANY AT ITS
ORIGINAL PURCHASE PRICE (IF ANY) FROM SUCH GRANTEE OR SUCH GRANTEE’S LEGAL
REPRESENTATIVE SIMULTANEOUSLY WITH SUCH TERMINATION OF EMPLOYMENT (OR OTHER
SERVICE RELATIONSHIP), AND THEREAFTER SHALL CEASE TO REPRESENT ANY OWNERSHIP OF
THE COMPANY BY THE GRANTEE OR RIGHTS OF THE GRANTEE AS A STOCKHOLDER. FOLLOWING
SUCH DEEMED REACQUISITION OF UNVESTED RESTRICTED STOCK THAT ARE REPRESENTED BY
PHYSICAL CERTIFICATES, A GRANTEE SHALL SURRENDER SUCH CERTIFICATES TO THE
COMPANY UPON REQUEST WITHOUT CONSIDERATION.

 

(D)                                 VESTING OF RESTRICTED STOCK. THE
ADMINISTRATOR AT THE TIME OF GRANT SHALL SPECIFY THE DATE OR DATES AND/OR THE
ATTAINMENT OF PRE-ESTABLISHED PERFORMANCE GOALS, OBJECTIVES AND OTHER CONDITIONS
ON WHICH THE NON-TRANSFERABILITY OF THE RESTRICTED STOCK AND THE COMPANY’S RIGHT
OF REPURCHASE OR FORFEITURE SHALL LAPSE. NOTWITHSTANDING THE FOREGOING, IN THE
EVENT THAT ANY SUCH RESTRICTED STOCK GRANTED TO EMPLOYEES SHALL HAVE A
PERFORMANCE-BASED GOAL, THE RESTRICTION PERIOD WITH RESPECT TO SUCH SHARES SHALL
NOT BE LESS THAN ONE YEAR, AND IN THE EVENT ANY SUCH RESTRICTED STOCK GRANTED TO
EMPLOYEES SHALL HAVE A TIME-BASED RESTRICTION, THE TOTAL RESTRICTION PERIOD WITH
RESPECT TO SUCH SHARES SHALL NOT BE LESS THAN THREE YEARS; PROVIDED, HOWEVER,
THAT RESTRICTED STOCK WITH A TIME-BASED RESTRICTION MAY BECOME VESTED
INCREMENTALLY OVER SUCH THREE-YEAR PERIOD. SUBSEQUENT TO SUCH DATE OR DATES
AND/OR THE ATTAINMENT OF SUCH PRE-ESTABLISHED PERFORMANCE GOALS, OBJECTIVES AND
OTHER CONDITIONS, THE SHARES ON WHICH ALL RESTRICTIONS HAVE

 

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LAPSED SHALL NO LONGER BE RESTRICTED STOCK AND SHALL BE DEEMED “VESTED.”  EXCEPT
AS MAY OTHERWISE BE PROVIDED BY THE ADMINISTRATOR EITHER IN THE AWARD AGREEMENT
OR, SUBJECT TO SECTION 18 BELOW, IN WRITING AFTER THE AWARD AGREEMENT IS ISSUED,
A GRANTEE’S RIGHTS IN ANY SHARES OF RESTRICTED STOCK THAT HAVE NOT VESTED SHALL
AUTOMATICALLY TERMINATE UPON THE GRANTEE’S TERMINATION OF EMPLOYMENT (OR OTHER
SERVICE RELATIONSHIP) WITH THE COMPANY AND ITS SUBSIDIARIES AND SUCH SHARES
SHALL BE SUBJECT TO THE PROVISIONS OF SECTION 7(C) ABOVE.

 

SECTION 8. DEFERRED STOCK AWARDS

 

(A)                                  NATURE OF DEFERRED STOCK AWARDS. THE
ADMINISTRATOR SHALL DETERMINE THE RESTRICTIONS AND CONDITIONS APPLICABLE TO EACH
DEFERRED STOCK AWARD AT THE TIME OF GRANT. CONDITIONS MAY BE BASED ON CONTINUING
EMPLOYMENT (OR OTHER SERVICE RELATIONSHIP) AND/OR ACHIEVEMENT OF PRE-ESTABLISHED
PERFORMANCE GOALS AND OBJECTIVES. THE GRANT OF A DEFERRED STOCK AWARD IS
CONTINGENT ON THE GRANTEE EXECUTING THE DEFERRED STOCK AWARD AGREEMENT. THE
TERMS AND CONDITIONS OF EACH SUCH AWARD AGREEMENT SHALL BE DETERMINED BY THE
ADMINISTRATOR, AND SUCH TERMS AND CONDITIONS MAY DIFFER AMONG INDIVIDUAL AWARDS
AND GRANTEES. NOTWITHSTANDING THE FOREGOING, IN THE EVENT THAT ANY SUCH DEFERRED
STOCK AWARD GRANTED TO EMPLOYEES SHALL HAVE A PERFORMANCE-BASED GOAL, THE
RESTRICTION PERIOD WITH RESPECT TO SUCH AWARD SHALL NOT BE LESS THAN ONE YEAR,
AND IN THE EVENT ANY SUCH DEFERRED STOCK AWARD GRANTED TO EMPLOYEES SHALL HAVE A
TIME-BASED RESTRICTION, THE TOTAL RESTRICTION PERIOD WITH RESPECT TO SUCH AWARD
SHALL NOT BE LESS THAN THREE YEARS; PROVIDED, HOWEVER, THAT ANY DEFERRED STOCK
AWARD WITH A TIME-BASED RESTRICTION MAY BECOME VESTED INCREMENTALLY OVER SUCH
THREE-YEAR PERIOD. AT THE END OF THE DEFERRAL PERIOD, THE DEFERRED STOCK AWARD,
TO THE EXTENT VESTED, SHALL BE SETTLED IN THE FORM OF SHARES OF STOCK. TO THE
EXTENT THAT A DEFERRED STOCK AWARD IS SUBJECT TO SECTION 409A, IT MAY CONTAIN
SUCH ADDITIONAL TERMS AND CONDITIONS AS THE ADMINISTRATOR SHALL DETERMINE IN ITS
SOLE DISCRETION IN ORDER FOR SUCH AWARD TO COMPLY WITH THE REQUIREMENTS OF
SECTION 409A.

 

(B)                                 ELECTION TO RECEIVE DEFERRED STOCK AWARDS IN
LIEU OF COMPENSATION. THE ADMINISTRATOR MAY, IN ITS SOLE DISCRETION, PERMIT A
GRANTEE TO ELECT TO RECEIVE A PORTION OF FUTURE CASH COMPENSATION OTHERWISE DUE
TO SUCH GRANTEE IN THE FORM OF A DEFERRED STOCK AWARD. ANY SUCH ELECTION SHALL
BE MADE IN WRITING AND SHALL BE DELIVERED TO THE COMPANY NO LATER THAN THE DATE
SPECIFIED BY THE ADMINISTRATOR AND IN ACCORDANCE WITH SECTION 409A AND SUCH
OTHER RULES AND PROCEDURES ESTABLISHED BY THE ADMINISTRATOR. ANY SUCH FUTURE
CASH COMPENSATION THAT THE GRANTEE ELECTS TO DEFER SHALL BE CONVERTED TO A FIXED
NUMBER OF PHANTOM STOCK UNITS BASED ON THE FAIR MARKET VALUE OF STOCK ON THE
DATE THE COMPENSATION WOULD OTHERWISE HAVE BEEN PAID TO THE GRANTEE IF SUCH
PAYMENT HAD NOT BEEN DEFERRED AS PROVIDED HEREIN. THE ADMINISTRATOR SHALL HAVE
THE SOLE RIGHT TO DETERMINE WHETHER AND UNDER WHAT CIRCUMSTANCES TO PERMIT SUCH
ELECTIONS AND TO IMPOSE SUCH LIMITATIONS AND OTHER TERMS AND CONDITIONS THEREON
AS THE ADMINISTRATOR DEEMS APPROPRIATE.

 

(C)                                  RIGHTS AS A STOCKHOLDER. A GRANTEE SHALL
HAVE THE RIGHTS AS A STOCKHOLDER ONLY AS TO SHARES OF STOCK ACQUIRED BY THE
GRANTEE UPON SETTLEMENT OF A DEFERRED STOCK AWARD; PROVIDED, HOWEVER, THAT THE
GRANTEE MAY BE CREDITED WITH DIVIDEND EQUIVALENT RIGHTS WITH RESPECT TO THE
PHANTOM STOCK UNITS UNDERLYING HIS DEFERRED STOCK AWARD, SUBJECT TO SUCH TERMS
AND CONDITIONS AS THE ADMINISTRATOR MAY DETERMINE.

 

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(D)                                 TERMINATION. EXCEPT AS MAY OTHERWISE BE
PROVIDED BY THE ADMINISTRATOR EITHER IN THE AWARD AGREEMENT OR, SUBJECT TO
SECTION 18 BELOW, IN WRITING AFTER THE AWARD AGREEMENT IS ISSUED, A GRANTEE’S
RIGHT IN ALL DEFERRED STOCK AWARDS THAT HAVE NOT VESTED SHALL AUTOMATICALLY
TERMINATE UPON THE GRANTEE’S TERMINATION OF EMPLOYMENT (OR CESSATION OF SERVICE
RELATIONSHIP) WITH THE COMPANY AND ITS SUBSIDIARIES FOR ANY REASON.

 

SECTION 9. UNRESTRICTED STOCK AWARDS

 

Grant or Sale of Unrestricted Stock. The Administrator may, in its sole
discretion, grant (or sell at par value or such higher purchase price determined
by the Administrator) an Unrestricted Stock Award under the Plan. Unrestricted
Stock Awards may be granted in respect of past services or other valid
consideration, or in lieu of cash compensation due to such grantee.

 

SECTION 10. CASH-BASED AWARDS

 

Grant of Cash-Based Awards. The Administrator may, in its sole discretion, grant
Cash-Based Awards to any grantee in such number or amount and upon such terms,
and subject to such conditions, as the Administrator shall determine at the time
of grant. The Administrator shall determine the maximum duration of the
Cash-Based Award, the amount of cash to which the Cash-Based Award pertains, the
conditions upon which the Cash-Based Award shall become vested or payable, and
such other provisions as the Administrator shall determine. Each Cash-Based
Award shall specify a cash-denominated payment amount, formula or payment ranges
as determined by the Administrator. Payment, if any, with respect to a
Cash-Based Award shall be made in accordance with the terms of the Award and may
be made in cash or in shares of Stock, as the Administrator determines.

 

SECTION 11. PERFORMANCE SHARE AWARDS

 

(A)                                  NATURE OF PERFORMANCE SHARE AWARDS. THE
ADMINISTRATOR MAY, IN ITS SOLE DISCRETION, GRANT PERFORMANCE SHARE AWARDS
INDEPENDENT OF, OR IN CONNECTION WITH, THE GRANTING OF ANY OTHER AWARD UNDER THE
PLAN. THE ADMINISTRATOR SHALL DETERMINE WHETHER AND TO WHOM PERFORMANCE SHARE
AWARDS SHALL BE GRANTED, THE PERFORMANCE GOALS, THE PERIODS DURING WHICH
PERFORMANCE IS TO BE MEASURED, AND SUCH OTHER LIMITATIONS AND CONDITIONS AS THE
ADMINISTRATOR SHALL DETERMINE.

 

(B)                                 RIGHTS AS A STOCKHOLDER. A GRANTEE RECEIVING
A PERFORMANCE SHARE AWARD SHALL HAVE THE RIGHTS OF A STOCKHOLDER ONLY AS TO
SHARES ACTUALLY RECEIVED BY THE GRANTEE UNDER THE PLAN AND NOT WITH RESPECT TO
SHARES SUBJECT TO THE AWARD BUT NOT ACTUALLY RECEIVED BY THE GRANTEE. A GRANTEE
SHALL BE ENTITLED TO RECEIVE SHARES OF STOCK UNDER A PERFORMANCE SHARE AWARD
ONLY UPON SATISFACTION OF ALL CONDITIONS SPECIFIED IN THE PERFORMANCE SHARE
AWARD AGREEMENT (OR IN A PERFORMANCE PLAN ADOPTED BY THE ADMINISTRATOR).

 

(C)                                  TERMINATION. EXCEPT AS MAY OTHERWISE BE
PROVIDED BY THE ADMINISTRATOR EITHER IN THE AWARD AGREEMENT OR, SUBJECT TO
SECTION 18 BELOW, IN WRITING AFTER THE AWARD AGREEMENT IS ISSUED, A GRANTEE’S
RIGHTS IN ALL PERFORMANCE SHARE AWARDS SHALL AUTOMATICALLY TERMINATE UPON THE
GRANTEE’S TERMINATION OF EMPLOYMENT (OR CESSATION OF SERVICE RELATIONSHIP) WITH
THE COMPANY AND ITS SUBSIDIARIES FOR ANY REASON.

 

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SECTION 12. PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES

 

(A)                                  PERFORMANCE-BASED AWARDS. ANY EMPLOYEE OR
OTHER KEY PERSON PROVIDING SERVICES TO THE COMPANY AND WHO IS SELECTED BY THE
ADMINISTRATOR MAY BE GRANTED ONE OR MORE PERFORMANCE-BASED AWARDS IN THE FORM OF
A RESTRICTED STOCK AWARD, DEFERRED STOCK AWARD, PERFORMANCE SHARE AWARDS OR
CASH-BASED AWARD PAYABLE UPON THE ATTAINMENT OF PERFORMANCE GOALS THAT ARE
ESTABLISHED BY THE ADMINISTRATOR AND RELATE TO ONE OR MORE OF THE PERFORMANCE
CRITERIA, IN EACH CASE ON A SPECIFIED DATE OR DATES OR OVER ANY PERIOD OR
PERIODS DETERMINED BY THE ADMINISTRATOR. THE ADMINISTRATOR SHALL DEFINE IN AN
OBJECTIVE FASHION THE MANNER OF CALCULATING THE PERFORMANCE CRITERIA IT SELECTS
TO USE FOR ANY PERFORMANCE PERIOD. DEPENDING ON THE PERFORMANCE CRITERIA USED TO
ESTABLISH SUCH PERFORMANCE GOALS, THE PERFORMANCE GOALS MAY BE EXPRESSED IN
TERMS OF OVERALL COMPANY PERFORMANCE OR THE PERFORMANCE OF A DIVISION, BUSINESS
UNIT, OR AN INDIVIDUAL. THE ADMINISTRATOR, IN ITS DISCRETION, MAY ADJUST OR
MODIFY THE CALCULATION OF PERFORMANCE GOALS FOR SUCH PERFORMANCE PERIOD IN ORDER
TO PREVENT THE DILUTION OR ENLARGEMENT OF THE RIGHTS OF AN INDIVIDUAL (I) IN THE
EVENT OF, OR IN ANTICIPATION OF, ANY UNUSUAL OR EXTRAORDINARY CORPORATE ITEM,
TRANSACTION, EVENT OR DEVELOPMENT, (II) IN RECOGNITION OF, OR IN ANTICIPATION
OF, ANY OTHER UNUSUAL OR NONRECURRING EVENTS AFFECTING THE COMPANY, OR THE
FINANCIAL STATEMENTS OF THE COMPANY, OR (III) IN RESPONSE TO, OR IN ANTICIPATION
OF, CHANGES IN APPLICABLE LAWS, REGULATIONS, ACCOUNTING PRINCIPLES, OR BUSINESS
CONDITIONS PROVIDED HOWEVER, THAT THE ADMINISTRATOR MAY NOT EXERCISE SUCH
DISCRETION IN A MANNER THAT WOULD INCREASE THE PERFORMANCE-BASED AWARD GRANTED
TO A COVERED EMPLOYEE. EACH PERFORMANCE-BASED AWARD SHALL COMPLY WITH THE
PROVISIONS SET FORTH BELOW.

 

(B)                                 GRANT OF PERFORMANCE-BASED AWARDS. WITH
RESPECT TO EACH PERFORMANCE-BASED AWARD GRANTED TO A COVERED EMPLOYEE, THE
ADMINISTRATOR SHALL SELECT, WITHIN THE FIRST 90 DAYS OF A PERFORMANCE CYCLE (OR,
IF SHORTER, WITHIN THE MAXIMUM PERIOD ALLOWED UNDER SECTION 162(M) OF THE CODE)
THE PERFORMANCE CRITERIA FOR SUCH GRANT, AND THE PERFORMANCE GOALS WITH RESPECT
TO EACH PERFORMANCE CRITERION (INCLUDING A THRESHOLD LEVEL OF PERFORMANCE BELOW
WHICH NO AMOUNT WILL BECOME PAYABLE WITH RESPECT TO SUCH AWARD). EACH
PERFORMANCE-BASED AWARD WILL SPECIFY THE AMOUNT PAYABLE, OR THE FORMULA FOR
DETERMINING THE AMOUNT PAYABLE, UPON ACHIEVEMENT OF THE VARIOUS APPLICABLE
PERFORMANCE TARGETS. THE PERFORMANCE CRITERIA ESTABLISHED BY THE ADMINISTRATOR
MAY BE (BUT NEED NOT BE) DIFFERENT FOR EACH PERFORMANCE CYCLE AND DIFFERENT
PERFORMANCE GOALS MAY BE APPLICABLE TO PERFORMANCE-BASED AWARDS TO DIFFERENT
COVERED EMPLOYEES.

 

(C)                                  PAYMENT OF PERFORMANCE-BASED AWARDS.
FOLLOWING THE COMPLETION OF A PERFORMANCE CYCLE, THE ADMINISTRATOR SHALL MEET TO
REVIEW AND CERTIFY IN WRITING WHETHER, AND TO WHAT EXTENT, THE PERFORMANCE GOALS
FOR THE PERFORMANCE CYCLE HAVE BEEN ACHIEVED AND, IF SO, TO ALSO CALCULATE AND
CERTIFY IN WRITING THE AMOUNT OF THE PERFORMANCE-BASED AWARDS EARNED FOR THE
PERFORMANCE CYCLE. THE ADMINISTRATOR SHALL THEN DETERMINE THE ACTUAL SIZE OF
EACH COVERED EMPLOYEE’S PERFORMANCE-BASED AWARD, AND, IN DOING SO, MAY REDUCE OR
ELIMINATE THE AMOUNT OF THE PERFORMANCE-BASED AWARD FOR A COVERED EMPLOYEE IF,
IN ITS SOLE JUDGMENT, SUCH REDUCTION OR ELIMINATION IS APPROPRIATE.

 

(D)                                 MAXIMUM AWARD PAYABLE. THE MAXIMUM
PERFORMANCE-BASED AWARD PAYABLE TO ANY ONE COVERED EMPLOYEE UNDER THE PLAN FOR A
PERFORMANCE CYCLE IS 3,000,000 SHARES (SUBJECT TO ADJUSTMENT AS PROVIDED IN
SECTION 3(B) HEREOF).

 

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SECTION 13. DIVIDEND EQUIVALENT RIGHTS

 

(A)                                  DIVIDEND EQUIVALENT RIGHTS. A DIVIDEND
EQUIVALENT RIGHT MAY BE GRANTED HEREUNDER TO ANY GRANTEE AS A COMPONENT OF A
DEFERRED STOCK AWARD, RESTRICTED STOCK AWARD OR PERFORMANCE SHARE AWARD OR AS A
FREESTANDING AWARD. THE TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS SHALL
BE SPECIFIED IN THE AWARD AGREEMENT. DIVIDEND EQUIVALENTS CREDITED TO THE HOLDER
OF A DIVIDEND EQUIVALENT RIGHT MAY BE PAID CURRENTLY OR MAY BE DEEMED TO BE
REINVESTED IN ADDITIONAL SHARES OF STOCK, WHICH MAY THEREAFTER ACCRUE ADDITIONAL
EQUIVALENTS. ANY SUCH REINVESTMENT SHALL BE AT FAIR MARKET VALUE ON THE DATE OF
REINVESTMENT OR SUCH OTHER PRICE AS MAY THEN APPLY UNDER A DIVIDEND REINVESTMENT
PLAN SPONSORED BY THE COMPANY, IF ANY. DIVIDEND EQUIVALENT RIGHTS MAY BE SETTLED
IN CASH OR SHARES OF STOCK OR A COMBINATION THEREOF, IN A SINGLE INSTALLMENT OR
INSTALLMENTS. A DIVIDEND EQUIVALENT RIGHT GRANTED AS A COMPONENT OF A DEFERRED
STOCK AWARD, RESTRICTED STOCK AWARD OR PERFORMANCE SHARE AWARD MAY PROVIDE THAT
SUCH DIVIDEND EQUIVALENT RIGHT SHALL BE SETTLED UPON SETTLEMENT OR PAYMENT OF,
OR LAPSE OF RESTRICTIONS ON, SUCH OTHER AWARD, AND THAT SUCH DIVIDEND EQUIVALENT
RIGHT SHALL EXPIRE OR BE FORFEITED OR ANNULLED UNDER THE SAME CONDITIONS AS SUCH
OTHER AWARD. A DIVIDEND EQUIVALENT RIGHT GRANTED AS A COMPONENT OF A DEFERRED
STOCK AWARD, RESTRICTED STOCK AWARD OR PERFORMANCE SHARE AWARD MAY ALSO CONTAIN
TERMS AND CONDITIONS DIFFERENT FROM SUCH OTHER AWARD.

 

(B)                                 INTEREST EQUIVALENTS. ANY AWARD UNDER THIS
PLAN THAT IS SETTLED IN WHOLE OR IN PART IN CASH ON A DEFERRED BASIS MAY PROVIDE
IN THE GRANT FOR INTEREST EQUIVALENTS TO BE CREDITED WITH RESPECT TO SUCH CASH
PAYMENT. INTEREST EQUIVALENTS MAY BE COMPOUNDED AND SHALL BE PAID UPON SUCH
TERMS AND CONDITIONS AS MAY BE SPECIFIED BY THE GRANT.

 

(C)                                  TERMINATION. EXCEPT AS MAY OTHERWISE BE
PROVIDED BY THE ADMINISTRATOR EITHER IN THE AWARD AGREEMENT OR, SUBJECT TO
SECTION 18 BELOW, IN WRITING AFTER THE AWARD AGREEMENT IS ISSUED, A GRANTEE’S
RIGHTS IN ALL DIVIDEND EQUIVALENT RIGHTS OR INTEREST EQUIVALENTS GRANTED AS A
COMPONENT OF A DEFERRED STOCK AWARD, RESTRICTED STOCK AWARD OR PERFORMANCE SHARE
AWARD THAT HAS NOT VESTED SHALL AUTOMATICALLY TERMINATE UPON THE GRANTEE’S
TERMINATION OF EMPLOYMENT (OR CESSATION OF SERVICE RELATIONSHIP) WITH THE
COMPANY AND ITS SUBSIDIARIES FOR ANY REASON.

 

SECTION 14. TRANSFERABILITY OF AWARDS

 

(A)                                  TRANSFERABILITY. EXCEPT AS PROVIDED IN
SECTION 14(B) BELOW, DURING A GRANTEE’S LIFETIME, HIS OR HER AWARDS SHALL BE
EXERCISABLE ONLY BY THE GRANTEE, OR BY THE GRANTEE’S LEGAL REPRESENTATIVE OR
GUARDIAN IN THE EVENT OF THE GRANTEE’S INCAPACITY. NO AWARDS SHALL BE SOLD,
ASSIGNED, TRANSFERRED OR OTHERWISE ENCUMBERED OR DISPOSED OF BY A GRANTEE OTHER
THAN BY WILL OR BY THE LAWS OF DESCENT AND DISTRIBUTION. NO AWARDS SHALL BE
SUBJECT, IN WHOLE OR IN PART, TO ATTACHMENT, EXECUTION, OR LEVY OF ANY KIND, AND
ANY PURPORTED TRANSFER IN VIOLATION HEREOF SHALL BE NULL AND VOID.

 

(B)                                 ADMINISTRATOR ACTION. NOTWITHSTANDING
SECTION 14(A), THE ADMINISTRATOR, IN ITS DISCRETION, MAY PROVIDE EITHER IN THE
AWARD AGREEMENT REGARDING A GIVEN AWARD OR BY SUBSEQUENT WRITTEN APPROVAL THAT
THE GRANTEE (WHO IS AN EMPLOYEE OR DIRECTOR) MAY TRANSFER HIS OR HER AWARDS
(OTHER THAN ANY INCENTIVE STOCK OPTIONS) TO HIS OR HER IMMEDIATE FAMILY MEMBERS,
TO TRUSTS FOR THE BENEFIT OF SUCH FAMILY MEMBERS, OR TO PARTNERSHIPS IN WHICH
SUCH FAMILY MEMBERS

 

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ARE THE ONLY PARTNERS, PROVIDED THAT THE TRANSFEREE AGREES IN WRITING WITH THE
COMPANY TO BE BOUND BY ALL OF THE TERMS AND CONDITIONS OF THIS PLAN AND THE
APPLICABLE AWARD.

 

(C)                                  FAMILY MEMBER. FOR PURPOSES OF
SECTION 14(B), “FAMILY MEMBER” SHALL MEAN A GRANTEE’S CHILD, STEPCHILD,
GRANDCHILD, PARENT, STEPPARENT, GRANDPARENT, SPOUSE, FORMER SPOUSE, SIBLING,
NIECE, NEPHEW, MOTHER-IN-LAW, FATHER-IN-LAW, SON-IN-LAW, DAUGHTER-IN-LAW,
BROTHER-IN-LAW, OR SISTER-IN-LAW, INCLUDING ADOPTIVE RELATIONSHIPS, ANY PERSON
SHARING THE GRANTEE’S HOUSEHOLD (OTHER THAN A TENANT OF THE GRANTEE), A TRUST IN
WHICH THESE PERSONS (OR THE GRANTEE) HAVE MORE THAN 50 PERCENT OF THE BENEFICIAL
INTEREST, A FOUNDATION IN WHICH THESE PERSONS (OR THE GRANTEE) CONTROL THE
MANAGEMENT OF ASSETS, AND ANY OTHER ENTITY IN WHICH THESE PERSONS (OR THE
GRANTEE) OWN MORE THAN 50 PERCENT OF THE VOTING INTERESTS.

 

(D)                                 DESIGNATION OF BENEFICIARY. EACH GRANTEE TO
WHOM AN AWARD HAS BEEN MADE UNDER THE PLAN MAY DESIGNATE A BENEFICIARY OR
BENEFICIARIES TO EXERCISE ANY AWARD OR RECEIVE ANY PAYMENT UNDER ANY AWARD
PAYABLE ON OR AFTER THE GRANTEE’S DEATH. ANY SUCH DESIGNATION SHALL BE ON A FORM
PROVIDED FOR THAT PURPOSE BY THE ADMINISTRATOR AND SHALL NOT BE EFFECTIVE UNTIL
RECEIVED BY THE ADMINISTRATOR. IF NO BENEFICIARY HAS BEEN DESIGNATED BY A
DECEASED GRANTEE, OR IF THE DESIGNATED BENEFICIARIES HAVE PREDECEASED THE
GRANTEE, THE BENEFICIARY SHALL BE THE GRANTEE’S ESTATE.

 

SECTION 15. TAX WITHHOLDING

 

(A)                                  PAYMENT BY GRANTEE. EACH GRANTEE SHALL, NO
LATER THAN THE DATE AS OF WHICH THE VALUE OF AN AWARD OR OF ANY STOCK OR OTHER
AMOUNTS RECEIVED THEREUNDER FIRST BECOMES INCLUDABLE IN THE GROSS INCOME OF THE
GRANTEE FOR FEDERAL INCOME TAX PURPOSES, PAY TO THE COMPANY, OR MAKE
ARRANGEMENTS SATISFACTORY TO THE ADMINISTRATOR REGARDING PAYMENT OF, ANY
FEDERAL, STATE, OR LOCAL TAXES OF ANY KIND REQUIRED BY LAW TO BE WITHHELD BY THE
COMPANY WITH RESPECT TO SUCH INCOME. THE COMPANY AND ITS SUBSIDIARIES SHALL, TO
THE EXTENT PERMITTED BY LAW, HAVE THE RIGHT TO DEDUCT ANY SUCH TAXES FROM ANY
PAYMENT OF ANY KIND OTHERWISE DUE TO THE GRANTEE. THE COMPANY’S OBLIGATION TO
DELIVER EVIDENCE OF BOOK ENTRY (OR STOCK CERTIFICATES) TO ANY GRANTEE IS SUBJECT
TO AND CONDITIONED ON TAX WITHHOLDING OBLIGATIONS BEING SATISFIED BY THE
GRANTEE.

 

(B)                                 PAYMENT IN STOCK. SUBJECT TO APPROVAL BY THE
ADMINISTRATOR, A GRANTEE MAY ELECT TO HAVE THE COMPANY’S MINIMUM REQUIRED TAX
WITHHOLDING OBLIGATION SATISFIED, IN WHOLE OR IN PART, BY AUTHORIZING THE
COMPANY TO WITHHOLD FROM SHARES OF STOCK TO BE ISSUED PURSUANT TO ANY AWARD A
NUMBER OF SHARES WITH AN AGGREGATE FAIR MARKET VALUE (AS OF THE DATE THE
WITHHOLDING IS EFFECTED) THAT WOULD SATISFY THE WITHHOLDING AMOUNT DUE.

 

SECTION 16. SECTION 409A AWARDS.

 

To the extent that any Award is determined to constitute “nonqualified deferred
compensation” within the meaning of Section 409A (a “409A Award”), the Award
shall be subject to such additional rules and requirements as specified by the
Administrator from time to time in order to comply with Section 409A. In this
regard, if any amount under a 409A Award is payable upon a “separation from
service” (within the meaning of Section 409A) to a grantee who is then
considered a “specified employee” (within the meaning of Section 409A), then no
such

 

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payment shall be made prior to the date that is the earlier of (i) six months
and one day after the grantee’s separation from service, or (ii) the grantee’s
death, but only to the extent such delay is necessary to prevent such payment
from being subject to interest, penalties and/or additional tax imposed pursuant
to Section 409A. Further, the settlement of any such Award may not be
accelerated except to the extent permitted by Section 409A.

 

SECTION 17. TRANSFER, LEAVE OF ABSENCE, ETC.

 

For purposes of the Plan, the following events shall not be deemed a termination
of employment:

 

(A)                                  A TRANSFER TO THE EMPLOYMENT OF THE COMPANY
FROM A SUBSIDIARY OR FROM THE COMPANY TO A SUBSIDIARY, OR FROM ONE SUBSIDIARY TO
ANOTHER; OR

 

(B)                                 AN APPROVED LEAVE OF ABSENCE FOR MILITARY
SERVICE OR SICKNESS, OR FOR ANY OTHER PURPOSE APPROVED BY THE COMPANY, IF THE
EMPLOYEE’S RIGHT TO RE-EMPLOYMENT IS GUARANTEED EITHER BY A STATUTE OR BY
CONTRACT OR UNDER THE POLICY PURSUANT TO WHICH THE LEAVE OF ABSENCE WAS GRANTED
OR IF THE ADMINISTRATOR OTHERWISE SO PROVIDES IN WRITING.

 

SECTION 18. AMENDMENTS AND TERMINATION

 

The Board may, at any time, amend or discontinue the Plan and the Administrator
may, at any time, amend or cancel any outstanding Award for the purpose of
satisfying changes in law or for any other lawful purpose, but no such action
shall (a) adversely affect rights under any outstanding Award without the
holder’s consent or (b) except as provided in Section 3(b) or 3(c), without the
prior approval of the Company’s stockholders, reduce the exercise price of or
otherwise reprice, including through replacement grants, any outstanding Stock
Option or Stock Appreciation Right. To the extent required under the rules of
any securities exchange or market system on which the Stock is listed, to the
extent determined by the Administrator to be required by the Code to ensure that
Incentive Stock Options granted under the Plan are qualified under Section 422
of the Code or to ensure that compensation earned under Awards qualifies as
performance-based compensation under Section 162(m) of the Code, Plan amendments
shall be subject to approval by the Company stockholders entitled to vote at a
meeting of stockholders. Nothing in this Section 18 shall limit the
Administrator’s authority to take any action permitted pursuant to Section 3(c).

 

SECTION 19. STATUS OF PLAN

 

With respect to the portion of any Award that has not been exercised and any
payments in cash, Stock or other consideration not received by a grantee, a
grantee shall have no rights greater than those of a general creditor of the
Company unless the Administrator shall otherwise expressly determine in
connection with any Award or Awards. In its sole discretion, the Administrator
may authorize the creation of trusts or other arrangements to meet the Company’s
obligations to deliver Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the foregoing sentence.

 

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SECTION 20. CHANGE OF CONTROL PROVISIONS

 

Upon the occurrence of a Change of Control as defined in this Section 20:

 

(A)                                  EXCEPT AS OTHERWISE PROVIDED IN THE
APPLICABLE AWARD AGREEMENT, EACH OUTSTANDING STOCK OPTION, STOCK APPRECIATION
RIGHT AND DIVIDEND EQUIVALENT RIGHT SHALL AUTOMATICALLY BECOME FULLY
EXERCISABLE.

 

(B)                                 EXCEPT AS OTHERWISE PROVIDED IN THE
APPLICABLE AWARD AGREEMENT, CONDITIONS AND RESTRICTIONS ON EACH OUTSTANDING
RESTRICTED STOCK AWARD, DEFERRED STOCK AWARD AND PERFORMANCE SHARE AWARD WHICH
RELATE SOLELY TO THE PASSAGE OF TIME AND CONTINUED EMPLOYMENT WILL BE REMOVED.
PERFORMANCE OR OTHER CONDITIONS (OTHER THAN CONDITIONS AND RESTRICTIONS RELATING
SOLELY TO THE PASSAGE OF TIME AND CONTINUED EMPLOYMENT) WILL CONTINUE TO APPLY
UNLESS OTHERWISE PROVIDED IN THE APPLICABLE AWARD AGREEMENT.

 

(C)                                  “CHANGE OF CONTROL” SHALL MEAN THE
OCCURRENCE OF ANY ONE OF THE FOLLOWING EVENTS:

 

(I)                                     ANY “PERSON,” AS SUCH TERM IS USED IN
SECTIONS 13(D) AND 14(D) OF THE ACT (OTHER THAN THE COMPANY, ANY OF ITS
SUBSIDIARIES, OR ANY TRUSTEE, FIDUCIARY OR OTHER PERSON OR ENTITY HOLDING
SECURITIES UNDER ANY EMPLOYEE BENEFIT PLAN OR TRUST OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES), TOGETHER WITH ALL “AFFILIATES” AND “ASSOCIATES” (AS SUCH TERMS
ARE DEFINED IN RULE 12B-2 UNDER THE ACT) OF SUCH PERSON, SHALL BECOME THE
“BENEFICIAL OWNER” (AS SUCH TERM IS DEFINED IN RULE 13D-3 UNDER THE ACT),
DIRECTLY OR INDIRECTLY, OF SECURITIES OF THE COMPANY REPRESENTING 25 PERCENT OR
MORE OF THE COMBINED VOTING POWER OF THE COMPANY’S THEN OUTSTANDING SECURITIES
HAVING THE RIGHT TO VOTE IN AN ELECTION OF THE COMPANY’S BOARD OF DIRECTORS
(“VOTING SECURITIES”) (IN SUCH CASE OTHER THAN AS A RESULT OF AN ACQUISITION OF
SECURITIES DIRECTLY FROM THE COMPANY); OR

 

(II)                                  PERSONS WHO, AS OF THE EFFECTIVE DATE,
CONSTITUTE THE COMPANY’S BOARD OF DIRECTORS (THE “INCUMBENT DIRECTORS”) CEASE
FOR ANY REASON, INCLUDING, WITHOUT LIMITATION, AS A RESULT OF A TENDER OFFER,
PROXY CONTEST, MERGER OR SIMILAR TRANSACTION, TO CONSTITUTE AT LEAST A MAJORITY
OF THE BOARD, PROVIDED THAT ANY PERSON BECOMING A DIRECTOR OF THE COMPANY
SUBSEQUENT TO THE EFFECTIVE DATE SHALL BE CONSIDERED AN INCUMBENT DIRECTOR IF
SUCH PERSON’S ELECTION WAS APPROVED BY OR SUCH PERSON WAS NOMINATED FOR ELECTION
BY EITHER (A) A VOTE OF AT LEAST A MAJORITY OF THE INCUMBENT DIRECTORS OR (B) A
VOTE OF AT LEAST A MAJORITY OF THE INCUMBENT DIRECTORS WHO ARE MEMBERS OF A
NOMINATING COMMITTEE COMPRISED, IN THE MAJORITY, OF INCUMBENT DIRECTORS; BUT
PROVIDED FURTHER, THAT ANY SUCH PERSON WHOSE INITIAL ASSUMPTION OF OFFICE IS IN
CONNECTION WITH AN ACTUAL OR THREATENED ELECTION CONTEST RELATING TO THE
ELECTION OF MEMBERS OF THE BOARD OF DIRECTORS OR OTHER ACTUAL OR THREATENED
SOLICITATION OF PROXIES OR CONSENTS BY OR ON BEHALF OF A PERSON OTHER THAN THE
BOARD, INCLUDING BY REASON OF AGREEMENT INTENDED TO AVOID OR SETTLE ANY SUCH
ACTUAL OR THREATENED CONTEST OR SOLICITATION, SHALL NOT BE CONSIDERED AN
INCUMBENT DIRECTOR; OR

 

(III)                               THE CONSUMMATION OF (A) ANY CONSOLIDATION OR
MERGER OF THE COMPANY WHERE THE STOCKHOLDERS OF THE COMPANY, IMMEDIATELY PRIOR
TO THE CONSOLIDATION OR MERGER, WOULD NOT, IMMEDIATELY AFTER THE CONSOLIDATION
OR MERGER, BENEFICIALLY OWN (AS SUCH TERM IS DEFINED IN RULE 13D-3 UNDER THE
ACT), DIRECTLY OR INDIRECTLY, SHARES REPRESENTING IN THE AGGREGATE MORE THAN

 

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50 PERCENT OF THE VOTING SHARES OF THE CORPORATION ISSUING CASH OR SECURITIES IN
THE CONSOLIDATION OR MERGER (OR OF ITS ULTIMATE PARENT CORPORATION, IF ANY), (B)
ANY SALE, LEASE, EXCHANGE OR OTHER TRANSFER (IN ONE TRANSACTION OR A SERIES OF
TRANSACTIONS CONTEMPLATED OR ARRANGED BY ANY PARTY AS A SINGLE PLAN) OF ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY; OR

 

(IV)                              THE SHAREHOLDERS OF THE COMPANY SHALL APPROVE
ANY PLAN OR PROPOSAL FOR THE LIQUIDATION OR DISSOLUTION OF THE COMPANY.

 

Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have
occurred for purposes of the foregoing clause (i) solely as the result of an
acquisition of securities by the Company which, by reducing the number of shares
of Voting Securities outstanding, increases the proportionate number of shares
of Voting Securities beneficially owned by any person to 25 percent or more of
the combined voting power of all then outstanding Voting Securities; provided,
however, that if any person referred to in this sentence shall thereafter become
the beneficial owner of any additional shares of Voting Securities (other than
pursuant to a stock split, stock dividend, or similar transaction or as a result
of an acquisition of securities directly from the Company), then a “Change of
Control” shall be deemed to have occurred for purposes of the foregoing clause
(i).

 

SECTION 21. GENERAL PROVISIONS

 

(A)                                  NO DISTRIBUTION. THE ADMINISTRATOR MAY
REQUIRE EACH PERSON ACQUIRING STOCK PURSUANT TO AN AWARD TO REPRESENT TO AND
AGREE WITH THE COMPANY IN WRITING THAT SUCH PERSON IS ACQUIRING THE SHARES
WITHOUT A VIEW TO DISTRIBUTION THEREOF.

 

(B)                                 DELIVERY OF STOCK CERTIFICATES. STOCK
CERTIFICATES TO GRANTEES UNDER THIS PLAN SHALL BE DEEMED DELIVERED FOR ALL
PURPOSES WHEN THE COMPANY OR A STOCK TRANSFER AGENT OF THE COMPANY SHALL HAVE
MAILED SUCH CERTIFICATES IN THE UNITED STATES MAIL, ADDRESSED TO THE GRANTEE, AT
THE GRANTEE’S LAST KNOWN ADDRESS ON FILE WITH THE COMPANY. UNCERTIFICATED STOCK
SHALL BE DEEMED DELIVERED FOR ALL PURPOSES WHEN THE COMPANY OR A STOCK TRANSFER
AGENT OF THE COMPANY SHALL HAVE GIVEN TO THE GRANTEE BY ELECTRONIC MAIL (WITH
PROOF OF RECEIPT) OR BY UNITED STATES MAIL, ADDRESSED TO THE GRANTEE, AT THE
GRANTEE’S LAST KNOWN ADDRESS ON FILE WITH THE COMPANY, NOTICE OF ISSUANCE AND
RECORDED THE ISSUANCE IN ITS RECORDS (WHICH MAY INCLUDE ELECTRONIC “BOOK ENTRY”
RECORDS). NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE COMPANY SHALL NOT
BE REQUIRED TO ISSUE OR DELIVER ANY CERTIFICATES EVIDENCING SHARES OF STOCK
PURSUANT TO THE EXERCISE OF ANY AWARD, UNLESS AND UNTIL THE ADMINISTRATOR HAS
DETERMINED, WITH ADVICE OF COUNSEL (TO THE EXTENT THE ADMINISTRATOR DEEMS SUCH
ADVICE NECESSARY OR ADVISABLE), THAT THE ISSUANCE AND DELIVERY OF SUCH
CERTIFICATES IS IN COMPLIANCE WITH ALL APPLICABLE LAWS, REGULATIONS OF
GOVERNMENTAL AUTHORITIES AND, IF APPLICABLE, THE REQUIREMENTS OF ANY EXCHANGE ON
WHICH THE SHARES OF STOCK ARE LISTED, QUOTED OR TRADED. ALL STOCK CERTIFICATES
DELIVERED PURSUANT TO THE PLAN SHALL BE SUBJECT TO ANY STOP-TRANSFER ORDERS AND
OTHER RESTRICTIONS AS THE ADMINISTRATOR DEEMS NECESSARY OR ADVISABLE TO COMPLY
WITH FEDERAL, STATE OR FOREIGN JURISDICTION, SECURITIES OR OTHER LAWS, RULES AND
QUOTATION SYSTEM ON WHICH THE STOCK IS LISTED, QUOTED OR TRADED. THE
ADMINISTRATOR MAY PLACE LEGENDS ON ANY STOCK CERTIFICATE TO REFERENCE
RESTRICTIONS APPLICABLE TO THE STOCK. IN ADDITION TO THE TERMS AND CONDITIONS
PROVIDED HEREIN, THE ADMINISTRATOR MAY REQUIRE THAT AN INDIVIDUAL MAKE SUCH
REASONABLE COVENANTS, AGREEMENTS, AND REPRESENTATIONS AS THE ADMINISTRATOR, IN
ITS DISCRETION, DEEMS NECESSARY OR ADVISABLE IN ORDER TO COMPLY WITH ANY

 

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SUCH LAWS, REGULATIONS, OR REQUIREMENTS. THE ADMINISTRATOR SHALL HAVE THE RIGHT
TO REQUIRE ANY INDIVIDUAL TO COMPLY WITH ANY TIMING OR OTHER RESTRICTIONS WITH
RESPECT TO THE SETTLEMENT OR EXERCISE OF ANY AWARD, INCLUDING A WINDOW-PERIOD
LIMITATION, AS MAY BE IMPOSED IN THE DISCRETION OF THE ADMINISTRATOR.

 

(C)                                  STOCKHOLDER RIGHTS. UNTIL STOCK IS DEEMED
DELIVERED IN ACCORDANCE WITH SECTION 21(B), NO RIGHT TO VOTE OR RECEIVE
DIVIDENDS OR ANY OTHER RIGHTS OF A STOCKHOLDER WILL EXIST WITH RESPECT TO SHARES
OF STOCK TO BE ISSUED IN CONNECTION WITH AN AWARD, NOTWITHSTANDING THE EXERCISE
OF A STOCK OPTION OR ANY OTHER ACTION BY THE GRANTEE WITH RESPECT TO AN AWARD.

 

(D)                                 OTHER COMPENSATION ARRANGEMENTS; NO
EMPLOYMENT RIGHTS. NOTHING CONTAINED IN THIS PLAN SHALL PREVENT THE BOARD FROM
ADOPTING OTHER OR ADDITIONAL COMPENSATION ARRANGEMENTS, INCLUDING TRUSTS, AND
SUCH ARRANGEMENTS MAY BE EITHER GENERALLY APPLICABLE OR APPLICABLE ONLY IN
SPECIFIC CASES. THE ADOPTION OF THIS PLAN AND THE GRANT OF AWARDS DO NOT CONFER
UPON ANY EMPLOYEE ANY RIGHT TO CONTINUED EMPLOYMENT WITH THE COMPANY OR ANY
SUBSIDIARY.

 

(E)                                  TRADING POLICY RESTRICTIONS. OPTION
EXERCISES AND OTHER AWARDS UNDER THE PLAN SHALL BE SUBJECT TO SUCH COMPANY’S
INSIDER TRADING POLICY AND PROCEDURES, AS IN EFFECT FROM TIME TO TIME.

 

(F)                                    FORFEITURE OF AWARDS UNDER SARBANES-OXLEY
ACT. IF THE COMPANY IS REQUIRED TO PREPARE AN ACCOUNTING RESTATEMENT DUE TO THE
MATERIAL NONCOMPLIANCE OF THE COMPANY, AS A RESULT OF MISCONDUCT, WITH ANY
FINANCIAL REPORTING REQUIREMENT UNDER THE SECURITIES LAWS, THEN ANY GRANTEE WHO
IS ONE OF THE INDIVIDUALS SUBJECT TO AUTOMATIC FORFEITURE UNDER SECTION 304 OF
THE SARBANES-OXLEY ACT OF 2002 SHALL REIMBURSE THE COMPANY FOR THE AMOUNT OF ANY
AWARD RECEIVED BY SUCH INDIVIDUAL UNDER THE PLAN DURING THE 12-MONTH PERIOD
FOLLOWING THE FIRST PUBLIC ISSUANCE OR FILING WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION, AS THE CASE MAY BE, OF THE FINANCIAL DOCUMENT EMBODYING
SUCH FINANCIAL REPORTING REQUIREMENT.

 

SECTION 22. EFFECTIVE DATE OF PLAN

 

This Plan shall become effective upon approval by the holders of a majority of
the votes cast at a meeting of stockholders at which a quorum is present. No
grants of Stock Options and other Awards may be made hereunder after the tenth
anniversary of the Effective Date and no grants of Incentive Stock Options may
be made hereunder after the tenth anniversary of the date the Plan is approved
by the Board.

 

SECTION 23. GOVERNING LAW

 

This Plan and all Awards and actions taken thereunder shall be governed by, and
construed in accordance with, the laws of the State of Delaware, applied without
regard to conflict of law principles.

 

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