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EXHIBIT 10.9

AMENDED AND RESTATED
ROSETTA RESOURCES INC.
2005 LONG-TERM INCENTIVE PLAN

Amended and Restated Effective January 1, 2011

ARTICLE I.  ESTABLISHMENT AND PURPOSE

1.1           Establishment and Purpose.  Rosetta Resources Inc. (“Rosetta”)
hereby establishes the Amended and Restated Rosetta Resources Inc. 2005
Long-Term Incentive Plan, as set forth in this document. The purpose of the Plan
is to attract and retain highly qualified individuals and service providers, to
further align the interests of Company employees and other service providers
with those of the stockholders of Rosetta, and closely link compensation with
Company performance. Rosetta is committed to creating long-term stockholder
value. Rosetta’s compensation philosophy is based on a belief that Rosetta can
best create stockholder value if key employees, directors, and certain others
providing services to the Company act and are rewarded as business owners.
Rosetta believes that an equity stake through equity compensation programs
effectively aligns employee and stockholder interests by motivating and
rewarding long-term performance that will enhance stockholder value.

1.2           Effectiveness and Term.  This Plan originally became effective as
of July 7, 2005 (the “Effective Date”), contingent on the closing of the
Acquisition and the Offering, provided that prior to the Effective Date the Plan
was duly approved by the holders of at least a majority of the shares of Common
Stock either (i) present or represented and entitled to vote at a special
meeting of the stockholders of Rosetta duly held in accordance with applicable
law or (ii) by written action in lieu of a meeting in accordance with applicable
law. This amended and restated Plan shall be effective from and after January 1,
2011.  Unless terminated earlier by the Board pursuant to Section 15.1, this
Plan shall terminate on the day prior to the tenth anniversary of the Effective
Date.

ARTICLE II.  DEFINITIONS

2.1           “Acquisition” means the closing of the transactions contemplated
by the Purchase and Sale Agreement.

2.2           “Affiliate” means (i) with respect to Incentive Stock Options, a
“parent corporation” or a “subsidiary corporation” of Rosetta, as those terms
are defined in Sections 424(e) and (f) of the Code, respectively, and (ii) with
respect to other Awards, (A) a “parent corporation” or a subsidiary corporation”
of Rosetta as defined in (i) above, (B) a limited liability company, partnership
or other entity in which Rosetta controls 50% or more of the voting power or
equity interests.

2.3           “Award” means an award granted to a Participant in the form of
Options, SARs, Restricted Stock, Restricted Stock Units, Performance Awards,
Stock Awards or Other Incentive Awards, whether granted singly or in
combination.
 
 
 

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2.4           “Award Agreement” means a written agreement between Rosetta and a
Participant that sets forth the terms, conditions, restrictions and limitations
applicable to an Award.
 
2.5           “Board” means the Board of Directors of Rosetta.

2.6           “Cash Dividend Right” means a contingent right, granted in tandem
with a specific Restricted Stock Unit Award, to receive an amount in cash equal
to the cash distributions made by Rosetta with respect to a share of Common
Stock during the period such Award is outstanding.

2.7           “Cause” means a finding by the Committee of acts or omissions
constituting, in the Committee’s reasonable judgment, (i) a breach of duty by
the Participant in the course of his employment or service involving fraud, acts
of dishonesty (other than inadvertent acts or omissions), disloyalty to the
Company, or moral turpitude constituting criminal felony; (ii) conduct by the
Participant that is materially detrimental to the Company, monetarily or
otherwise, or reflects unfavorably on the Company or the Participant to such an
extent that the Company’s best interests reasonably require the termination of
the Participant’s employment or service; (iii) acts or omissions of the
Participant materially in violation of his obligations under any written
employment or other agreement between the Participant and the Company or at law;
(iv) the Participant’s failure to comply with or enforce Company policies
concerning equal employment opportunity, including engaging in sexually or
otherwise harassing conduct; (v) the Participant’s repeated insubordination;
(vi) the Participant’s failure to comply with or enforce, in any material
respect, all other personnel policies of the Company; (vii) the Participant’s
failure to devote his full (or other required) working time and best efforts to
the performance of his responsibilities to the Company; or (viii) the
Participant’s conviction of, or entry of a plea agreement or consent decree or
similar arrangement with respect to a felony or any violation of federal or
state securities laws.

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

2.9           “Committee” means the Compensation Committee of the Board or such
other committee of the Board as may be designated by the Board to administer the
Plan, which committee shall consist of two or more members of the Board;
provided, however, that with respect to the application of the Plan to Awards
made to Outside Directors, the “Committee” shall be the Board. During such time
as the Common Stock is registered under Section 12 of the Exchange Act, each
member of the Committee shall be an Outside Director. To the extent that no
Committee exists that has the authority to administer the Plan, the functions of
the Committee shall be exercised by the Board.

2.10         “Common Stock” means the common stock of Rosetta, $0.001 par value
per share, or any stock or other securities of hereafter issued or issuable in
substitution or exchange for the Common Stock.

2.11         “Company” means Rosetta and any Affiliate.

 
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2.12         “Corporate Change” means (i) the dissolution or liquidation of
Rosetta; (ii) a reorganization, merger or consolidation of Rosetta with one or
more corporations (other than a merger or consolidation effecting a
reincorporation of Rosetta in another state or any other merger or consolidation
in which the stockholders of the surviving corporation and their proportionate
interests therein immediately after the merger or consolidation are
substantially identical to the stockholders of Rosetta and their proportionate
interests therein immediately prior to the merger or consolidation)
(collectively, a “Corporate Change Merger”); (iii) the sale of all or
substantially all of the assets of the Company; or (iv) the occurrence of a
Change in Control. A “Change in Control” shall be deemed to have occurred if (x)
individuals who were directors of Rosetta immediately prior to a Control
Transaction shall cease, within two years of such Control Transaction to
constitute a majority of the Board (or of the Board of Directors of any
successor to Rosetta or to a company which has acquired all or substantially all
its assets) other than by reason of an increase in the size of the membership of
the applicable Board that is approved by at least a majority of the individuals
who were directors of Rosetta immediately prior to such Control Transaction or
(y) any entity, person or Group acquires shares of Rosetta in a transaction or
series of transactions that result in such entity, person or Group directly or
indirectly owning beneficially 50% or more of the outstanding shares of Common
Stock. As used herein, “Control Transaction” means (A) any tender offer for or
acquisition of capital stock of Rosetta pursuant to which any person, entity, or
Group directly or indirectly acquires beneficial ownership of 20% or more of the
outstanding shares of Common Stock; (B) any Corporate Change Merger of Rosetta;
(C) any contested election of directors of Rosetta; or (D) any combination of
the foregoing, any one of which results in a change in voting power sufficient
to elect a majority of the Board. As used herein, “Group” means persons who act
“in concert” as described in Sections 13(d)(3) and/or 14(d)(2) of the Exchange
Act. Notwithstanding the foregoing, “Corporate Change” shall not include the
Acquisition, the Offering, or any public offering of equity of Rosetta pursuant
to a registration that is effective under the Securities Act.

2.13         “Dividend Unit Right” means a contingent right, granted in tandem
with a specific Restricted Stock Unit Award, to have an additional number of
Restricted Stock Units credited to a Participant in respect of the Award equal
to the number of shares of Common Stock that could be purchased at Fair Market
Value with the amount of each cash distribution made by Rosetta with respect to
a share of Common Stock during the period such Award is outstanding.

2.14         “Effective Date” means the date this Plan becomes effective as
provided in Section 1.2.

2.15         “Employee” means an employee of the Company; provided, however,
that the term “Employee” does not include an Outside Director or an individual
performing services for the Company who is treated for tax purposes as an
independent contractor at the time of performance of the services.

2.16         “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

2.17         “Fair Market Value” means the fair market value of the Common
Stock, as determined in good faith by the Committee or (i) if the Common Stock
is traded in the over-the-counter market, the average of the representative
closing bid and asked prices as reported by NASDAQ for the date the Award is
granted (or if there was no quoted price for such date of grant, then for the
last preceding business day on which there was a quoted price), or (ii) if the
Common Stock is traded in the NASDAQ National Market System, the average of the
highest and lowest selling prices for such stock as quoted on the NASDAQ
National Market System for the date the Award is granted (or if there are no
sales for such date of grant, then for the last preceding business day on which
there were sales), or (iii) if the Common Stock is listed on any national stock
exchange, the average of the highest and lowest selling prices for such stock as
quoted on such exchange for the date the Award is granted (or if there are no
sales for such date of grant, then for the last preceding business day on which
there were sales).

 
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2.18         “Good Reason” means any of the following actions if taken without
the Participant’s prior written consent: (i) any material failure by the Company
to comply with its obligations under the terms of a written employment
agreement; (ii) any demotion of the Participant as evidenced by a material
reduction in the Participant’s responsibilities, duties, compensation, or
benefits; or (iii) any permanent relocation of the Participant’s place of
business to a location 50 miles or more from the then-current location. Neither
a transfer of employment among Rosetta and any of its Affiliates, a change in
the co-employment relationship, nor a mere change in job title or reporting
structure constitutes “Good Reason.”

2.19         “Grant Date” means the date an Award is determined to be effective
by the Committee upon the grant of such Award.

2.20         “Inability to Perform” means and shall be deemed to have occurred
if the Participant has been determined under the Company’s or any co-employer’s
long-term disability plan to be eligible for long-term disability benefits. In
the absence of the Participant’s participation in, application for benefits
under, or existence of such a plan, “Inability to Perform” means a finding by
the Committee in its sole judgment that the Participant is, despite any
reasonable accommodation required by law, unable to perform the essential
functions of his position because of an illness or injury for (i) 60% or more of
the normal working days during six consecutive calendar months or (ii) 40% or
more of the normal working days during twelve consecutive calendar
months.  Provided, however, that if the Participant’s employment is governed by
an individual employment agreement with the Company which provides a definition
of “Inability to Perform”, then such contractual definition will control for
purposes of this Plan, and the preceding two sentences shall not apply.

2.21         “Incentive Stock Option” means an Option that is intended to meet
the requirements of Section 422(b) of the Code.

2.22         “NASDAQ” means The NASDAQ Stock Market, Inc.

2.23         “Nonqualified Stock Option” means an Option that is not an
Incentive Stock Option.

2.24         “Offering” means the offering, sale and issuance by Rosetta of
Common Stock as set forth that certain offering memorandum initially dated June
9, 2005.

2.25         “Option” means an option to purchase shares of Common Stock granted
to a Participant pursuant to Article VII. An Option may be either an Incentive
Stock Option or a Nonqualified Stock Option, as determined by the Committee.

 
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2.26         “Other Incentive Award” means an incentive award granted to a
Participant pursuant to Article XII.

2.27         “Outside Director” means a member of the Board who: (i) meets the
independence requirements of the principal exchange or quotation system upon
which the shares of Common Stock are listed or quoted, (ii) from and after the
date on which the remuneration paid pursuant to the Plan becomes subject to the
deduction limitation under Section 162(m) of the Code, qualifies as an “outside
director” under Section 162(m) of the Code, (iii) qualifies as a “non-employee
director” of Rosetta under Rule 16b-3, and (iv) satisfies independence criteria
under any other applicable laws or regulations relating to the issuance of
shares of Common Stock to Employees.

2.28         “Participant” means an Employee, director, or other individual or
entity who performs services for the Company that has been granted an Award;
provided, however, that no Award that may be settled in Common Stock may be
issued to a Participant that is not a natural person.

2.29         “Performance Award” means an Award granted to a Participant
pursuant to Article XI to receive cash or Common Stock conditioned in whole or
in part upon the satisfaction of performance goals based on specified
performance criteria.

2.30         “Performance Period” or “performance period” shall be the period of
time as provided in the Performance Award, as set forth in Section 11.1.

2.31         “Permitted Transferee” shall have the meaning given such term in
Section 16.4.

2.32         “Plan” means the Amended and Restated Rosetta Resources Inc. 2005
Long-Term Incentive Plan, as in effect and as amended from time to time.

2.33         “Purchase and Sale Agreement” means that certain Purchase and Sale
Agreement by and among Calpine Gas Holdings LLC, Calpine Fuels Corporation,
Calpine Corporation and Rosetta dated July 7, 2005.

2.34         “Purchased Restricted Stock” shall have the meaning given such term
in Section 9.2.

2.35         “Restricted Period” means the period established by the Committee
with respect to an Award of Restricted Stock or Restricted Stock Units during
which the Award remains subject to forfeiture.

2.36         “Restricted Stock” means a share of Common Stock granted to a
Participant pursuant to Article IX that is subject to such terms, conditions,
and restrictions as may be determined by the Committee.

2.37         “Restricted Stock Unit” means a fictional share of Common Stock
granted to a Participant pursuant to Article X that is subject to such terms,
conditions, and restrictions as may be determined by the Committee.

 
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2.38         “Rosetta” means Rosetta Resources Inc., a Delaware corporation, or
any successor thereto.

2.39         “Rule 16b-3” means Rule 16b-3 promulgated by the SEC under the
Exchange Act, or any successor rule or regulation that may be in effect from
time to time.

2.40         “SEC” means the United States Securities and Exchange Commission,
or any successor agency or organization.

2.41         “Securities Act” means the Securities Act of 1933, as amended.

2.42         “Stock Appreciation Right” or “SAR” means a right granted to a
Participant pursuant to Article VIII with respect to a share of Common Stock to
receive upon exercise cash, Common Stock or a combination of cash and Common
Stock, equal to the appreciation in value of a share of Common Stock.

2.43         “Total and Permanent Disability” means that the Participant has
terminated employment or service with the Company and is eligible for and
receiving benefits under the long-term disability insurance plan sponsored by
the Company (“LTD Plan”), and at the time such Participant terminated employment
or service, the Participant met the definition of disabled for purposes of
receiving benefits under such LTD Plan, provided, however, that with respect to
any Award which is subject to Section 409A of the Code, such Participant must
also, at the time of termination of employment or service, meet one of the
following standards:

(a)           The Participant is, at such time, unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months; or

(b)           The Participant is, at such time, by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, receiving income replacement benefits for a period of not less than
three months under an accident and health plan covering employees of the
Company.

Provided, further, that a Participant shall be deemed to have a Total and
Permanent Disability if such Participant is determined to be totally disabled by
the Social Security Administration.

ARTICLE III.  PLAN ADMINISTRATION

3.1           Plan Administrator and Discretionary Authority.  The Plan shall be
administered by the Committee. The Committee shall have total and exclusive
responsibility to control, operate, manage and administer the Plan in accordance
with its terms. The Committee shall have all the authority that may be necessary
or helpful to enable it to discharge its responsibilities with respect to the
Plan. Without limiting the generality of the preceding sentence, the Committee
shall have the exclusive right to:  (i) interpret the Plan and the Award
Agreements executed hereunder; (ii) decide all questions concerning eligibility
for, and the amount of, Awards granted under the Plan; (iii) construe any
ambiguous provision of the Plan or any Award Agreement; (iv) prescribe the form
of Award Agreements; (v) correct any defect, supply any omission or reconcile
any inconsistency in the Plan or any Award Agreement; (vi) issue administrative
guidelines as an aid to administering the Plan and make changes in such
guidelines as the Committee from time to time deems proper; (vii) make
regulations for carrying out the Plan and make changes in such regulations as
the Committee from time to time deems proper; (viii) determine whether Awards
should be granted singly or in combination; (ix) to the extent permitted under
the Plan, grant waivers of Plan terms, conditions, restrictions and limitations;
(x) accelerate the exercise, vesting or payment of an Award when such action or
actions would be in the best interests of the Company; (xi) require Participants
to hold a stated number or percentage of shares of Common Stock acquired
pursuant to an Award for a stated period; and (xii) take any and all other
actions the Committee deems necessary or advisable for the proper operation or
administration of the Plan. The Committee shall have authority in its sole
discretion with respect to all matters related to the discharge of its
responsibilities and the exercise of its authority under the Plan, including
without limitation its construction of the terms of the Plan and its
determination of eligibility for participation in, and the terms of Awards
granted under, the Plan. The decisions of the Committee and its actions with
respect to the Plan shall be final, conclusive and binding on all persons having
or claiming to have any right or interest in or under the Plan, including
without limitation Participants and their respective Permitted Transferees,
estates, beneficiaries and legal representatives.

 
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3.2           Delegation of Authority.  The Committee may delegate to one or
more officers of the Company the authority to act on behalf of the Committee
with respect to any matter, right, obligation, or election that is the
responsibility of or that is allocated to the Committee herein, and that may be
so delegated as a matter of law, except for grants of Awards to persons (i)
subject to Section 16 of the Exchange Act or (ii) who are, or who are reasonably
expected to be, “covered employees” for purposes of Section 162(m) of the Code.

3.3           Liability; Indemnification.  No member of the Committee, nor any
person to whom it has delegated authority, shall be personally liable for any
action, interpretation or determination made in good faith with respect to the
Plan or Awards granted hereunder, and each member of the Committee (or delegate
of the Committee) shall be fully indemnified and protected by Rosetta with
respect to any liability he may incur with respect to any such action,
interpretation or determination, to the maximum extent permitted by applicable
law.

ARTICLE IV.  SHARES SUBJECT TO THE PLAN

4.1           Available Shares.

(a)           Subject to adjustment as provided in Section 4.2, the maximum
number of shares of Common Stock that shall be available for grant of Awards
under the Plan shall be 4,950,000 shares of Common Stock.

(b)           The maximum number of shares of Common Stock that may be subject
to Incentive Stock Options granted under the Plan is 4,950,000. The maximum
number of shares of Common Stock that may be subject to all Awards granted under
the Plan to any one Participant (i) during the fiscal year of Rosetta in which
the Participant is first hired by the Company is 300,000 shares and (ii) during
each subsequent fiscal year is 200,000 shares. The limitations provided in this
Section 4.1(b) shall be subject to adjustment as provided in Section 4.2.

 
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(c)           Shares of Common Stock issued pursuant to the Plan may be original
issue or treasury shares or a combination of the foregoing, as the Committee, in
its sole discretion, shall from time to time determine. During the term of this
Plan, Rosetta will at all times reserve and keep available such number of shares
of Common Stock as shall be sufficient to satisfy the requirements of the Plan.

4.2           Adjustments for Recapitalizations and Reorganizations.  Subject to
Article XIII, if there is any change in the number or kind of shares of Common
Stock outstanding (i) by reason of a stock dividend, spin-off, recapitalization,
stock split, or combination or exchange of shares, (ii) by reason of a merger,
reorganization, or consolidation, (iii) by reason of a reclassification or
change in par value, or (iv) by reason of any other extraordinary or unusual
event affecting the outstanding Common Stock as a class without Rosetta’s
receipt of consideration, or if the value of outstanding shares of Common Stock
is reduced as a result of a spin-off or Rosetta’s payment of an extraordinary
cash dividend, or distribution or dividend or distribution consisting of any
assets of Rosetta other than cash, the maximum number and kind of shares of
Common Stock available for issuance under the Plan, the maximum number and kind
of shares of Common Stock for which any individual may receive Awards in any
fiscal year, the number and kind of shares of Common Stock covered by
outstanding Awards, and the price per share or the applicable market value or
performance target of such Awards shall be equitably and proportionately
adjusted by the Committee to reflect any increase or decrease in the number of,
or change in the kind or value of, issued shares of Common Stock to preclude, to
the extent practicable, the enlargement or dilution of rights under such Awards;
provided, however, that any fractional shares resulting from such adjustment
shall be eliminated.

4.3           Adjustments for Awards.  The Committee shall have sole discretion
to determine the manner in which shares of Common Stock available for grant of
Awards under the Plan are counted. Without limiting the discretion of the
Committee under this Section 4.3, unless otherwise determined by the Committee,
the following rules shall apply for the purpose of determining the number of
shares of Common Stock available for grant of Awards under the Plan:

(a)           Options, Restricted Stock and Stock Awards. The grant of Options,
Restricted Stock or Stock Awards shall reduce the number of shares of Common
Stock available for grant of Awards under the Plan by the number of shares of
Common Stock subject to such an Award.

(b)           SARs. The grant of SARs that may be paid or settled (i) only in
Common Stock or (ii) in either cash or Common Stock shall reduce the number of
shares available for grant of Awards under the Plan by the number of shares
subject to such an Award; provided, however, that upon the exercise of SARs, the
excess of the number of shares of Common Stock with respect to which the Award
is exercised over the number of shares of Common Stock issued upon exercise of
the Award shall again be available for grant of Awards under the Plan. The grant
of SARs that may be paid or settled only for cash shall not affect the number of
shares available for grant of Awards under the Plan.

 
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(c)           Restricted Stock Units. The grant of Restricted Stock Units
(including those credited to a Participant in respect of a Dividend Unit Right)
that may be paid or settled (i) only in Common Stock or (ii) in either cash or
Common Stock shall reduce the number of shares available for grant of Awards
under the Plan by the number of shares subject to such an Award; provided,
however, that upon settlement of the Award, the excess, if any, of the number of
shares of Common Stock that had been subject to such Award over the number of
shares of Common Stock issued upon its settlement shall again be available for
grant of Awards under the Plan. The grant of Restricted Stock Units that may be
paid or settled only for cash shall not affect the number of shares available
for grant of Awards under the Plan.

(d)           Other Incentive Awards. The grant of a Performance Award or Other
Incentive Award in the form of Common Stock or that may be paid or settled (i)
only in Common Stock or (ii) in either Common Stock or cash shall reduce the
number of shares available for grant of Awards under the Plan by the number of
shares subject to such an Award; provided, however, that upon settlement of the
Award, the excess, if any, of the number of shares of Common Stock that had been
subject to such Award over the number of shares of Common Stock issued upon its
settlement shall again be available for grant of Awards under the Plan. The
grant of a Performance Award or Other Incentive Award that may be paid or
settled only for cash shall not affect the number of shares available for grant
of Awards under the Plan.

(e)           Cancellation, Forfeiture and Termination. If any Award referred to
in Sections 4.3(a), (b), (c), or (d) (other than an Award that may be paid or
settled only for cash) is canceled or forfeited, or terminates, expires or
lapses, for any reason, the shares then subject to such Award shall again be
available for grant of Awards under the Plan.

(f)           Payment of Exercise Price and Withholding Taxes. If previously
acquired shares of Common Stock are used to pay the exercise price of an Award,
the number of shares available for grant of Awards under the Plan shall be
increased by the number of shares delivered as payment of such exercise price.
If previously acquired shares of Common Stock are used to pay withholding taxes
payable upon exercise, vesting or payment of an Award, or shares of Common Stock
that would be acquired upon exercise, vesting or payment of an Award are
withheld to pay withholding taxes payable upon exercise, vesting or payment of
such Award, the number of shares available for grant of Awards under the Plan
shall be increased by the number of shares delivered or withheld as payment of
such withholding taxes.

ARTICLE V.  ELIGIBILITY

5.1           The Committee shall select Participants from those Employees,
Outside Directors and other individuals or entities providing services to the
Company that, in the opinion of the Committee, are in a position to make a
significant contribution to the success of the Company. Once a Participant has
been selected for an Award by the Committee, the Committee shall determine the
type and size of Award to be granted to the Participant and shall establish in
the related Award Agreement the terms, conditions, restrictions and limitations
applicable to the Award, in addition to those set forth in the Plan and the
administrative guidelines and regulations, if any, established by the Committee.

 
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ARTICLE VI.  FORM OF AWARDS

6.1           Form of Awards.  Awards may be granted under the Plan, in the
Committee’s sole discretion, in the form of Options pursuant to Article VII,
SARs pursuant to Article VIII, Restricted Stock pursuant to Article IX,
Restricted Stock Units pursuant to Article X, Performance Awards pursuant to
Article XI, and Stock Awards and Other Incentive Awards pursuant to Article XII,
or a combination thereof. All Awards shall be subject to the terms, conditions,
restrictions and limitations of the Plan. The Committee may, in its sole
discretion, subject any Award to such other terms, conditions, restrictions
and/or limitations (including without limitation the time and conditions of
exercise, vesting or payment of an Award and restrictions on transferability of
any shares of Common Stock issued or delivered pursuant to an Award), provided
they are not inconsistent with the terms of the Plan. The Committee may, but is
not required to, subject an Award to such conditions as it determines are
necessary or appropriate to ensure that an Award constitutes “qualified
performance based compensation” within the meaning of Section 162(m) of the Code
and the regulations thereunder. Awards under a particular Article of the Plan
need not be uniform, and Awards under more than one Article of the Plan may be
combined in a single Award Agreement. Any combination of Awards may be granted
at one time and on more than one occasion to the same Participant. Subject to
compliance with applicable tax law, an Award Agreement may provide that a
Participant may elect to defer receipt of income attributable to the exercise or
vesting of an Award.

6.2           No Repricing or Reload Rights.  Except for adjustments made
pursuant to Section 4.2, no Award may be repriced, replaced, regranted through
cancellation or otherwise modified without stockholder approval, if the effect
would be to reduce the exercise price for the shares underlying such Award. The
Committee may not cancel an outstanding Option that is under water for the
purpose of granting a replacement Award of a different type.

6.3           Loans.  The Committee may, in its sole discretion, approve the
extension of a loan by the Company to a Participant who is an Employee to assist
the Participant in paying the exercise price or purchase price of an Award;
provided, however, that no loan shall be permitted if the extension of such loan
would violate any provision of applicable law. Any loan will be made upon such
terms and conditions as the Committee shall determine.

ARTICLE VII.  OPTIONS

7.1           General.  Awards may be granted in the form of Options that may be
Incentive Stock Options or Nonqualified Stock Options, or a combination of both;
provided, however, that Incentive Stock Options may be granted only to
Employees.

7.2           Terms and Conditions of Options.  An Option shall be exercisable
in whole or in such installments and at such times as may be determined by the
Committee. The price at which a share of Common Stock may be purchased upon
exercise of an Option shall be determined by the Committee, but such exercise
price shall not be less than 100% of the Fair Market Value per share of Common
Stock on the Grant Date unless the Option was granted through the assumption of,
or in substitution for, outstanding awards previously granted to individuals who
became Employees as a result of a merger, consolidation, acquisition, or other
corporate transaction involving the Company and complies with Section 409A of
the Code. Except as otherwise provided in Section 7.3, the term of each Option
shall be as specified by the Committee; provided, however, that no Options shall
be exercisable later than ten years after the Grant Date. Options may be granted
with respect to Restricted Stock or shares of Common Stock that are not
Restricted Stock, as determined by the Committee in its sole discretion.

 
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7.3           Restrictions Relating to Incentive Stock Options.

(a)           Options granted in the form of Incentive Stock Options shall, in
addition to being subject to the terms and conditions of Section 7.2, comply
with Section 422(b) of the Code. To the extent the aggregate Fair Market Value
(determined as of the times the respective Incentive Stock Options are granted)
of Common Stock with respect to which Incentive Stock Options are exercisable
for the first time by an individual during any calendar year under all incentive
stock option plans of the Company exceeds $100,000, such excess Incentive Stock
Options shall be treated as options that do not constitute Incentive Stock
Options. The Committee shall determine, in accordance with the applicable
provisions of the Code, which of a Participant’s Incentive Stock Options will
not constitute Incentive Stock Options because of such limitation and shall
notify the Participant of such determination as soon as practicable after such
determination. The price at which a share of Common Stock may be purchased upon
exercise of an Incentive Stock Option shall be determined by the Committee, but
such exercise price shall not be less than 100% of the Fair Market Value of a
share of Common Stock on the Grant Date. No Incentive Stock Option shall be
granted to an Employee under the Plan if, at the time such Option is granted,
such Employee owns stock possessing more than 10% of the total combined voting
power of all classes of stock of Rosetta or an Affiliate, within the meaning of
Section 422(b)(6) of the Code, unless (i) on the Grant Date of such Option, the
exercise price of such Option is at least 110% of the Fair Market Value of the
Common Stock subject to the Option and (ii) such Option by its terms is not
exercisable after the expiration of five years from the Grant Date of the
Option.

(b)           Each Participant awarded an Incentive Stock Option shall notify
Rosetta in writing immediately after the date he or she makes a disqualifying
disposition of any shares of Common Stock acquired pursuant to the exercise of
such Incentive Stock Option. A disqualifying disposition is any disposition
(including any sale) of such Common Stock before the later of (i) two years
after the Grant Date of the Incentive Stock Option or (ii) one year after the
date of exercise of the Incentive Stock Option.

7.4           Exercise of Options.

(a)           Subject to the terms and conditions of the Plan, Options shall be
exercised by the delivery of a written notice of exercise to Rosetta, setting
forth the number of whole shares of Common Stock with respect to which the
Option is to be exercised, accompanied by full payment for such shares.

(b)           Upon exercise of an Option, the exercise price of the Option shall
be payable to Rosetta in full either: (i) in cash or an equivalent acceptable to
the Committee, or (ii) in the sole discretion of the Committee and in accordance
with any applicable administrative guidelines established by the Committee, by
tendering one or more previously acquired nonforfeitable, unrestricted shares of
Common Stock that have been held by the Participant for at least six months
having an aggregate Fair Market Value at the time of exercise equal to the total
exercise price, or (iii) in a combination of the forms of payment specified in
clauses (i) and (ii) above.

 
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(c)           During such time as the Common Stock is registered under Section
12 of the Exchange Act, to the extent permissible under applicable law, payment
of the exercise price of an Option may also be made, in the absolute discretion
of the Committee, by delivery to Rosetta or its designated agent of an executed
irrevocable option exercise form together with irrevocable instructions to a
broker-dealer to sell or margin a sufficient portion of the shares with respect
to which the Option is exercised and deliver the sale or margin loan proceeds
directly to Rosetta to pay the exercise price and any required withholding
taxes.

(d)           As soon as reasonably practicable after receipt of written
notification of exercise of an Option and full payment of the exercise price and
any required withholding taxes, Rosetta shall (i) deliver to the Participant, in
the Participant’s name or the name of the Participant’s designee, a stock
certificate or certificates in an appropriate aggregate amount based upon the
number of shares of Common Stock purchased under the Option, or (ii) cause to be
issued in the Participant’s name or the name of the Participant’s designee, in
book-entry form, an appropriate number of shares of Common Stock based upon the
number of shares purchased under the Option.

7.5           Termination of Employment or Service.  Each Award Agreement
embodying the Award of an Option shall set forth the extent to which the
Participant shall have the right to exercise the Option following termination of
the Participant’s employment or service with the Company. Such provisions shall
be determined by the Committee in its absolute discretion, need not be uniform
among all Options granted under the Plan and may reflect distinctions based on
the reasons for termination of employment or service. In the event a
Participant’s Award Agreement embodying the award of an Option does not set
forth such termination provisions, the following termination provisions shall
apply with respect to such Award:

(a)           Termination Other Than For Cause. If the employment or service of
a Participant shall terminate for any reason other than Cause, each outstanding
Option held by the Participant may be exercised, to the extent then vested,
until the earlier of (i) the expiration of one year from the date of such
termination of employment or service or (ii) the expiration of the term of such
Option.

(b)           Termination for Cause.  Notwithstanding subsection (a) above, if
the employment or service of a Participant shall terminate for Cause, each
outstanding Option held by the Participant may be exercised, to the extent then
vested, until the earlier of (i) the expiration of 30 days from the date of such
termination of employment or service or (ii) the expiration of the terms of such
Option.

Notwithstanding the foregoing, an Option will not be treated as an Incentive
Stock Option unless at all times beginning on the Grant Date and ending on the
day three months (one year in the case of a Participant who is “disabled” within
the meaning of Section 22(e)(3) of the Code) before the date of exercise of the
Option, the Participant is an employee of Rosetta or an Affiliate (or a
corporation or a parent or subsidiary corporation of such corporation issuing or
assuming an option in a transaction to which Section 424(a) of the Code
applies).

 
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ARTICLE VIII.  STOCK APPRECIATION RIGHTS

8.1           General.  The Committee may grant Awards in the form of SARs in
such numbers and at such times as it shall determine. SARs shall vest and be
exercisable in whole or in such installments and at such times as may be
determined by the Committee. The price at which SARs may be exercised shall be
determined by the Committee but shall not be less than 100% of the Fair Market
Value per share of Common Stock on the Grant Date unless the SARs were granted
through the assumption of, or in substitution for, outstanding awards previously
granted to individuals who became Employees as a result of a merger,
consolidation, acquisition, or other corporate transaction involving the Company
and comply with Section 409A of the Code. The term of each SAR shall be as
specified by the Committee; provided, however, that no SARs shall be exercisable
later than ten years after the Grant Date. At the time of an Award of SARs, the
Committee may, in its sole discretion, prescribe additional terms, conditions,
restrictions and limitations applicable to the SARs, including without
limitation rules pertaining to the termination of employment or service (by
reason of death, permanent and total disability, or otherwise) of a Participant
prior to exercise of the SARs, as it determines are necessary or appropriate,
provided they are not inconsistent with the Plan.

8.2           Exercise of SARs.  SARs shall be exercised by the delivery of a
written notice of exercise to Rosetta, setting forth the number of whole shares
of Common Stock with respect to which the Award is being exercised. Upon the
exercise of SARs, the Participant shall be entitled to receive an amount equal
to the excess of the aggregate Fair Market Value of the shares of Common Stock
with respect to which the Award is exercised (determined as of the date of such
exercise) over the aggregate exercise price of such shares. Such amount shall be
payable to the Participant in cash or in shares of Common Stock, as provided in
the Award Agreement; provided, however, that if SARs are to be settled in cash,
the SARs shall be structured to avoid negative tax consequences to the
Participant under Section 409A of the Code.

ARTICLE IX.  RESTRICTED STOCK

9.1           General.  Awards may be granted in the form of Restricted Stock in
such numbers and at such times as the Committee shall determine. The Committee
shall impose such terms, conditions and restrictions on Restricted Stock as it
may deem advisable, including without limitation providing for vesting upon the
achievement of specified performance goals pursuant to a Performance Award and
restrictions under applicable Federal or state securities laws. A Participant
shall not be required to make any payment for Restricted Stock unless required
by the Committee pursuant to Section 9.2.

9.2           Purchased Restricted Stock.  The Committee may in its sole
discretion require a Participant to pay a stipulated purchase price for each
share of Restricted Stock (“Purchased Restricted Stock”).

9.3           Restricted Period.  At the time an Award of Restricted Stock is
granted, the Committee shall establish a Restricted Period applicable to such
Restricted Stock. Each Award of Restricted Stock may have a different Restricted
Period in the sole discretion of the Committee.

 
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9.4           Other Terms and Conditions.  Restricted Stock shall constitute
issued and outstanding shares of Common Stock for all corporate purposes.
Restricted Stock awarded to a Participant under the Plan shall be registered in
the name of the Participant or, at the option of Rosetta, in the name of a
nominee of Rosetta, and shall be issued in book-entry form or represented by a
stock certificate. Subject to the terms and conditions of the Award Agreement, a
Participant to whom Restricted Stock has been awarded shall have the right to
receive dividends thereon during the Restricted Period, to vote the Restricted
Stock and to enjoy all other stockholder rights with respect thereto, except
that (i) Rosetta shall retain custody of any certificates evidencing the
Restricted Stock during the Restricted Period, and (ii) the Participant may not
sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the
Restricted Stock during the Restricted Period. A breach of the terms and
conditions established by the Committee pursuant to the Award of the Restricted
Stock may result in a forfeiture of the Restricted Stock. At the time of an
Award of Restricted Stock, the Committee may, in its sole discretion, prescribe
additional terms, conditions, restrictions and limitations applicable to the
Restricted Stock, including without limitation rules pertaining to the
termination of employment or service (by reason of death, permanent and total
disability, retirement, cause or otherwise) of a Participant prior to expiration
of the Restricted Period.

9.5           Miscellaneous.  Nothing in this Article shall prohibit the
exchange of shares of Restricted Stock pursuant to a plan of merger or
reorganization for stock or other securities of Rosetta or another corporation
that is a party to the reorganization, provided that the stock or securities so
received in exchange for shares of Restricted Stock shall, except as provided in
Article XIII, become subject to the restrictions applicable to such Restricted
Stock. Any shares of Common Stock received as a result of a stock split or stock
dividend with respect to shares of Restricted Stock shall also become subject to
the restrictions applicable to such Restricted Stock.

ARTICLE X.  RESTRICTED STOCK UNITS

10.1         General.  Awards may be granted in the form of Restricted Stock
Units in such numbers and at such times as the Committee shall determine. The
Committee shall impose such terms, conditions and restrictions on Restricted
Stock Units as it may deem advisable, including without limitation prescribing
the period over which and the conditions upon which a Restricted Stock Unit may
become vested or be forfeited, and providing for vesting upon the achievement of
specified performance goals pursuant to a Performance Award. Upon the lapse of
restrictions with respect to each Restricted Stock Unit, the Participant shall
be entitled to receive from the Company one share of Common Stock or an amount
of cash equal to the Fair Market Value of one share of Common Stock, as provided
in the Award Agreement. A Participant shall not be required to make any payment
for Restricted Stock Units.

10.2         Restricted Period.  At the time an Award of Restricted Stock Units
is granted, the Committee shall establish a Restricted Period applicable to such
Restricted Stock Units. Each Award of Restricted Stock Units may have a
different Restricted Period in the sole discretion of the Committee.

 
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10.3         Cash Dividend Rights and Dividend Unit Rights. To the extent
provided by the Committee in its sole discretion, a grant of Restricted Stock
Units may include a tandem Cash Dividend Right or Dividend Unit Right grant. A
grant of Cash Dividend Rights may provide that such Cash Dividend Rights shall
be paid directly to the Participant at the time of payment of related dividend,
be credited to a bookkeeping account subject to the same vesting and payment
provisions as the tandem Award (with or without interest in the sole discretion
of the Committee), or be subject to such other provisions or restrictions as
determined by the Committee in its sole discretion. A grant of Dividend Unit
Rights may provide that such Dividend Unit Rights shall be subject to the same
vesting and payment provisions as the tandem Award or be subject to such other
provisions and restrictions as determined by the Committee in its sole
discretion.

10.4         Other Terms and Conditions.  At the time of an Award of Restricted
Stock Units, the Committee may, in its sole discretion, prescribe additional
terms, conditions, restrictions and limitations applicable to the Restricted
Stock Units, including without limitation rules pertaining to the termination of
employment or service (by reason of death, permanent and total disability,
retirement, cause or otherwise) of a Participant prior to expiration of the
Restricted Period. Awards of Restricted Stock Units are considered nonqualified
deferred compensation subject to Section 409A of the Code and will be designed
to comply with that section.

ARTICLE XI.  PERFORMANCE AWARDS

11.1         General.  Awards may be granted in the form of Performance Awards
that may be payable in the form of cash, shares of Common Stock, or a
combination of both, in such amounts and at such times as the Committee shall
determine. Performance Awards shall be conditioned upon the level of achievement
of one or more stated performance goals over a specified performance period that
shall not be shorter than one year. Performance Awards may be combined with
other Awards to impose performance criteria as part of the terms of such other
Awards.

11.2         Terms and Conditions.  Each Award Agreement embodying a Performance
Award shall set forth (i) the amount, including a target and maximum amount if
applicable, a Participant may earn in the form of cash or shares of Common Stock
or a formula for determining such amount, (ii) the performance criteria and
level of achievement versus such criteria that shall determine the amount
payable or number of shares of Common Stock to be granted, issued, retained
and/or vested, (iii) the performance period over which performance is to be
measured, (iv) the timing of any payments to be made, (v) restrictions on the
transferability of the Award, and (vi) such other terms and conditions as the
Committee may determine that are not inconsistent with the Plan.

11.3         Code Section 162(m) Requirements.  From and after the date on which
remuneration paid pursuant to the Plan becomes subject to the deduction
limitation of Section 162(m) of the Code, the Committee shall determine in its
sole discretion whether all or any portion of a Performance Award shall be
intended to satisfy the requirements for “performance-based compensation” under
Section 162(m) of the Code (the “162(m) Requirements”). The performance goals
for any Performance Award that are intended to satisfy the 162(m) Requirements
shall be established in writing by the Committee based on one or more
performance criteria as set forth in Section 11.4 not later than 90 days after
commencement of the performance period with respect to such Award (or, if longer
or shorter, within the maximum period allowed under Section 162(m) of the Code),
provided that the outcome of the performance in respect of the goals remains
substantially uncertain as of such time. The maximum amount that may be paid in
cash pursuant to Performance Awards granted to a Participant with respect to a
fiscal year that are intended to satisfy the 162(m) Requirements is $1,000,000;
provided, however, that such maximum amount with respect to a Performance Award
that provides for a performance period longer than one fiscal year shall be the
foregoing limit multiplied by the number of full fiscal years in the performance
period. At the time of the grant of a Performance Award and to the extent
permitted under Code Section 162(m) and regulations thereunder for a Performance
Award intended to satisfy the 162(m) Requirements, the Committee may provide for
the manner in which the performance goals will be measured in light of specified
corporate transactions, extraordinary events, accounting changes and other
similar occurrences.

 
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11.4         Performance Goals.  The performance criteria to be used for
purposes of Performance Awards may be described in terms of objectives that are
related to the individual Participant or objectives that are Company-wide or
related to a subsidiary, division, department, region, function or business unit
of the Company in which the Participant is employed or with respect to which the
Participant performs services, and may consist of one or more or any combination
of the following criteria:  (i) earnings or earnings per share (whether on a
pre-tax, after-tax, operational or other basis), (ii) return on equity, (iii)
return on assets or net assets, (iv) return on capital or invested capital and
other related financial measures, (v) cash flow (whether as an absolute number
or percentage change), (vi) revenues, (vii) income or operating income, (viii)
expenses or expense levels, (ix) one or more operating ratios, (x) stock price,
(xi) total stockholder return, (xii) market share, (xiii) operating profit,
(xiv) profit margin, (xv) capital expenditures, (xvi) net borrowing, debt
leverage levels, credit quality or debt ratings, (xvii) the accomplishment of
mergers, acquisitions, dispositions, public offerings or similar extraordinary
business transactions, (xviii) net asset value per share, (xix) economic value
added, (xx) individual business objectives, (xxi) growth in production, (xxii)
added reserves, (xxiii) growth in reserves per share, and (xxiv) inventory
growth.  Any one or more of the performance criteria may be used on an absolute
or relative basis to measure the performance of the individual Participant, the
Company, or a subsidiary, division, department, region, function or business
unit of the Company in which the Participant is employed or with respect to
which the Participant performs services, or any combination thereof, as the
Committee may deem appropriate, or any of the above performance criteria may be
compared to the performance of a selected group of comparison companies, or a
published or special index that the Committee, in its sole discretion, deems
appropriate, or as compared to various stock market indices.  To the extent
required under Section 162(m) of the Code, the Committee shall, within the first
90 days of a performance period (or, if longer or shorter, within the maximum
period allowed under Section 162(m) of the Code), define in an objective fashion
the manner of calculating the performance criteria it selects to use for such
performance period and thereafter promptly communicate such performance criteria
to the Participant.

 
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11.5         Certification and Negative Discretion.

(a)           Certification.  Following the completion of a performance period
and prior to the payment of any compensation pursuant to a Performance Award
that is intended to satisfy the 162(m) Requirements, the Committee shall review
and certify in writing whether, and to what extent, the performance goals for
the performance period have been achieved and, if so, calculate and certify in
writing that amount of the Performance Awards earned for the performance
period.  The Committee shall then determine the amount of each Participant’s
Performance Award actually payable for the performance period and, in so doing,
may apply its negative discretion pursuant to subsection (b) below.

(b)           Negative Discretion.  If a Performance Award is intended to
satisfy the 162(m) Requirements, the Committee in its sole discretion shall have
the authority to reduce or eliminate, but not to increase, the amount payable
and the number of shares to be granted, issued, retained or vested pursuant to a
Performance Award.

11.6         Code Section 162(m) Approval.  If so determined by the Committee,
the provisions of the Plan regarding Performance Awards shall be disclosed and
reapproved by shareholders no later than the first shareholder meeting that
occurs in the fifth year following the year in which shareholders previously
approved such provisions, in each case in order for certain Awards granted after
such time to be exempt from the deduction limitations of Section 162(m) of the
Code.  Nothing in this Section, however, shall affect the validity of Awards
granted after such time if such shareholder approval has not been obtained.

ARTICLE XII.  STOCK AWARDS AND OTHER INCENTIVE AWARDS

12.1         Stock Awards.  Stock Awards may be granted to Participants upon
such terms and conditions as the Committee may determine. Shares of Common Stock
issued pursuant to Stock Awards may be issued for cash consideration or for no
cash consideration. The Committee shall determine the number of shares of Common
Stock to be issued pursuant to a Stock Award.

12.2         Other Incentive Awards.  Other Incentive Awards may be granted in
such amounts, upon such terms and at such times as the Committee shall
determine. Other Incentive Awards may be granted based upon, payable in or
otherwise related to, in whole or in part, shares of Common Stock if the
Committee, in its sole discretion, determines that such Other Incentive Awards
are consistent with the purposes of the Plan. Each grant of an Other Incentive
Award shall be evidenced by an Award Agreement that shall specify the amount of
the Other Incentive Award and the terms, conditions, restrictions and
limitations applicable to such Award. Payment of Other Incentive Awards shall be
made at such times and in such form, which may be cash, shares of Common Stock
or other property (or a combination thereof), as established by the Committee,
subject to the terms of the Plan.

ARTICLE XIII.  CORPORATE CHANGE

13.1         Vesting of Awards.  Except as provided otherwise below in this
Article or in an Award Agreement at the time an Award is granted or amended,
notwithstanding anything to the contrary in this Plan, if a Participant's
employment or service with the Company is terminated for any reason other than
death, Cause or Inability to Perform, Total and Permanent Disability, or if a
Participant voluntarily terminates employment or service for Good Reason, in
either case within the one-year period following a Corporate Change of Rosetta,
any time periods, conditions or contingencies relating to the exercise or
realization of, or lapse of restrictions under, any Award shall be automatically
accelerated or waived so that:

 
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(a)           if no exercise of the Award is required, the Award may be realized
in full at the time of the occurrence of the Participant's termination of
employment or service; or

(b)           if exercise of the Award is required, the Award may be exercised
in full commencing on the date of the Participant's termination of employment or
service.

In the event all outstanding Awards are replaced in connection with a Corporate
Change by comparable types of awards of at least substantially equivalent value,
as determined by the Committee in its sole discretion, such replacement awards
shall provide for automatic acceleration or waiver as provided above in the
event of a Participant's involuntary termination of employment or service with
the Company other than for Cause or voluntary termination of employment or
service for Good Reason, as applicable.

13.2         Cancellation of Awards.  Notwithstanding the foregoing, on or prior
to the date of a Corporate Change, the Committee may take any of the following
actions with respect to any or all outstanding Awards, without the consent of
any Participant: (i) the Committee may require that Participants surrender their
outstanding Options and SARs in exchange for payment by the Company, in cash,
Common Stock, the securities of another company, or a combination thereof, as
determined by the Committee, in an amount equal to the amount, if any, by which
the then Fair Market Value of the shares of Common Stock subject to the
Participant’s unexercised Options and SARs exceeds the exercise price or grant
price, and (ii) with respect to Participants holding Restricted Stock,
Restricted Stock Units, Performance Awards or Other Incentive Awards, and
related Cash Dividend Rights and Dividend Unit Rights (if applicable), the
Committee may determine that such Participants shall receive payment in
settlement of such Awards (and dividend rights), in an amount equivalent to the
value of such Awards (and dividend rights) at the time of such settlement.

ARTICLE XIV. VESTING OF AWARDS UPON DEATH OR TOTAL AND PERMANENT DISABILITY

14.1         Vesting Upon Death.   Effective with respect to an Award granted on
or after January 1, 2011, an Award under this Plan shall fully vest upon the
Death of a Participant if such Death occurs during the time period of the
Participant’s employment.  In any case in which the fact of the death of the
Participant is uncertain, such as where a Participant’s whereabouts are unknown
in circumstances that would suggest that death has occurred, the Committee may,
in its sole and absolute discretion, make a determination regarding the death of
the Participant.  Provided, however, an Award consisting of Performance Share
Units shall be fully vested under this Section taking into account Section 14.4.

 
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14.2         Vesting Upon Total and Permanent Disability.    Effective with
respect to an Award granted on or after January 1, 2011, an Award under this
Plan shall fully vest upon the Total and Permanent Disability of the
Participant.  Provided, however, an Award consisting of Performance Share Units
shall be fully vested under this Section taking into account Section 14.4.

14.3         Exercise, Payment or Settlement.   In the case of the vesting of an
Award under this Article XIV, such Award shall be exercised, paid or settled as
otherwise provided in the Award Agreement and this Plan.  Awards which become
vested pursuant to Section 14.1 shall be exercised pursuant to Section 16.4.

14.4         Performance Share Units – Vesting Upon Death or Total and Permanent
Disability.   Upon the vesting under this Article XIV of Awards consisting of
Performance Units in the event of vesting upon Death or Total and Permanent
Disability, the following shall apply:

(a)           The Participant (or the Participant’s Beneficiary, in the case of
death or incapacity, for purposes of this Section 14.4, the “Participant”) shall
be entitled to receive, as soon as administratively practicable, but not later
than thirty (30) days after such vesting event, Shares, cash or a combination of
Shares and cash, as the Committee determines in its sole discretion, equal to
the number of Performance Units that have vested pursuant to Section
14.4(b).  If the Performance Units are settled in cash, in full or in part,
prior to the end of the Performance Period, the cash settlement shall be based
upon the Fair Market Value (as defined in the Plan) of a Share on the date of
vesting. If the Performance Units are settled in cash, in full or in part, after
the end of the Performance Period, the cash value shall be based on the Fair
Market Value of a Share as of the last trading day of the Performance Period;
and

(b)           At the time of Death or Total and Permanent Disability, the
Performance Objectives shall be deemed to be met at target, Transfer
Restrictions shall not apply, and Service Requirements shall be deemed met.

14.5         No Vesting Where Participant Notified of Termination for Cause
Prior to Death or Total and Permanent Disability. This Article XIV shall not
apply, and no vesting shall take place if the Participant has, prior Death or
Total and Permanent Disability, been notified that such Participant’s employment
with the Company will be terminated for Cause.  In the case in which a
Participant has received notice of a termination for Cause, then any such Award
shall be treated pursuant to the applicable provisions of this Plan relating to
termination for Cause, and shall not be vested pursuant to this Article.

ARTICLE XV.  AMENDMENT AND TERMINATION

15.1         Plan Amendment and Termination.  The Board may at any time suspend,
terminate, amend or modify the Plan, in whole or in part; provided, however,
that no amendment or modification of the Plan shall become effective without the
approval of such amendment or modification by the holders of at least a majority
of the shares of Common Stock if (i) such amendment or modification increases
the maximum number of shares subject to the Plan (except as provided in Article
IV) or changes the designation or class of persons eligible to receive Awards
under the Plan, (ii) such amendment or modification is necessary to prevent the
Company from being denied a tax deduction under Section 162(m) of the Code, or
(iii) counsel for Rosetta determines that such approval is otherwise required by
or necessary to comply with applicable law or the listing requirements of NASDAQ
or such other exchange or association on which the Common Stock is then listed
or quoted. An amendment to the Plan shall not require stockholder approval if it
curtails rather than expands the scope of the Plan, nor if it is made to conform
the Plan to new statutory or regulatory requirements that arise after submission
of the Plan to stockholders for their approval, such as, without limitation,
changes to Section 409A of the Code, or regulations issued thereunder. Upon
termination of the Plan, the terms and provisions of the Plan shall,
notwithstanding such termination, continue to apply to Awards granted prior to
such termination. Except as otherwise provided herein, no suspension,
termination, amendment or modification of the Plan shall adversely affect in any
material way any Award previously granted under the Plan, without the consent of
the Participant (or the Permitted Transferee) holding such Award.

 
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15.2         Award Amendment and Cancellation.  The Committee may amend the
terms of any outstanding Award granted pursuant to the Plan, but except as
otherwise provided herein, no such amendment shall adversely affect in any
material way the Participant’s (or a Permitted Transferee’s) rights under an
outstanding Award without the consent of the Participant (or the Permitted
Transferee) holding such Award.

ARTICLE XVI.  MISCELLANEOUS

16.1         Award Agreements.  After the Committee grants an Award under the
Plan to a Participant, Rosetta and the Participant shall enter into an Award
Agreement setting forth the terms, conditions, restrictions and limitations
applicable to the Award and such other matters as the Committee may determine to
be appropriate. The Committee may permit or require a Participant to defer
receipt of the payment of cash or the delivery of shares of Common Stock that
would otherwise be due to the Participant in connection with any Award. Awards
that are not paid currently shall be recorded as payable on Rosetta’s records
for the Plan. The terms and provisions of the respective Award Agreements need
not be identical. All Award Agreements shall be subject to the provisions of the
Plan, and in the event of any conflict between an Award Agreement and the Plan,
the terms of the Plan shall govern.

16.2         Listing; Suspension.

(a)           As long as the Common Stock is listed on a national securities
exchange or system sponsored by a national securities association, the issuance
of any shares of Common Stock pursuant to an Award shall be conditioned upon
such shares being listed on such exchange or system. Rosetta shall have no
obligation to issue such shares unless and until such shares are so listed, and
the right to exercise any Option or other Award with respect to such shares
shall be suspended until such listing has been effected.

(b)           If at any time counsel to Rosetta or its Affiliates shall be of
the opinion that any sale or delivery of shares of Common Stock pursuant to an
Award is or may in the circumstances be unlawful or result in the imposition of
excise taxes on Rosetta or its Affiliates under the laws of any applicable
jurisdiction, Rosetta or its Affiliates shall have no obligation to make such
sale or delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act, or otherwise, with
respect to shares of Common Stock or Awards, and the right to exercise any
Option or other Award shall be suspended until, in the opinion of such counsel,
such sale or delivery shall be lawful or will not result in the imposition of
excise taxes on Rosetta or its Affiliates.

 
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(c)           Upon termination of any period of suspension under this Section,
any Award affected by such suspension that shall not then have expired or
terminated shall be reinstated as to all shares available before such suspension
and as to shares that would otherwise have become available during the period of
such suspension, but no such suspension shall extend the term of any Award
unless otherwise determined by the Committee in its sole discretion.

16.3         Additional Conditions.  Notwithstanding anything in the Plan to the
contrary:  (i) the Committee may, if it shall determine it necessary or
desirable in its sole discretion, at the time of grant of any Award or the
issuance of any shares of Common Stock pursuant to any Award, require the
recipient of the Award or such shares of Common Stock, as a condition to the
receipt thereof, to deliver to Rosetta a written representation of present
intention to acquire the Award or such shares of Common Stock for his own
account for investment and not for distribution, (ii) the certificate for shares
of Common Stock issued to a Participant may include any legend that the
Committee deems appropriate to reflect any restrictions on transfer, and (iii)
all certificates for shares of Common Stock delivered under the Plan shall be
subject to such stop transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations and other requirements of the SEC,
any stock exchange or association upon which the Common Stock is then listed or
quoted, any applicable federal or state securities law, and any applicable
corporate law, and the Committee may cause a legend or legends to be placed on
any such certificates to make appropriate reference to such restrictions.

16.4         Transferability.

(a)           All Awards granted to a Participant shall be exercisable during
his lifetime only by such Participant, or if applicable, a Permitted Transferee
as provided in subsection (c) of this Section; provided, however, that in the
event of a Participant’s legal incapacity, an Award may be exercised by his
guardian or legal representative. When a Participant dies, the personal
representative, beneficiary, or other person entitled to succeed to the rights
of the Participant may acquire the rights under an Award. Any such successor
must furnish proof satisfactory to Rosetta of the successor’s entitlement to
receive the rights under an Award under the Participant’s will or under the
applicable laws of descent and distribution.

(b)           Except as otherwise provided in this Section, no Award shall be
subject to execution, attachment or similar process, and no Award may be sold,
transferred, pledged, exchanged, hypothecated or otherwise disposed of, other
than by will or pursuant to the applicable laws of descent and distribution. Any
attempted sale, transfer, pledge, exchange, hypothecation or other disposition
of an Award not specifically permitted by the Plan or the Award Agreement shall
be null and void and without effect.

(c)           If provided in the Award Agreement, Nonqualified Stock Options may
be transferred by a Participant to a Permitted Transferee. For purposes of the
Plan, “Permitted Transferee” means (i) a member of a Participant’s immediate
family, (ii) any person sharing the Participant’s household (other than a tenant
or employee of the Participant), (iii) trusts in which a person listed in (i) or
(ii) above has more than 50% of the beneficial interest, (iv) a foundation in
which the Participant or a person listed in (i) or (ii) above controls the
management of assets, (v) any other entity in which the Participant or a person
listed in (i) or (ii) above owns more than 50% of the voting interests, provided
that in the case of the preceding clauses (i) through (v), no consideration is
provided for the transfer, and (vi) any transferee permitted under applicable
securities and tax laws as determined by counsel to Rosetta. In determining
whether a person is a “Permitted Transferee,” immediate family members shall
include a Participant’s child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including adoptive relationships.

 
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(d)           Incident to a Participant’s divorce, the Participant may request
that Rosetta agree to observe the terms of a domestic relations order which may
or may not be part of a qualified domestic relations order (as defined in Code
Section 414(p)) with respect to all or a part of one or more Awards made to the
Participant under the Plan. Rosetta’s decision regarding such a request shall be
made by the Committee, in its sole and absolute discretion, based upon the best
interests of Rosetta. The Committee’s decision need not be uniform among
Participants. As a condition of participation, a Participant agrees to hold
Rosetta harmless from any claim that may arise out of Rosetta’s observance of
the terms of any such domestic relations order.

16.5         Withholding Taxes.  The Company shall be entitled to deduct from
any payment made under the Plan, regardless of the form of such payment, the
amount of all applicable income and employment taxes required by law to be
withheld with respect to such payment, may require the Participant to pay to the
Company such withholding taxes prior to and as a condition of the making of any
payment or the issuance or delivery of any shares of Common Stock under the
Plan, and shall be entitled to deduct from any other compensation payable to the
Participant any withholding obligations with respect to Awards. In accordance
with any applicable administrative guidelines it establishes, the Committee may
allow a Participant to pay the amount of taxes required by law to be withheld
from or with respect to an Award by (i) withholding shares of Common Stock from
any payment of Common Stock due as a result of such Award, or (ii) permitting
the Participant to deliver to the Company previously acquired shares of Common
Stock, in each case having an aggregate Fair Market Value equal to the amount of
such required withholding taxes. No payment shall be made and no shares of
Common Stock shall be issued pursuant to any Award unless and until the
applicable tax withholding obligations have been satisfied.

16.6         No Fractional Shares.  No fractional shares of Common Stock shall
be issued or delivered pursuant to the Plan or any Award granted hereunder,
provided that the Committee in its sole discretion may round fractional shares
down to the nearest whole share or settle fractional shares in cash.

16.7         Notices.  All notices required or permitted to be given or made
under the Plan or pursuant to any Award Agreement (unless provided otherwise in
such Award Agreement) shall be in writing and shall be deemed to have been duly
given or made if (i) delivered personally, (ii) transmitted by first class
registered or certified United States mail, postage prepaid, return receipt
requested, (iii) sent by prepaid overnight courier service, or (iv) sent by
telecopy or facsimile transmission, with confirmation receipt, to the person who
is to receive it at the address that such person has theretofore specified by
written notice delivered in accordance herewith. Such notices shall be effective
(i) if delivered personally or sent by courier service, upon actual receipt by
the intended recipient, (ii) if mailed, upon the earlier of five days after
deposit in the mail or the date of delivery as shown by the return receipt
therefor, or (iii) if sent by telecopy or facsimile transmission, when the
answer back is received. Rosetta or a Participant may change, at any time and
from time to time, by written notice to the other, the address that it or such
Participant had theretofore specified for receiving notices. Until such address
is changed in accordance herewith, notices hereunder or under an Award Agreement
shall be delivered or sent (i) to a Participant at his address as set forth in
the records of the Company or (ii) to Rosetta at the principal executive offices
of Rosetta clearly marked “Attention:  General Counsel.”

 
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16.8         Compliance with Law and Stock Exchange or Association
Requirements.  In addition, it is the intent of Rosetta that Options designated
Incentive Stock Options comply with the applicable provisions of Section 422 of
the Code, and that Awards intended to constitute “qualified performance-based
awards” comply with the applicable provisions of Section 162(m) of the Code and
that any deferral of the receipt of the payment of cash or the delivery of
shares of Common Stock that the Committee may permit or require, and any Award
granted that is subject to Section 409A of the Code, comply with the
requirements of Section 409A of the Code. To the extent that any legal
requirement of Section 16 of the Exchange Act or Sections 422, 162(m) or 409A of
the Code as set forth in the Plan ceases to be required under Section 16 of the
Exchange Act or Sections 422, 162(m) or 409A of the Code, that Plan provision
shall cease to apply. Any provision of this Plan to the contrary
notwithstanding, the Committee may revoke any Award if it is contrary to law,
governmental regulation, or stock exchange requirements or modify an Award to
bring it into compliance with any government regulation or stock exchange
requirements. The Committee may agree to limit its authority under this Section.

16.9         California Blue Sky Laws.  Prior to the effective registration of
the Common Stock under Section 12 of the Exchange Act, (i) Rosetta shall deliver
a balance sheet and an income statement at least annually to each Participant
performs services in the State of California, unless such Participant is a key
employee whose duties in connection with the Company assure such Participant
access to equivalent information, (ii) the Compensation Committee may not impose
upon any Award grant made to a Participant performs services in the State of
California a vesting schedule that is more restrictive than 20 percent per year
vesting, with the initial vesting to occur not later than one year after the
Award’s grant date; provided, however, that such vesting limitation shall not be
applicable to any Award grants made to individuals who are officers of Rosetta
and (iii) with respect to California Participants (including any individual
whose Award is based in whole or in part on services performed in California),
the Plan shall otherwise be administered in accordance with California
Corporations Code section 25102(o) and California Code of Regulations, Title 10,
sections 260.140.41, 260.140.42, 260.140.45, and 260.140.46.

16.10      Binding Effect.  The obligations of Rosetta under the Plan shall be
binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of Rosetta, or upon any successor
corporation or organization succeeding to all or substantially all of the assets
and business of Rosetta. The terms and conditions of the Plan shall be binding
upon each Participant and his Permitted Transferees, heirs, legatees,
distributees and legal representatives.

 
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16.11      Severability.  If any provision of the Plan or any Award Agreement is
held to be illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining provisions of the Plan or such agreement, as the case
may be, but such provision shall be fully severable and the Plan or such
agreement, as the case may be, shall be construed and enforced as if the illegal
or invalid provision had never been included herein or therein.

16.12      No Restriction of Corporate Action.  Nothing contained in the Plan
shall be construed to prevent Rosetta or any Affiliate from taking any corporate
action (including any corporate action to suspend, terminate, amend or modify
the Plan) that is deemed by Rosetta or such Affiliate to be appropriate or in
its best interest, whether or not such action would have an adverse effect on
the Plan or any Awards made or to be made under the Plan. No Participant or
other person shall have any claim against Rosetta or any Affiliate as a result
of such action.

16.13      Governing Law.  The Plan shall be governed by and construed in
accordance with the internal laws (and not the principles relating to conflicts
of laws) of the State of Texas except as superseded by applicable federal law.

16.14      No Right, Title or Interest in Company Assets.  No Participant shall
have any rights as a stockholder of Rosetta as a result of participation in the
Plan until the date of issuance of Common Stock in his name and, in the case of
Restricted Stock, unless and until such rights are granted to the Participant
pursuant to the Plan. To the extent any person acquires a right to receive
payments from the Company under the Plan, such rights shall be no greater than
the rights of an unsecured general creditor of the Company, and such person
shall not have any rights in or against any specific assets of the Company. All
Awards shall be unfunded.

16.15      Risk of Participation.  Nothing contained in the Plan shall be
construed either as a guarantee by Rosetta or the Affiliates, or their
respective stockholders, directors, officers or employees, of the value of any
assets of the Plan or as an agreement by Rosetta or the Affiliates, or their
respective stockholders, directors, officers or employees, to indemnify anyone
for any losses, damages, costs or expenses resulting from participation in the
Plan.

16.16      No Guarantee of Tax Consequences.  No person connected with the Plan
in any capacity, including without limitation Rosetta and the Affiliates and
their respective directors, officers, agents and employees, makes any
representation, commitment or guarantee that any tax treatment, including
without limitation federal, state and local income, estate and gift tax
treatment, will be applicable with respect to any Awards or payments thereunder
made to or for the benefit of a Participant under the Plan or that such tax
treatment will apply to or be available to a Participant on account of
participation in the Plan.

16.17      Continued Employment or Service.  Nothing contained in the Plan or in
any Award Agreement shall confer upon any Participant the right to continue in
the employ or service of the Company, or interfere in any way with the rights of
the Company to terminate a Participant’s employment or service at any time, with
or without cause. The loss of existing or potential profit in Awards will not
constitute an element of damages in the event of termination of employment or
service for any reason, even if the termination is in violation of an obligation
of Rosetta or an Affiliate to the Participant.

 
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16.18       Miscellaneous.  Headings are given to the articles and sections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction of the Plan or
any provisions hereof. The use of the masculine gender shall also include within
its meaning the feminine. Wherever the context of the Plan dictates, the use of
the singular shall also include within its meaning the plural, and vice versa.
 
 
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