Exhibit 10.1
 
 
ECHO THERAPEUTICS, INC.
2008 EQUITY INCENTIVE PLAN
 

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TABLE OF CONTENTS
 

                          Page  
Section 1
  —   PURPOSE   1
Section 2
  —   DEFINITIONS   1
Section 3
  —   ADMINISTRATION   2
Section 4
  —   STOCK   3
Section 5
  —   GRANTING OF AWARDS   3
Section 6
  —   TERMS AND CONDITIONS OF OPTIONS   3
Section 7
  —   RESTRICTED STOCK   5
Section 8
  —   AWARD AGREEMENTS   5
Section 9
  —   ADJUSTMENT IN CASE OF CHANGES IN COMMON STOCK   6
Section 10
  —   CHANGE IN CONTROL   6
Section 11
  —   CERTAIN CORPORATE TRANSACTIONS   7
Section 12
  —   AMENDMENT OF THE PLAN AND OUTSTANDING AWARDS   7
Section 13
  —   TERMINATION OF PLAN; CESSATION OF ISO GRANTS   7
Section 14
  —   MISCELLANEOUS   7

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ECHO THERAPEUTICS, INC.
2008 EQUITY INCENTIVE PLAN
 
WHEREAS, Echo Therapeutics, Inc. (the “Company”) hereby wishes to adopt the Echo
Therapeutics, Inc. 2008 Equity Incentive Plan (the “Plan”);
 
NOW, THEREFORE, effective as of April 1, 2008, the Plan is hereby adopted under
the following terms and conditions:
 
Section 1 — PURPOSE
 
The Plan is intended to provide a means whereby the Company may, through the
grant of Awards to Employees, Consultants and Non-Employee Directors, attract
and retain such individuals and motivate them to exercise their best efforts on
behalf of the Company and of any Related Corporation.
 
Section 2 — DEFINITIONS
 
The following terms, when used herein, shall have the following meanings unless
otherwise required by the context:
 
(a) “Award” shall mean an ISO, an NQSO or shares of Restricted Stock awarded by
the Company to an Employee, a Consultant or a Non-Employee Director.
 
(b) “Award Agreement” shall mean a written document evidencing the grant of an
Award, as described in Section 8.
 
(c) “Board” shall mean the Board of Directors of the Company.
 
(d) “Code” shall mean the Internal Revenue Code of 1986, as amended.
 
(e) “Committee” shall mean a committee which consists solely of not fewer than
two directors of the Company who shall be appointed by, and serve at the
pleasure of, the Board (taking into consideration the rules under Section 16(b)
of the Exchange Act and the requirements of Code § 162(m)). In the event a
committee has not been established, the entire Board shall be the Committee.
 
(f) “Common Stock” shall mean the common stock of the Company, par value $0.01
per share.
 
(g) “Company” shall mean Echo Therapeutics, Inc., a Minnesota corporation.
 
(h) “Consultant” shall mean an individual who is not an Employee or a
Non-Employee Director and who has entered into a consulting arrangement with the
Company or a Related Corporation to provide bona fide services that (i) are not
in connection with the offer or sale of securities in a capital-raising
transaction, and (ii) do not directly or indirectly promote or maintain a market
for the Company’s securities.
 
(i) “Employee” shall mean an officer or other employee of the Company or a
Related Corporation.
 
(j) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
 
(k) “Fair Market Value” shall mean the fair market value of a share of Common
Stock, arrived at by a determination of the Committee under a method that
complies with Code § 422 (for ISOs) or Code § 409A (for NQSOs) and any rules and
regulations under such sections, and that is adopted by the Committee. Fair
Market Value shall be determined without regard to any “lapse restrictions,” as
defined in Treas. Reg. § 1.83-3(i) or any successor thereto.
 
(l) “Grantee” shall mean an Employee, a Consultant or a Non-Employee Director
who has been granted an Award under the Plan.
 
(m) “ISO” shall mean an Option which, at the time such Option is granted,
qualifies as an incentive stock option within the meaning of Code § 422, unless
the Award Agreement states that the Option will not be treated as an ISO.
 
(n) “Non-Employee Director” shall mean a director of the Company who is not an
Employee.

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(o) “NQSO” shall mean an Option which, at the time such Option is granted, does
not qualify as an ISO, whether or not it is designated as a nonqualified stock
option in the Award Agreement.
 
(p) “Option” shall mean an ISO or an NQSO, in either case which entitles the
Grantee on exercise thereof to purchase shares of Common Stock at a specified
exercise price.
 
(q) “Plan” shall mean the Echo Therapeutics, Inc. 2008 Equity Incentive Plan as
set forth herein.
 
(r) “Related Corporation” shall mean either a “subsidiary corporation” of the
Company, as defined in Code § 424(f), or the “parent corporation” of the
Company, as defined in Code § 424(e).
 
(s) “Restricted Stock” shall mean Common Stock subject to restrictions
determined by the Committee pursuant to Section 7.
 
(t) “Termination of Service” shall mean (i) with respect to an Award granted to
an Employee, the termination of the employment relationship between the Employee
and the Company and all Related Corporations; (ii) with respect to an Award
granted to a Consultant, the termination of the consulting or advisory
arrangement between the Consultant and the Company and all Related Corporations;
and (iii) with respect to an Award granted to a Non-Employee Director, the
cessation of the provision of services as a director of the Company and all
Related Corporations; provided, however, that if the Grantee’s status changes
from Employee, Consultant or Non-Employee Director to any other status eligible
to receive an Award under the Plan, the Committee (subject to Section 12) may
provide that no Termination of Service occurs for purposes of the Plan until the
Grantee’s new status with the Company and all Related Corporations terminates.
For purposes of this subsection, if a Grantee is an Employee, Consultant or
Non-Employee Director of a Related Corporation and not the Company, the Grantee
shall incur a Termination of Service when such corporation ceases to be a
Related Corporation, unless the Committee determines otherwise. A Termination of
Service shall not be deemed to have resulted by reason of a bona fide leave of
absence approved by the Committee.
 
Section 3 — ADMINISTRATION
 
The Plan shall be administered by the Committee. Each member of the Committee,
while serving as such, shall be deemed to be acting in his or her capacity as a
director of the Company. The Committee shall have full authority, subject to the
terms of the Plan, to select the Employees, Consultants and Non-Employee
Directors to be granted Awards under the Plan, to grant Awards on behalf of the
Company, and to set the date of grant and the other terms of such Awards in
accordance with the terms of the Plan. The Committee may correct any defect,
supply any omission, and reconcile any inconsistency in the Plan and in any
Award granted hereunder, in the manner and to the extent it deems desirable. The
Committee also shall have the authority (i) to establish such rules and
regulations, not inconsistent with the provisions of the Plan, for the proper
administration of the Plan, and to amend, modify or rescind any such rules and
regulations, (ii) to adopt modifications, amendments, procedures, sub-plans and
the like, which may be inconsistent with the provisions of the Plan, as are
necessary to comply with the laws and regulations of other countries in which
the Company operates in order to assure the viability of Awards granted under
the Plan to individuals in such other countries, and (iii) to make such
determinations and interpretations under, or in connection with, the Plan, as it
deems necessary or advisable. All such rules, regulations, determinations and
interpretations shall be binding and conclusive upon the Company, its
shareholders and all Grantees, upon their respective legal representatives,
beneficiaries, successors and assigns, and upon all other persons claiming under
or through any of them. Except as otherwise required by the bylaws of the
Company or by applicable law, no member of the Board or the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any Award granted under it. In addition to the Committee, subject to the
restrictions in Sections 6 and 7 below, and to the extent permitted by
applicable law, the Board may delegate to one or more executive officers of the
Company (who are also Board members) the power to grant Awards and exercise such
other powers under the Plan as the Board may determine; provided, that the Board
shall fix the maximum number of Awards to be granted by such executive officers
and the maximum number of shares issuable to any one Participant pursuant to
Awards granted by such executive officers.

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Section 4 — STOCK
 
The maximum aggregate number of shares of Common Stock that may be delivered
under the Plan is 1,700,000 shares (which is also the maximum aggregate number
of shares that may be issued under the Plan through ISOs), subject to
adjustment, as described in Section 9. Shares delivered under the Plan may be
authorized but unissued shares or reacquired shares, and the Company may
purchase shares required for this purpose on the open market, from time to time,
if it deems such purchase to be advisable. Further, the maximum number of shares
with respect to which Awards may be granted to any Employee under the Plan may
not exceed 425,000 Shares per fiscal year of the Company.
 
If any Award expires, terminates for any reason, is cancelled, or is forfeited,
the number of shares of Common Stock with respect to which such Award expired,
terminated, was cancelled, or was forfeited, shall continue to be available for
future Awards granted under the Plan. If any Option is exercised by surrendering
Common Stock to the Company or by withholding Common Stock as full or partial
payment, or if tax withholding requirements are satisfied by surrendering Common
Stock to the Company or by withholding Common Stock, only the number of shares
issued net of Common Stock withheld or surrendered shall be deemed delivered for
purposes of determining the maximum number of shares that remain available for
grant under the Plan.
 
Section 5 — GRANTING OF AWARDS
 
The Committee may, on behalf of the Company, grant to Employees, Consultants and
Non-Employee Directors such Awards as it, in its sole discretion, determines are
warranted. However, Consultants and Non-Employee Directors shall not be eligible
to receive ISOs under the Plan. More than one Award may be granted to an
Employee, Consultant or Non-Employee Director under the Plan.
 
Section 6 — TERMS AND CONDITIONS OF OPTIONS
 
Options shall include expressly or by reference the following terms and
conditions as well as such other provisions as the Committee shall deem
desirable that do not cause the Option to be subject to Code § 409A and that are
not inconsistent with the provisions of the Plan and, for ISOs, Code § 422(b).
The Board may delegate to a committee of the Board consisting of one or more
Board members, who may be or include the Company’s Chief Executive Officer (the
“CEO”) while the CEO is a member of the Board, the right to grant Options for
compensation purposes, subject to the limits described in the last sentence of
Section 3. Any such delegation to a separate committee of the Board shall be set
forth in a resolution duly adopted by the Board. Notwithstanding the
aforementioned, such committee of the Board may not grant an Option to the CEO
if the committee is or includes the CEO.
 
(a) Number of Shares.  The Award Agreement shall state the number of shares of
Common Stock to which the Option pertains.
 
(b) Exercise Price.  The Award Agreement shall state the exercise price which
shall be determined and fixed by the Committee in its discretion, but the
exercise price shall not be less than the higher of 100 percent (110 percent in
the case of an ISO granted to a more-than-10-percent shareholder, as provided in
subsection (i) below) of the Fair Market Value of a share of Common Stock on the
date the Option is granted, or the par value thereof.
 
(c) Term.  The term of each Option shall be determined by the Committee, in its
discretion; provided, however, that the term of each ISO shall be not more than
10 years (five years in the case of a more-than-10-percent shareholder, as
provided in subsection (i) below) from the date of grant of the ISO. Each Option
shall be subject to earlier termination as provided in subsections (f), (g), and
(h) below and in Section 11.
 
(d) Exercise.  An Option shall be exercisable in such installments, upon
fulfillment of such conditions (such as performance-based requirements), or on
such dates as the Committee may specify. The Committee may accelerate the
exercise date of an outstanding Option, in its discretion, if the Committee
deems such acceleration to be desirable.
 
Any exercisable Option may be exercised at any time up to the expiration or
termination of the Option. Exercisable Options may be exercised, in whole or in
part and from time to time, by giving notice of exercise to the Company at its
principal office, specifying the number of shares to be purchased and
accompanied by payment in

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full of the aggregate exercise price for such shares. Only full shares shall be
issued, and any fractional share which might otherwise be issuable upon exercise
of an Option shall be forfeited.
 
The Committee, in its sole discretion, shall determine from the following
alternatives the methods by which the exercise price may be paid:
 
(1) in cash or, if permitted by the Committee, its equivalent;
 
(2) in shares of Common Stock previously acquired by the Grantee;
 
(3) in shares of Common Stock newly acquired by the Grantee upon exercise of
such Option (which shall constitute a disqualifying disposition in the case of
an ISO);
 
(4) by delivering a properly executed notice of exercise of the Option to the
Company and a broker, with irrevocable instructions to the broker promptly to
deliver to the Company the amount of sale or loan proceeds necessary to pay the
exercise price of the Option;
 
(5) if the Committee so determines, at the date of grant in the case of an ISO,
or at or after the date of grant in the case of an NQSO, and if the Optionee
thereafter so requests, (i) the Company will loan the Optionee the money
required to pay the exercise price of the Option; (ii) any such loan to an
Optionee shall be made only at the time the Option is exercised; and (iii) the
loan will be made on the Optionee’s personal, negotiable, full recourse
promissory note, bearing interest at the lowest rate which will avoid the
imputation of interest under Code § 7872, with a pledge of the Common Stock
acquired upon exercise, and including such other terms as the Committee may
prescribe; or
 
(6) in any combination of paragraphs (1), (2), (3), (4) and (5) above.
 
In the event the exercise price is paid, in whole or in part, with shares of
Common Stock, the portion of the exercise price so paid shall be equal to the
aggregate Fair Market Value (determined as of the date of exercise of the
Option) of the Common Stock used to pay the exercise price.
 
(e) ISO Annual Limit.  The aggregate Fair Market Value (determined as of the
date the ISO is granted) of the Common Stock with respect to which ISOs are
exercisable for the first time by an Employee during any calendar year (counting
ISOs under this Plan and under any other stock option plan of the Company or a
Related Corporation) shall not exceed $100,000. If an Option intended as an ISO
is granted to an Employee and the Option may not be treated in whole or in part
as an ISO pursuant to the $100,000 limit, the Option shall be treated as an ISO
to the extent it may be so treated under the limit and as an NQSO as to the
remainder. For purposes of determining whether an ISO would cause the limitation
to be exceeded, ISOs shall be taken into account in the order granted.
 
(f) Termination of Service for a Reason Other Than Death or Disability.  If a
Grantee’s Termination of Service occurs prior to the expiration date fixed for
his or her Option for any reason other than death or disability, such Option may
be exercised by the Grantee at any time prior to the earlier of (i) the
expiration date specified in the Award Agreement, or (ii) three months after the
date of such Termination of Service (unless the Award Agreement provides a
different expiration date in the case of such a termination). Such Option may be
exercised to the extent of the number of shares with respect to which the
Grantee could have exercised it on the date of such Termination of Service, or
to any greater extent permitted by the Committee, and shall terminate with
respect to the remaining shares.
 
(g) Disability.  If a Grantee becomes disabled (within the meaning of Code
§ 22(e)(3)) prior to the expiration date fixed for his or her Option, and the
Grantee’s Termination of Service occurs as a consequence of such disability,
such Option may be exercised by the Grantee at any time prior to the earlier of
(i) the expiration date specified in the Award Agreement, or (ii) one year after
the date of such Termination of Service (unless the Award Agreement provides a
different expiration date in the case of such a termination). Such Option may be
exercised to the extent of the number of shares with respect to which the
Grantee could have exercised it on the date of such Termination of Service, or
to any greater extent permitted by the Committee, and shall terminate with
respect to the remaining shares. In the event of the Grantee’s legal disability,
such Option may be exercised by the Grantee’s legal representative.

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(h) Death.  If a Grantee’s Termination of Service occurs as a result of death
prior to the expiration date fixed for his or her Option, or if the Grantee dies
following his or her Termination of Service but prior to the expiration of the
period determined under subsection (f) or subsection (g) above (including any
extension of such period provided in the Award Agreement), such Option may be
exercised by the Grantee’s estate, personal representative, or beneficiary who
acquired the right to exercise such Option by bequest or inheritance or by
reason of the death of the Grantee. Such post-death exercise may occur at any
time prior to the earlier of (i) the expiration date specified in the Award
Agreement, or (ii) one year after the date of the Grantee’s death (unless the
Award Agreement provides a different expiration date in the case of death). Such
Option may be exercised to the extent of the number of shares with respect to
which the Grantee could have exercised it on the date of his or her death, or to
any greater extent permitted by the Committee, and shall terminate with respect
to the remaining shares.
 
(i) More-Than-10-Percent Shareholder.  If, after applying the attribution rules
of Code § 424(d), the Grantee owns stock possessing more than 10 percent of the
total combined voting power of all classes of stock of the Company or of a
Related Corporation immediately before an ISO is granted to him or her, the
exercise price for the ISO shall be not less than 110 percent of the Fair Market
Value of the optioned shares of Common Stock on the date the ISO is granted, and
such ISO, by its terms, shall not be exercisable after the expiration of five
years from the date the ISO is granted. The conditions set forth in this
subsection shall not apply to NQSOs.
 
Section 7 — RESTRICTED STOCK
 
(a) General Requirements.  Restricted Stock may be issued or transferred for
consideration or for no consideration, as determined by the Committee. If for
consideration, payment may be in cash or check (acceptable to the Committee),
bank draft, or money order payable to the order of the Company. The Board may
delegate to a committee of the Board consisting of one or more Board members,
who may be or include the CEO while the CEO is a member of the Board, the right
to grant Restricted for compensation purposes, subject to the limits described
in the last sentence of Section 3. Any such delegation to a separate committee
of the Board shall be set forth in a resolution duly adopted by the Board.
Notwithstanding the aforementioned, such committee of the Board may not grant
Restricted Stock to the CEO if the committee is or includes the CEO.
 
(b) Shareholder Rights.  Each Grantee who receives Restricted Stock shall have
all of the rights of a shareholder with respect to such shares, subject to the
restrictions set forth in subsection (c) below, including the right to vote the
shares and receive dividends and other distributions. Any shares of Common Stock
or other securities received by a Grantee with respect to a share of Restricted
Stock as a stock dividend, or in connection with a stock split or combination,
share exchange or other recapitalization, shall have the same status and be
subject to the same restrictions as such Restricted Stock. Any cash dividends
with respect to a Grantee’s Restricted Stock shall be paid to the Grantee at the
same time as such dividends are paid to other shareholders. Unless the Committee
determines otherwise, certificates evidencing shares of Restricted Stock will
remain in the possession of the Company until such shares are free of all
restrictions under the Plan and the Grantee has satisfied any federal, state and
local tax withholding obligations applicable to such shares.
 
(c) Restrictions.  Except as otherwise specifically provided in the Plan,
Restricted Stock may not be sold, assigned, transferred, pledged, or otherwise
encumbered or disposed of, and if the Grantee incurs a Termination of Service
for any reason, must be offered to the Company for purchase for the amount paid
for the shares of Common Stock, or forfeited to the Company if nothing was so
paid.
 
(d) Lapse of Restrictions.  The restrictions described in subsection (c) above
shall lapse at such time or times, and on such conditions (such as
performance-based requirements), as the Committee may specify.
 
(e) Notice of Tax Election.  Any Grantee making an election under Code § 83(b)
for the immediate recognition of income attributable to the award of Restricted
Stock must provide a copy thereof to the Company within 10 days of the filing of
such election with the Internal Revenue Service.
 
Section 8 — AWARD AGREEMENTS
 
Awards granted under the Plan shall be evidenced by Award Agreements in such
form as the Committee shall from time to time approve, and containing such
provisions as the Committee shall deem advisable that are not inconsistent with
the provisions of the Plan, Code § 409A and, for ISOs, Code § 422(b). The Award
Agreements

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shall specify the type of Award granted. Each Grantee shall enter into, and be
bound by, an Award Agreement as soon as practicable after the grant of an Award.
 
Section 9 — ADJUSTMENT IN CASE OF CHANGES IN COMMON STOCK
 
The following shall be adjusted to reflect any stock dividend, stock split,
reverse stock split, spin-off, distribution, recapitalization, share combination
or reclassification, or similar change in the capitalization of the Company:
 
(a) The maximum number and type of shares under the limit set forth in
Section 4; and
 
(b) The number and type of shares issuable upon exercise or vesting of
outstanding Options under the Plan (as well as the option price per share under
outstanding Options); provided, however, that (i) no such adjustment shall be
made to an outstanding ISO if such adjustment would constitute a modification
under Code § 424(h), unless the Grantee consents to such adjustment, and (ii) no
such adjustment shall be made to an outstanding Option if such adjustment would
cause the Option to be subject to Code § 409A.
 
In the event any such change in capitalization cannot be reflected in a straight
mathematical adjustment of the number of shares issuable upon the exercise or
vesting of outstanding Options, the Committee shall make such adjustments as are
appropriate to reflect most nearly such straight mathematical adjustment. Such
adjustments shall be made only as necessary to maintain the proportionate
interest of Grantees, and preserve, without exceeding, the value of Awards. For
purposes of this Section, Restricted Stock shall be treated in the same manner
as issued shares of Common Stock not subject to restrictions.
 
Section 10 — CHANGE IN CONTROL
 
(a) Full Vesting.  Notwithstanding any other Section of this Plan, outstanding
Restricted Stock shall become fully vested and outstanding Options shall become
fully vested and exercisable upon a Change in Control unless the Award Agreement
evidencing such Awards provides otherwise. However, this Section shall not
increase the extent to which an Award is vested or exercisable if the Grantee’s
Termination of Service occurs prior to the Change in Control.
 
(b) Definition.  “Change in Control” means the date on which any of the
following events occur:
 
(1) Any person (a “Person”), as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (other than (i) the Company and/or its wholly owned
subsidiaries; (ii) any “employee stock ownership plan” (as that term is defined
in Code § 4975(e)(7)) or other employee benefit plan of the Company and any
trustee or other fiduciary in such capacity holding securities under such plan;
(iii) any corporation owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership of stock of the
Company; or (iv) any other Person who, within the one year prior to the event
which would otherwise be a Change in Control, is an executive officer of the
Company or any group of Persons of which he or she voluntarily is a part), is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 50% or
more of the combined voting power of the Company’s then outstanding securities;
 
(2) During any two-year period after the effective date of this Plan, directors
of the Company in office at the beginning of such period plus any new director
(other than a director designated by a Person who has entered into an agreement
with the Company to effect a transaction within the purview of paragraph
(1) above or paragraph (3) below) whose election by the Board or whose
nomination for election by the Company’s shareholders was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, shall cease for any reason to constitute at
least a majority of the Board;
 
(3) The consummation of (i) any consolidation or merger of the Company in which
the Company is not the continuing or surviving corporation or pursuant to which
the Company’s common stock would be converted into cash, securities and/or other
property, other than a merger of the Company in which holders of common stock
immediately prior to the merger have the same proportionate ownership of voting
securities of the surviving corporation immediately after the merger as they had
in the common stock immediately before;

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or (ii) any sale, lease, exchange, or other transfer (in one transaction or a
series of related transactions) of all or substantially all the assets or
earning power of the Company; or
 
(4) The Company’s shareholders or the Board shall approve the liquidation or
dissolution of the Company.
 
Section 11 — CERTAIN CORPORATE TRANSACTIONS
 
In the event of a corporate transaction (such as, for example, a merger,
consolidation, acquisition of property or stock, separation, reorganization, or
liquidation), the surviving or successor corporation shall assume each
outstanding Award or substitute a new award of the same type for each
outstanding Award; provided, however, that, in the event of a proposed corporate
transaction, the Committee may terminate all or a portion of the outstanding
Awards, effective upon the closing of the corporate transaction, if it
determines that such termination is in the best interests of the Company. If the
Committee decides so to terminate outstanding Options, the Committee shall give
each Grantee holding an Option to be terminated not less than seven days’ notice
prior to any such termination, and any Option which is to be so terminated may
be exercised (if and only to the extent that it is then exercisable under the
terms of the Award Agreement and Section 10) up to, and including the date
immediately preceding such termination. Further, the Committee may in its
discretion accelerate, in whole or in part, the date on which any or all Awards
become exercisable or vested (to the extent such Award is not fully exercisable
or vested pursuant to the Award Agreement or Section 10).
 
The Committee also may, in its discretion, change the terms of any outstanding
Award to reflect any such corporate transaction, provided that (i) in the case
of ISOs, such change would not constitute a “modification” under Code § 424(h),
unless the Grantee consents to the change, and (ii) no such adjustment shall be
made to an outstanding Option if such adjustment would cause the Option to
become subject to Code § 409A.
 
Section 12 — AMENDMENT OF THE PLAN AND OUTSTANDING AWARDS
 
The Board, pursuant to resolution, may amend or suspend the Plan, and, except as
provided below, the Committee may amend an outstanding Award in any respect
whatsoever and at any time; provided, however, that the following amendments
shall require the approval of shareholders:
 
(1) A change in the class of employees eligible to participate in the Plan with
respect to ISOs; and
 
(2) Except as permitted under Section 9, an increase in the maximum number of
shares of Common Stock with respect to which ISOs may be granted under the Plan.
 
If the Fair Market Value of Common Stock subject to an Option has declined since
the Option was granted, the Committee, in its sole discretion, may reduce the
exercise price (or the amount over which appreciation is measured) of any (or
all) such Option(s), or cancel any (or all) such Option(s) in exchange for cash
or the grant of new Awards; provided that any such reduction or cancellation and
re-grant does not cause the Option to become subject to Code § 409A. Except as
provided in Section 11, no amendment or suspension of an outstanding Award shall
(i) adversely affect the rights of the Grantee or cause the modification (within
the meaning of Code § 424(h)) of an ISO, without the consent of the Grantee
affected thereby, or (ii) cause an Option to become subject to Code § 409A.
 
Section 13 — TERMINATION OF PLAN; CESSATION OF ISO GRANTS
 
The Board, pursuant to resolution, may terminate the Plan at any time and for
any reason. No ISOs shall be granted hereunder after the 10th anniversary of the
date the Plan was adopted or the date the Plan was approved by the shareholders
of the Company, whichever was earlier. Nothing contained in this Section,
however, shall terminate or affect the continued existence of rights created
under Awards granted hereunder which are outstanding on the date the Plan is
terminated and which by their terms extend beyond such date.
 
Section 14 — MISCELLANEOUS
 
(a) Effective Date.  This Plan shall become effective on April 1, 2008;
provided, however, that if the Plan is not approved by the shareholders of the
Company within 12 months before or after the date the Plan is adopted by the
Board, all ISOs granted hereunder shall be null and void and no additional ISOs
shall be granted hereunder.

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(b) Rights.  Neither the adoption of the Plan nor any action of the Board or the
Committee shall be deemed to give any individual any right to be granted an
Award, or any other right hereunder, unless and until the Committee shall have
granted such individual an Award, and then his or her rights shall be only such
as are provided in the Award Agreement. Notwithstanding any provisions of the
Plan or the Award Agreement with an Employee, the Company and any Related
Corporation shall have the right, in its discretion but subject to any
employment contract entered into with the Employee, to retire the Employee at
any time pursuant to its retirement rules or otherwise to terminate his or her
employment at any time for any reason whatsoever, or for no reason. A Grantee
shall have no rights as a shareholder with respect to any shares covered by his
or her Award until the issuance of a stock certificate to him or her for such
shares, except as otherwise provided under Section 7(b) (regarding Restricted
Stock).
 
(c) Indemnification of Board and Committee.  Without limiting any other rights
of indemnification which they may have from the Company and any Related
Corporation, the members of the Board and the members of the Committee shall be
indemnified by the Company against all costs and expenses reasonably incurred by
them in connection with any claim, action, suit, or proceeding to which they or
any of them may be a party by reason of any action taken or failure to act
under, or in connection with, the Plan, or any Award granted hereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit, or proceeding, except a
judgment based upon a finding of willful misconduct or recklessness on their
part. Upon the making or institution of any such claim, action, suit, or
proceeding, the Board or Committee member shall notify the Company in writing,
giving the Company an opportunity, at its own expense, to handle and defend the
same before such Board or Committee member undertakes to handle it on his or her
own behalf. The provisions of this Section shall not give members of the Board
or the Committee greater rights than they would have under the Company’s by-laws
or the applicable law of the Company’s jurisdiction of incorporation.
 
(d) Transferability; Registration.  No ISO or Restricted Stock shall be
assignable or transferable by the Grantee other than by will or by the laws of
descent and distribution. During the lifetime of the Grantee, an ISO shall be
exercisable only by the Grantee or, in the event of the Grantee’s legal
disability, by the Grantee’s guardian or legal representative. Except as
provided in a Grantee’s Award Agreement, such limits on assignment, transfer and
exercise shall also apply to NQSOs.
 
If the Grantee so requests at the time of exercise of an Option or at the time
of grant of Restricted Stock, the certificate(s) shall be registered in the name
of the Grantee and the Grantee’s spouse jointly, with right of survivorship.
 
(e) Deferrals.  The Committee may permit or require Grantees to defer receipt of
any Common Stock issuable upon the lapse of the restriction period applicable to
Restricted Stock, subject to such rules and procedures as it may establish,
which may include provisions for the payment or crediting of interest, or
dividend equivalents, including converting such credits into deferred Common
Stock equivalents. In no event, however, shall such deferrals be permitted
unless the Grantee’s Award Agreement specifically permits deferrals under this
Section.
 
(f) Listing and Registration of Shares.  Each Award shall be subject to the
requirement that, if at any time the Committee shall determine, in its
discretion, that the listing, registration, or qualification of the shares of
Common Stock covered thereby upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting of
such Award or the purchase of shares of Common Stock thereunder, or that action
by the Company, its shareholders, or the Grantee should be taken in order to
obtain an exemption from any such requirement or to continue any such listing,
registration, or qualification, no Option may be exercised, in whole or in part,
and no Restricted Stock may be awarded, unless and until such listing,
registration, qualification, consent, approval, or action shall have been
effected, obtained, or taken under conditions acceptable to the Committee.
Without limiting the generality of the foregoing, each Grantee or his or her
legal representative or beneficiary may also be required to give satisfactory
assurance that such person is an eligible purchaser under applicable securities
laws, and that the shares purchased or granted pursuant to the Award shall be
for investment purposes and not with a view to distribution; certificates
representing such shares may be legended accordingly.
 
(g) Withholding and Use of Shares to Satisfy Tax Obligations.  The obligation of
the Company to deliver shares of Common Stock upon the exercise of any Option or
upon the vesting of Restricted Stock shall be subject to

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applicable federal, state, and local tax withholding requirements. If the
exercise of any Option or the vesting of Restricted Stock is subject to the
withholding requirements of applicable federal, state or local tax law, the
Committee, in its discretion, may permit or require the Grantee to satisfy the
federal, state and/or local withholding tax, in whole or in part, by electing to
have the Company withhold shares of Common Stock (or by returning previously
acquired shares of Common Stock to the Company); provided, however, that the
Company may limit the number of shares withheld to satisfy the tax withholding
requirements with respect to any Award to the extent necessary to avoid adverse
accounting consequences. Shares of Common Stock shall be valued, for purposes of
this subsection, at their Fair Market Value (determined as of the date the
amount attributable to the exercise or vesting of the Award is includible in
income by the Grantee under Code § 83). The Committee shall adopt such
withholding rules as it deems necessary to carry out the provisions of this
subsection.
 
(h) Application of Funds.  Any cash received in payment for shares pursuant to
an Award shall be added to the general funds of the Company. Any Common Stock
received in payment for shares shall become treasury stock.
 
(i) No Obligation to Exercise Option.  The granting of an Option shall impose no
obligation upon a Grantee to exercise such Option.
 
(j) Governing Law.  The Plan shall be governed by the applicable Code provisions
to the maximum extent possible. Otherwise, the laws of the Company’s
jurisdiction of incorporation shall govern the operation of, and the rights of
Grantees under, the Plan, and Awards granted thereunder.
 
(k) Unfunded Plan.  The Plan, insofar as it provides for Awards, shall be
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by Awards under the Plan. Any liability of the
Company to any person with respect to any Award under this Plan shall be based
solely upon any contractual obligations that may be created pursuant to the
Plan. No such obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company.

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