Exhibit 10.1

ORBITAL SCIENCES CORPORATION

2005 STOCK INCENTIVE PLAN

(as amended through April 28, 2005)

     Orbital Sciences Corporation, a Delaware corporation (the “Company”), sets
forth herein the terms of its 2005 Stock Incentive Plan (the “Plan”), as
follows:

1. PURPOSE

     The Plan is intended to enhance the Company’s and its Affiliates’ (as
defined herein) ability to attract and retain highly qualified officers,
directors, key employees, and other persons, and to motivate such officers,
directors, key employees, and other persons to serve the Company and its
Affiliates and to expend maximum effort to improve the business results and
earnings of the Company, by providing to such persons an opportunity to acquire
or increase a direct proprietary interest in the operations and future success
of the Company. To this end, the Plan provides for the grant of stock options,
stock appreciation rights, restricted stock, stock units, unrestricted stock,
dividend equivalent rights and cash awards. Any of these awards may, but need
not, be made as performance incentives to reward attainment of annual or
long-term performance goals in accordance with the terms hereof. Stock options
granted under the Plan may be non-qualified stock options or incentive stock
options, as provided herein.

2. DEFINITIONS

     For purposes of interpreting the Plan and related documents (including
Award Agreements), the following definitions shall apply:

     2.1 “Affiliate” means, with respect to the Company, any company or other
trade or business that controls, is controlled by or is under common control
with the Company within the meaning of Rule 405 of Regulation C under the
Securities Act, including, without limitation, any Subsidiary.

     2.2 “Annual Incentive Award” means an Award made subject to attainment of
performance goals (as described in Section 13) over a performance period of up
to one (1) year (the fiscal year, unless otherwise specified by the Committee).

     2.3 “Award” means a grant of an Option, Stock Appreciation Right,
Restricted Stock, Unrestricted Stock, Stock Unit, Dividend Equivalent Rights, or
cash award under the Plan.

     2.4 “Award Agreement” means the written agreement between the Company and a
Grantee that evidences and sets out the terms and conditions of an Award.

     2.5 “Benefit Arrangement” shall have the meaning set forth in Section 14
hereof.

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

 

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     2.7 “Cause” means, as determined by the Board and unless otherwise provided
in an applicable agreement with the Company or an Affiliate, (i) incompetence or
willful misconduct in connection with the performance of duties; (ii) conduct
casting such discredit on the Company as in the opinion of the Board justifies
termination or forfeiture of any Award, or (iii) material breach of any term of
any employment, consulting or other services, confidentiality, intellectual
property or non-competition agreements, if any, between the Service Provider and
the Company or an Affiliate.

     2.8 “Code” means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended.

     2.9 “Committee” means a committee of, and designated from time to time by
resolution of, the Board, which shall be constituted as provided in Section 3.2.
Commencing on the Effective Date and until such time as the Board shall
determine otherwise, the Committee shall be the Human Resources and Compensation
Committee of the Board (or any successor committee thereto with like
responsibilities).

     2.10 “Company” means Orbital Sciences Corporation.

     2.11 “Corporate Transaction” means (i) the dissolution or liquidation of
the Company or a merger, consolidation, or reorganization of the Company with
one or more other entities in which the Company is not the surviving entity,
(ii) a sale of substantially all of the assets of the Company to another person
or entity, or (iii) any transaction (including without limitation a merger or
reorganization in which the Company is the surviving entity) which results in
any person or entity (other than persons who are stockholders or Affiliates
immediately prior to the transaction) owning a majority or more of the combined
voting power of all classes of stock of the Company.

     2.12 “Covered Employee” means a Grantee who is a Covered Employee within
the meaning of Section 162(m)(3) of the Code.

     2.13 “Disability” means the Grantee is unable to perform each of the
essential duties of such Grantee’s position by reason of a medically
determinable physical or mental impairment which is potentially permanent in
character or which can be expected to last for a continuous period of not less
than twelve (12) months; provided, however, that, with respect to rules
regarding expiration of an Incentive Stock Option following termination of the
Grantee’s Service, Disability shall mean the Grantee is unable to engage in any
substantial gainful activity by reason of a medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than 12 months.

     2.14 “Dividend Equivalent Right” means a right, granted to a Grantee under
Section 12 hereof, to receive cash, Stock, other Awards or other property equal
in value to dividends paid with respect to a specified number of shares of
Stock, or other periodic payments.

 

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     2.15 “Effective Date” means March 9, 2005, the date the Plan is approved by
the Board.

     2.16 “Exchange Act” means the Securities Exchange Act of 1934, as now in
effect or as hereafter amended.

     2.17 “Executive Officer” means individuals designated by the Board of
Directors as “executive officers” under Rule 3b-7 of the Exchange Act, and/or as
Section 16 “officers” under such Act.

     2.18 “Fair Market Value” means the value of a share of Stock, determined as
follows: if on the Grant Date or other determination date the Stock is listed on
an established national or regional stock exchange, is admitted to quotation on
The Nasdaq Stock Market, Inc. or is publicly traded on an established securities
market, the Fair Market Value of a share of Stock shall be the closing price of
the Stock on such exchange or in such market (if there is more than one such
exchange or market the Board shall determine the appropriate exchange or market)
on the Grant Date or such other determination date (or if there is no such
reported closing price, the Fair Market Value shall be the mean between the
highest bid and lowest asked prices or between the high and low sale prices on
such trading day) or, if no sale of Stock is reported for such trading day, on
the next preceding day on which any sale shall have been reported. If the Stock
is not listed on such an exchange, quoted on such system or traded on such a
market, Fair Market Value shall be the value of the Stock as determined by the
Board in good faith.

     2.19 “Family Member” means a person who is a spouse, former spouse, child,
stepchild, grandchild, parent, stepparent, grandparent, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother, sister,
brother-in-law, or sister-in-law, including adoptive relationships, of the
Grantee, any person sharing the Grantee’s household (other than a tenant or
employee), a trust in which any one or more of these persons have more than
fifty percent (50%) of the beneficial interest, a foundation in which any one or
more of these persons (or the Grantee) control the management of assets, and any
other entity in which one or more of these persons (or the Grantee) own more
than fifty percent (50%) of the voting interests.

     2.20 “Grant Date” means, as determined by the Board, the latest to occur of
(i) the date as of which the Board approves an Award, (ii) the date on which the
recipient of an Award first becomes eligible to receive an Award under Section 6
hereof, or (iii) such other date as may be specified by the Board.

     2.21 “Grantee” means a person who receives or holds an Award under the
Plan.

     2.22 “Incentive Stock Option” means an “incentive stock option” within the
meaning of Section 422 of the Code, or the corresponding provision of any
subsequently enacted tax statute, as amended from time to time.

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

     2.24 “Option” means an option to purchase one or more shares of Stock
pursuant to the Plan.

     2.25 “Option Price” means the exercise price for each share of Stock
subject to an Option.

     2.26 “Other Agreement” shall have the meaning set forth in Section 14
hereof.

 

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     2.27 “Outside Director” means a member of the Board who is not an officer
or employee of the Company.

     2.28 “Performance Award” means an Award made subject to the attainment of
performance goals (as described in Section 13) over a performance period of up
to ten (10) years.

     2.29 “Plan” means this Orbital Sciences Corporation 2005 Stock Incentive
Plan.

     2.30 “Purchase Price” means the purchase price for each share of Stock
pursuant to a grant of Restricted Stock or Unrestricted Stock.

     2.31 “Reporting Person” means a person who is required to file reports
under Section 16(a) of the Exchange Act.

     2.32 “Restricted Stock” means shares of Stock, awarded to a Grantee
pursuant to Section 9 hereof.

     2.33 “SAR” means a right granted to a Grantee under Section 8 hereof.

     2.34 “SAR Exercise Price” means the per share exercise price of a SAR
granted to a Grantee under Section 8 hereof.

     2.35 “Securities Act” means the Securities Act of 1933, as now in effect or
as hereafter amended.

     2.36 “Service” means service as a Service Provider to the Company or an
Affiliate. Unless otherwise stated in the applicable Award Agreement, a
Grantee’s change in position or duties shall not result in interrupted or
terminated Service, so long as such Grantee continues to be a Service Provider
to the Company or an Affiliate. Subject to the preceding sentence, whether a
termination of Service shall have occurred for purposes of the Plan shall be
determined by the Board, which determination shall be final, binding and
conclusive.

     2.37 “Service Provider” means an employee, officer or director of the
Company or an Affiliate, or a consultant or adviser currently providing services
to the Company or an Affiliate.

     2.38 “Stock” means the common stock, par value $.01 per share, of the
Company.

     2.39 “Stock Appreciation Right” means a right granted to a Grantee under
Section 8 hereof.

     2.40 “Stock Unit” means a bookkeeping entry representing the equivalent of
shares of Stock, awarded to a Grantee pursuant to Section 9 hereof.

     2.41 “Subsidiary” means any “subsidiary corporation” of the Company within
the meaning of Section 424(f) of the Code.

     2.42 “Termination Date” means the date upon which an Option shall terminate
or expire, as set forth in Section 7.3 hereof.

 

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     2.43 “Ten Percent Stockholder” means an individual who owns more than ten
percent (10%) of the total combined voting power of all classes of outstanding
stock of the Company, its parent or any of its Subsidiaries. In determining
stock ownership, the attribution rules of Section 424(d) of the Code shall be
applied.

     2.44 “Unrestricted Stock” means an Award pursuant to Section 10 hereof.

3. ADMINISTRATION OF THE PLAN

     3.1. Board

     The Board shall have such powers and authorities related to the
administration of the Plan as are consistent with the Company’s certificate of
incorporation and by-laws and applicable law. The Board shall have full power
and authority to take all actions and to make all determinations required or
provided for under the Plan, any Award or any Award Agreement, and shall have
full power and authority to take all such other actions and make all such other
determinations not inconsistent with the specific terms and provisions of the
Plan that the Board deems to be necessary or appropriate to the administration
of the Plan, any Award or any Award Agreement. All such actions and
determinations shall be by the affirmative vote of a majority of the members of
the Board present at a meeting or by unanimous consent of the Board executed in
writing in accordance with the Company’s certificate of incorporation and
by-laws and applicable law. The interpretation and construction by the Board of
any provision of the Plan, any Award or any Award Agreement shall be final,
binding and conclusive.

     3.2. Committee

     The Board from time to time may delegate to the Committee such powers and
authorities related to the administration and implementation of the Plan, as set
forth in Section 3.1 above and other applicable provisions, as the Board shall
determine, consistent with the certificate of incorporation and by-laws of the
Company and applicable law.

     The Board may also appoint one or more separate committees of the Board,
each composed of one or more directors of the Company who need not be Outside
Directors, who may administer the Plan with respect to employees or other
Service Providers who are not Executive Officers or directors of the Company,
may grant Awards under the Plan to such employees or other Service Providers,
and may determine all terms of such Awards.

     In the event that the Plan, any Award or any Award Agreement entered into
hereunder provides for any action to be taken by or determination to be made by
the Board, such action may be taken or such determination may be made by the
Committee if the power and authority to do so has been delegated to the
Committee by the Board as provided for in this Section. Unless otherwise
expressly determined by the Board, any such action or determination by the
Committee shall be final, binding and conclusive. To the extent permitted by
law, the Committee may delegate its authority under the Plan to a member of the
Board.

     3.3. Terms of Awards

     Subject to the other terms and conditions of the Plan, the Board shall have
full and final authority to:

 

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          (i) designate Grantees;

          (ii) determine the type or types of Awards to be made to a Grantee;

          (iii) determine the number of shares of Stock to be subject to an
Award;

          (iv) establish the terms and conditions of each Award (including, but
not limited to, the exercise price of any Option, the nature and duration of any
restriction or condition (or provision for lapse thereof) relating to the
vesting, exercise, transfer, or forfeiture of an Award or the shares of Stock
subject thereto, and any terms or conditions that may be necessary to qualify
Options as Incentive Stock Options);

          (v) prescribe the form of each Award Agreement evidencing an Award;
and

          (vi) amend, modify, or supplement the terms of any outstanding Award.
Such authority specifically includes the authority, in order to effectuate the
purposes of the Plan but without amending the Plan, to modify Awards to eligible
individuals who are foreign nationals or are individuals who are employed
outside the United States to recognize differences in local law, tax policy, or
custom. Notwithstanding the foregoing, no amendment, modification or supplement
of any Award shall, without the consent of the Grantee, impair the Grantee’s
rights under such Award.

     The Company may retain the right in an Award Agreement to cause a
forfeiture of the gain realized by a Grantee on account of actions taken by the
Grantee in violation or breach of or in conflict with any employment agreement,
non-competition agreement, any agreement prohibiting solicitation of employees
or clients of the Company or any Affiliate thereof or any confidentiality
obligation with respect to the Company or any Affiliate thereof or otherwise in
competition with the Company or any Affiliate thereof, to the extent specified
in such Award Agreement applicable to the Grantee. Furthermore, the Company may
annul an Award if the Grantee is an employee of the Company or an Affiliate
thereof and is terminated for Cause as defined in the applicable Award Agreement
or the Plan, as applicable. The grant of any Award shall be contingent upon the
Grantee executing the appropriate Award Agreement.

     Notwithstanding the foregoing, no amendment or modification may be made to
an outstanding Option or SAR which reduces the Option Price or SAR Exercise
Price, either by lowering the Option Price or SAR Exercise Price or by canceling
the outstanding Option or SAR and granting a replacement Option or SAR with a
lower exercise price without the approval of the stockholders of the Company,
provided, that, appropriate adjustments may be made to outstanding Options and
SARs pursuant to Section 16.

     3.4. Deferral Arrangement

     The Board may permit or require the deferral of any award payment into a
deferred compensation arrangement, subject to such rules and procedures as it
may establish, which may include provisions for the payment or crediting of
interest or dividend equivalents, including converting such credits into
deferred Stock equivalents and restricting deferrals to comply with hardship
distribution rules affecting 401(k) plans.

 

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     3.5. No Liability

     No member of the Board or of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Award or
Award Agreement.

     3.6. Book Entry

     Notwithstanding any other provision of this Plan to the contrary, the
Company may elect to satisfy any requirement under this Plan for the delivery of
stock certificates through the use of book-entry.

4. STOCK SUBJECT TO THE PLAN

     Subject to adjustment as provided in Section 16 hereof, the number of
shares of Stock available for issuance under the Plan shall be 2,500,000. Stock
issued or to be issued under the Plan shall be authorized but unissued shares;
or, to the extent permitted by applicable law, issued shares that have been
reacquired by the Company. If any shares covered by an Award are not purchased
or are forfeited, or if an Award otherwise terminates without delivery of any
Stock subject thereto, then the number of shares of Stock counted against the
aggregate number of shares available under the Plan with respect to such Award
shall, to the extent of any such forfeiture or termination, again be available
for making Awards under the Plan.

     The Board shall have the right to substitute or assume Awards in connection
with mergers, reorganizations, separations, or other transactions to which
Section 424(a) of the Code applies, provided such substitutions and assumptions
are permitted by Section 424 of the Code and the regulations promulgated
thereunder. The number of shares of Stock reserved pursuant to Section 4 may be
increased by the corresponding number of Awards assumed and, in the case of a
substitution, by the net increase in the number of shares of Stock subject to
Awards before and after the substitution.

5. EFFECTIVE DATE, DURATION AND AMENDMENTS

     5.1. Effective Date

     The Plan shall be effective as of the Effective Date, subject to approval
of the Plan by the Company’s stockholders within one (1) year of the Effective
Date. Upon approval of the Plan by the stockholders of the Company as set forth
above, all Awards made under the Plan on or after the Effective Date shall be
fully effective as if the stockholders of the Company had approved the Plan on
the Effective Date. If the stockholders fail to approve the Plan within one
(1) year after the Effective Date, any Awards made hereunder shall be null and
void and of no effect.

     5.2. Term

     The Plan shall terminate automatically ten (10) years after its adoption by
the Board and may be terminated on any earlier date as provided in Section 5.3.

 

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     5.3. Amendment and Termination of the Plan

     The Board may, at any time and from time to time, amend, suspend, or
terminate the Plan as to any shares of Stock as to which Awards have not been
made. An amendment shall be contingent on approval of the Company’s stockholders
to the extent stated by the Board, required by applicable law or required by
applicable stock exchange listing requirements. No Awards shall be made after
termination of the Plan. No amendment, suspension, or termination of the Plan
shall, without the consent of the Grantee, impair rights or obligations under
any Award theretofore awarded under the Plan.

6. AWARD ELIGIBILITY AND LIMITATIONS

     6.1. Service Providers and Other Persons

     Subject to this Section 6, Awards may be made under the Plan to: (i) any
Service Provider to the Company or of any Affiliate, including any Service
Provider who is an officer or director of the Company, or of any Affiliate, as
the Board shall determine and designate from time to time, (ii) any Outside
Director, and (iii) any other individual whose participation in the Plan is
determined to be in the best interests of the Company by the Board.

     6.2. Successive Awards

     An eligible person may receive more than one Award, subject to such
restrictions as are provided herein.

     6.3. Limitation on Shares of Stock Subject to Awards and Cash Awards

     During any time when the Company has a class of equity security registered
under Section 12 of the Exchange Act:

          (i) the maximum number of shares of Stock subject to Options or SARs
that can be awarded under the Plan to any person eligible for an Award under
Section 6 hereof is 350,000 per calendar year;

          (ii) the maximum number of shares that can be awarded under the Plan,
other than pursuant to an Option or SARs, to any person eligible for an Award
under Section 6 hereof is 200,000 per calendar year; and

          (iii) the maximum amount that may be earned as an Annual Incentive
Award or other cash Award in any calendar year by any one Grantee shall be
$2,500,000 and the maximum amount that may be earned as a Performance Award or
other cash Award in respect of a performance period by any one Grantee shall be
$2,500,000.

     The preceding limitations in this Section 6.3 are subject to adjustment as
provided in Section 16 hereof.

 

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     6.4. Award Agreement

     Each Award granted pursuant to the Plan shall be evidenced by an Award
Agreement, in such form or forms as the Board shall from time to time determine.
Award Agreements granted from time to time or at the same time need not contain
similar provisions but shall be consistent with the terms of the Plan. Each
Award Agreement evidencing an Award of Options shall specify whether such
Options are intended to be Non-qualified Stock Options or Incentive Stock
Options, and in the absence of such specification such options shall be deemed
Non-qualified Stock Options.

7. TERMS AND CONDITIONS OF OPTIONS

     7.1. Option Price

     The Option Price of each Option shall be fixed by the Board and stated in
the Award Agreement evidencing such Option. The Option Price of each Option
shall be at least the Fair Market Value on the Grant Date of a share of Stock;
provided, however, that in the event that a Grantee is a Ten Percent
Stockholder, the Option Price of an Option granted to such Grantee that is
intended to be an Incentive Stock Option shall be not less than one hundred and
ten percent (110%) of the Fair Market Value of a share of Stock on the Grant
Date. In no case shall the Option Price of any Option be less than the par value
of a share of Stock.

     7.2. Vesting

     Subject to Sections 7.3 and 16.3 hereof, each Option granted under the Plan
shall become exercisable at such times and under such conditions as shall be
determined by the Board and stated in the Award Agreement. For purposes of this
Section 7.2, fractional numbers of shares of Stock subject to an Option shall be
rounded down to the next nearest whole number. No Option shall be exercisable in
whole or in part prior to the date the Plan is approved by the Stockholders of
the Company as provided in Section 5.1 hereof.

     7.3. Term

     Each Option granted under the Plan shall terminate, and all rights to
purchase shares of Stock thereunder shall cease, upon the expiration of ten
(10) years from the date such Option is granted, or under such circumstances and
on such date prior thereto as is set forth in the Plan or as may be fixed by the
Board and stated in the Award Agreement relating to such Option (the
“Termination Date”); provided, however, that in the event that the Grantee is a
Ten Percent Stockholder, an Option granted to such Grantee that is intended to
be an Incentive Stock Option shall not be exercisable after the expiration of
five (5) years from its Grant Date.

     7.4. Termination of Service

     Each Award Agreement shall set forth the extent to which the Grantee shall
have the right to exercise the Option following termination of the Grantee’s
Service. Such provisions shall be determined in the sole discretion of the
Board, need not be uniform among all Options issued pursuant to the Plan, and
may reflect distinctions based on the reasons for termination of Service.

 

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     7.5. Limitations on Exercise of Option

     Notwithstanding any other provision of the Plan, in no event may any Option
be exercised, in whole or in part, prior to the date the Plan is approved by the
stockholders of the Company as provided herein or after the occurrence of an
event referred to in Section 16 hereof which results in termination of the
Option.

     7.6. Method of Exercise

     An Option that is exercisable may be exercised by the Grantee’s delivery to
the Company of written notice of exercise on any business day, at the Company’s
principal office, on the form specified by the Company and in accordance with
Section 12 hereof. Such notice shall specify the number of shares of Stock with
respect to which the Option is being exercised and shall be accompanied by
payment in full of the Option Price of the shares for which the Option is being
exercised plus the amount (if any) of federal and/or other taxes which the
Company may, in its judgment, be required to withhold with respect to an Award.

     7.7. Rights of Holders of Options

     Unless otherwise stated in the applicable Award Agreement, an individual
holding or exercising an Option shall have none of the rights of a stockholder
(for example, the right to receive cash or dividend payments or distributions
attributable to the subject shares of Stock or to direct the voting of the
subject shares of Stock ) until the shares of Stock covered thereby are fully
paid and issued to him. Except as provided in Section 16 hereof, no adjustment
shall be made for dividends, distributions or other rights for which the record
date is prior to the date of such issuance.

     7.8. Delivery of Stock Certificates

     Promptly after the exercise of an Option by a Grantee and the payment in
full of the Option Price, such Grantee shall be entitled to the issuance of a
stock certificate or certificates evidencing his or her ownership of the shares
of Stock subject to the Option.

     7.9. Transferability of Options

     Except as provided in Section 7.10, during the lifetime of a Grantee, only
the Grantee (or, in the event of legal incapacity or incompetency, the Grantee’s
guardian or legal representative) may exercise an Option. Except as provided in
Section 7.10, no Option shall be assignable or transferable by the Grantee to
whom it is granted, other than by will or the laws of descent and distribution.

     7.10. Family Transfers

     If authorized in the applicable Award Agreement, a Grantee may transfer,
not for value, all or part of an Option which is not an Incentive Stock Option
to any Family Member. For the purpose of this Section 7.10, a “not for value”
transfer is a transfer which is (i) a gift, (ii) a transfer under a domestic
relations order in settlement of marital property rights; or (iii) a transfer to
an entity in which more than fifty percent (50%) of the voting interests are
owned by Family Members (or the Grantee) in exchange for an interest in that
entity. Following a transfer under this Section 7.10, any such Option shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer.

 

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Subsequent transfers of transferred Options are prohibited except to Family
Members of the original Grantee in accordance with this Section 7.10 or by will
or the laws of descent and distribution. The events of termination of Service of
Section 7.4 hereof shall continue to be applied with respect to the original
Grantee, following which the Option shall be exercisable by the transferee only
to the extent, and for the periods specified, in Section 7.4.

     7.11. Limitations on Incentive Stock Options

     An Option shall constitute an Incentive Stock Option only (i) if the
Grantee of such Option is an employee of the Company or any Subsidiary of the
Company; (ii) to the extent specifically provided in the related Award
Agreement; and (iii) to the extent that the aggregate Fair Market Value
(determined at the time the Option is granted) of the shares of Stock with
respect to which all Incentive Stock Options held by such Grantee become
exercisable for the first time during any calendar year (under the Plan and all
other plans of the Grantee’s employer and its Affiliates) does not exceed
$100,000. This limitation shall be applied by taking Options into account in the
order in which they were granted.

8. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS

     8.1. Right to Payment

     A SAR shall confer on the Grantee to whom it is granted a right to receive,
upon exercise thereof, the excess of (A) the Fair Market Value of one share of
Stock on the date of exercise over (B) the grant price of the SAR as determined
by the Board. The Award Agreement for a SAR shall specify the grant price of the
SAR, which shall be no less than the Fair Market Value of a share of Stock on
the date of grant. SARs may be granted in conjunction with all or part of an
Option granted under the Plan or at any subsequent time during the term of such
Option, in conjunction with all or part of any other Award or without regard to
any Option or other Award. All SARs granted under the Plan shall have such terms
and conditions as are necessary to avoid the imposition of the twenty percent
(20%) excise tax under Code Section 409A.

     8.2. Other Terms

     The Board shall determine at the date of grant or thereafter, the time or
times at which and the circumstances under which any SAR may be exercised in
whole or in part (including based on achievement of performance goals and/or
future service requirements), the time or times at which SARs shall cease to be
or become exercisable following termination of Service or upon other conditions,
the method of exercise, method of settlement, form of consideration payable in
settlement, method by or forms in which Stock will be delivered or deemed to be
delivered to Grantees, whether or not any SAR shall be in tandem or in
combination with any other Award, and any other terms and conditions of any SAR.

9. TERMS AND CONDITIONS OF RESTRICTED STOCK AND STOCK UNITS

     9.1. Grant of Restricted Stock or Stock Units

     Awards of Restricted Stock or Stock Units may be made for no consideration
(other than par value of the shares which is deemed paid by Services already
rendered).

 

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     9.2. Restrictions

     At the time a grant of Restricted Stock or Stock Units is made, the Board
may, in its sole discretion, establish a period of time (a “restricted period”)
applicable to such Restricted Stock or Stock Units. Each Award of Restricted
Stock or Stock Units may be subject to a different restricted period. The Board
may, in its sole discretion, at the time a grant of Restricted Stock or Stock
Units is made, prescribe restrictions in addition to or other than the
expiration of the restricted period, including the satisfaction of corporate or
individual performance objectives, which may be applicable to all or any portion
of the Restricted Stock or Stock Units in accordance with Sections 13.1 and
13.2. Notwithstanding the foregoing, Restricted Stock that vests solely by the
passage of time shall not vest in full in less than three (3) years from the
Grant Date. Restricted Stock for which vesting may be accelerated by achieving
performance targets shall not vest in full in less than one (1) year from the
Grant Date. Neither Restricted Stock nor Stock Units may be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of during the restricted
period or prior to the satisfaction of any other restrictions prescribed by the
Board with respect to such Restricted Stock or Stock Units.

     9.3. Restricted Stock Certificates

     The Company shall issue, in the name of each Grantee to whom Restricted
Stock has been granted, stock certificates representing the total number of
shares of Restricted Stock granted to the Grantee, as soon as reasonably
practicable after the Grant Date. The Board may provide in an Award Agreement
that either (i) the Secretary of the Company shall hold such certificates for
the Grantee’s benefit until such time as the Restricted Stock is forfeited to
the Company or the restrictions lapse, or (ii) such certificates shall be
delivered to the Grantee, provided, however, that such certificates shall bear a
legend or legends that comply with the applicable securities laws and
regulations and makes appropriate reference to the restrictions imposed under
the Plan and the Award Agreement.

     9.4. Rights of Holders of Restricted Stock

     Unless the Board otherwise provides in an Award Agreement, holders of
Restricted Stock shall have the right to vote such Stock and the right to
receive any dividends declared or paid with respect to such Stock. The Board may
provide that any dividends paid on Restricted Stock must be reinvested in shares
of Stock, which may or may not be subject to the same vesting conditions and
restrictions applicable to such Restricted Stock. All distributions, if any,
received by a Grantee with respect to Restricted Stock as a result of any stock
split, stock dividend, combination of shares, or other similar transaction shall
be subject to the restrictions applicable to the original Grant.

     9.5. Rights of Holders of Stock Units

          9.5.1. Voting and Dividend Rights

          Unless the Board otherwise provides in an Award Agreement, holders of
Stock Units shall have no rights as stockholders of the Company. The Board may
provide in an Award Agreement evidencing a grant of Stock Units that the holder
of such Stock Units shall be entitled to receive, upon the Company’s payment of
a cash dividend on its outstanding Stock, a cash payment for each Stock Unit
held equal to the per-share dividend paid on the Stock. Such Award Agreement may
also provide that such cash payment will be deemed reinvested in additional
Stock Units at a price per unit equal to the Fair Market Value of a share of
Stock on the date that such dividend is paid.

 

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          9.5.2. Creditor’s Rights

          A holder of Stock Units shall have no rights other than those of a
general creditor of the Company. Stock Units represent an unfunded and unsecured
obligation of the Company, subject to the terms and conditions of the applicable
Award Agreement.

     9.6. Termination of Service

     Unless the Board otherwise provides in an Award Agreement or in writing
after the Award Agreement is issued, upon the termination of a Grantee’s
Service, any Restricted Stock or Stock Units held by such Grantee that have not
vested, or with respect to which all applicable restrictions and conditions have
not lapsed, shall immediately be deemed forfeited. Upon forfeiture of Restricted
Stock or Stock Units, the Grantee shall have no further rights with respect to
such Award, including but not limited to any right to vote Restricted Stock or
any right to receive dividends with respect to shares of Restricted Stock or
Stock Units.

     9.7. Purchase of Restricted Stock

     The Grantee shall be required, to the extent required by applicable law, to
purchase the Restricted Stock from the Company at a Purchase Price equal to the
greater of (i) the aggregate par value of the shares of Stock represented by
such Restricted Stock or (ii) the Purchase Price, if any, specified in the Award
Agreement relating to such Restricted Stock. The Purchase Price shall be payable
in a form described in Section 11 or, in the discretion of the Board, in
consideration for past Services rendered to the Company or an Affiliate.

     9.8. Delivery of Stock

     Upon the expiration or termination of any restricted period and the
satisfaction of any other conditions prescribed by the Board, the restrictions
applicable to shares of Restricted Stock or Stock Units settled in Stock shall
lapse, and, unless otherwise provided in the Award Agreement, a stock
certificate for such shares shall be delivered, free of all such restrictions,
to the Grantee or the Grantee’s beneficiary or estate, as the case may be.

10. TERMS AND CONDITIONS OF UNRESTRICTED STOCK AWARDS

     The Board may, in its sole discretion, grant (or sell at par value or such
other higher purchase price determined by the Board) an Unrestricted Stock Award
to any Grantee pursuant to which such Grantee may receive shares of Stock free
of any restrictions (“Unrestricted Stock”) under the Plan. Unrestricted Stock
Awards may be granted or sold as described in the preceding sentence in lieu of
any cash compensation due to such Grantee.

 

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11. FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK

     11.1. General Rule

     Payment of the Option Price for the shares purchased pursuant to the
exercise of an Option or the Purchase Price for Restricted Stock shall be made
in cash or in cash equivalents acceptable to the Company.

     11.2. Cashless Exercise

     With respect to an Option only (and not with respect to Restricted Stock),
to the extent permitted by law and to the extent the Award Agreement so
provides, payment of the Option Price for shares purchased pursuant to the
exercise of an Option may be made all or in part by delivery (on a form
acceptable to the Board) of an irrevocable direction to a licensed securities
broker acceptable to the Company to sell shares of Stock and to deliver all or
part of the sales proceeds to the Company in payment of the Option Price and any
withholding taxes described in Section 17.3.

     11.3. Other Forms of Payment

     To the extent the Award Agreement so provides, payment of the Option Price
for shares purchased pursuant to exercise of an Option or the Purchase Price for
Restricted Stock may be made in any other form that is consistent with
applicable laws, regulations and rules.

12. TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS

     12.1. Dividend Equivalent Rights

     A Dividend Equivalent Right is an Award entitling the recipient to receive
credits based on cash distributions that would have been paid on the shares of
Stock specified in the Dividend Equivalent Right (or other award to which it
relates) if such shares had been issued to and held by the recipient. A Dividend
Equivalent Right may be granted hereunder to any Grantee as a component of
another Award or as a freestanding award. The terms and conditions of Dividend
Equivalent Rights shall be specified in the grant. Dividend equivalents credited
to the holder of a Dividend Equivalent Right may be paid currently or may be
deemed to be reinvested in additional shares of Stock, which may thereafter
accrue additional equivalents. Any such reinvestment shall be at Fair Market
Value on the date of reinvestment. Dividend Equivalent Rights may be settled in
cash or Stock or a combination thereof, in a single installment or installments,
all determined in the sole discretion of the Board. A Dividend Equivalent Right
granted as a component of another Award may provide that such Dividend
Equivalent Right shall be settled upon exercise, settlement, or payment of, or
lapse of restrictions on, such other award, and that such Dividend Equivalent
Right shall expire or be forfeited or annulled under the same conditions as such
other award. A Dividend Equivalent Right granted as a component of another Award
may also contain terms and conditions different from such other award.

 

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     12.2. Termination of Service

     Except as may otherwise be provided by the Board either in the Award
Agreement or in writing after the Award Agreement is issued, a Grantee’s rights
in all Dividend Equivalent Rights or interest equivalents shall automatically
terminate upon the Grantee’s termination of Service for any reason.

13. TERMS AND CONDITIONS OF PERFORMANCE AND ANNUAL INCENTIVE AWARDS

     13.1. Performance Conditions

     The right of a Grantee to exercise or receive a grant or settlement of any
Award, and the timing thereof, may be subject to such performance conditions as
may be specified by the Board. The Board may use such business criteria and
other measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce the amounts
payable under any Award subject to performance conditions, except as limited
under Section 13.2 hereof in the case of a Performance Award or Annual Incentive
Award intended to qualify under Code Section 162(m). If and to the extent
required under Code Section 162(m), any power or authority relating to a
Performance Award or Annual Incentive Award intended to qualify under Code
Section 162(m), shall be exercised by the Committee and not the Board.

     13.2. Performance or Annual Incentive Awards Granted to Designated Covered
Employees

     If and to the extent that the Committee determines that a Performance or
Annual Incentive Award to be granted to a Grantee who is designated by the
Committee as likely to be a Covered Employee should qualify as
“performance-based compensation” for purposes of Code Section 162(m), the grant,
exercise and/or settlement of such Performance or Annual Incentive Award shall
be contingent upon achievement of pre-established performance goals and other
terms set forth in this Section 13.2.

          13.2.1. Performance Goals Generally

          The performance goals for such Performance or Annual Incentive Awards
shall consist of one or more business criteria and a targeted level or levels of
performance with respect to each of such criteria, as specified by the Committee
consistent with this Section 13.2. Performance goals shall be objective and
shall otherwise meet the requirements of Code Section 162(m) and regulations
thereunder including the requirement that the level or levels of performance
targeted by the Committee result in the achievement of performance goals being
“substantially uncertain.” The Committee may determine that such Performance or
Annual Incentive Awards shall be granted, exercised and/or settled upon
achievement of any one performance goal or that two (2) or more of the
performance goals must be achieved as a condition to grant, exercise and/or
settlement of such Performance or Annual Incentive Awards. Performance goals may
differ for Performance or Annual Incentive Awards granted to any one Grantee or
to different Grantees.

          13.2.2. Business Criteria

          One or more of the following business criteria for the Company, on a
consolidated basis, and/or specified subsidiaries or business units of the
Company (except with respect to the total

 

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stockholder return and earnings per share criteria), shall be used exclusively
by the Committee in establishing performance goals for such Performance or
Annual Incentive Awards: (1) cash flow; (2) operating income; (3) revenues;
(4) backlog; (5) total stockholder return; (6) such total stockholder return as
compared to total return (on a comparable basis) of a publicly available index
such as, but not limited to, the Standard & Poor’s 500 Stock Index; (7) net
income; (8) pretax earnings; (9) earnings before interest expense, taxes,
depreciation and amortization; (10) pretax operating earnings after interest
expense and before bonuses, service fees, and extraordinary or special items;
(11) operating margin; (12) earnings per share; (13) return on equity;
(14) return on capital; (15) return on investment; (16) working capital and
(17) ratio of debt to stockholders’ equity. Business criteria may be measured on
an absolute basis or on a relative basis (i.e., performance relative to peer
companies) and on a GAAP or non-GAAP basis. Financial criteria may be measured
at the operating group and/or on a consolidated basis.

          13.2.3. Timing For Establishing Performance Goals

          Performance goals shall be established not later than 90 days after
the beginning of any performance period applicable to such Performance or Annual
Incentive Awards, or at such other date as may be required or permitted for
“performance-based compensation” under Code Section 162(m).

          13.2.4. Settlement of Performance or Annual Incentive Awards; Other
Terms

          Settlement of such Performance or Annual Incentive Awards shall be in
cash, Stock, other Awards or other property, in the discretion of the Committee.
The Committee may, in its discretion, reduce the amount of a settlement
otherwise to be made in connection with such Performance or Annual Incentive
Awards. The Committee shall specify the circumstances in which such Performance
or Annual Incentive Awards shall be paid or forfeited in the event of
termination of Service by the Grantee prior to the end of a performance period
or settlement of Performance Awards.

     13.3. Written Determinations

     All determinations by the Committee as to the establishment of performance
goals, the amount of any Performance Award pool or potential individual
Performance Awards and as to the achievement of performance goals relating to
Performance Awards, and the amount of any Annual Incentive Award pool or
potential individual Annual Incentive Awards and the amount of final Annual
Incentive Awards, shall be made in writing in the case of any Award intended to
qualify under Code Section 162(m). To the extent required to comply with Code
Section 162(m), the Committee may delegate any responsibility relating to such
Performance Awards or Annual Incentive Awards.

     13.4. Status of Section 14.2 Awards Under Code Section 162(m)

     It is the intent of the Company that Performance Awards and Annual
Incentive Awards under Section 13.2 hereof granted to persons who are designated
by the Committee as likely to be Covered Employees within the meaning of Code
Section 162(m) and regulations thereunder shall, if so designated by the
Committee, constitute “qualified performance-based compensation” within the
meaning of Code Section 162(m) and regulations thereunder. Accordingly, the
terms of Section 13.2, including the definitions of Covered Employee and other
terms used therein, shall be interpreted in a manner consistent with Code
Section 162(m) and regulations thereunder. The foregoing notwithstanding,
because the Committee cannot determine with certainty whether a given Grantee
will be a Covered Employee with respect to a fiscal year that has not yet been
completed, the term Covered Employee as used herein shall mean only a person
designated by the Committee, at the time of grant of Performance

 

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Awards or an Annual Incentive Award, as likely to be a Covered Employee with
respect to that fiscal year. If any provision of the Plan or any agreement
relating to such Performance Awards or Annual Incentive Awards does not comply
or is inconsistent with the requirements of Code Section 162(m) or regulations
thereunder, such provision shall be construed or deemed amended to the extent
necessary to conform to such requirements.

14. PARACHUTE LIMITATIONS

     Notwithstanding any other provision of this Plan or of any other agreement,
contract, or understanding heretofore or hereafter entered into by a Grantee
with the Company or any Affiliate, except an agreement, contract, or
understanding hereafter entered into that expressly modifies or excludes
application of this paragraph (an “Other Agreement”), and notwithstanding any
formal or informal plan or other arrangement for the direct or indirect
provision of compensation to the Grantee (including groups or classes of
Grantees or beneficiaries of which the Grantee is a member), whether or not such
compensation is deferred, is in cash, or is in the form of a benefit to or for
the Grantee (a “Benefit Arrangement”), if the Grantee is a “disqualified
individual,” as defined in Section 280G(c) of the Code, any Option, Restricted
Stock or Stock Unit held by that Grantee and any right to receive any payment or
other benefit under this Plan shall not become exercisable or vested (i) to the
extent that such right to exercise, vesting, payment, or benefit, taking into
account all other rights, payments, or benefits to or for the Grantee under this
Plan, all Other Agreements, and all Benefit Arrangements, would cause any
payment or benefit to the Grantee under this Plan to be considered a “parachute
payment” within the meaning of Section 280G(b)(2) of the Code as then in effect
(a “Parachute Payment”) and (ii) if, as a result of receiving a Parachute
Payment, the aggregate after-tax amounts received by the Grantee from the
Company under this Plan, all Other Agreements, and all Benefit Arrangements
would be less than the maximum after-tax amount that could be received by the
Grantee without causing any such payment or benefit to be considered a Parachute
Payment. In the event that the receipt of any such right to exercise, vesting,
payment, or benefit under this Plan, in conjunction with all other rights,
payments, or benefits to or for the Grantee under any Other Agreement or any
Benefit Arrangement would cause the Grantee to be considered to have received a
Parachute Payment under this Plan that would have the effect of decreasing the
after-tax amount received by the Grantee as described in clause (ii) of the
preceding sentence, then the Grantee shall have the right, in the Grantee’s sole
discretion, to designate those rights, payments, or benefits under this Plan,
any Other Agreements, and any Benefit Arrangements that should be reduced or
eliminated so as to avoid having the payment or benefit to the Grantee under
this Plan be deemed to be a Parachute Payment.

15. REQUIREMENTS OF LAW

     15.1. General

     The Company shall not be required to sell or issue any shares of Stock
under any Award if the sale or issuance of such shares would constitute a
violation by the Grantee, any other individual exercising an Option, or the
Company of any provision of any law or regulation of any governmental authority,
including without limitation any federal or state securities laws or
regulations. If at any time the Company shall determine, in its discretion, that
the listing, registration or qualification of any shares subject to an Award
upon any securities exchange or under any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the issuance or
purchase of shares hereunder, no shares of Stock may be issued or sold to the
Grantee or any other individual exercising an Option pursuant to such Award
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any

 

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conditions not acceptable to the Company, and any delay caused thereby shall in
no way affect the date of termination of the Award. Specifically, in connection
with the Securities Act, upon the exercise of any Option or the delivery of any
shares of Stock underlying an Award, unless a registration statement under such
Act is in effect with respect to the shares of Stock covered by such Award, the
Company shall not be required to sell or issue such shares unless the Board has
received evidence satisfactory to it that the Grantee or any other individual
exercising an Option may acquire such shares pursuant to an exemption from
registration under the Securities Act. Any determination in this connection by
the Board shall be final, binding, and conclusive. The Company may, but shall in
no event be obligated to, register any securities covered hereby pursuant to the
Securities Act. The Company shall not be obligated to take any affirmative
action in order to cause the exercise of an Option or the issuance of shares of
Stock pursuant to the Plan to comply with any law or regulation of any
governmental authority. As to any jurisdiction that expressly imposes the
requirement that an Option shall not be exercisable until the shares of Stock
covered by such Option are registered or are exempt from registration, the
exercise of such Option (under circumstances in which the laws of such
jurisdiction apply) shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.

     15.2. Rule 16b-3

     During any time when the Company has a class of equity security registered
under Section 12 of the Exchange Act, it is the intent of the Company that
Awards pursuant to the Plan and the exercise of Options granted hereunder will
qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To the
extent that any provision of the Plan or action by the Board does not comply
with the requirements of Rule 16b-3, it shall be deemed inoperative to the
extent permitted by law and deemed advisable by the Board, and shall not affect
the validity of the Plan. In the event that Rule 16b-3 is revised or replaced,
the Board may exercise its discretion to modify this Plan in any respect
necessary to satisfy the requirements of, or to take advantage of any features
of, the revised exemption or its replacement.

16. EFFECT OF CHANGES IN CAPITALIZATION

     16.1. Changes in Stock

     If the number of outstanding shares of Stock is increased or decreased or
the shares of Stock are changed into or exchanged for a different number or kind
of shares or other securities of the Company on account of any recapitalization,
reclassification, stock split, reverse split, combination of shares, exchange of
shares, stock dividend or other distribution payable in capital stock, or other
increase or decrease in such shares effected without receipt of consideration by
the Company occurring after the Effective Date, the number and kinds of shares
for which grants of Options and other Awards may be made under the Plan shall be
adjusted proportionately and accordingly by the Company. In addition, the number
and kind of shares for which Awards are outstanding shall be adjusted
proportionately and accordingly so that the proportionate interest of the
Grantee immediately following such event shall, to the extent practicable, be
the same as immediately before such event. Any such adjustment in outstanding
Options or SARs shall not change the aggregate Option Price or SAR Exercise
Price payable with respect to shares that are subject to the unexercised portion
of an outstanding Option or SAR, as applicable, but shall include a
corresponding proportionate adjustment in the Option Price or SAR Exercise Price
per share. The conversion of any convertible securities of the Company shall not
be treated as an increase in shares effected without receipt of consideration.
Notwithstanding the foregoing, in the event of any distribution to the Company’s
stockholders of securities of any other entity or other assets (including an
extraordinary cash dividend but

 

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excluding a non-extraordinary dividend payable in cash or in stock of the
Company) without receipt of consideration by the Company, the Company may, in
such manner as the Company deems appropriate, adjust (i) the number and kind of
shares subject to outstanding Awards and/or (ii) the exercise price of
outstanding Options and Stock Appreciation Rights to reflect such distribution.

  16.2.   Reorganization in Which the Company Is the Surviving Entity Which does
not Constitute a Corporate Transaction

     Subject to Section 16.3 hereof, if the Company shall be the surviving
entity in any reorganization, merger, or consolidation of the Company with one
or more other entities which does not constitute a Corporate Transaction, any
Option or SAR theretofore granted pursuant to the Plan shall pertain to and
apply to the securities to which a holder of the number of shares of Stock
subject to such Option or SAR would have been entitled immediately following
such reorganization, merger, or consolidation, with a corresponding
proportionate adjustment of the Option Price or SAR Exercise Price per share so
that the aggregate Option Price or SAR Exercise Price thereafter shall be the
same as the aggregate Option Price or SAR Exercise Price of the shares remaining
subject to the Option or SAR immediately prior to such reorganization, merger,
or consolidation. Subject to any contrary language in an Award Agreement
evidencing an Award, any restrictions applicable to such Award shall apply as
well to any replacement shares received by the Grantee as a result of the
reorganization, merger or consolidation. In the event of a transaction described
in this Section 16.2, Stock Units shall be adjusted so as to apply to the
securities that a holder of the number of shares of Stock subject to the Stock
Units would have been entitled to receive immediately following such
transaction.

     16.3. Corporate Transaction

     Subject to the exceptions set forth in the last sentence of this
Section 16.3 and the last sentence of Section 16.4, upon the occurrence of a
Corporate Transaction, the Board shall provide for any one or more of the
following actions to be taken (with any such action to be contingent on the
occurrence of such Corporate Transaction):

          (i) the vesting of all outstanding shares of Restricted Stock and all
Stock Units, and the delivery of the shares of Stock subject to the Stock Units,
immediately prior to the occurrence of such Corporate Transaction,

          (ii) that fifteen (15) days prior to the scheduled consummation of a
Corporate Transaction, all Options and SARs outstanding hereunder shall become
immediately exercisable and shall remain exercisable for a period of fifteen
(15) days, or

          (iii) that all, or a portion of, the outstanding Awards of Options,
Restricted Stock, Stock Units, and/or SARs will be cancelled with the holders
paid or delivered an amount in cash or securities having a value (as determined
by the Board acting in good faith), in the case of Restricted Stock or Stock
Units, equal to the formula or fixed price per share paid to holders of shares
of Stock and, in the case of Options or SARs, equal to the product of the number
of shares of Stock subject to the Option or SAR (the “Award Shares”) multiplied
by the amount, if any, by which (I) the formula or fixed price per share paid to
holders of shares of Stock pursuant to such transaction exceeds (II) the Option
Price or SAR Exercise Price applicable to such Award Shares.

 

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     With respect to the Company’s establishment of an exercise window, (a) any
exercise of an Option or SAR during such fifteen- (15-) day period shall be
conditioned upon the consummation of the event and shall be effective only
immediately before the consummation of the event, and (b) upon consummation of
any Corporate Transaction the Plan, and all outstanding but unexercised Options
and SARs shall terminate. The Board shall send written notice of an event that
will result in such a termination to all individuals who hold Options and SARs
not later than the time at which the Company gives notice thereof to its
stockholders.

     This Section 16.3 shall not apply to any Corporate Transaction to the
extent that provision is made in writing in connection with such Corporate
Transaction for the assumption or continuation of the Options, SARs, Stock Units
and Restricted Stock theretofore granted, or for the substitution for such
Options, SARs, Stock Units and Restricted Stock for new common stock options and
stock appreciation rights and new common stock units and restricted stock
relating to the stock of a successor entity, or a parent or subsidiary thereof,
with appropriate adjustments as to the number of shares (disregarding any
consideration that is not common stock) and option and stock appreciation right
exercise prices, in which event the Plan, Options, SARs, Stock Units and
Restricted Stock theretofore granted shall continue in the manner and under the
terms so provided.

     16.4. Adjustments

     Adjustments under this Section 16 related to shares of Stock or securities
of the Company shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. No fractional shares or other securities
shall be issued pursuant to any such adjustment, and any fractions resulting
from any such adjustment shall be eliminated in each case by rounding downward
to the nearest whole share. The Board shall determine the effect of a Corporate
Transaction upon Awards other than Options, SARs, Stock Units and Restricted
Stock, and such effect shall be set forth in the appropriate Award Agreement.
The Board may provide in the Award Agreements at the time of grant, or any time
thereafter with the consent of the Grantee, for different provisions to apply to
an Award in place of those described in Sections 16.1, 16.2 and 16.3.

     16.5. No Limitations on Company

     The making of Awards pursuant to the Plan shall not affect or limit in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge,
consolidate, dissolve, or liquidate, or to sell or transfer all or any part of
its business or assets.

17. GENERAL PROVISIONS

     17.1. Disclaimer of Rights

     No provision in the Plan or in any Award or Award Agreement shall be
construed to confer upon any individual the right to remain in the employ or
service of the Company or any Affiliate, or to interfere in any way with any
contractual or other right or authority of the Company either to increase or
decrease the compensation or other payments to any individual at any time, or to
terminate any employment or other relationship between any individual and the
Company. In addition, notwithstanding anything contained in the Plan to the
contrary, unless otherwise stated in the applicable Award Agreement, no Award
granted

 

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under the Plan shall be affected by any change of duties or position of the
Grantee, so long as such Grantee continues to be a director, officer, consultant
or employee of the Company or an Affiliate. The obligation of the Company to pay
any benefits pursuant to this Plan shall be interpreted as a contractual
obligation to pay only those amounts described herein, in the manner and under
the conditions prescribed herein. The Plan shall in no way be interpreted to
require the Company to transfer any amounts to a third party trustee or
otherwise hold any amounts in trust or escrow for payment to any Grantee or
beneficiary under the terms of the Plan.

     17.2. Nonexclusivity of the Plan

     Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or particular individuals) as the Board in its discretion determines
desirable, including, without limitation, the granting of stock options or
restricted stock otherwise than under the Plan.

     17.3. Withholding Taxes

     The Company or an Affiliate, as the case may be, shall have the right to
deduct from payments of any kind otherwise due to a Grantee any federal, state,
or local taxes of any kind required by law to be withheld with respect to the
vesting of or other lapse of restrictions applicable to an Award or upon the
issuance of any shares of Stock upon the exercise of an Option or pursuant to an
Award. At the time of such vesting, lapse, or exercise, the Grantee shall pay to
the Company or the Affiliate, as the case may be, any amount that the Company or
the Affiliate may reasonably determine to be necessary to satisfy such
withholding obligation. Subject to the prior approval of the Company or the
Affiliate, which may be withheld by the Company or the Affiliate, as the case
may be, in its sole discretion, the Grantee may elect to satisfy such
obligations, in whole or in part, (i) by causing the Company or the Affiliate to
withhold shares of Stock otherwise issuable to the Grantee or (ii) by delivering
to the Company or the Affiliate shares of Stock already owned by the Grantee.
The shares of Stock so delivered or withheld shall have an aggregate Fair Market
Value equal to such withholding obligations. The Fair Market Value of the shares
of Stock used to satisfy such withholding obligation shall be determined by the
Company or the Affiliate as of the date that the amount of tax to be withheld is
to be determined. A Grantee who has made an election pursuant to this
Section 17.3 may satisfy his or her withholding obligation only with shares of
Stock that are not subject to any repurchase, forfeiture, unfulfilled vesting,
or other similar requirements.

     17.4. Captions

     The use of captions in this Plan or any Award Agreement is for the
convenience of reference only and shall not affect the meaning of any provision
of the Plan or such Award Agreement.

     17.5. Other Provisions

     Each Award granted under the Plan may contain such other terms and
conditions not inconsistent with the Plan as may be determined by the Board, in
its sole discretion.

 

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     17.6. Number and Gender

     With respect to words used in this Plan, the singular form shall include
the plural form, the masculine gender shall include the feminine gender, etc.,
as the context requires.

     17.7. Severability

     If any provision of the Plan or any Award Agreement shall be determined to
be illegal or unenforceable by any court of law in any jurisdiction, the
remaining provisions hereof and thereof shall be severable and enforceable in
accordance with their terms, and all provisions shall remain enforceable in any
other jurisdiction.

     17.8. Governing Law

     The validity and construction of this Plan and the instruments evidencing
the Award hereunder shall be governed by the laws of the State of Delaware,
other than any conflicts or choice of law rule or principle that might otherwise
refer construction or interpretation of this Plan and the instruments evidencing
the Awards granted hereunder to the substantive laws of any other jurisdiction.

* * *

     To record adoption of the Plan by the Board as of March 9, 2005, and
approval of the Plan by the stockholders on April 28, 2005, the Company has
caused its authorized officer to execute the Plan.

              ORBITAL SCIENCES CORPORATION
 
       

  By:   /s/ Leo Millstein

       

      Leo Millstein

      Senior Vice President, General Counsel and

      Secretary of the Company