Exhibit 10.1

 

VERMILLION, INC.

 

AMENDED AND RESTATED 2010 STOCK INCENTIVE PLAN

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Plan Document

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Vermillion, Inc. (the “Company”) hereby establishes and adopts the following
Amended and Restated 2010 Stock Incentive Plan (the “Plan”), effective upon
approval by the Company’s stockholders at the Company’s 2013 Annual Meeting of
Stockholders (the “Effective Date”). 

 

1.

Introduction. 

 

(a) Purpose.  The  purposes of the Plan are: (i) to enhance the Company’s
ability to attract highly qualified personnel; (ii) to strengthen its retention
capabilities; (iii) to enhance the long-term performance and competitiveness of
the Company; and (iv) to align the interests of Plan participants with those of
the Company’s stockholders.  Effective Date.  This Plan, as amended and
restated, shall be submitted to the stockholders of the Company for approval
and, if approved, shall become effective as of the Effective Date. 

(b) Definitions.  Terms in the Plan and any Appendix that begin with an initial
capital letter have the defined meaning set forth in Appendix I or elsewhere in
this Plan, in either case unless the context of their use clearly indicates a
different meaning.

(c) Effect on Other Plans, Awards, and Arrangements.  This Plan is not intended
to affect and shall not affect any stock options, equity-based compensation, or
other benefits that the Company or its Affiliates may have provided, or may
separately provide in the future, pursuant to any agreement, plan, or program
that is independent of this Plan.

(d) Appendices.  Incorporated by reference and thereby part of the Plan are the
definitions set forth in Appendix I hereof.

2.

Types of Awards.  The Plan permits the granting of the following types of Awards
according to the Sections of the Plan listed here:

 

Section 5

Stock Options

Section 6

Share Appreciation Rights (“SARs”)

Section 7

Restricted Shares, Restricted Share Units (“RSUs”), and Unrestricted Shares

Section 8

Deferred Share Units (“DSUs”)

Section 9

Performance and Cash-settled Awards

Section 10

Dividend Equivalent Rights

 

3.

Shares Available for Awards.    

 

(a) Number of Shares. Subject to Section 13 below, a total of 3,622,983 Shares
shall be available for issuance under the Plan.  The Shares deliverable pursuant
to Awards shall be authorized but unissued Shares, or Shares that the Company
otherwise holds in treasury or in trust. 

(b) Replenishment; Counting of Shares.    For purposes of the limitation under
Section 3(a), to the extent that Shares underlying any Plan Awards are not
issued or delivered by

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reason of (i) forfeiture, cancellation, expiration or termination (other than by
exercise) or (ii) the settlement of such Shares in cash, then such Shares shall
be added back to the Shares available for issuance under the
Plan.  Notwithstanding the foregoing, the following Shares shall not be added to
the Shares authorized for grant under the Plan:  (i) Shares that were subject to
an Option or an SAR and were not issued or delivered upon the net settlement or
net exercise of such Option or SAR, (ii) Shares delivered to or withheld by the
Company to pay purchase price or the withholding taxes related to an outstanding
Option or SAR or (iii) Shares repurchased by the Company on the open market with
the proceeds of an Option exercise. Shares delivered to or withheld by the
Company to pay the withholding taxes for Awards (other than Options or SARs) or
Performance Awards shall again be available for issuance under this Plan.
 Further, and to the extent permitted under Applicable Law, the maximum number
of Shares available for delivery under the Plan shall not be reduced by any
Shares issued under the Plan through the settlement, assumption, or substitution
of outstanding awards or obligations to grant future awards as a condition of
the Company’s or an Affiliate’s acquiring another entity. 

(c) ISO Share Reserve.  The number of Shares that are available for ISO Awards
shall not exceed the total number set forth in Section 3(a) above (as adjusted
pursuant to Section 13 of the Plan, and as determined in accordance with Code
Section 422).

4.

Eligibility.   

 

(a) General Rule.  Subject to the express provisions of the Plan, the Committee
shall determine from the class of Eligible Persons those Persons to whom Awards
may be granted.  Each Award shall be evidenced by an Award Agreement that sets
forth its Grant Date and all other terms and conditions of the Award, that is
signed on behalf of the Company (or delivered by an authorized agent through an
electronic medium), and that, if required by the Committee, is signed by the
Eligible Person as an acceptance of the Award.  The grant of an Award shall not
obligate the Company or any Affiliate to continue the employment or service of
any Eligible Person, or to provide any future Awards or other remuneration at
any time thereafter.

(b) Option and SAR Limits per Person.  Subject to adjustment pursuant to Section
13, the maximum number of Shares with respect to which Options or SARs, or a
combination thereof, may be granted during any fiscal year of the Company to any
person shall be 500,000.

5.

Stock Options.

(a) Grants.  Subject to the special rules for ISOs set forth in the next
paragraph, the Committee may grant Options to Eligible Persons pursuant to Award
Agreements setting forth terms and conditions that are not inconsistent with the
Plan, that may be immediately exercisable or that may become exercisable in
whole or in part based on future events or conditions, that may include vesting
or other requirements for the right to exercise the Option, and that may differ
for any reason between Eligible Persons or classes of Eligible Persons, provided
in all instances that:

(i)

the exercise price for Shares subject to purchase through exercise of an Option
shall not be less than 100% of the Fair Market Value of the underlying Shares on
the Grant Date; and

(ii)

no Option shall be exercisable for a term ending more than ten years after its
Grant Date.

 

(b) Special ISO Provisions.  The following provisions shall control any grants
of Options that are denominated as ISOs.

(i)

Eligibility.  The Committee may grant ISOs only to Employees (including officers
who are Employees) of the Company or an Affiliate that is a “parent corporation”
or “subsidiary corporation” within the meaning of Code Section 424. 

 

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(ii)

Documentation.  Each Option that is intended to be an ISO must be designated in
the Award Agreement as an ISO, provided that any Option designated as an ISO
will be a Non-ISO to the extent the Option fails to meet the requirements of
Code Section 422.  In the case of an ISO, the Committee shall determine on the
Grant Date the acceptable methods of paying the exercise price for Shares, and
it shall be included in the applicable Award Agreement.

 

(iii)

$100,000 Limit.  To the extent that the aggregate Fair Market Value of Shares
with respect to which ISOs first become exercisable by a Participant in any
calendar year (under this Plan and any other plan of the Company or any
Affiliate) exceeds U.S. $100,000, such excess Options shall be treated as
Non-ISOs.  For purposes of determining whether the U.S. $100,000 limit is
exceeded, the Fair Market Value of the Shares subject to an ISO shall be
determined as of the Grant Date.  In reducing the number of Options treated as
ISOs to meet the U.S. $100,000 limit, the most recently granted Options shall be
reduced first.  In the event that Code Section 422 is amended to alter the
limitation set forth therein, the limitation of this paragraph shall be
automatically adjusted accordingly.

 

 

(iv)

Grants to 10% Holders.  In the case of an ISO granted to an Employee who is a
Ten Percent Holder on the Grant Date, the ISO’s term shall not exceed five years
from the Grant Date, and the exercise price shall be at least 110% of the Fair
Market Value of the underlying Shares on the Grant Date.  In the event that Code
Section 422 is amended to alter the limitations set forth therein, the
limitations of this paragraph shall be automatically adjusted accordingly.

 

(v)

Substitution of Options.  In the event the Company or an Affiliate acquires
(whether by purchase, merger, or otherwise) all or substantially all of
outstanding capital stock or assets of another corporation or in the event of
any reorganization or other transaction qualifying under Code Section 424, the
Committee may, in accordance with the provisions of that Section, substitute
ISOs for ISOs previously granted under the plan of the acquired company provided
(A) the excess of the aggregate Fair Market Value of the Shares subject to an
ISO immediately after the substitution over the aggregate exercise price of such
shares is not more than the similar excess immediately before such substitution,
and (B) the new ISO does not give additional benefits to the Participant,
including any extension of the exercise period.

 

 

(vi)

Notice of Disqualifying Dispositions.  By executing an ISO Award Agreement, each
Participant agrees to notify the Company in writing immediately after the
Participant sells, transfers or otherwise disposes of any Shares acquired
through exercise of the ISO, if such disposition occurs within the earlier of
(A) two years of the Grant Date, or (B) one year after the exercise of the ISO
being exercised.  Each Participant further agrees to provide any information
about a disposition of Shares as may be requested by the Company to assist it in
complying with any applicable tax laws.

 

(c) Method of Exercise.  Each Option may be exercised, in whole or in part
(provided that the Company shall not be required to issue fractional shares) at
any time and from time to time prior to its expiration, but only pursuant to the
terms of the applicable Award Agreement, and subject to the times, circumstances
and conditions for exercise contained in the applicable Award
Agreement.  Exercise shall occur by delivery of both written notice of exercise
to the secretary of the Company, and payment of the full exercise price for the
Shares being purchased.  The methods of payment that the Committee may in its
discretion accept or commit to accept in an Award Agreement include:

(i)

cash or check payable to the Company (in U.S. dollars);

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(ii)

other Shares that (A) are owned by the Participant who is purchasing Shares
pursuant to an Option, (B) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which the Option is
being exercised, (C) are all, at the time of such surrender, free and clear of
any and all claims, pledges, liens and encumbrances, or any restrictions which
would in any manner restrict the transfer of such Shares to or by the Company
(other than such restrictions as may have existed prior to an issuance of such
Shares by the Company to such Participant), and (D) are duly endorsed for
transfer to the Company;

(iii)

a net exercise by surrendering to the Company Shares otherwise receivable upon
exercise of the Option;

(iv)

a cashless exercise program that the Committee may approve, from time to time in
its discretion, pursuant to which a Participant may elect to concurrently
provide irrevocable instructions (A) to such Participant’s broker or dealer to
effect the immediate sale of the purchased Shares and remit to the Company, out
of the sale proceeds available on the settlement date, sufficient funds to cover
the exercise price of the Option plus all Withholding Taxes, and (B) to the
Company to deliver the certificates for the purchased Shares directly to such
broker or dealer in order to complete the sale; or

(v)

any combination of the foregoing methods of payment.

The Company shall not be required to deliver Shares pursuant to the exercise of
an Option until the Company has received sufficient funds to cover the full
exercise price due and all applicable Withholding Taxes required by reason of
such exercise.

Notwithstanding any other provision of the Plan to the contrary, no Participant
who is a Director or an “executive officer” of the Company within the meaning of
Section 13(k) of the Exchange Act shall be permitted to make payment with
respect to any Awards granted under the Plan, or continue any extension of
credit with respect to such payment with a loan from the Company or a loan
arranged by the Company in violation of Section 13(k) of the Exchange Act.

(d) Exercise of an Unvested Option.  The Committee in its sole discretion may
allow a Participant to exercise an unvested Option, in which case the Shares
then issued shall be Restricted Shares having analogous vesting restrictions to
the unvested Option.

(e) Termination of Continuous Service.  The Committee may establish and set
forth in the applicable Award Agreement the terms and conditions on which an
Option shall remain exercisable, if at all, following termination of a
Participant’s Continuous Service.  The Committee may waive or modify these
provisions at any time.  To the extent that a Participant is not entitled to
exercise an Option at the date of his or her termination of Continuous Service,
or if the Participant (or other person entitled to exercise the Option) does not
exercise the Option to the extent so entitled within the time specified in the
Award Agreement or below (as applicable), the Option shall terminate and the
Shares underlying the unexercised portion of the Option shall revert to the Plan
and become available for future Awards. 

The following provisions shall apply to the extent an Award Agreement does not
specify the terms and conditions upon which an Option shall terminate when there
is a termination of a Participant’s Continuous Service:

Reason for terminating Continuous Service

Option Termination Date

(I) By the Company for Cause, or what would have been Cause if the Company had
known all of the relevant facts.

Termination of the Participant’s Continuous Service, or when Cause first existed
if earlier.

(II) Disability of the Participant.

Within one year after termination of the Participant’s Continuous Service.

(III) Retirement of the Participant after age 65 with five years or more of
Continuous Service.

Within one year after termination of the Participant’s Continuous Service.

(IV) Death of the Participant during Continuous Service or within 90 days
thereafter.

Within one year after termination of the Participant’s Continuous Service.

(V) Other than due to Cause or the Participant’s Disability, Retirement, or
Death.

Within 90 days after termination of the Participant’s Continuous Service.

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If there is a Securities and Exchange Commission blackout period (or a
Committee-imposed blackout period) that prohibits the buying or selling of
Shares during any part of the ten day period before the expiration of any Option
based on the termination of a Participant’s Continuous Service (as described
above), the period for exercising the Options shall be extended until ten days
beyond when such blackout period ends.  Notwithstanding any provision hereof or
within an Award Agreement, no Option shall ever be exercisable after the
expiration date of its original term as set forth in the Award Agreement.

6.

SARs.

(a) Grants.  The Committee may grant SARs to Eligible Persons pursuant to Award
Agreements setting forth terms and conditions that are not inconsistent with the
Plan; provided that:

(i)

the exercise price for the Shares subject to each SAR shall not be less than
100% of the Fair Market Value of the underlying Shares on the Grant Date;

 

(ii)

no SAR shall be exercisable for a term ending more than ten years after its
Grant Date; and

 

(iii)

each SAR shall, except to the extent an SAR Award Agreement provides otherwise,
be subject to the provisions of Section 5(e) relating to the effect of a
termination of Participant’s Continuous Service, with “SAR” being substituted
for “Option.” 

 

 

(b) Settlement.  Subject to the Plan’s terms, an SAR shall entitle the
Participant, upon exercise of the SAR, to receive Shares having a Fair Market
Value on the date of exercise equal to the product of the number of Shares as to
which the SAR is being exercised, and the excess of (i) the Fair Market Value,
on such date, of the Shares covered by the exercised SAR, over (ii) an exercise
price designated in the SAR Award Agreement.  Notwithstanding the foregoing, an
SAR Award Agreement may limit the total settlement value that the Participant
will be entitled to receive upon the SAR’s exercise, and may provide for
settlement either in cash or in any combination of cash or Shares that the
Committee may authorize pursuant to an Award Agreement.  If, on the date on
which an SAR or portion thereof is to expire, the Fair Market Value exceeds the
per Share exercise price of such SAR, then the SAR shall be deemed exercised and
cancelled without any payment in settlement thereof; subject to any specific
provision to the contrary within an Award Agreement.

(c) SARs related to Options.  The Committee may grant SARs either concurrently
with the grant of an Option or with respect to an outstanding Option, in which
case the SAR shall extend to all or a portion of the Shares covered by the
related Option, and shall have an exercise price that is not less than the
exercise price of the related Option.  An SAR shall entitle the Participant who
holds the related Option, upon exercise of the SAR and surrender of the related

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Option, or portion thereof, to the extent the SAR and related Option each were
previously unexercised, to receive payment of an amount determined pursuant to
Section 6(b) above.  Any SAR granted in tandem with an ISO will contain such
terms as may be required to comply with the provisions of Code Section 422.

7.

Restricted Shares, RSUs, and Unrestricted Share Awards.

(a) Grant.  The Committee may grant Restricted Share, RSU, or Unrestricted Share
Awards to Eligible Persons, in all cases pursuant to Award Agreements setting
forth terms and conditions that are not inconsistent with the Plan.  The
Committee shall establish as to each Restricted Share or RSU Award the number of
Shares deliverable or subject to the Award (which number may be determined by a
written formula), and the period or periods of time (the “Restriction Period”)
at the end of which all or some restrictions specified in the Award Agreement
shall lapse, and the Participant shall receive unrestricted Shares (or cash to
the extent provided in the Award Agreement) in settlement of the Award.  Such
restrictions may include, without limitation, restrictions concerning voting
rights and transferability, and such restrictions may lapse separately or in
combination at such times and pursuant to such circumstances or based on such
criteria as selected by the Committee, including, without limitation, criteria
based on the Participant’s duration of employment, directorship or consultancy
with the Company, individual, group, or divisional performance criteria, Company
performance, or other criteria selection by the Committee. The Committee may
make Restricted Share and RSU Awards with or without the requirement for payment
of cash or other consideration.  In addition, the Committee may grant Awards
hereunder in the form of Unrestricted Shares which shall vest in full upon the
Grant Date or such other date as the Committee may determine or which the
Committee may issue pursuant to any program under which one or more Eligible
Persons (selected by the Committee in its sole discretion) elect to pay for such
Shares or to receive Unrestricted Shares in lieu of cash bonuses that would
otherwise be paid.

(b) Vesting and Forfeiture.  The Committee shall set forth, in an Award
Agreement granting Restricted Shares or RSUs, the terms and conditions under
which the Participant’s interest in the Restricted Shares or the Shares or cash
subject to RSUs will become vested and non-forfeitable.  Except as set forth in
the applicable Award Agreement or as the Committee otherwise determines, upon
termination of a Participant’s Continuous Service for any reason, the
Participant shall forfeit his or her Restricted Shares and RSUs to the extent
the Participant’s interest therein has not vested on or before such termination
date; provided that if a Participant purchases Restricted Shares and forfeits
them for any reason, the Company shall return the purchase price to the
Participant to the extent either set forth in an Award Agreement or required by
Applicable Law.

(c) Certificates for Restricted Shares.  Unless otherwise provided in an Award
Agreement, the Company shall hold certificates representing Restricted Shares
and dividends (whether in Shares or cash) that accrue with respect to them until
the restrictions lapse, and the Participant shall provide the Company with
appropriate stock powers endorsed in blank. The Participant’s failure to provide
such stock powers within ten days after a written request from the Company shall
entitle the Committee to unilaterally declare a forfeiture of all or some of the
Participant’s Restricted Shares. 

(d) Section 83(b) Elections.  A Participant may make an election under Code
Section 83(b) (the “Section 83(b) Election”) with respect to Restricted
Shares.  A Participant who has received RSUs may, within ten days after
receiving the RSU Award, provide the Committee with a written notice of his or
her desire to make Section 83(b) Election with respect to the Shares subject to
such RSUs.  The Committee may in its discretion convert the Participant’s RSUs
into Restricted Shares, on a one-for-one basis, in full satisfaction of the
Participant’s RSU Award.  The Participant may then make a Section 83(b) Election
with respect to those Restricted Shares; provided that the Participant’s Section
83(b) Election will be invalid if not filed with the Company

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and the appropriate U.S. tax authorities within 30 days after the Grant Date of
the RSUs replaced by the Restricted Shares.

(e) Deferral Elections for RSUs.  To the extent specifically provided in an
Award Agreement, a Participant may irrevocably elect, in accordance with Section
8 below, to defer the receipt of all or a percentage of the Shares that would
otherwise be transferred to the Participant both more than 12 months after the
date of the Participant’s deferral election and upon the vesting of an RSU
Award.  If the Participant makes this election, the Company shall credit the
Shares subject to the election, and any associated Shares attributable to
Dividend Equivalent Rights attached to the Award, to a DSU account established
pursuant to Section 8 below on the date such Shares would otherwise have been
delivered to the Participant pursuant to this Section.

(f) Issuance of Shares upon Vesting.  As soon as practicable after vesting of a
Participant’s Restricted Shares (or of the right to receive Shares underlying
RSUs), the Company shall deliver to the Participant, free from vesting
restrictions, one Share for each surrendered and vested Restricted Share (or
deliver one Share free of the vesting restriction for each vested RSU), unless
an Award Agreement provides otherwise and subject to Section 11 regarding
Withholding Taxes.  No fractional Shares shall be distributed, and cash shall be
paid in lieu thereof.

8.

DSUs.

(a) Elections to Defer.  The Committee may make DSU awards to Eligible Persons
pursuant to Award Agreements (regardless of whether or not there is a deferral
of the Eligible Person’s compensation), and may permit select Eligible Persons
to irrevocably elect, on a form provided by and acceptable to the Committee (the
“Election Form”), to forego the receipt of cash or other compensation (including
the Shares deliverable pursuant to any RSU Award) and in lieu thereof to have
the Company credit to an internal Plan account a number of DSUs having a Fair
Market Value equal to the Shares and other compensation deferred.  These credits
will be made at the end of each calendar quarter (or other period determined by
the Committee) during which compensation is deferred.  Notwithstanding the
foregoing sentence, a Participant’s Election Form will be ineffective with
respect to any compensation that the Participant earns before the date on which
the Election Form takes effect.  For any Participant who is subject to U.S.
income taxation, the Committee shall only authorize deferral elections under
this Section (i) pursuant to written procedures, and using written Election
Forms, that satisfy the requirements of Code Section 409A, and (ii) only by
Eligible Persons who are Directors, Consultants, or members of a select group of
management or highly compensated Employees (within the meaning of ERISA).

(b) Vesting.  Unless an Award Agreement expressly provides otherwise, each
Participant shall be 100% vested at all times in any Shares subject to DSUs.

(c) Issuances of Shares.  Unless an Award Agreement expressly provides
otherwise, the Company shall settle a Participant’s DSU Award, by delivering one
Share for each DSU, in five substantially equal annual installments that are
issued before the last day of each of the five calendar years that end after the
date on which the Participant’s Continuous Service ends for any reason, subject
to –

(i)

the Participant’s right to elect a different form of distribution, only on a
form provided by and acceptable to the Committee, that permits the Participant
to select any combination of a lump sum and annual installments that are
triggered by, and completed within ten years following, the last day of the
Participant’s Continuous Service, and

(ii)

the Company’s acceptance of the Participant’s distribution election form
executed at the time the Participant elects to defer the receipt of cash or
other compensation pursuant to Section 8(a), provided that the Participant may
change a distribution election through any subsequent election that (A) the
Participant delivers to the Company at least one year before the date on which
distributions are otherwise scheduled to commence pursuant to the Participant’s
initial distribution election, (B) such

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distribution election does not take effect until at least one year after the
date it was executed by the Participant and (C) defers the commencement of
distributions by at least five years from the originally scheduled distribution
commencement date.

Fractional shares shall not be issued, and instead shall be paid out in cash.

(d) Emergency Withdrawals.  In the event that a Participant suffers an
unforeseeable emergency within the contemplation of this Section, the
Participant may apply to the Committee for an immediate distribution of all or a
portion of the Participant’s DSUs.  The unforeseeable emergency must result from
a sudden and unexpected illness or accident of the Participant, the
Participant’s spouse, or a dependent (within the meaning of Code Section 152) of
the Participant, casualty loss of the Participant’s property, or other similar
extraordinary and unforeseeable conditions beyond the control of the
Participant.  The Committee shall, in its sole and absolute discretion,
determine whether a Participant has a qualifying unforeseeable emergency, may
require independent verification of the emergency, and may determine whether or
not to provide the Participant with cash or Shares.  Examples of purposes which
are not considered unforeseeable emergencies include post-secondary school
expenses or the desire to purchase a residence.  In no event will a distribution
be made to the extent the unforeseeable emergency could be relieved through
reimbursement or compensation by insurance or otherwise, or by liquidation of
the Participant’s nonessential assets to the extent such liquidation would not
itself cause a severe financial hardship.  The amount of any distribution
hereunder shall be limited to the amount necessary to relieve the Participant’s
unforeseeable emergency plus amounts necessary to pay taxes reasonably
anticipated as a result of the distribution.  The number of Shares subject to
the Participant’s DSU Award shall be reduced by any Shares distributed to the
Participant and by a number of Shares having a Fair Market Value on the date of
the distribution equal to any cash paid to the Participant pursuant to this
Section.  For all DSUs granted to Participants who are U.S. taxpayers, the term
“unforeseeable emergency” shall be interpreted in accordance with Code Section
409A.

(e) Termination of Service.  For purposes of this Section, a Participant’s
“Continuous Service” shall only end when the Participant incurs a “separation
from service” within the meaning of Treasury Regulations § 1.409A-1(h).  A
Participant shall be considered to have experienced a termination of Continuous
Service when the facts and circumstances indicate that either (i) no further
services will be performed for the Company or any Affiliate after a certain
date, or (ii) that the level of bona fide services the Participant will perform
after such date (whether as an Employee, Director, or Consultant) are reasonably
expected to permanently decrease to no more than 50% of the average level of
bona fide services performed by such Participant (whether as an Employee,
Director, or Consultant) over the immediately preceding 36-month period (or full
period of services to the Company and its Affiliates if the Participant has been
providing such services for less than 36 months).

9.

Performance and Cash-Settled Awards.

(a) Performance Units.  Subject to the limitations set forth in paragraph (b)
hereof, the Committee may in its discretion grant Performance Awards, including
Performance Units to any Eligible Person, including Performance Unit Awards that
(i) have substantially the same financial benefits and other terms and
conditions as Options, SARs, RSUs, or DSUs, but (ii) are settled only in
cash.  All Awards hereunder shall be made pursuant to Award Agreements setting
forth terms and conditions that are not inconsistent with the Plan.

(b) Performance Compensation Awards.  Subject to the limitations set forth in
this Section, the Committee may, at the time of grant of a Performance Unit,
designate such Award as a “Performance Compensation Award” (payable in cash or
Shares) in order that such Award constitutes, and has terms and conditions that
are designed to qualify as, “qualified performance-based compensation” under
Code Section 162(m).  With respect to each such Performance Compensation Award,
the Committee shall establish, in writing within the time required under

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Code Section 162(m), a “Performance Period,” “Performance Measure(s)”, and
“Performance Formula(e)” (each such term being defined below).  Once established
for a Performance Period, the Performance Measure(s) and Performance Formula(e)
shall not be amended or otherwise modified to the extent such amendment or
modification would cause the compensation payable pursuant to the Award to fail
to constitute qualified performance-based compensation under Code Section
162(m).

A Participant shall be eligible to receive payment in respect of a Performance
Compensation Award only to the extent that the Performance Measure(s) for such
Award is achieved and the Performance Formula(e) as applied against such
Performance Measure(s) determines that all or some portion of such Participant’s
Award has been earned for the Performance Period.  As soon as practicable after
the close of each Performance Period, the Committee shall review and certify in
writing whether, and to what extent, the Performance Measure(s) for the
Performance Period have been achieved and, if so, determine and certify in
writing the amount of the Performance Compensation Award to be paid to the
Participant and, in so doing, may use negative discretion to decrease, but not
increase, the amount of the Award otherwise payable to the Participant based
upon such performance

(c) Limitations on Awards.  The maximum Performance Award and the maximum
Performance Compensation Award that any one Participant may receive during any
12-month period during a Performance Period, without regard to time of vesting
or exercisability, shall not together exceed 500,000  Shares, as adjusted
pursuant to Section 13 below (or, for Performance Units to be settled in cash,
U.S. $2,000,000. 

(d) Definitions.

(i)“Performance Formula” means, for a Performance Period, one or more objective
formulas or standards established by the Committee for purposes of determining
whether or the extent to which an Award has been earned based on the level of
performance attained or to be attained with respect to one or more Performance
Measure(s).  Performance Formulae may vary from Performance Period to
Performance Period and from Participant to Participant and may be established on
a stand-alone basis, in tandem or in the alternative.

(ii)“Performance Measure” means one or more of the following selected by the
Committee to measure Company, Affiliate, and/or business unit performance for a
Performance Period, whether in absolute or relative terms (including, without
limitation, terms relative to a peer group or index):  basic, diluted, or
adjusted earnings per share; sales or revenue; earnings before interest, taxes,
and other adjustments (in total or on a per share basis); basic or adjusted net
income; returns on equity, assets, capital, or revenue; economic value added;
working capital; total stockholder return; and product development, product
market share, research, licensing, successful completion of clinical trials,
submission of applications with the U.S. Food and Drug Administration (“FDA”)
for new tests, receipt from the FDA of clearance for new tests,
commercialization of new tests, litigation, human resources, information
services, mergers, acquisitions, sales of assets of Affiliates or business
units.  Each such measure shall be, to the extent applicable, determined in
accordance with generally accepted accounting principles as consistently applied
by the Company (or such other standard applied by the Committee) and, if so
determined by the Committee, and in the case of a Performance Compensation
Award, to the extent permitted under Code Section 162(m), adjusted to omit the
effects of extraordinary items, gain or loss on the disposal of a business
segment, unusual or infrequently occurring events and transactions and
cumulative effects of changes in accounting principles.  Performance Measures
may vary from Performance Period to Performance Period and from Participant to
Participant, and may be established on a stand-alone basis, in tandem or in the
alternative.

(iii)“Performance Period” means one or more periods of time (of not less than
one fiscal year of the Company), as the Committee may designate, over which the
attainment of one or more Performance Measure(s) will be measured for the
purpose of determining a Participant’s rights in respect of an Award.

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(e) Deferral Elections.  At any time prior to the date that is both at least six
months before the close of a Performance Period (or shorter or longer period
that the Committee selects) with respect to a Performance Award and at which
time vesting or payment is substantially uncertain to occur, the Committee may
permit a Participant who is a member of a select group of management or highly
compensated employees (within the meaning of ERISA) to irrevocably elect, on a
form provided by and acceptable to the Committee, to defer the receipt of all or
a percentage of the cash or Shares that would otherwise be transferred to the
Participant upon the vesting of such Award.  If the Participant makes this
election, the cash or Shares subject to the election, and any associated
interest and dividends, shall be credited to an account established pursuant to
Section 8 hereof on the date such cash or Shares would otherwise have been
released or issued to the Participant pursuant to this Section.  

10.

Dividend Equivalent Rights.  To the extent expressly provided in an Award
Agreement, a Dividend Equivalent Right shall entitle an Eligible Person who has
received an Award to be credited with dividends that the Company declares and
pays (in cash, Shares, or other securities) to its stockholders of record
between the Grant Date and the settlement date of the Award.  Any Dividend
Equivalent Rights arising from cash dividends shall be immediately deemed to be
reinvested in Shares having a Fair Market Value equal to such cash dividends
(unless an Award Agreement provides otherwise).  The Company shall settle
Dividend Equivalent Rights by issuing Shares to a Participant to the extent they
were previously credited to the Participant as Dividend Equivalent Rights and
are attributable to Shares that the Participant is receiving as settlement of an
Award.  Notwithstanding the foregoing, the Committee may in an Award Agreement
or modification thereto provide for (i) an earlier or later settlement event for
Dividend Equivalent Rights, and (ii) complete or partial settlement in cash
rather than in Shares; provided that Dividend Equivalent Rights associated with
an Award subject to performance-based vesting conditions shall be deposited with
the Company and shall be subject to the same restrictions as the underlying
Award.

11.

Taxes; Withholding. 

(a)General Rule.    Participants are solely responsible and liable for the
satisfaction of all taxes and penalties that may arise in connection with
Awards, and neither the Company, any Affiliate, nor any of their employees,
directors, or agents shall have any obligation to mitigate, indemnify, or to
otherwise hold any Participant harmless from any or all of such taxes.    The
Company’s obligation to deliver Shares (or to pay cash) to Participants pursuant
to Awards is at all times subject to their prior or coincident satisfaction of
all required Withholding Taxes.  Except to the extent otherwise either provided
in an Award Agreement or thereafter authorized by the Committee, the Company or
any Affiliate will satisfy required Withholding Taxes that the Participant has
not otherwise arranged to settle before the due date thereof –

(i)     first from withholding the cash otherwise payable to the Participant
pursuant to the Award;

 

(ii)     then by withholding and cancelling the Participant’s rights with
respect to a number of Shares that (A) would otherwise have been delivered to
the Participant pursuant to the Award, and (B) have an aggregate Fair Market
Value equal to the Withholding Taxes (such withheld Shares may not have a value
in excess of the aggregate Fair Market Value thereof on the date of the
withholding determined by applying the minimum statutory withholding rate); and 

 

(iii)      finally, withholding the cash otherwise payable to the Participant by
the Company.

 

(b)U.S. Code Section 409A.   To the extent that the Committee determines that
any Award granted under the Plan is subject to Code Section 409A, the Award
Agreement evidencing such Award shall incorporate the terms and conditions
required by Code Section 409A.  To the extent applicable, the Plan and Award
Agreements shall be interpreted in accordance with Code Section 409A and
Department of Treasury regulations and other interpretive guidance issued
thereunder, including without limitation any such regulations or other guidance
that may be issued after the Effective Date.  Notwithstanding any provision of
the Plan to the contrary, the Committee may adopt such amendments to the Plan
and the applicable Award Agreement or adopt other policies and procedures
(including amendments, policies and procedures with retroactive effect), or take
any other actions, that the Administrator determines are necessary or
appropriate (i) to exempt the Award from Code Section 409A and/or preserve the
intended tax treatment of the benefits provided with respect to the Award, or
(ii) to comply with the

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requirements of Code Section 409A and related Department of Treasury guidance
and thereby avoid the application of any penalty taxes under such Section.

(c)  Unfunded Tax Status.  The Plan is intended to be an “unfunded” plan for
incentive compensation.  With respect to any payments not yet made to a Person
pursuant to an Award, nothing contained in the Plan or any Award Agreement shall
give the Person any rights that are greater than those of a general creditor of
the Company or any Affiliate, and a Participant’s rights under the Plan at all
times constitute an unsecured claim against the general assets of the Company
for the collection of benefits as they come due.  Neither the Participant nor
the Participant’s duly-authorized transferee or Beneficiaries shall have any
claim against or rights in any specific assets, Shares, or other funds of the
Company.

12.

Non-Transferability of Awards.

(a) General.  Except as set forth in this Section, or as otherwise approved by
the Committee, Awards may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or by the laws of
descent or distribution.  The designation of a death Beneficiary by a
Participant will not constitute a transfer.  An Award may be exercised, during
the lifetime of the holder of an Award, only by such holder, by the
duly-authorized legal representative of a holder who is Disabled, or by a
transferee permitted by this Section.

(b) Limited Transferability Rights.    The Committee may in its discretion
provide in an Award Agreement that an Award in the form of a Non-ISO, a
Share-settled SAR, Restricted Shares, RSUs, Performance Awards, Performance
Units may be transferred without consideration and on such terms and conditions
as the Committee deems appropriate, either (i) by instrument to the
Participant’s “Immediate Family” (as defined below), (ii) by instrument to an
inter vivos or testamentary trust (or other entity) in which the Award is to be
passed to the Participant’s designated beneficiaries, or (iii) by gift to
charitable institutions.  Any transferee of the Participant’s rights shall
succeed and be subject to all of the terms of the applicable Award Agreement and
the Plan.  “Immediate Family” means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, and shall include adoptive relationships.

(c) Death.  In the event of the death of a Participant, any outstanding Awards
issued to the Participant shall automatically be transferred to the
Participant’s Beneficiary (or, if no Beneficiary is designated or surviving, to
the person or persons to whom the Participant’s rights under the Award pass by
will or the laws of descent and distribution). 

13.

Change in Capital Structure; Change in Control; Etc.

(a) Changes in Capitalization.  The Committee shall equitably adjust the number
of Shares covered by each outstanding Award,  the number of Shares that have
been authorized for issuance under the Plan but as to which no Awards have yet
been granted or that have been returned to the Plan upon cancellation,
forfeiture, or expiration of an Award, the per person maximums set forth in the
Plan, as well as the exercise or other price per Share covered by each such
outstanding Award, to reflect any increase or decrease in the number of issued
Shares resulting from a stock-split, reverse stock-split, stock dividend,
combination, recapitalization or reclassification of the Shares, merger,
consolidation, change in form of organization, or any other increase or decrease
in the number of issued Shares effected without receipt of consideration by the
Company.  In the event of any such transaction or event, the Committee may
provide in substitution for any or all outstanding Awards under the Plan such
alternative consideration (including cash or securities of any surviving entity)
as it may in good faith determine to be equitable under the circumstances and
may require in connection therewith the surrender of all Awards so replaced.  In
any case, such substitution of cash or securities shall not require the consent
of any person who is granted Awards pursuant to the Plan.  Except as expressly
provided herein, or in an Award Agreement, if the Company issues for
consideration shares of stock of any

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class or securities convertible into shares of stock of any class, the issuance
shall not affect, and no adjustment by reason thereof shall be required to be
made with respect to the number or price of Shares subject to any Award.

(b) Dissolution or Liquidation. In the event of the dissolution or liquidation
of the Company other than as part of a Change in Control, each Award will
terminate immediately prior to the consummation of such dissolution or
liquidation, subject to the ability of the Committee to exercise any discretion
authorized in the case of a Change in Control. 

(c) Change in Control.  In the event of a Change in Control but subject to the
terms of any Award Agreements or employment-related agreements between the
Company or any Affiliates and any Participant, each outstanding Award shall be
assumed or a substantially equivalent award shall be substituted by the
surviving or successor company or a parent or subsidiary of such successor
company (in each case, the “Successor Company”) upon consummation of the Change
in Control.  Notwithstanding the foregoing, instead of having outstanding Awards
be assumed or replaced with equivalent awards by the Successor Company, the
Committee may in its sole and absolute discretion and authority, without
obtaining the approval or consent of the Company’s stockholders or any
Participant with respect to his or her outstanding Awards, take one or more of
the following actions (with respect to any or all of the Awards, and with
discretion to differentiate between individual Participants and Awards for any
reason):

(i)

accelerate the vesting of Awards so that Awards shall vest (and, to the extent
applicable, become exercisable) as to the Shares that otherwise would have been
unvested and provide that repurchase rights of the Company with respect to
Shares issued pursuant to an Award shall lapse as to the Shares subject to such
repurchase right;

(ii)

arrange or otherwise provide for the payment of cash or other consideration to
Participants in exchange for the satisfaction and cancellation of outstanding
Awards (with the Committee determining the amount payable to each Participant
based on the Fair Market Value, on the date of the Change in Control, of the
Award being cancelled, based on any reasonable valuation method selected by the
Committee);

(iii)

terminate all or some Awards upon the consummation of the Change in Control,
provided that the Committee shall provide for vesting of such Awards in full as
of a date immediately prior to consummation of the Change in Control.  To the
extent that an Award is not exercised prior to consummation of a transaction in
which the Award is not being assumed or substituted, such Award shall terminate
upon such consummation;

(iv)

make such other modifications, adjustments or amendments to outstanding Awards
or this Plan as the Committee deems necessary or appropriate, subject however to
the terms of Section 13 above.

14.

Termination, Rescission and Recapture of Awards.

(a) Each Award under the Plan is intended to align the Participant’s long-term
interests with those of the Company.  Accordingly, unless otherwise expressly
provided in an Award Agreement, the Company may terminate any outstanding,
unexercised, unexpired, unpaid, or deferred Awards (“Termination”), rescind any
exercise, payment or delivery pursuant to the Award (“Rescission”), or recapture
any Shares (whether restricted or unrestricted) or proceeds from the
Participant’s sale of Shares issued pursuant to the Award (“Recapture”), if the
Participant does not comply with the conditions of subsections (b), (c), and (e)
hereof (collectively, the “Conditions”).

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(b) The Participant shall comply with any agreement between the Participant and
the Company or any Affiliate with regard to nondisclosure of the  proprietary or
confidential information or material of the Company or any Affiliate. 

(c) The Participant shall comply with any agreement between the Participant and
the Company or any Affiliate with regard to intellectual property (including but
not limited to patents, trademarks, copyrights, trade secrets, inventions,
developments and improvements). 

(d) Upon exercise, payment, or delivery of cash or Company Stock pursuant to an
Award, the Participant shall certify on a form acceptable to the Company that he
or she is in compliance with the terms and conditions of the Plan.

(e) If the Company determines, in its sole and absolute discretion, that (i) a
Participant has violated any of the Conditions set forth in subsection (b) or
(c); (ii) during his or her Continuous Service, or within one year after its
termination for any reason, a Participant has solicited any non-administrative
employee of the Company to terminate employment with the Company; or (y) during
his or her Continuous Service, a Participant has engaged in activities which
are materially prejudicial to or in conflict with the interests of the Company,
including any breaches of fiduciary duty or the duty of loyalty, then the
Company may, in its sole and absolute discretion, impose a Termination,
Rescission, and/or Recapture with respect to any or all of the Participant’s
relevant Awards, Shares, and the proceeds thereof. 

(f) Within ten days after receiving notice from the Company of any such activity
described in Section 14(e) above, the Participant shall deliver to the Company
the Shares acquired pursuant to the Award, or, if Participant has sold the
Shares, the gain realized, or payment received as a result of the rescinded
exercise, payment, or delivery; provided, that if the Participant returns Shares
that the Participant purchased pursuant to the exercise of an Option (or the
gains realized from the sale of such Company Stock), the Company shall promptly
refund the exercise price, without earnings, that the Participant paid for the
Shares.  Any payment by the Participant to the Company pursuant to this Section
shall be made either in cash or by returning to the Company the number of Shares
that the Participant received in connection with the rescinded exercise,
payment, or delivery. 

(g) Notwithstanding the foregoing provisions of this Section, the Company has
sole and absolute discretion not to require Termination, Rescission and/or
Recapture, and its determination not to require Termination, Rescission and/or
Recapture with respect to any particular act by a particular Participant or
Award shall not in any way reduce or eliminate the Company’s authority to
require Termination, Rescission and/or Recapture with respect to any other act
or Participant or Award.   

(h) All administrative and discretionary authority given to the Company under
this Section shall be exercised by the most senior human resources executive of
the Company or such other person or committee (including without limitation the
Committee) as the Committee may designate from time to time.

(i) If any provision within this Section is determined to be unenforceable or
invalid under any Applicable Law, such provision will be applied to the maximum
extent permitted by Applicable Law, and shall automatically be deemed amended in
a manner consistent with its objectives and any limitations required under
Applicable Law. 

15.

Recoupment of Awards.  Unless otherwise specifically provided in an Award
Agreement, and to the extent permitted by Applicable Law, the Committee may in
its sole and absolute discretion, without obtaining the approval or consent of
the Company’s stockholders or of any Participant, require that any Participant
reimburse the Company for all or any portion of any Awards granted under this
Plan (“Reimbursement”), or the Committee may require the Termination or
Rescission of, or the Recapture associated with, any Award, if and to the
extent—

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(a) the granting, vesting, or payment of such Award was predicated upon the
achievement of certain financial results that were subsequently the subject of a
material financial restatement;

(b) in the Committee’s view the Participant either benefited from a calculation
that later proves to be materially inaccurate, or engaged in fraud or misconduct
that caused or partially caused the need for a material financial restatement by
the Company or any Affiliate; and

(c) a lower granting, vesting, or payment of such Award would have occurred
based upon the  miscalculated amounts or the conduct described in clause (b) of
this Section.

In each instance, the Committee will, to the extent practicable and allowable
under Applicable Laws, require Reimbursement, Termination or Rescission of, or
Recapture relating to, any such Award granted to a Participant; provided that
the Company will not seek Reimbursement, Termination or Rescission of, or
Recapture relating to, any such Awards that were paid or vested more than three
years prior to the first date of the applicable restatement period. 

 

16.

Relationship to other Benefits.  No payment pursuant to the Plan shall be taken
into account in determining any benefits under any pension, retirement, savings,
profit sharing, group insurance, welfare or other benefit plan of the Company or
any Affiliate except to the extent otherwise expressly provided in writing in
such other plan or an agreement thereunder.

17.

Administration of the Plan.   The Committee shall administer the Plan in
accordance with its terms, provided that the Board may act in lieu of the
Committee on any matter.  The Committee shall hold meetings at such times and
places as it may determine and shall make such rules and regulations for the
conduct of its business as it deems advisable.  In the absence of a duly
appointed Committee, the Board shall function as the Committee for all purposes
of the Plan.

(a) Committee Composition.  The Board shall appoint the members of the
Committee. If and to the extent permitted by Applicable Law, the Committee may
authorize one or more executive officers to make Awards to Eligible Persons
other than themselves.  The Board may at any time appoint additional members to
the Committee, remove and replace members of the Committee with or without
Cause, and fill vacancies on the Committee however caused.

(b) Powers of the Committee.  Subject to the provisions of the Plan, the
Committee shall have the authority, in its sole discretion:

(i)

to grant Awards and to determine Eligible Persons to whom Awards shall be
granted from time to time, and the number of Shares, units, or dollars to be
covered by each Award;

(ii)

to determine, from time to time, the Fair Market Value of Shares;

(iii)

to determine, and to set forth in Award Agreements, the terms and conditions of
all Awards, including any applicable exercise or purchase price, the
installments and conditions under which an Award shall become vested (which may
be based on performance), terminated, expired, cancelled, or replaced, and the
circumstances for vesting acceleration or waiver of forfeiture restrictions, and
other restrictions and limitations;

(iv)

to approve the forms of Award Agreements and all other documents, notices and
certificates in connection therewith which need not be identical either as to
type of Award or among Participants;

(v)

to construe and interpret the terms of the Plan and any Award Agreement, to
determine the meaning of their terms, and to prescribe, amend, and rescind rules
and procedures relating to the Plan and its administration;

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(vi)

to the extent consistent with the purposes of the Plan and without amending the
Plan, to modify, to cancel, or to waive the Company’s rights with respect to any
Awards, to adjust or to modify Award Agreements for changes in Applicable Law,
and to recognize differences in foreign law, tax policies, or customs;

(vii)

in the event that the Company establishes, for itself or using the services of a
third party, an automated system for the documentation, granting, settlement, or
exercise of Award, such as a system using an internet website or interactive
voice response, to implement paperless documentation, granting, settlement, or
exercise of Awards by a Participant may be permitted through the use of such an
automated system; and

(viii)

to make all interpretations and to take all other actions that the Committee may
consider necessary or advisable to administer the Plan or to effectuate its
purposes.

Subject to Applicable Law and the restrictions set forth in the Plan, the
Committee may delegate administrative functions to individuals who are Directors
or Employees.

(c) Law Adjustments and Sub-plans.  To facilitate the making of any grant of an
Award under this Plan, the Committee may adopt rules and provide for such
special terms for Awards to Participants who are located within the United
States, foreign nationals, or who are employed by the Company or any Affiliate
outside of the United States of America as the Committee may consider necessary
or appropriate to accommodate differences in local law, tax policy or
custom.  Without limiting the foregoing, the Company is specifically authorized
to adopt rules and procedures regarding the conversion of local currency, taxes,
withholding procedures and handling of stock certificates which vary with the
customs and requirements of particular countries.  The Company may adopt
sub-plans and establish escrow accounts and trusts, and settle Awards in cash in
lieu of shares, as may be appropriate, required or applicable to particular
locations and countries.

(d) Action by Committee.  Unless otherwise established by the Board or in any
charter of the Committee, a majority of the Committee shall constitute a quorum
and the acts of a majority of the members present at any meeting at which a
quorum is present, and acts approved in writing by all members of the Committee
in lieu of a meeting, shall be deemed the acts of the Committee.  Each member of
the Committee is entitled to, in good faith, rely or act upon any report or
other information furnished to that member by an officer or other employee of
the Company or any Affiliate, the Company’s independent certified public
accounts, or any executive compensation consultant or other professional
retained by the Company to assist in the administration of the Plan.

(e) Deference to Committee Determinations.  The Committee shall have the
discretion to interpret or construe ambiguous, unclear, or implied (but omitted)
terms in any fashion it deems to be appropriate in its sole discretion, and to
make any findings of fact needed in the administration of the Plan or Award
Agreements.  The Committee’s prior exercise of its discretionary authority shall
not obligate it to exercise its authority in a like fashion thereafter.  The
Committee’s interpretation and construction of any provision of the Plan, or of
any Award or Award Agreement, and all determination the Committee makes pursuant
to the Plan shall be final, binding, and conclusive.   The validity of any such
interpretation, construction, decision or finding of fact shall not be given de
novo review if challenged in court, by arbitration, or in any other forum, and
shall be upheld unless clearly made in bad faith or materially affected by
fraud.

(f) No Liability; Indemnification.  Neither the Board nor any Committee member,
nor any Person acting at the direction of the Board or the Committee, shall be
liable for any act, omission, interpretation, construction or determination made
in good faith with respect to the Plan, any Award or any Award Agreement.  The
Company and its Affiliates shall pay or reimburse any member of the Committee,
as well as any Director, Employee, or Consultant who in good faith takes action
on behalf of the Plan, for all expenses incurred with respect to the Plan, and
to the full

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extent allowable under Applicable Law shall indemnify each and every one of them
for any claims, liabilities, and costs (including reasonable attorney’s fees)
arising out of their good faith performance of duties on behalf of the
Plan.  The Company and its Affiliates may, but shall not be required to, obtain
liability insurance for this purpose.

(g) Expenses.  The expenses of administering the Plan shall be borne jointly and
severally by the Company and its Affiliates.

18.

Modification of Awards and Substitution of Options.   Within the limitations of
the Plan, the Committee may modify an Award to accelerate the rate at which an
Option or SAR may be exercised, to accelerate the vesting of any Award, to
extend or renew outstanding Awards, to accept the cancellation of outstanding
Awards to the extent not previously exercised, or to make any change that the
Plan would permit for a new Award.  Notwithstanding the foregoing, no
modification of an outstanding Award may materially and adversely affect a
Participant’s rights thereunder unless either (a) the Participant provides
written consent to the modification, or (b) before a Change in Control, the
Committee determines in good faith that the modification is not materially
adverse to the Participant.    Except as provided in Section 13, without prior
stockholder approval, in no event may the Committee exercise its discretion to
reduce the exercise price of outstanding Options or SARs or effect repricing
through cancellation and re-grants or cancellation in exchange for cash.

19.

Plan Amendment and Termination.  The Board may amend or terminate the Plan as it
shall deem advisable; provided that no change shall be made that increases the
total number of Shares reserved for issuance pursuant to Awards (except pursuant
to Section 13 above) unless such change is authorized by the stockholders of the
Company.  A termination or amendment of the Plan shall not materially and
adversely affect a Participant’s vested rights under an Award previously granted
to him or her, unless either (a) the Participant consents in writing to such
termination or amendment, or (b) before a Change in Control, the Committee
determines in good faith that the modification is not materially adverse to the
Participant.  Notwithstanding the foregoing, the Committee may amend the Plan to
comply with changes in tax or securities laws or regulations, or in the
interpretation thereof. 

20.

Term of Plan.  If not sooner terminated by the Board, this Plan shall terminate
at the close of business on the date ten years after its Effective Date.  No
Awards shall be made under the Plan after its termination; however, termination
of the Plan shall not affect the Committee’s ability to exercise the powers
granted to it hereunder with respect to Awards granted under the Plan prior to
the date of such termination. 

21.

Governing Law.    The terms of this Plan shall be governed by the laws of the
State of Delaware, within the United States of America, without regard to the
State’s conflict of laws rules. 

22.

Laws and Regulations.

(a)General Rules.    This Plan, the granting of Awards, the exercise of Options
and SARs, and the obligations of the Company hereunder (including those to pay
cash or to deliver, sell or accept the surrender of any of its Shares or other
securities) shall be subject to all Applicable Laws.  In the event that any
Shares are not registered under any Applicable Law prior to the required
delivery of them pursuant to Awards, the Company may require, as a condition to
their issuance or delivery, that the persons to whom the Shares are to be issued
or delivered make any written representations and warranties (such as that such
Shares are being acquired by the Participant for investment for the
Participant’s own account and not with a view to, for resale in connection with,
or with an intent of participating directly or indirectly in, any distribution
of such Shares) that the Committee may reasonably require, and the Committee may
in its sole discretion include a legend to such effect on the certificates
representing any Shares issued or delivered pursuant to the Plan.

(b)Black-out Periods.  Notwithstanding any contrary terms within the Plan or any
Award Agreement, the Committee shall have the absolute discretion to impose a
“blackout” period on the exercise of any Option or SAR, as well as the
settlement of any Award, with respect to any or all Participants (including
those whose Continuous Service has ended) to the extent that the Committee
determines that doing so is either desirable or required in order to comply with
applicable securities laws.

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23.

No Stockholder Rights.  Neither a Participant nor any transferee or Beneficiary
of a Participant shall have any rights as a stockholder of the Company with
respect to any Shares underlying any Award until the date of issuance of  the
Shares to such Participant, transferee, or Beneficiary for such Shares in
accordance with the Company’s governing instruments and Applicable Law.  Prior
to the issuance of Shares or Restricted Shares pursuant to an Award, a
Participant shall not have the right to vote or to receive dividends or any
other rights as a stockholder with respect to the Shares underlying the Award
(unless otherwise provided in the Award Agreement for Restricted Shares),
notwithstanding its exercise in the case of Options and SARs.  No adjustment
will be made for a dividend or other right that is determined based on a record
date prior to the date the Share is issued, except as otherwise specifically
provided for in this Plan or an Award Agreement.

 

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___________________

Appendix I: Definitions

___________________

 

As used in the Plan, the following terms have the meanings indicated when they
begin with initial capital letters within the Plan:

 

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly controls or is controlled by or under common control with such
Person.  For the purposes of this definition, “control,” when used with respect
to any Person, means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of such Person or the
power to elect directors, whether through the ownership of voting securities, by
contract or otherwise; and the terms “affiliated,” “controlling” and
“controlled” have meanings correlative to the foregoing.

 

“Applicable Law” means the legal requirements relating to the administration of
options and share-based plans under any applicable laws of the United States,
any other country, and any provincial, state, or local subdivision, any
applicable stock exchange or automated quotation system rules or regulations, as
such laws, rules, regulations and requirements shall be in place from time to
time.

 

“Award” means any award made pursuant to the Plan, including awards made in the
form of an Option, an SAR, a Restricted Share, a RSU, an Unrestricted Share, a
DSU, a Performance Unit, a Performance Award, or Dividend Equivalent Rights, or
any combination thereof, whether alternative or cumulative.

 

“Award Agreement” means any written document setting forth the terms of an Award
that has been authorized by the Committee. The Committee shall determine the
form or forms of documents to be used, and may change them from time to time for
any reason.

 

“Beneficiary” means the person or entity designated by the Participant, in a
form approved by the Company, to exercise the Participant’s rights with respect
to an Award or receive payment or settlement under an Award after the
Participant’s death.

 

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

 

“Cause” will have the meaning set forth in any unexpired employment agreement
between the Company and the Participant. In the absence of such an agreement,
“Cause” will exist if the Participant is terminated from employment or other
service with the Company or an Affiliate for any of the following reasons: (i)
the Participant’s willful failure to substantially perform his or her duties and
responsibilities to the Company or deliberate violation of a material Company
policy; (ii) the Participant’s commission of any material act or acts of fraud,
embezzlement, dishonesty, or other willful misconduct; (iii) the Participant’s
material unauthorized use or disclosure of any proprietary information or trade
secrets of the Company or any other party to whom the Participant owes an
obligation of nondisclosure as a result of his or her relationship with the
Company; or (iv) Participant’s willful and material breach of any of his or her
obligations under any written agreement or covenant with the Company.  The
foregoing definition does not in any way limit the Company’s ability to
terminate a Participant’s employment or consulting relationship at any time, and
the term “Company” will be interpreted herein to include any Affiliate or
successor thereto, if appropriate.

 

“Change in Control” means any of the following:

(i)

Merger.  The Company consummates a merger, or consolidation of the Company with
any other corporation unless: (A) the voting securities of the Company
outstanding immediately before the merger or consolidation would continue to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 50% of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; and (B) no Person (other than
Persons who are Employees at any time more than one year before a transaction)
becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the Company’s
then outstanding securities.

(ii)

Sale of Assets.  The stockholders of the Company approve an agreement for the
sale or disposition by the Company of all, or substantially all, of the
Company’s assets.

 

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate

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ownership in an entity which owns all or substantially all of the assets of the
Company immediately following such transaction or series of transactions.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Committee”  means the Compensation Committee of the Board or its successor,
provided that the term “Committee” means (i) with respect to any decision
involving an Award intended to satisfy the requirements of Code Section 162(m),
a committee consisting of two or more Directors of the Company who are intended
to be “outside directors” within the meaning of Code Section 162(m), and (ii)
with respect to any decision relating to a Reporting Person, a committee
consisting of solely of two or more Directors who are intended to be
disinterested within the meaning of Rule 16b-3.

 

“Company” means Vermillion, Inc., a Delaware corporation; provided that in the
event the Company reincorporates to another jurisdiction, all references to the
term “Company” shall refer to the Company in such new jurisdiction.

 

“Company Stock” means common stock, $0.001 par value, of the Company.  In the
event of a change in the capital structure of the Company affecting the common
stock (as provided in Section 13), the Shares resulting from such a change in
the common stock shall be deemed to be Company Stock within the meaning of the
Plan. 

 

“Consultant” means any person (other than an Employee or Director), including an
advisor, who is engaged by the Company or any Affiliate to render services and
is compensated for such services.

 

“Continuous Service” means a Participant’s period of service in the absence of
any interruption or termination, as an Employee, Director, or
Consultant.  Continuous Service shall not be considered interrupted in the case
of:  (i) sick leave; (ii) military leave; (iii) any other leave of absence
approved by the Committee, provided that such leave is for a period of not more
than 90 days, unless reemployment upon the expiration of such leave is
guaranteed by contract or statute, or unless provided otherwise pursuant to
Company policy adopted from time to time; (iv) changes in status from Director
to advisory director or emeritus status; or (iv) transfers between locations of
the Company or between the Company and its Affiliates.  Changes in status
between service as an Employee, Director, and a Consultant will not constitute
an interruption of Continuous Service if the individual continues to perform
bona fide services for the Company.  The Committee shall have the discretion to
determine whether and to what extent the vesting of any Awards shall be tolled
during any paid or unpaid leave of absence; provided,  however, that in the
absence of such determination, vesting for all Awards shall be tolled during any
such unpaid leave (but not for a paid leave).

 

“Deferred Share Units” or “DSUs” mean Awards pursuant to Section 8 of the Plan.

 

“Director” means a member of the Board, or a member of the board of directors of
an Affiliate.

 

“Disabled” means a condition under which a Participant –

 

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

 

(ii)is, by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, received income replacement
benefits for a period of not less than three months under an accident or health
plan covering employees of the Company.

 

“Dividend Equivalent Rights” means Awards pursuant to Section 10 of the Plan,
which may be attached to other Awards.

 

“Effective Date” means the date on which the shareholders of the Company approve
the Plan, as amended and restated.

 

“Eligible Person” means any Consultant, Director, or Employee.

 

“Employee” means any person whom the Company or any Affiliate classifies as an
employee (including an officer) for employment tax purposes, whether or not that
classification is correct.  The payment by the Company of a director’s fee to a
Director shall not be sufficient to constitute “employment” of such Director by
the Company.

 

“Employer” means the Company and each Subsidiary and Affiliate that employs one
or more Participants.

 

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

 

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“Fair Market Value” means, as of any date, the closing price of the Company
Stock on the New York Stock Exchange, the American Stock Exchange, NASDAQ or
such other stock exchange as the Company Stock is then listed for trading, as of
such date (and, if none, as determined by the Committee in good faith based on
relevant facts and circumstances).

 

“Grant Date” means the later of (i) the date designated as the “Grant Date”
within an Award Agreement, and (ii) date on which the Committee determines the
key terms of an Award, provided that as soon as reasonably practical thereafter
the Committee both notifies the Eligible Person of the Award and enters into an
Award Agreement with the Eligible Person.

 

“Incentive Stock Option” (or “ISO”) means, an Option that qualifies for
favorable income tax treatment under Code Section 422, and which is intended by
the Committee to constitute an Incentive Stock Option

 

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

 

“Option” means a right to purchase Company Stock granted under the Plan, at a
price determined in accordance with the Plan.

 

“Participant” means any Eligible Person who holds an outstanding Award.

 

“Performance Awards” mean Awards granted pursuant to Section 9.

 

“Performance Unit” means an Award granted pursuant to Section 9(a) of the Plan
which may be paid in cash, in Shares, or such combination of cash and Shares as
the Committee in its sole discretion shall determine.

 

“Person” means any natural person, association, trust, business trust,
cooperative, corporation, general partnership, joint venture, joint-stock
company, limited partnership, limited liability company, real estate investment
trust, regulatory body, governmental agency or instrumentality, unincorporated
organization or organizational entity.

 

“Plan” means this Vermillion, Inc. Amended and Restated 2010 Stock Incentive
Plan.

 

“Recapture” and “Rescission” have the meaning set forth in Section 14 of the
Plan.

 

“Reimbursement” has the meaning set forth in Section 15 of the Plan.

 

“Reporting Person” means an Employee, Director, or Consultant who is subject to
the reporting requirements set forth under Rule 16b-3.

 

“Restricted Share” means a Share of Company Stock awarded with restrictions
imposed under Section 7.

 

“Restricted Share Unit” or “RSU” means a right granted to a Participant to
receive Shares or cash upon the lapse of restrictions imposed under Section 7.

 

“Retirement” means a Participant’s termination of employment after age 65.

 

“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act, as amended
from time to time, or any successor provision.

 

“Share” means a share of Company Stock, as adjusted in accordance with Section
13 of the Plan.

 

“SAR” or “Share Appreciation Right” means a right to receive amounts awarded
under Section 6.

 

“Ten Percent Holder” means a person who owns (within the meaning of Code Section
422) stock representing more than ten percent (10%) of the combined voting power
of all classes of stock of the Company.

 

“Unrestricted Shares” mean Shares (without restrictions) awarded pursuant to
Section 7 of the Plan.

 

“Withholding Taxes” means the aggregate minimum amount of federal, state, local
and foreign income, payroll and other taxes that the Company and any Affiliates
are required to withhold in connection with any Award.

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Vermillion, Inc.

Amended and Restated 2010 Stock Incentive Plan

_______________________

 

Appendix II: ____ Sub-Plan

_______________________

 

This Appendix II applies to any Awards that are made to Eligible Persons who are
residents of ___________ and who are or may become subject to its tax laws (i.e.
income tax and/or social security tax) as a result of Awards granted under the
Vermillion, Inc. Amended and Restated 2010 Stock Incentive Plan (the
“Plan”).  Terms herein that begin with initial capital letters have the special
definition set forth in the Plan. 

This Appendix II shall be read in conjunction with the Plan and is subject to
the terms and conditions of the Plan; provided that, to the extent that the
terms and conditions of the Plan differ from or conflict with the terms of this
Appendix II, the following terms of this Appendix II shall prevail:

1.______________________

 

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Vermillion, Inc.

Amended and Restated 2010 Stock Incentive Plan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As approved by the Board of

Directors on _________  ___,

2013, and by the Company’s

stockholders on _____, 2013.

 

 

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