Exhibit 10.1

 

AMENDED AND RESTATED SAREPTA THERAPEUTICS, INC. 2011

EQUITY INCENTIVE PLAN

(as Amended and Restated on June 27, 2016)

1. Purposes of the Plan. The purposes of this Plan, as amended and restated
herein, are:

 

  •   attract and retain the best available personnel for positions of
substantial responsibility,

 

  •   provide additional incentives to Employees, Directors and Consultants, and

 

  •   to promote the success of the Company’s business.

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

2. Definitions. As used herein, the following definitions will apply:

(a) “Administrator” means the Board or any of its Committees as will be
administering the Plan, in accordance with Section 4 of the Plan.

(b) “Affiliate” means any corporation or any other entity (including, but not
limited to, partnerships and joint ventures) controlling, controlled by, or
under common control with the Company.

(c) “Applicable Laws” means the requirements relating to the administration of
equity-based awards under U.S. state corporate laws, U.S. federal and state
securities laws, the Code, any stock exchange or quotation system on which the
Common Stock is listed or quoted and the applicable laws of any foreign country
or jurisdiction where Awards are, or will be, granted under the Plan.

(d) “Award” means, individually or collectively, a grant under the Plan of
Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units,
Performance Units, Performance Shares or a Performance-Based Cash Award.

(e) “Award Agreement” means the written or electronic agreement setting forth
the terms and provisions applicable to each Award granted under the Plan. The
Award Agreement is subject to the terms and conditions of the Plan.

(f) “Board” means the Board of Directors of the Company.

(g) “Change in Control” means the occurrence of any of the following events:

(i) Change in Ownership of the Company. A change in the ownership of the Company
which occurs on the date that any one person, or more than one person acting as
a group (“Person”), acquires ownership of the stock of the Company that,
together with the stock held by such Person, constitutes more than fifty percent
(50%) of the total voting power of the stock of the Company; provided, however,
that for purposes of this subsection (i), the acquisition of additional stock by
any one Person, who is considered to own more than fifty percent (50%) of the
total voting power of the stock of the Company will not be considered a Change
in Control; or

(ii) Change in Effective Control of the Company. If the Company has a class of
securities registered pursuant to Section 12 of the Exchange Act, a change in
the effective control of the Company which occurs on the date that a majority of
members of the Board is replaced during any twelve (12) month period by
Directors whose appointment or election is not endorsed by a majority of the
members of the Board prior to the date of the appointment or election. For
purposes of this subsection (ii), if any Person is considered to be in effective
control of the Company, the acquisition of additional control of the Company by
the same Person will not be considered a Change in Control; or

(iii) Change in Ownership of a Substantial Portion of the Company’s Assets. A
change in the ownership of a substantial portion of the Company’s assets which
occurs on the date that any Person acquires (or

 

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has acquired during the twelve (12) month period ending on the date of the most
recent acquisition by such person or persons) assets from the Company that have
a total gross fair market value equal to or more than fifty percent (50%) of the
total gross fair market value of all of the assets of the Company immediately
prior to such acquisition or acquisitions; provided, however, that for purposes
of this subsection (iii), the following will not constitute a change in the
ownership of a substantial portion of the Company’s assets: (A) a transfer to an
entity that is controlled by the Company’s stockholders immediately after the
transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of
the Company (immediately before the asset transfer) in exchange for or with
respect to the Company’s stock, (2) an entity, fifty percent (50%) or more of
the total value or voting power of which is owned, directly or indirectly, by
the Company, (3) a Person, that owns, directly or indirectly, fifty percent
(50%) or more of the total value or voting power of all the outstanding stock of
the Company, or (4) an entity, at least fifty percent (50%) of the total value
or voting power of which is owned, directly or indirectly, by a Person described
in this subsection (iii)(B)(3). For purposes of this subsection (iii), gross
fair market value means the value of the assets of the Company, or the value of
the assets being disposed of, determined without regard to any liabilities
associated with such assets.

For purposes of this definition, persons will be considered to be acting as a
group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar business transaction
with the Company. Further and for the avoidance of doubt, a transaction shall
not constitute a Change in Control if: (i) its sole purpose is to change the
state of the Company’s incorporation, or (ii) its sole purpose is to create a
holding company that shall be owned in substantially the same proportions by the
persons who held the Company’s securities immediately before such transaction.

Notwithstanding the foregoing, for an Award that provides for payment or
settlement triggered upon a Change in Control and that constitutes an Award
subject to Section 409A of the Code, the foregoing definition shall apply for
purposes of vesting of such Award, provided that for purposes of payment or
settlement of such Award, such Award shall not be paid or otherwise settled
until the earliest of (A) the Participant’s “separation from service” within the
meaning of Section 409A of the Code, (B) the Participant’s death or “disability”
within the meaning of Section 409A of the Code or (C) a transaction that
qualifies as a change in control event within the meaning of Section 409A of the
Code.

(h) “Code” means the Internal Revenue Code of 1986, as amended. Reference to a
specific section of the Code or Treasury Regulation thereunder will include such
section or regulation, any valid regulation or other official applicable
guidance promulgated under such section, and any comparable provision of any
future legislation or regulation amending, supplementing or superseding such
section or regulation.

(i) “Committee” means a committee of Directors or of other individuals
satisfying Applicable Laws appointed by the Board subject to and in accordance
with Section 4 hereof.

(j) “Common Stock” means the common stock of the Company.

(k) “Company” means Sarepta Therapeutics, Inc., a Delaware corporation, or any
successor thereto.

(l) “Consultant” means any person, including an advisor, engaged by the Company
or a Parent or a Subsidiary to render services to such entity other than as an
Employee.

(m) “Determination Date” means the latest possible date that will not jeopardize
the qualification of an Award granted under the Plan as “performance-based
compensation” under Section 162(m) of the Code.

(n) “Director” means a member of the Board.

(o) “Disability” means total and permanent disability as defined in Section
22(e)(3) of the Code, provided that in the case of Awards other than Incentive
Stock Options, the Administrator in its discretion may determine whether a
permanent and total disability exists in accordance with uniform and
non-discriminatory standards adopted by the Administrator from time to time.
Notwithstanding the foregoing, for an Award that provides for payment or
settlement triggered upon a Disability and that constitutes an Award subject to
Section 409A of the Code, the foregoing definition shall apply for purposes of
vesting of such Award, provided that for purposes of payment or settlement of
such Award, such Award shall not be paid (or otherwise settled) until the
earliest of: (A) the Participant’s “disability” within the meaning of Section
409A(a)(2)(C)(i) or (ii) of the Code, (B) the

 

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Participant’s “separation from service” within the meaning of Section 409A of
the Code, (C) the date such Award would otherwise be settled pursuant to the
terms of the Award agreement, (D) a transaction that qualifies as a change in
control event within the meaning of Section 409A of the Code or (E) death of the
Participant.

(p) “Employee” means any person, including Officers and Directors, employed by
the Company or any Parent or Subsidiary of the Company. Neither service as a
Director nor payment of a director’s fee by the Company will be sufficient to
constitute “employment” by the Company.

(q) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(r) “Fair Market Value” means, as of any date, the value of Common Stock as
follows:

(i) If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the Nasdaq Global Market,
the Nasdaq Global Select Market or the Nasdaq Capital Market, its Fair Market
Value shall be the closing sales price for such stock (or, if no closing sales
price was reported on that date, as applicable, on the last trading date such
closing sales price is reported) as quoted on such exchange or system on the day
of determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;

(ii) If the Common Stock is regularly quoted by a recognized securities dealer
but selling prices are not reported, its Fair Market Value shall be the mean of
the high bid and low asked prices for the Common Stock on the day of
determination (or, if no bids and asks were reported on that date, as
applicable, on the last trading date such bids and asks are reported); or

(iii) In the absence of an established market for the Common Stock, the Fair
Market Value will be determined in good faith by the Administrator, determined
in accordance with Section 409A of the Code.

(s) “Family Member” means any 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) of the Employee, any person sharing the
Employee’s household (other than a tenant or employee), a trust in which these
persons (or the Employee) have more than 50% of the beneficial interest, a
foundation in which these persons (or the Employee) control the management of
assets, and any other entity in which these persons (or the Employee) own more
than 50% of the voting interests.

(t) “Fiscal Year” means the fiscal year of the Company.

(u) “Full Value Award” shall mean any Award, other than an Option or a Stock
Appreciation Right that is settled by the issuance of Shares.

(v) “Incentive Stock Option” means an Option that by its terms qualifies and is
otherwise intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code and the regulations promulgated thereunder.

(w) “Inside Director” means a Director who is an Employee.

(x) “Nonstatutory Stock Option” means an Option that by its terms does not
qualify or is not intended to qualify as an Incentive Stock Option.

(y) “Officer” means a person who is an officer of the Company within the meaning
of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.

(z) “Option” means a stock option granted pursuant to the Plan.

(aa) “Outside Director” means a Director who is not an Employee.

(bb) “Parent” means a “parent corporation,” whether now or hereafter existing,
as defined in Section 424(e) of the Code.

 

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(cc) “Participant” means the holder of an outstanding Award.

(dd) “Performance-Based Cash Award” means a cash Award pursuant to Section 10
that is payable or otherwise based on the attainment of certain pre-established
performance goals during a Performance Period.

(ee) “Performance Goals” will have the meaning set forth in Section 11 of the
Plan.

(ff) “Performance Period” means any Fiscal Year of the Company or such other
period as determined by the Administrator in its sole discretion.

(gg) “Performance Share” means an Award denominated in Shares which may be
earned in whole or in part upon attainment of performance goals or other vesting
criteria as the Administrator may determine pursuant to Section 10.

(hh) “Performance Unit” means an Award which may be earned in whole or in part
upon attainment of performance goals or other vesting criteria as the
Administrator may determine and which may be settled for cash, Shares or other
securities or a combination of the foregoing pursuant to Section 10.

(ii) “Period of Restriction” means the period during which the transfer of
Shares of Restricted Stock are subject to restrictions and therefore, the Shares
are subject to a substantial risk of forfeiture. Such restrictions may be based
on the passage of time, the achievement of target levels of performance, or the
occurrence of other events as determined by the Administrator.

(jj) “Plan” means this Amended and Restated 2011 Equity Incentive Plan, as may
be amended from time to time.

(kk) “Recoupment Policy” means the Company’s Incentive Compensation Recoupment
Policy, adopted as of April 27, 2016 and as effective from time to time.

(ll) “Restricted Stock” means Shares issued pursuant to a Restricted Stock award
under Section 8 of the Plan, or issued pursuant to the early exercise of an
Option.

(mm) “Restricted Stock Unit” means a bookkeeping entry representing an amount
equal to the Fair Market Value of one Share, granted pursuant to Section 9. Each
Restricted Stock Unit represents an unfunded and unsecured obligation of the
Company.

(nn) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule
16b-3, as in effect when discretion is being exercised with respect to the Plan.

(oo) “Service Provider” means an Employee, Director or Consultant.

(pp) “Share” means a share of the Common Stock, as adjusted in accordance with
Section 15(a) of the Plan.

(qq) “Stock Appreciation Right” means an Award, granted alone or in connection
with an Option, that pursuant to Section 7 is designated as a Stock Appreciation
Right.

(rr) “Stock Ownership Guidelines” means the Company’s Stock Ownership Guidelines
for Non-Employee Directors and Executive Officers, adopted as of April 27, 2016
and as effective from time to time.

(ss) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter
existing, as defined in Section 424(f) of the Code.

3. Stock Subject to the Plan.

(a) Stock Subject to the Plan. Subject to adjustment pursuant to Section 15(a)
of the Plan, the maximum aggregate number of Shares that may be subject to
Awards and sold under the Plan is 7,536,903 Shares, plus the number of Shares
subject to outstanding awards under the 2002 Equity Incentive Plan (the “2002
Plan”) that expire

 

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or otherwise terminate without having been exercised in full, or are forfeited
to or repurchased by us, up to a maximum of 121,325 Shares; provided, however,
that such aggregate number of Shares available for issuance under the Plan shall
be reduced by 1.41 shares for each Share delivered in settlement of any Full
Value Award and, provided further, that no more than 5,000,000 Shares may be
issued upon the exercise of Incentive Stock Options. The Shares may be
authorized, but unissued, or reacquired Common Stock.

(b) Lapsing Awards. If any Award that is not a Full Value Award is forfeited or
expires, or such Award is settled for cash (in whole or in part), the Shares
subject to such Award shall, to the extent of such forfeiture, expiration or
cash settlement, again be available for future grants of Awards under the
Plan. To the extent that a Full Value Award is forfeited or expires, or such
Full Value Award is settled for cash (in whole or in part), the Shares available
under the Plan shall be increased by 1.41 Shares subject to such Full Value
Award that is forfeited, expired or settled in cash. Notwithstanding anything to
the contrary herein, with respect to Stock Appreciation Rights, all Shares
subject to a Stock Appreciation Right will cease to be available under the Plan,
other than Shares forfeited due to failure to vest which will become available
for future grant or sale under the Plan (unless the Plan has terminated). Shares
that have actually been issued under the Plan under any Award will not be
returned to the Plan and will not become available for future distribution under
the Plan; provided, however, that if Shares issued pursuant to Awards of
Restricted Stock, Restricted Stock Units, Performance Shares or Performance
Units are repurchased by the Company at the original issuance price or are
forfeited to the Company due to failure to vest, such Shares will become
available for future grant under the Plan. Shares used to pay the exercise or
purchase price of an Award and/or to satisfy the tax withholding obligations
related to an Option or Stock Appreciation Right will not become available for
future grant or sale under the Plan. Shares used to satisfy the tax withholding
obligations related to an Award other than an Option or Stock Appreciation Right
will become available for future grant or sale under the Plan. Notwithstanding
the foregoing and, subject to adjustment as provided in Section 15(a), the
maximum number of Shares that may be issued upon the exercise of Incentive Stock
Options will equal the aggregate Share number stated in Section 3(a), plus, to
the extent allowable under Section 422 of the Code and the Treasury Regulations
promulgated thereunder, any Shares that become available for issuance under the
Plan under this Section 3(b).

(c) Full Value Award Vesting Limitations. Notwithstanding any other provision of
the Plan to the contrary, Full Value Awards made to Employees or Consultants
shall become vested over a period of not less than three years (or, in the case
of vesting based upon the attainment of Performance Goals or other
performance-based objectives, over a period of not less than one year measured
from the commencement of the period over which performance is evaluated)
following the date the Award is made; provided, however, that, notwithstanding
the foregoing, (i) the Administrator may provide that such vesting restrictions
may lapse or be waived upon the Participant’s Disability, retirement or
termination of employment or a Change in Control, (ii) such vesting restrictions
shall lapse upon the Participant’s death while providing services to the
Company, and (iii) Full Value Awards that result in the issuance of an aggregate
of up to 10% of the shares of Common Stock available pursuant to Section 3(a)
may be granted to any one or more Participants without respect to such minimum
vesting provisions.

(d) Share Reserve. The Company, during the term of this Plan, will at all times
reserve and keep available such number of Shares as will be sufficient to
satisfy the requirements of the Plan.

4. Administration of the Plan.

(a) Procedure.

(i) Multiple Administrative Bodies. Different Committees with respect to
different groups of Service Providers may administer the Plan.

(ii) Section 162(m); Rule 16b-3; Exchange Listing Rules. With respect to the
application of this Plan to Service Providers, the Plan will be administered by
a Committee of two or more non-employee directors, each of whom is intended to
be (A) to the extent required by Rule 16b-3 promulgated under Section 16(b) of
the Exchange Act, a “nonemployee director” as defined in Rule 16b-3; (ii) to the
extent required by Section 162(m) of the Code, an “outside director” as defined
under Section 162(m) of the Code; and (iii) an “independent director” as defined
under NASDAQ Listing Rules, the NYSE Listed Company Manual or such other
applicable stock exchange rule, as applicable and as amended and/or restated
from time to time; and (b) with respect to the application of this Plan to
Directors, the Board. If for any reason the appointed Committee does not meet
the requirements of Rule 16b-3 or Section 162(m) of the Code, such noncompliance
shall not affect the validity of Awards, grants, interpretations or other
actions of the Administrator.

(iii) Other Administration. Other than as provided above, the Plan will be
administered by (A) the Board or (B) a Committee, which committee will be
constituted to satisfy Applicable Laws.

 

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(b) Powers of the Administrator. Subject to the provisions of the Plan, and in
the case of a Committee, subject to the specific duties delegated by the Board
to such Committee, the Administrator will have the authority, in its discretion:

(i) to determine the Fair Market Value;

(ii) to select the Service Providers to whom Awards may be granted hereunder;

(iii) to determine the number of Shares to be covered by each Award granted
hereunder;

(iv) to approve forms of Award Agreements for use under the Plan;

(v) to determine the terms and conditions, not inconsistent with the terms of
the Plan, of any Award granted hereunder. Such terms and conditions include, but
are not limited to, the exercise price, the time or times when Awards may be
exercised (which may be based on performance criteria), any vesting acceleration
or waiver of forfeiture restrictions, and any restriction or limitation
regarding any Award or the Shares relating thereto, based in each case on such
factors as the Administrator will determine;

(vi) to construe and interpret the terms of the Plan and Awards granted pursuant
to the Plan;

(vii) to prescribe, amend and rescind rules and regulations relating to the
Plan, including rules and regulations relating to sub-plans established for the
purpose of satisfying applicable foreign laws or for qualifying for favorable
tax treatment under applicable foreign laws;

(viii) to modify or amend each Award (subject to Section(s) 4(e)(i) and 20(c) of
the Plan), including but not limited to the discretionary authority to extend
the post-termination exercisability period of Awards, but not beyond the
scheduled term of an Option and subject to Section 6(b);

(ix) to allow Participants to satisfy withholding tax obligations in such manner
as prescribed in Section 16;

(x) to authorize any person to execute on behalf of the Company any instrument
required to effect the grant of an Award previously granted by the
Administrator;

(xi) to allow a Participant to defer the receipt of the payment of cash or the
delivery of Shares that would otherwise be due to such Participant under an
Award pursuant to such procedures as the Administrator may determine, in a
manner that complies with, or is exempt from, Section 409A of the Code and
without adverse tax consequences to the Participant; and

(xii) to make all other determinations deemed necessary or advisable for
administering the Plan.

(c) Effect of Administrator’s Decision. The Administrator’s decisions,
determinations and interpretations will be final and binding on all Participants
and any other holders of Awards.

(d) No Liability. Under no circumstances shall the Company, its Affiliates, the
Administrator, or the Board incur liability for any indirect, incidental,
consequential or special damages (including lost profits) of any form incurred
by any person, whether or not foreseeable and regardless of the form of the act
in which such a claim may be brought, with respect to the Plan or the Company’s,
its Affiliates’, the Administrator’s or the Board’s roles in connection with the
Plan.

 

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(e) Limitations.

(i) Prohibition Against Repricing. Notwithstanding Section 4(b)(viii), the
Administrator may not modify or amend an Option or Stock Appreciation Right to
reduce the exercise price of such Option or Stock Appreciation Right after it
has been granted (except for adjustments made pursuant to Section 15), and
neither may the Administrator cancel any outstanding Option or Stock
Appreciation Right in exchange for cash or any other Award with a lower exercise
price, unless such action is approved by stockholders prior to such action being
taken. Subject to Section 15, the Administrator shall have the authority,
without the approval of the stockholders of the Company, to amend any
outstanding Award to increase the price per share or to cancel and replace an
Award with the grant of an Award having a price per share that is greater than
or equal to the price per share on the date of grant.

(ii) Buyout Provisions. The Administrator may at any time offer to buy out for a
payment in cash an Option previously granted based on such terms and conditions
as the Administrator will establish and communicate to the Participant at the
time that such offer is made. Notwithstanding anything contained in this Section
4(e)(ii) to the contrary, the Administrator shall not be allowed to authorize
the buyout of underwater Options or Stock Appreciation Rights without the prior
consent of the Company’s stockholders.

5. Eligibility. Nonstatutory Stock Options, Restricted Stock, Restricted Stock
Units, Stock Appreciation Rights, Performance Units, Performance Shares and
Performance-Based Cash Awards may be granted to Service Providers. Incentive
Stock Options may be granted only to employees of the Company or any Parent or
Subsidiary of the Company.

6. Stock Options.

(a) Limitations.

(i) Each Option will be designated in the Award Agreement as either an Incentive
Stock Option or a Nonstatutory Stock Option. However, notwithstanding such
designation, to the extent that the aggregate Fair Market Value of the Shares
with respect to which Incentive Stock Options are exercisable for the first time
by the Participant during any calendar year (under all plans of the Company and
any Parent or Subsidiary) exceeds one hundred thousand U.S. dollars ($100,000),
such Options will be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options will be taken into account in the order in
which they were granted. The Fair Market Value of the Shares will be determined
as of the time the Option with respect to such Shares is granted.

(ii) The Administrator will have complete discretion to determine the number of
Shares subject to an Option granted to any Participant, provided that during any
Fiscal Year, no Participant will be granted an Option covering more than 500,000
Shares. Notwithstanding the limitation in the previous sentence, in connection
with his or her initial service as an Employee, an Employee may be granted
Options covering up to an additional 500,000 Shares. The foregoing limitations
will be adjusted proportionately in connection with any change in the Company’s
capitalization as described in Section 15(a).

(b) Term of Option. The term of each Option will be stated in the Award
Agreement; provided, however, that the term will be no more than ten (10) years
from the date of grant thereof. In the case of an Incentive Stock Option granted
to a Participant who, at the time the Incentive Stock Option is granted, owns
stock representing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
term of the Incentive Stock Option will be five (5) years from the date of grant
or such shorter term as may be provided in the Award Agreement.

(c) Option Exercise Price and Consideration.

(i) The per Share exercise price for the Shares to be issued pursuant to the
exercise of an Option will be determined by the Administrator, but will be no
less than one hundred percent (100%) of the Fair Market Value per Share on the
date of grant. In addition, in the case of an Incentive Stock Option granted to
an employee of the Company or any Parent or Subsidiary of the Company who, at
the time the Incentive Stock Option is granted, owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price will be no
less than one hundred ten percent (110%) of the Fair

 

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Market Value per Share on the date of grant. Notwithstanding the foregoing
provisions of this Section 6(c)(i), Options may be granted with a per Share
exercise price of less than one hundred percent (100%) of the Fair Market Value
per Share on the date of grant pursuant to a transaction described in, and in a
manner consistent with, Code Section 424(a).

(ii) Waiting Period and Exercise Dates. At the time an Option is granted, the
Administrator will fix the period within which the Option may be exercised
(subject to the right to extend such period under Section 4(b)(viii)) and will
determine any conditions that must be satisfied before the Option may be
exercised.

(iii) Form of Consideration. The Administrator will determine the acceptable
form(s) of consideration for exercising an Option, including the method of
payment, to the extent permitted by Applicable Laws. In the case of an Incentive
Stock Option, the Administrator will determine the acceptable form of
consideration at the time of grant. Such consideration to the extent permitted
by Applicable Laws may include, but is not limited to:

(1) cash;

(2) check;

(3) other Shares which have a Fair Market Value on the date of surrender equal
to the aggregate exercise price of the Shares as to which said Option will be
exercised and provided that accepting such Shares, in the sole discretion of the
Administrator, will not result in any adverse accounting consequences to the
Company;

(4) by net exercise;

(5) consideration received by the Company under a cashless exercise program
implemented by the Company in connection with the Plan;

(6) a reduction in the amount of any Company liability to the Participant,
including any liability attributable to the Participant’s participation in any
Company-sponsored deferred compensation program or arrangement, in each case,
without adverse tax consequences to the Participant under Section 409A of the
Code;

(7) such other consideration and method of payment for the issuance of Shares to
the extent permitted by Applicable Laws; or

(8) any combination of the foregoing methods of payment.

(d) Exercise of Option.

(i) Procedure for Exercise; Rights as a Stockholder. Any Option granted
hereunder will be exercisable according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set forth
in the Award Agreement. An Option may not be exercised for a fraction of a
Share.

An Option will be deemed exercised when the Company receives: (i) notice of
exercise (in such form as the Administrator specifies from time to time) from
the person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised (together with applicable tax
withholdings). Full payment may consist of any consideration and method of
payment authorized by the Administrator and permitted by the Award Agreement and
the Plan. Shares issued upon exercise of an Option will be issued in the name of
the Participant or, if requested by the Participant, in the name of the
Participant and his or her spouse. Until the Shares are issued (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a stockholder will exist with respect to the Shares subject to
an Option, notwithstanding the exercise of the Option. The Company will issue
(or cause to be issued) such Shares promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the Shares are issued, except as provided in Section 15(a)
of the Plan.

Exercising an Option in any manner will decrease the number of Shares thereafter
available, both for purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.

 

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(ii) Termination of Relationship as a Service Provider. If a Participant ceases
to be a Service Provider, other than upon the Participant’s termination as the
result of the Participant’s death or Disability, the Participant may exercise
his or her Option within such period of time as is specified in the Award
Agreement to the extent that the Option is vested on the date of termination
(but in no event later than the expiration of the term of such Option as set
forth in the Award Agreement). In the absence of a specified time in the Award
Agreement, the Option will remain exercisable for three (3) months following the
Participant’s termination. Unless otherwise provided by the Administrator, if on
the date of termination the Participant is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option will revert to
the Plan. If after termination the Participant does not exercise his or her
Option within the time specified by the Administrator, the Option will
terminate, and the Shares covered by such Option will revert to the Plan.

(iii) Disability of Participant. If a Participant ceases to be a Service
Provider as a result of the Participant’s Disability, the Participant may
exercise his or her Option within such period of time as is specified in the
Award Agreement to the extent the Option is vested on the date of termination
(but in no event later than the expiration of the term of such Option as set
forth in the Award Agreement). In the absence of a specified time in the Award
Agreement, the Option will remain exercisable for twelve (12) months following
the Participant’s termination. Unless otherwise provided by the Administrator,
if on the date of termination the Participant is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option will
revert to the Plan. If after termination the Participant does not exercise his
or her Option within the time specified herein, the Option will terminate, and
the Shares covered by such Option will revert to the Plan.

(iv) Death of Participant. If a Participant dies while a Service Provider, then
the vesting and exercisability of all shares subject to the Option shall be
accelerated as to 100% of the Shares subject to the Option as of such
Participant’s death. If a Participant dies while a Service Provider, the Option
may be exercised following the Participant’s death within such period of time as
is specified in the Award Agreement to the extent that the Option is vested on
the date of death (but in no event may the Option be exercised later than the
expiration of the term of such Option as set forth in the Award Agreement), by
the Participant’s designated beneficiary, provided such beneficiary has been
designated prior to Participant’s death in a form acceptable to the
Administrator. If no such beneficiary has been designated by the Participant,
then such Option may be exercised by the personal representative of the
Participant’s estate or by the person(s) to whom the Option is transferred
pursuant to the Participant’s will or in accordance with the laws of descent and
distribution. In the absence of a specified time in the Award Agreement, the
Option will remain exercisable for twelve (12) months following Participant’s
death. If the Option is not so exercised within the time specified herein, the
Option will terminate, and the Shares covered by such Option will revert to the
Plan.

(v) Other Termination. A Participant’s Award Agreement also may provide that if
the exercise of the Option following the termination of Participant’s status as
a Service Provider (other than upon the Participant’s death or Disability) would
result in liability under Section 16(b) of the Exchange Act, then the Option
will terminate on the earlier of (A) the expiration of the term of the Option
set forth in the Award Agreement, or (B) the tenth (10th) day after the last
date on which such exercise would result in such liability under Section 16(b)
of the Exchange Act. Finally, a Participant’s Award Agreement may also provide
that if the exercise of the Option following the termination of the
Participant’s status as a Service Provider (other than upon the Participant’s
death or Disability) would be prohibited at any time solely because the issuance
of Shares would violate the registration requirements under the Securities Act,
then the Option will terminate on the earlier of (A) the expiration of the term
of the Option, or (B) the expiration of a period of three (3) months after the
termination of the Participant’s status as a Service Provider during which the
exercise of the Option would not be in violation of such registration
requirements.

7. Stock Appreciation Rights.

(a) Grant of Stock Appreciation Rights. Subject to the terms and conditions of
the Plan, a Stock Appreciation Right may be granted to Service Providers at any
time and from time to time as will be determined by the Administrator, in its
sole discretion.

(b) Number of Shares. The Administrator will have complete discretion to
determine the number of Stock Appreciation Rights granted to any Participant,
provided that during any Fiscal Year, no Participant will be granted Stock
Appreciation Rights covering more than 500,000 Shares. Notwithstanding the
limitation in the previous sentence, in connection with his or her initial
service as an Employee, an Employee may be granted Stock Appreciation Rights
covering up to an additional 500,000 Shares. The foregoing limitations will be
adjusted proportionately in connection with any change in the Company’s
capitalization as described in Section 15(a).

 

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(c) Exercise Price and Other Terms. The Administrator, subject to the provisions
of the Plan, will have complete discretion to determine the terms and conditions
of Stock Appreciation Rights granted under the Plan, provided, however, that the
exercise price will not be less than one hundred percent (100%) of the Fair
Market Value of a Share on the date of grant. Notwithstanding the foregoing
provisions of this Section 7(c), Stock Appreciation Rights may be granted with a
per Share exercise price of less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant pursuant to a transaction described
in, and in a manner consistent with, Section 424(a) of the Code and the Treasury
Regulations thereunder. If a Participant dies while a Service Provider, then the
vesting and exercisability of all shares subject to the Stock Appreciation
Rights shall be accelerated as to 100% of the Shares subject to the Stock
Appreciation Rights as of such Participant’s death.

(d) Stock Appreciation Right Agreement. Each Stock Appreciation Right grant will
be evidenced by an Award Agreement that will specify the exercise price, the
term of the Stock Appreciation Right, the acceptable forms of consideration for
exercise (which may include any form of consideration permitted by Section
6(c)(iii), the conditions of exercise, and such other terms and conditions as
the Administrator, in its sole discretion, will determine.

(e) Expiration of Stock Appreciation Rights. A Stock Appreciation Right granted
under the Plan will expire upon the date determined by the Administrator, in its
sole discretion, and set forth in the Award Agreement; provided, however, that
the term will be no more than ten (10) years from the date of grant thereof.
Notwithstanding the foregoing, the rules of Section 6(d) relating to exercise
also will apply to Stock Appreciation Rights.

(f) Payment of Stock Appreciation Right Amount. Upon exercise of a Stock
Appreciation Right, a Participant will be entitled to receive payment from the
Company in an amount determined by multiplying:

(i) The difference between the Fair Market Value of a Share on the date of
exercise over the exercise price; by

(ii) The number of Shares with respect to which the Stock Appreciation Right is
exercised.

At the discretion of the Administrator, the payment upon Stock Appreciation
Right exercise may be in cash, in Shares of equivalent value, or in some
combination thereof.

8. Restricted Stock.

(a) Grant of Restricted Stock. Subject to the terms and provisions of the Plan,
the Administrator, at any time and from time to time, may grant Shares of
Restricted Stock to Service Providers in such amounts as the Administrator, in
its sole discretion, will determine.

(b) Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced
by an Award Agreement that will specify the Period of Restriction, the number of
Shares granted, and such other terms and conditions as the Administrator, in its
sole discretion, will determine. Unless the Administrator determines otherwise,
the Company as escrow agent will hold Shares of Restricted Stock until the
restrictions on such Shares have lapsed. Notwithstanding the foregoing sentence,
for restricted stock intended to qualify as “performance-based compensation”
within the meaning of Section 162(m) of the Code, during any Fiscal Year no
Participant will receive more than an aggregate of 100,000 Shares of Restricted
Stock. Notwithstanding the foregoing limitation, in connection with his or her
initial service as an Employee, for restricted stock intended to qualify as
“performance-based compensation” within the meaning of Section 162(m) of the
Code, an Employee may be granted an aggregate of up to an additional 100,000
Shares of Restricted Stock. The foregoing limitations will be adjusted
proportionately in connection with any change in the Company’s capitalization as
described in Section 15(a).

(c) Transferability. Except as provided in this Section 8, Shares of Restricted
Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated until the end of the applicable Period of Restriction.

 

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(d) Other Restrictions. The Administrator, in its sole discretion, may impose
such other restrictions on Shares of Restricted Stock as it may deem advisable
or appropriate.

(e) Removal of Restrictions. Except as otherwise provided in this Section 8,
Shares of Restricted Stock covered by each Restricted Stock grant made under the
Plan will be released from escrow as soon as practicable after the last day of
the Period of Restriction or at such other time as the Administrator may
determine. The Administrator, in its sole discretion, may reduce or waive any
restrictions for such Award and may accelerate the time at which any
restrictions will lapse or be removed.

(f) Voting Rights. During the Period of Restriction, Service Providers holding
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares, unless the Administrator determines otherwise.

(g) Dividends and Other Distributions. During the Period of Restriction, Service
Providers holding Shares of Restricted Stock will be entitled to receive all
dividends and other distributions paid with respect to such Shares, unless the
Administrator provides otherwise. If any such dividends or distributions are
paid in Shares, the Shares will be subject to the same restrictions on
transferability and forfeitability as the Shares of Restricted Stock with
respect to which they were paid. In addition, with respect to a share of
Restricted Stock with performance-based vesting, dividends which are paid prior
to vesting shall only be paid out to the Participant to the extent that the
performance-based vesting conditions are subsequently satisfied and the share of
Restricted Stock vests.

(h) Return of Restricted Stock to Company. On the date set forth in the Award
Agreement, the Restricted Stock for which restrictions have not lapsed will
revert to the Company and again will become available for grant under the Plan.

(i) Section 162(m) Performance Restrictions. For purposes of qualifying grants
of Restricted Stock as “performance-based compensation” under Section 162(m) of
the Code, the Administrator, in its discretion, may set restrictions based upon
the achievement of Performance Goals. The Performance Goals will be set by the
Administrator on or before the Determination Date. In granting Restricted Stock
which is intended to qualify under Section 162(m) of the Code, the Administrator
will follow any procedures determined by it from time to time to be necessary or
appropriate to ensure qualification of the Award under Section 162(m) of the
Code (e.g., in determining the Performance Goals).

9. Restricted Stock Units.

(a) Grant. Restricted Stock Units may be granted at any time and from time to
time as determined by the Administrator. After the Administrator determines that
it will grant Restricted Stock Units under the Plan, it will advise the
Participant in an Award Agreement of the terms, conditions, and restrictions
related to the grant, including the number of Restricted Stock Units.
Notwithstanding anything to the contrary in this subsection (a), for Restricted
Stock Units intended to qualify as “performance-based compensation” within the
meaning of Section 162(m) of the Code, during any Fiscal Year of the Company, no
Participant will receive more than an aggregate of 100,000 Restricted Stock
Units. Notwithstanding the limitation in the previous sentence, for Restricted
Stock Units intended to qualify as “performance-based compensation” within the
meaning of Section 162(m) of the Code, in connection with his or her initial
service as an Employee, an Employee may be granted an aggregate of up to an
additional 100,000 Restricted Stock Units. The foregoing limitations will be
adjusted proportionately in connection with any change in the Company’s
capitalization as described in Section 15(a).

(b) Vesting Criteria and Other Terms. The Administrator will set vesting
criteria in its discretion, which, depending on the extent to which the criteria
are met, will determine the number of Restricted Stock Units that will be paid
out to the Participant. The Administrator may set vesting criteria based upon
the achievement of Company-wide, business unit, or individual goals (including,
but not limited to, continued employment), or any other basis determined by the
Administrator in its discretion.

(c) Earning Restricted Stock Units. Upon meeting the applicable vesting
criteria, the Participant will be entitled to receive a payout as determined by
the Administrator. Notwithstanding the foregoing, at any time after the grant of
Restricted Stock Units, the Administrator, in its sole discretion, may reduce or
waive any vesting criteria that must be met to receive a payout and may
accelerate the time at which any restrictions will lapse or be removed.

 

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(d) Form and Timing of Payment. Payment of earned Restricted Stock Units will be
made as soon as practicable after the date(s) set forth in the Award Agreement
or as otherwise provided in the applicable Award Agreement or as required by
Applicable Laws. The Administrator, in its sole discretion, may pay earned
Restricted Stock Units in cash, Shares, or a combination thereof. Shares
represented by Restricted Stock Units that are fully paid in cash again will not
reduce the number of Shares available for grant under the Plan.

(e) Cancellation. On the date set forth in the Award Agreement, all unearned
Restricted Stock Units will be forfeited to the Company.

(f) Section 162(m) Performance Restrictions. For purposes of qualifying grants
of Restricted Stock Units as “performance-based compensation” under Section
162(m) of the Code, the Administrator, in its discretion, may set restrictions
based upon the achievement of Performance Goals. The Performance Goals will be
set by the Administrator on or before the Determination Date. In granting
Restricted Stock Units which are intended to qualify under Section 162(m) of the
Code, the Administrator will follow any procedures determined by it from time to
time to be necessary or appropriate to ensure qualification of the Award under
Section 162(m) of the Code (e.g., in determining the Performance Goals).

10. Performance Units, Performance Shares and Performance Based Cash Awards.

(a) Grant of Performance Units/Shares. Performance Units and Performance Shares
may be granted to Service Providers at any time and from time to time, as will
be determined by the Administrator, in its sole discretion. The Administrator
will have complete discretion in determining the number of Performance Units and
Performance Shares granted to each Participant provided that during any Fiscal
Year, for Performance Units or Performance Shares intended to qualify as
“performance-based compensation” within the meaning of Section 162(m) of the
Code, (i) no Participant will receive Performance Units having an initial value
greater than $3,250,000, and (ii) no Participant will receive more than 250,000
Performance Shares. Notwithstanding the foregoing limitation, for Performance
Shares intended to qualify as “performance-based compensation” within the
meaning of Section 162(m) of the Code, in connection with his or her initial
service, a Service Provider may be granted up to an additional 250,000
Performance Shares and additional Performance Units having an initial value up
to $3,250,000. The foregoing limitations will be adjusted proportionately in
connection with any change in the Company’s capitalization as described in
Section 15(a).

(b) Value of Performance Units/Shares. Each Performance Unit will have an
initial value that is established by the Administrator on or before the date of
grant. Each Performance Share will have an initial value equal to the Fair
Market Value of a Share on the date of grant.

(c) Performance Objectives and Other Terms. The Administrator will set
performance objectives or other vesting provisions (including, without
limitation, continued status as a Service Provider) in its discretion which,
depending on the extent to which they are met, will determine the number or
value of Performance Units/Shares that will be paid out to the Service
Providers. The time period during which the performance objectives or other
vesting provisions must be met will be called the “Performance Period.” Each
Award of Performance Units/Shares will be evidenced by an Award Agreement that
will specify the Performance Period, and such other terms and conditions as the
Administrator, in its sole discretion, will determine. The Administrator may set
performance objectives based upon the achievement of Company-wide, divisional,
or individual goals, applicable federal or state securities laws, or any other
basis determined by the Administrator in its discretion.

(d) Earning of Performance Units/Shares. The holder of Performance Units/Shares
will be entitled to receive a payout of the number of Performance Units/Shares
earned by the Participant during the Performance Period, to be determined as a
function of the extent to which the corresponding performance objectives or
other vesting provisions have been achieved. After the grant of a Performance
Unit/Share, the Administrator, in its sole discretion, may reduce or waive any
performance objectives or other vesting provisions for such Performance
Unit/Share and may accelerate the time at which any restrictions will lapse or
be removed.

(e) Form and Timing of Payment of Performance Units/Shares. Payment of earned
Performance Units/Shares will be made (i) upon achievement of strategic and/or
operational goals prior to the expiration of the applicable Performance Period,
at the discretion of the Administrator or (ii) as soon as practicable after the
expiration of the applicable Performance Period, or as otherwise provided in the
applicable Award Agreement or as required by Applicable Laws. The Administrator,
in its sole discretion, may pay earned Performance Units/Shares

 

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in the form of cash, in Shares (which have an aggregate Fair Market Value equal
to the value of the earned Performance Units/Shares at the close of the
applicable Performance Period (or on the payment date pursuant to Section
10(e)(i) above)) or in a combination thereof.

(f) Cancellation of Performance Units/Shares. On the date set forth in the Award
Agreement, all unearned or unvested Performance Units/Shares will be forfeited
to the Company, and again will be available for grant under the Plan.

(g) Performance-Based Cash Awards. Performance-Based Cash Awards may be granted
either alone or in addition to or in tandem with other Awards granted under this
Plan. Subject to the provisions of this Plan, the Administrator shall have
authority to determine, in its sole discretion, the Service Providers to whom,
and the time or times at which, Performance-Based Cash Awards shall be made, the
dollar amount to be awarded pursuant to such Performance-Based Cash Award, and
all other conditions for the payment of the Performance-Based Cash Award. The
Administrator may also provide for the payment of a dollar amount under a
Performance-Based Cash Award upon the completion of a specified Performance
Period.

Except as otherwise provided herein or as otherwise determined by the
Administrator with respect to Awards not intended to qualify as
“performance-based compensation” under Section 162(m) of the Code, the
Administrator shall condition the right to payment of any Performance-Based Cash
Award upon the attainment of specified performance criteria (including, the
Performance Goals specified in Section 11(b) below) established pursuant to
Section 11(c) below and such other factors as the Administrator may determine in
its sole discretion, including to comply with the requirements of Section 162(m)
of the Code.

Subject to Section 11(c), for any Participant, the Administrator may specify a
targeted Performance-Based Cash Award for a Performance Period (each an
“Individual Target Award”). An Individual Target Award may be expressed as a
fixed dollar amount, a percentage of the Participant’s base pay, as a percentage
of a bonus pool funded by a formula as determined by the Administrator in its
sole discretion based on achievement of Performance Goals, or an amount
determined pursuant to an objective formula or standard. The Administrator’s
establishment of an Individual Target Award for a Participant for a Performance
Period shall not imply or require that the same level or any Individual Target
Award be established for the Participant for any subsequent Performance Period
or for or any other Participant for that Performance Period or any subsequent
Performance Period. At the time the Performance Goals are established (as
provided in Section 11(c)), the Administrator shall prescribe a formula to be
used to determine the maximum and/or threshold percentages (which may be greater
or less than one-hundred percent (100%), as applicable) of an Individual Target
Award that may be earned or payable based upon the degree of attainment of the
Performance Goals during the Performance Period. Notwithstanding anything else
herein, unless otherwise specified by the Administrator with respect to an
Individual Target Award, the Administrator may elect to pay a Participant an
amount that is less than the Participant’s Individual Target Award (or attained
percentages thereof) regardless of the degree of attainment of the Performance
Goals; provided that, except as otherwise specified by the Administrator with
respect to an Individual Target Award, no discretion to reduce a
Performance-Based Cash Award earned based on achievement of the applicable
Performance Goals shall be permitted for any Performance Period in which a
Change in Control occurs, or during such Performance Period with regard to the
prior Performance Periods if the Performance-Based Cash Awards for the prior
Performance Periods have not been paid by the time of the Change in Control,
with regard to individuals who were Participants at the time of the Change in
Control.

(h) Terms and Conditions of Performance-Based Cash Awards.

(i) Certification. At the expiration of the applicable Performance Period, the
Administrator shall determine, in its sole discretion, and certify in writing
the extent to which the Performance Goals established pursuant to Section 11(c)
are achieved and, if applicable, the percentage of the Participant’s Individual
Target Award that has been vested and earned.

(ii) Waiver of Limitation. In the event of the Participant’s death or
Disability, or in cases of special circumstances (to the extent permitted under
Section 162(m) of the Code with regard to a Performance-Based Cash Award that is
intended to comply with Section 162(m) of the Code), the Administrator may waive
in whole or in part any or all of the limitations imposed hereunder (if any)
with respect to any or all of a Performance-Based Cash Award.

 

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(iii) Termination. Unless otherwise determined by the Committee in its sole
discretion, no Performance-Based Cash Award or pro rata portion thereof shall be
payable to any Participant who incurs a termination prior to the date such
Performance-Based Cash Award is paid.

(iv) Maximum Payments. In granting Performance-Based Cash Awards intended to
qualify under Section 162(m) of the Code, the aggregate amount of compensation
to be paid to any one Participant in respect of all Performance-Based Cash
Awards intended to qualify as “performance-based compensation” under Section
162(m) of the Code granted to such Participant in respect of any one calendar
year shall not exceed $10,000,000.00 per year; provided, however, that with
respect to any Performance-Based Cash Awards intended to qualify as
“performance-based compensation” under Section 162(m) of the Code that are
subject to a Performance Period longer or shorter than one year, the foregoing
Performance-Based Cash Awards limit shall be proportionately adjusted upward or
downward; and provided, further, that any Performance-Based Cash Awards that are
intended to qualify as “performance-based compensation” under Section 162(m) of
the Code that are cancelled in respect of any period shall be counted against
this limit to the extent required by Section 162(m) of the Code for such period.
Notwithstanding the foregoing, the Administrator may in its discretion grant
Performance-Based Cash Awards that are not intended to qualify as
“performance-based compensation” under Section 162(m) of the Code to such
Participants that are based on Performance Goals or other specific criteria or
goals but that do not satisfy the requirements of Section 11.

(i) Section 162(m) Performance Restrictions. For purposes of qualifying grants
of Performance Units/Shares or Performance-Based Cash Awards intended to qualify
as “performance-based compensation” under Section 162(m) of the Code as
“performance-based compensation” under Section 162(m) of the Code, the
Administrator, in its discretion, may set restrictions based upon the
achievement of Performance Goals. The Performance Goals will be set by the
Administrator on or before the Determination Date. In granting Performance
Units/Shares or Performance-Based Cash Awards which are intended to qualify
under Section 162(m) of the Code, the Administrator will follow any procedures
determined by it from time to time to be necessary or appropriate to ensure
qualification of the Award under Section 162(m) of the Code (e.g., in
determining the Performance Goals).

11. Performance-Based Compensation Under Code Section 162(m).

(a) General. If the Administrator, in its discretion, decides to grant an Award
intended to qualify as “performance-based compensation” under Section 162(m) of
the Code, the provisions of this Section 11 will control over any contrary
provision in the Plan; provided, however, that the Administrator may in its
discretion grant Awards that are not intended to qualify as “performance-based
compensation” under Section 162(m) of the Code that are based on Performance
Goals or other specific criteria or goals but that are not intended to qualify
as “performance-based compensation” under Section 162(m) of the Code or
otherwise satisfy the requirements of this Section 11.

(b) Performance Goals. The granting and/or vesting of Awards of Restricted
Stock, Restricted Stock Units, Performance Shares, Performance Units and
Performance-Based Cash Awards and other incentives under the Plan may be made
subject to the attainment of performance goals relating to one or more business
criteria within the meaning of Section 162(m) of the Code and may provide for a
targeted level or levels of achievement (“Performance Goals”) including: (i)
attainment of research and development milestones, (ii) bookings, (iii) business
divestitures and acquisitions, (iv) cash flow, (v) cash position, (vi) contract
awards or backlog, (vii) customer renewals, (viii) customer retention rates from
an acquired company, business unit or division, (ix) earnings (which may include
earnings before interest and taxes, earnings before taxes and net earnings), (x)
earnings per Share, (xi) expenses, (xii) gross margin, (xiii) growth in
stockholder value relative to the moving average of the S&P 500 Index or another
index, (xiv) internal rate of return, (xv) market share, (xvi) net income,
(xvii) net profit, (xviii) net sales, (xix) new product development, (xx) new
product invention or innovation, (xxi) number of customers, (xxii) operating
cash flow, (xxiii) operating expenses, (xxiv) operating income, (xxv) operating
margin, (xxvi) overhead or other expense reduction, (xxvii) product defect
measures, (xxviii) product release timelines, (xxix) productivity, (xxx) profit,
(xxxi) return on assets, (xxxii) return on capital, (xxxiii) return on equity,
(xxxiv) return on investment, (xxxv) return on sales, (xxxvi) revenue, (xxxvii)
revenue growth, (xxxviii) sales results, (xxxix) sales growth, (xl) stock price,
(xli) time to market, (xlii) total stockholder return, (xliii) working capital.
Any criteria used may be (A) measured in absolute terms, (B) measured in terms
of growth, (C) compared to another company or companies, (D) measured against
the market as a whole and/or according to applicable market indices, (E)
measured against the performance of the Company as a whole or a segment of the
Company and/or (F) measured on a pre-tax or post-tax basis (if applicable).
Further, any Performance Goals may

 

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be used to measure the performance of the Company as a whole or a business unit
or other segment of the Company, or one or more product lines or specific
markets and may be measured relative to a peer group or index. The Performance
Goals may differ from Participant to Participant and from Award to Award. Prior
to the Determination Date, the Administrator will determine whether any
significant element(s) will be included in or excluded from the calculation of
any Performance Goal with respect to any Participant. In all other respects,
Performance Goals will be calculated in accordance with the Company’s financial
statements, generally accepted accounting principles, or under a methodology
established by the Administrator prior to the issuance of an Award and which is
consistently applied with respect to a Performance Goal in the relevant
Performance Period. The Administrator will appropriately adjust any evaluation
of performance under a Performance Goal to exclude (1) any items that are
unusual in nature or infrequently occurring, or both, within the meaning of FASB
Accounting Standards Codification and/or in management’s discussion and analysis
of financial conditions and results of operations appearing in the Company’s
annual report to stockholders for the applicable year, or (2) the effect of any
changes in accounting principles affecting the Company’s or a business unit’s
reported results. In addition, the Administrator will adjust any performance
criteria, Performance Goal or other feature of an Award that relates to or is
wholly or partially based on the number of, or the value of, any stock of the
Company, to reflect any stock dividend or split, repurchase, recapitalization,
combination, or exchange of shares or other similar changes in such stock.

(c) Procedures. To the extent necessary to comply with the performance-based
compensation provisions of Section 162(m) of the Code, with respect to any Award
granted subject to Performance Goals and intended to qualify as
“performance-based compensation” under Section 162(m) of the Code, within the
first twenty-five percent (25%) of the Performance Period, but in no event more
than ninety (90) days following the commencement of any Performance Period (or
such other time as may be required or permitted by Section 162(m) of the Code),
the Administrator will, in writing, (i) designate one or more Participants to
whom an Award will be made, (ii) select the Performance Goals applicable to the
Performance Period, (iii) establish the Performance Goals, and amounts of such
Awards, as applicable, which may be earned for such Performance Period, and (iv)
specify the relationship between Performance Goals and the amounts of such
Awards, as applicable, to be earned by each Participant for such Performance
Period. Following the completion of each Performance Period, the Administrator
will certify in writing whether the applicable Performance Goals have been
achieved for such Performance Period. In determining the amounts earned by a
Participant, the Administrator will have the right to reduce or eliminate (but
not to increase) the amount payable at a given level of performance to take into
account additional factors that the Administrator may deem relevant to the
assessment of individual or corporate performance for the Performance Period. A
Participant will be eligible to receive payment pursuant to an Award intended to
qualify as “performance-based compensation” under Section 162(m) of the Code for
a Performance Period only if the Performance Goals for such period are achieved.

(d) Additional Limitations. Notwithstanding any other provision of the Plan, any
Award which is granted to a Participant and is intended to constitute qualified
performance-based compensation under Section 162(m) of the Code will be subject
to any additional limitations set forth in the Code (including any amendment to
Section 162(m)) of the Code or any regulations and ruling issued thereunder that
are requirements for qualification as qualified performance-based compensation
as described in Section 162(m) of the Code, and the Plan will be deemed amended
to the extent necessary to conform to such requirements.

(e) Determination of Amounts Earned. In determining the amounts earned by a
Participant pursuant to an Award intended to be qualified as “performance-based
compensation” under Section 162(m) of the Code, the Committee will have the
right to (i) reduce or eliminate (but not to increase) the amount payable at a
given level of performance to take into account additional factors that the
Committee may deem relevant to the assessment of individual or corporate
performance for the Performance Period, (ii) determine what actual Award, if
any, will be paid in the event of a termination of employment as the result of a
Participant’s death or Disability or upon a Change in Control or in the event of
a termination of employment following a Change in Control prior to the end of
the Performance Period, and (iii) determine what actual Award, if any, will be
paid in the event of a termination of employment other than as the result of a
Participant’s death or Disability prior to a Change of Control and prior to the
end of the Performance Period to the extent an actual Award would have otherwise
been achieved had the Participant remained employed through the end of the
Performance Period. A Participant will be eligible to receive payment pursuant
to an Award intended to qualify as “performance-based compensation” under
Section 162(m) of the Code for a Performance Period only if the Performance
Goals for such period are achieved.

 

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12. Compliance With Code Section 409A. Although the Company does not guarantee
to a Participant the particular tax treatment of any Award, the Plan and all
Awards are intended to be exempt from the application of, or comply with, the
requirements of Code Section 409A such that the grant, payment, settlement or
deferral will not be subject to the additional tax or interest applicable under
Code Section 409A, except as otherwise determined in the sole discretion of the
Administrator. The Plan and each Award Agreement under the Plan is intended to
meet the requirements of Code Section 409A, except as otherwise determined in
the sole discretion of the Administrator. To the extent that an Award or
payment, or the settlement or deferral thereof, is subject to Code Section 409A
the Award will be granted, paid, settled or deferred in a manner that will meet
the requirements of Code Section 409A, such that the grant, payment, settlement
or deferral will not be subject to the additional tax or interest applicable
under Code Section 409A.

A Participant’s termination shall not be deemed to have occurred for purposes of
any provision of an Award governed by Code Section 409A providing for payment
upon or following a termination of the Participant’s employment unless such
termination is also a “separation from service” within the meaning of Code
Section 409A and, for purposes of any such provision of an Award governed by
Code Section 409A, references to a “termination,” “termination of employment” or
like terms shall mean separation from service. Notwithstanding any provision to
the contrary in the Plan or the Award agreement, if the Participant is deemed on
the date of the Participant’s termination to be a “specified employee” within
the meaning of that term under Code Section 409A(a)(2)(B) and using the
identification methodology selected by the Company from time to time, or if
none, the default methodology set forth in Code Section 409A, then with regard
to any such payment, to the extent required to be delayed in compliance with
Code Section 409A(a)(2)(B), such payment shall not be made prior to the earlier
of (i) the expiration of the six-month period measured from the date of the
Participant’s separation from service, and (ii) the date of the Participant’s
death. All payments delayed pursuant to this Section 12 shall be paid to the
Participant on the first day of the seventh month following the date of the
Participant’s separation from service or, if earlier, on the date of the
Participant’s death.

13. Leaves of Absence/Transfer Between Locations. Unless the Administrator
provides otherwise and except as required by Applicable Laws, vesting of Awards
granted hereunder will be suspended during any unpaid leave of absence. A
Participant will not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, or any Subsidiary. For purposes of
Incentive Stock Options, no such leave may exceed three (3) months, unless
reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, then six (6) months following the first (1st) day
of such leave, any Incentive Stock Option held by the Participant will cease to
be treated as an Incentive Stock Option and will be treated for tax purposes as
a Nonstatutory Stock Option.

14. Non-Transferability of Awards. Unless determined otherwise by the
Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Participant, only by the Participant. If the Administrator makes an Award
transferable, including, without limitation, by instrument to an inter vivos or
testamentary trust in which the Awards are to be passed to beneficiaries upon
the death of the trustor (settlor) or by gift to Family Members, such Award will
contain such additional terms and conditions as the Administrator deems
appropriate.

15. Adjustments; Dissolution or Liquidation; Merger or Change in Control.

(a) Adjustments. In the event that any dividend or other distribution (whether
in the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Shares or other securities of the Company, or other change in the corporate
structure of the Company affecting the Shares occurs, the Administrator, in
order to prevent diminution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, will adjust the number and class
of Shares that may be delivered under the Plan and/or the number, class, and
price of Shares covered by each outstanding Award, and the numerical Share
limits set forth in Sections 3, 6, 7, 8, 9 and 10 of the Plan.

(b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator will notify each Participant as
soon as practicable prior to the effective date of such proposed transaction. To
the extent it has not been previously exercised, an Award will terminate
immediately prior to the consummation of such proposed action.

 

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(c) Change in Control. In the event of a Change in Control, each outstanding
Award will be treated as the Administrator determines without a Participant’s
consent, including, without limitation, that (i) Awards will be assumed, or
substantially equivalent Awards will be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof) with appropriate adjustments as
to the number and kind of shares and prices; (ii) upon written notice to a
Participant, that the Participant’s Awards will terminate upon or immediately
prior to the consummation of such Change in Control; (iii) outstanding Awards
will vest and become exercisable, realizable, or payable, or restrictions
applicable to an Award will lapse, in whole or in part prior to or upon
consummation of such Change in Control, and, to the extent the Administrator
determines, terminate upon or immediately prior to the effectiveness of such
Change in Control; (iv) (A) the termination of an Award in exchange for an
amount of cash and/or property, if any, equal to the amount that would have been
attained upon the exercise of such Award or realization of the Participant’s
rights as of the date of the occurrence of the transaction (and, for the
avoidance of doubt, if as of the date of the occurrence of the transaction the
Administrator determines in good faith that no amount would have been attained
upon the exercise of such Award or realization of the Participant’s rights, then
such Award may be terminated by the Company without payment), or (B) the
replacement of such Award with other rights or property selected by the
Administrator in its sole discretion; or (v) any combination of the foregoing.
In taking any of the actions permitted under this subsection (c), the
Administrator will not be obligated to treat all Awards, all Awards held by a
Participant, or all Awards of the same type, similarly.

In the event that the successor corporation does not assume or substitute for
the Award (or portion thereof), the Participant will fully vest in and have the
right to exercise all of his or her outstanding Options and Stock Appreciation
Rights that are not assumed or substituted for, including Shares as to which
such Awards would not otherwise be vested or exercisable, all restrictions on
Restricted Stock, Restricted Stock Units, Performance Shares/Units and
Performance-Based Cash Awards not assumed or substituted for will lapse, and,
with respect to Awards with performance-based vesting not assumed or substituted
for, all performance goals or other vesting criteria will be deemed achieved at
one hundred percent (100%) of target levels and all other terms and conditions
met. In addition, if an Option or Stock Appreciation Right is not assumed or
substituted for in the event of a Change in Control, the Administrator will
notify the Participant in writing or electronically that the Option or Stock
Appreciation Right will be fully vested and exercisable for a period of time
determined by the Administrator in its sole discretion, and the Option or Stock
Appreciation Right will terminate upon the expiration of such period.

For the purposes of this subsection (c), an Award will be considered assumed if,
following the Change in Control, the Award confers the right to purchase or
receive, for each Share subject to the Award immediately prior to the Change in
Control, the consideration (whether stock, cash, or other securities or
property) or, in the case of a Stock Appreciation Right upon the exercise of
which the Administrator determines to pay cash or a Restricted Stock Unit,
Performance Share or Performance Unit which the Administrator can determine to
pay in cash, the fair market value of the consideration received in the Change
in Control by holders of Common Stock for each Share held on the effective date
of the 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 Change in
Control is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of an Option or Stock
Appreciation Right or upon the payout of a Restricted Stock Unit, Performance
Unit or Performance Share, for each Share subject to such Award (or in the case
of an Award settled in cash, the number of implied shares determined by dividing
the value of the Award by the per share consideration received by holders of
Common Stock in the Change in Control), to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the Change in Control.

Notwithstanding anything in this subsection (c) to the contrary, an Award that
vests, is earned or paid-out upon the satisfaction of one or more performance
goals will not be considered assumed if the Company or its successor modifies
any of such performance goals without the Participant’s consent; provided,
however, a modification to such performance goals only to reflect the successor
corporation’s post-Change in Control corporate structure will not be deemed to
invalidate an otherwise valid Award assumption.

 

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16. Tax Withholding.

(a) Withholding Requirements. Prior to the delivery of any Shares or cash
pursuant to an Award (or exercise thereof), the Company will have the power and
the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, local, foreign or other
taxes (including the Participant’s FICA obligation) required to be withheld with
respect to such Award (or exercise thereof).

(b) Withholding Arrangements. The Administrator, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may permit a
Participant to satisfy such tax withholding obligation, in whole or in part by
(without limitation) (i) paying cash, (ii) electing to have the Company withhold
otherwise deliverable cash or Shares having a Fair Market Value equal to the
statutory amount required to be withheld, (iii) delivering to the Company
already-owned Shares having a Fair Market Value equal to the statutory amount
required to be withheld, provided the delivery of such Shares will not result in
any adverse accounting consequences as the Administrator determines in its sole
discretion, (iv) selling a sufficient number of Shares otherwise deliverable to
the Participant through such means as the Administrator may determine in its
sole discretion (whether through a broker or otherwise) equal to the amount
required to be withheld, or (v) retaining from salary or other amounts payable
to the Participant cash having a sufficient value to satisfy the amount required
to be withheld. The Fair Market Value of the Shares to be withheld or delivered
will be determined as of the date that the taxes are required to be withheld.

17. No Effect on Employment or Service. Neither the Plan nor any Award will
confer upon a Participant any right with respect to continuing the Participant’s
relationship as a Service Provider with the Company, nor will they interfere in
any way with the Participant’s right or the Company’s right to terminate such
relationship at any time, with or without cause, to the extent permitted by
Applicable Laws.

18. Date of Grant. The date of grant of an Award will be, for all purposes, the
date on which the Administrator makes the determination granting such Award, or
such other later date as is determined by the Administrator. Notice of the
determination will be provided to each Participant within a reasonable time
after the date of such grant.

19. Term of Plan. The Plan became effective as of June 13, 2011 and was
previously amended and restated and approved by stockholders of the Company at
the Company’s 2013 annual meeting of stockholders. The Plan will continue in
effect for a term of ten (10) years from the earlier of the date the Plan is:
(a) adopted by the Board or (b) approved by stockholders, unless terminated
earlier under Section 20 of the Plan.

20. Amendment and Termination of the Plan.

(a) Amendment and Termination. The Administrator may at any time amend, alter,
suspend or terminate the Plan.

(b) Stockholder Approval. The Company will obtain stockholder approval of any
Plan amendment to the extent necessary and desirable to comply with Applicable
Laws.

(c) Effect of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan will impair the rights of any Participant, unless
mutually agreed otherwise between the Participant and the Administrator, which
agreement must be in writing and signed by the Participant and the Company.
Termination of the Plan will not affect the Administrator’s ability to exercise
the powers granted to it hereunder with respect to Awards granted under the Plan
prior to the date of such termination.

21. Conditions Upon Issuance of Shares.

(a) Legal Compliance. Shares will not be issued pursuant to the exercise of an
Award unless the exercise of such Award and the issuance and delivery of such
Shares will comply with Applicable Laws and will be further subject to the
approval of counsel for the Company with respect to such compliance.

(b) Investment Representations. As a condition to the exercise of an Award, the
Company may require the person exercising such Award to represent and warrant at
the time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is
required.

(c) Recoupment Policy; Stock Ownership Guidelines. All Awards made under the
Plan are subject to the Recoupment Policy and the Stock Ownership Guidelines,
where applicable.

 

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

23. Stockholder Approval. The Plan, as amended and restated herein, will be
subject to approval by the stockholders of the Company at the Company’s 2016
annual meeting of stockholders. Such stockholder approval will be obtained in
the manner and to the degree required under Applicable Laws.

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