Exhibit 10.1
DRAFT — July 22, 2008
ALKERMES, INC.
2008 STOCK OPTION AND INCENTIVE PLAN

SECTION 1.   GENERAL PURPOSE OF THE PLAN; DEFINITIONS

     The name of the plan is the Alkermes, Inc. 2008 Stock Option and Incentive
Plan (the “Plan”). The purpose of the Plan is to encourage and enable the
officers, employees, Non-Employee Directors and other key persons (including
consultants and prospective employees) of Alkermes, Inc. (the “Company”) and its
Subsidiaries upon whose judgment, initiative and efforts the Company largely
depends for the successful conduct of its business to acquire a proprietary
interest in the Company. It is anticipated that providing such persons with a
direct stake in the Company’s welfare will assure a closer identification of
their interests with those of the Company and its stockholders, thereby
stimulating their efforts on the Company’s behalf and strengthening their desire
to remain with the Company.
     The following terms shall be defined as set forth below:
     “Act” means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
     “Administrator” means the compensation committee of the Board or a similar
committee performing the functions of the compensation committee and which is
comprised of not less than two Non-Employee Directors who are independent.
     “Award” or “Awards,” except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Restricted Stock Awards, Restricted Stock Unit Awards, Cash-Based
Awards and Performance Share Awards.
     “Award Certificate” means a written or electronic certificate setting forth
the terms and provisions applicable to an Award granted under the Plan. Each
Award Certificate is subject to the terms and conditions of the Plan.
     “Board” means the Board of Directors of the Company.
     “Cash-Based Award” means an Award entitling the recipient to receive a
cash-denominated payment.
     “Code” means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
     “Covered Employee” means an employee who is a “Covered Employee” within the
meaning of Section 162(m) of the Code.
     “Effective Date” means the date on which the Plan is approved by
stockholders as set forth in Section 18.

 

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     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
     “Fair Market Value” of the Stock on any given date for purposes of the
Plan, unless otherwise required by any applicable provision of the Code or any
regulations issued thereunder, means the fair market value of the Stock
determined in good faith by the Administrator; provided, however, that if the
Stock is admitted to quotation on the National Association of Securities Dealers
Automated Quotation System (“NASDAQ”), NASDAQ Global Market or another national
securities exchange, the determination shall be made by reference to the closing
price reported by NASDAQ or such other exchange. If the market is closed on such
date, the determination shall be made by reference to the last date preceding
such date for which the market is open.
     “Incentive Stock Option” means any Stock Option designated and qualified as
an “incentive stock option” as defined in Section 422 of the Code.
     “Non-Employee Director” means a member of the Board who is not also an
employee of the Company or any Subsidiary.
     “Non-Qualified Stock Option” means any Stock Option that is not an
Incentive Stock Option.
     “Option” or “Stock Option” means any option to purchase shares of Stock
granted pursuant to Section 5.
     “Performance-Based Award” means any Restricted Stock Award, Restricted
Stock Unit Award, Performance Share Award or Cash-Based Award granted to a
Covered Employee that is intended to qualify as “performance-based compensation”
under Section 162(m) of the Code and the regulations promulgated thereunder.
     “Performance Criteria” means the criteria that the Administrator selects
for purposes of establishing the Performance Goal or Performance Goals for an
individual for a Performance Cycle. The Performance Criteria (which shall be
applicable to the organizational level specified by the Administrator,
including, but not limited to, the Company or a unit, division, group, or
Subsidiary of the Company) that will be used to establish Performance Goals are
limited to the following: earnings before interest, taxes, depreciation and
amortization, net income (loss) (either before or after interest, taxes,
depreciation and/or amortization), changes in the market price of the Stock,
economic value-added, initiation or completion of clinical trials, results of
clinical trials, drug development or commercialization milestones, collaboration
milestones, operational measures including production capacity and capability,
hiring and retention of key managers, expense management, capital raising
transactions, sales or revenue, acquisitions or strategic transactions,
operating income (loss), cash flow (including, but not limited to, operating
cash flow and free cash flow), return on capital, assets, equity, or investment,
stockholder returns, gross or net profit levels, operating margins, earnings
(loss) per share of Stock and sales or market shares, any of which may be
measured either in absolute terms or as compared to any incremental increase or
as compared to results of a peer group.

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     “Performance Cycle” means one or more periods of time, which may be of
varying and overlapping durations, as the Administrator may select, over which
the attainment of one or more Performance Criteria will be measured for the
purpose of determining a grantee’s right to and the payment of a Restricted
Stock Award, Restricted Stock Unit Award, Performance Share Award or Cash-Based
Award. Each such period shall not be less than 12 months.
     “Performance Goals” means the specific goals established in writing by the
Administrator for a Performance Cycle based upon the Performance Criteria.
     “Performance Share Award” means an Award entitling the recipient to acquire
shares of Stock upon the attainment of specified Performance Goals.
     “Restricted Stock Award” means an Award entitling the recipient to acquire,
at such purchase price (which may be zero) as determined by the Administrator,
shares of Stock subject to such restrictions and conditions as the Administrator
may determine at the time of grant.
     “Restricted Stock Unit Award” means an Award of phantom stock units to a
grantee.
     “Sale Event” shall mean (i) the sale of all or substantially all of the
assets of the Company on a consolidated basis to an unrelated person or entity,
(ii) a merger, reorganization or consolidation in which the outstanding shares
of Stock are converted into or exchanged for securities of the successor entity
and the holders of the Company’s outstanding voting power immediately prior to
such transaction do not own a majority of the outstanding voting power of the
successor entity immediately upon completion of such transaction, or (iii) the
sale of all of the Stock of the Company to an unrelated person or entity.
     “Sale Price” means the value as determined by the Administrator of the
consideration payable, or otherwise to be received by stockholders, per share of
Stock pursuant to a Sale Event.
     “Section 409A” means Section 409A of the Code and the regulations and other
guidance promulgated thereunder.
     “Stock” means the Common Stock, par value $.01 per share, of the Company,
subject to adjustments pursuant to Section 3.
     “Subsidiary” means any corporation or other entity (other than the Company)
in which the Company has at least a 50 percent interest, either directly or
indirectly.
     “Ten Percent Owner” means an employee who owns or is deemed to own (by
reason of the attribution rules of Section 424(d) of the Code) more than
10 percent of the combined voting power of all classes of stock of the Company
or any parent or subsidiary corporation.

SECTION 2.   ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES
AND DETERMINE AWARDS

     (a) Administration of Plan. The Plan shall be administered by the
Administrator.

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     (b) Powers of Administrator. The Administrator shall have the power and
authority to grant Awards consistent with the terms of the Plan, including the
power and authority:
     (i) to select the individuals to whom Awards may from time to time be
granted;
     (ii) to determine the time or times of grant, and the extent, if any, of
Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock Awards,
Restricted Stock Unit Awards, Cash-Based Awards and Performance Share Awards, or
any combination of the foregoing, granted to any one or more grantees;
     (iii) to determine the number of shares of Stock to be covered by any
Award;
     (iv) to determine and modify from time to time the terms and conditions,
including restrictions, not inconsistent with the terms of the Plan, of any
Award, which terms and conditions may differ among individual Awards and
grantees, and to approve the form of written (or electronic) instruments
evidencing the Awards;
     (v) subject to the provisions of Sections 6(d) and 7(a), to accelerate at
any time the exercisability or vesting of all or any portion of any Award;
     (vi) subject to the provisions of Section 5(a)(ii), to extend at any time
the period in which Stock Options may be exercised; and
     (vii) at any time to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and proceedings as
it shall deem advisable; to interpret the terms and provisions of the Plan and
any Award (including related written and electronic instruments); to make all
determinations it deems advisable for the administration of the Plan; to decide
all disputes arising in connection with the Plan; and to otherwise supervise the
administration of the Plan.
     All decisions and interpretations of the Administrator shall be binding on
all persons, including the Company and Plan grantees.
     (c) Delegation of Authority to Grant Options. Subject to applicable law,
the Administrator, in its discretion, may delegate to a subcommittee comprised
of one or more members of the Board of the Company all or part of the
Administrator’s authority and duties with respect to the granting of Options to
employees who are not subject to the reporting and other provisions of
Section 16 of the Exchange Act. Any such delegation by the Administrator shall
include a limitation as to the amount of Options that may be granted during the
period of the delegation and shall contain guidelines as to the determination of
the exercise price and the vesting criteria. The Administrator may revoke or
amend the terms of a delegation at any time but such action shall not invalidate
any prior actions of the Administrator’s delegate or delegates that were
consistent with the terms of the Plan.
     (d) Award Certificates. Awards under the Plan shall be evidenced by Award
Certificates that set forth the terms, conditions and limitations for each Award
which may include, without limitation, the term of an Award and the provisions
applicable in the event employment or service terminates.

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     (e) Indemnification. Neither the Board nor the Administrator, nor any
member of either or any delegate thereof, shall be liable for any act, omission,
interpretation, construction or determination made in good faith in connection
with the Plan, and the members of the Board and the Administrator (and any
delegate thereof) shall be entitled in all cases to indemnification and
reimbursement by the Company in respect of any claim, loss, damage or expense
(including, without limitation, reasonable attorneys’ fees) arising or resulting
therefrom to the fullest extent permitted by law and/or under the Company’s
articles or bylaws or any directors’ and officers’ liability insurance coverage
which may be in effect from time to time and/or any indemnification agreement
between such individual and the Company.
     (f) Foreign Award Recipients. Notwithstanding any provision of the Plan to
the contrary, in order to comply with the laws in other countries in which the
Company and its Subsidiaries operate or have employees or other individuals
eligible for Awards, the Administrator, in its sole discretion, shall have the
power and authority to: (i) determine which Subsidiaries shall be covered by the
Plan; (ii) determine which individuals outside the United States are eligible to
participate in the Plan; (iii) modify the terms and conditions of any Award
granted to individuals outside the United States to comply with applicable
foreign laws; (iv) establish subplans and modify exercise procedures and other
terms and procedures, to the extent the Administrator determines such actions to
be necessary or advisable (and such subplans and/or modifications shall be
attached to this Plan as appendices); provided, however, that no such subplans
and/or modifications shall increase the share limitations contained in Section
3(a) hereof; and (v) take any action, before or after an Award is made, that the
Administrator determines to be necessary or advisable to obtain approval or
comply with any local governmental regulatory exemptions or approvals.
Notwithstanding the foregoing, the Administrator may not take any actions
hereunder, and no Awards shall be granted, that would violate the Exchange Act
or any other applicable United States securities law, the Code, or any other
applicable United States governing statute or law.

SECTION 3.   STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION

     (a) Stock Issuable. The maximum number of shares of Stock reserved and
available for issuance under the Plan shall be the sum of (i) 6,400,000 shares,
plus (ii) the number of shares of Stock available for grant on the Effective
Date under the Alkermes, Inc. 1999 Stock Option Plan, the Alkermes, Inc. 2002
Restricted Stock Award Plan and the Alkermes, Inc. 2006 Stock Option Plan For
Non-Employee Directors (together, the “Old Stock Plans”), plus (iii) the number
of shares of Stock underlying any grants pursuant to the Old Stock Plans that
are forfeited, cancelled, repurchased or are terminated (other than by exercise)
from and after the Effective Date, plus (iv) the number of shares of Stock
underlying any grants under this Plan that are forfeited, cancelled, repurchased
or are terminated (other than by exercise). For purposes of this limitation, the
shares of Stock underlying any Awards that are forfeited, canceled or otherwise
terminated (other than by exercise) shall be added back to the shares of Stock
available for issuance under the Plan. Shares tendered or held back upon
exercise of an Option or settlement of an Award to cover the exercise price or
tax withholding shall not be available for future issuance under the Plan. In
addition, upon net exercise of Options, the gross number of

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shares exercised shall be deducted from the total number of shares remaining
available for issuance under the Plan. Subject to such overall limitations,
shares of Stock may be issued up to such maximum number pursuant to any type or
types of Award; provided, however, that Stock Options with respect to no more
than 4,000,000 shares of Stock may be granted to any one individual grantee
during any one calendar year period and no more than 6,400,000 shares of the
Stock may be issued in the form of Incentive Stock Options. The shares available
for issuance under the Plan may be authorized but unissued shares of Stock or
shares of Stock reacquired by the Company.
     (b) Effect of Awards. The grant of any full value Award (i.e., an Award
other than an Option) shall be deemed, for purposes of determining the number of
shares of Stock available for issuance under Section 3(a), as an Award of two
shares of Stock for each such share of Stock actually subject to the Award and
shall be treated similarly if returned to reserve status when forfeited or
canceled as provided in Section 3(a). The grant of an Option shall be deemed,
for purposes of determining the number of shares of Stock available for issuance
under Section 3(a), as an Award for one share of Stock for each such share of
Stock actually subject to the Award.
     (c) Changes in Stock. Subject to Section 3(d) hereof, if, as a result of
any reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar change in the Company’s capital
stock, the outstanding shares of Stock are increased or decreased or are
exchanged for a different number or kind of shares or other securities of the
Company, or additional shares or new or different shares or other securities of
the Company or other non-cash assets are distributed with respect to such shares
of Stock or other securities, or, if, as a result of any merger or
consolidation, sale of all or substantially all of the assets of the Company,
the outstanding shares of Stock are converted into or exchanged for securities
of the Company or any successor entity (or a parent or subsidiary thereof), the
Administrator shall make an appropriate or proportionate adjustment in (i) the
maximum number of shares reserved for issuance under the Plan, including the
maximum number of shares that may be issued in the form of Incentive Stock
Options, (ii) the number of Stock Options that can be granted to any one
individual grantee and the maximum number of shares that may be granted under a
Performance-Based Award, (iii) the number and kind of shares or other securities
subject to any then outstanding Awards under the Plan, (iv) the repurchase
price, if any, per share subject to each outstanding Restricted Stock Award,
(v) the number of Stock Options automatically granted to Non-Employee Directors,
and (vi) the price for each share subject to any then outstanding Stock Options
under the Plan, without changing the aggregate exercise price (i.e., the
exercise price multiplied by the number of Stock Options) as to which such Stock
Options remain exercisable. The Administrator shall also make equitable or
proportionate adjustments in the number of shares subject to outstanding Awards
and the exercise price and the terms of outstanding Awards to take into
consideration cash dividends paid other than in the ordinary course or any other
extraordinary corporate event. The adjustment by the Administrator shall be
final, binding and conclusive. No fractional shares of Stock shall be issued
under the Plan resulting from any such adjustment, but the Administrator in its
discretion may make a cash payment in lieu of fractional shares.
     (d) Mergers and Other Transactions. Except as the Administrator may
otherwise specify with respect to particular Awards in the relevant Award
documentation, in the case of and subject to the consummation of a Sale Event,
all Options that are not exercisable

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immediately prior to the effective time of the Sale Event shall become fully
exercisable as of the effective time of the Sale Event, all other Awards with
time-based vesting, conditions or restrictions shall become fully vested and
nonforfeitable as of the effective time of the Sale Event and all other Awards
with conditions and restrictions relating to the attainment of performance goals
may become vested and nonforfeitable in connection with a Sale Event in the
Administrator’s discretion. Upon the effective time of the Sale Event, the Plan
and all outstanding Awards granted hereunder shall terminate, unless provision
is made in connection with the Sale Event in the sole discretion of the parties
thereto for the assumption or continuation of Awards theretofore granted by the
successor entity, or the substitution of such Awards with new Awards of the
successor entity or parent thereof, with appropriate adjustment as to the number
and kind of shares and, if appropriate, the per share exercise prices, as such
parties shall agree (after taking into account any acceleration hereunder). In
the event of such termination, the Company shall make or provide for a cash
payment to the grantees holding Options, in exchange for the cancellation
thereof, in an amount equal to the difference between (A) the Sale Price
multiplied by the number of shares of Stock subject to outstanding Options (to
the extent then exercisable (after taking into account any acceleration
hereunder) at prices not in excess of the Sale Price) and (B) the aggregate
exercise price of all such outstanding Options.
     (e) Substitute Awards. The Administrator may grant Awards under the Plan in
substitution for stock and stock based awards held by employees, directors or
other key persons of another corporation in connection with the merger or
consolidation of the employing corporation with the Company or a Subsidiary or
the acquisition by the Company or a Subsidiary of property or stock of the
employing corporation. The Administrator may direct that the substitute awards
be granted on such terms and conditions as the Administrator considers
appropriate in the circumstances. Any substitute Awards granted under the Plan
shall not count against the share limitation set forth in Section 3(a).

SECTION 4.   ELIGIBILITY

     Grantees under the Plan will be such full or part-time officers and other
employees, Non-Employee Directors and key persons (including consultants and
prospective employees) of the Company and its Subsidiaries as are selected from
time to time by the Administrator in its sole discretion.

SECTION 5.   STOCK OPTIONS

     Any Stock Option granted under the Plan shall be in such form as the
Administrator may from time to time approve.
     Stock Options granted under the Plan may be either Incentive Stock Options
or Non-Qualified Stock Options. Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a “subsidiary corporation”
within the meaning of Section 424(f) of the Code. To the extent that any Option
does not qualify as an Incentive Stock Option, it shall be deemed a
Non-Qualified Stock Option.
     (a) Stock Options Granted to Employees and Key Persons. The Administrator
in its discretion may grant Stock Options to eligible employees and key persons
of the Company or

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any Subsidiary. Stock Options granted pursuant to this Section 5(a) shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the Plan, as the
Administrator shall deem desirable. If the Administrator so determines, Stock
Options may be granted in lieu of cash compensation at the optionee’s election,
subject to such terms and conditions as the Administrator may establish.
     (i) Exercise Price. The exercise price per share for the Stock covered by a
Stock Option granted pursuant to this Section 5(a) shall be determined by the
Administrator at the time of grant but shall not be less than 100 percent of the
Fair Market Value on the date of grant. In the case of an Incentive Stock Option
that is granted to a Ten Percent Owner, the option price of such Incentive Stock
Option shall be not less than 110 percent of the Fair Market Value on the grant
date.
     (ii) Option Term and Termination. The term of each Stock Option shall be
fixed by the Administrator, but no Stock Option shall be exercisable more than
ten years after the date the Stock Option is granted. In the case of an
Incentive Stock Option that is granted to a Ten Percent Owner, the term of such
Stock Option shall be no more than five years from the date of grant. Unless
otherwise determined by the Administrator on or after the date of grant, if a
grantee’s employment (or other service relationship) with the Company and its
Subsidiaries terminates for any reason, the portion of each Stock Option held by
the grantee that is not then exercisable shall be immediately forfeited. Unless
otherwise determined by the Administrator on or after the date of grant, the
grantee may exercise the exercisable portion of his Stock Options until the
earlier of three months after such date of termination or the expiration of the
stated term of such Stock Option.
     (iii) Exercisability; Rights of a Stockholder. Stock Options shall become
exercisable at such time or times, whether or not in installments, as shall be
determined by the Administrator at or after the grant date. The Administrator
may at any time accelerate the exercisability of all or any portion of any Stock
Option. An optionee shall have the rights of a stockholder only as to shares
acquired upon the exercise of a Stock Option and not as to unexercised Stock
Options.
     (iv) Method of Exercise. Stock Options may be exercised in whole or in
part, by giving written or electronic notice of exercise to the Company’s
delegate, specifying the number of shares to be purchased. In the case of a
Stock Option that is not an Incentive Stock Option, unless otherwise determined
by the Administrator on or after the date of grant, payment of the purchase
price must be made by reduction in the number of shares of Stock issuable upon
such exercise, based, in each case, on the Fair Market Value of the Stock on the
date of exercise. If the Administrator determines not to use the above payment
method, then payment of the purchase price may be made by one or more of the
following methods:
     (A) In cash, by certified or bank check or other instrument acceptable to
the Administrator;

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     (B) Through the delivery (or attestation to the ownership) of shares of
Stock owned by the optionee. Such surrendered shares shall be valued at Fair
Market Value on the exercise date; or
     (C) By the optionee delivering to the Company a properly executed exercise
notice together with irrevocable instructions to a broker to promptly deliver to
the Company cash or a check payable and acceptable to the Company for the
purchase price; provided that in the event the optionee chooses to pay the
purchase price as so provided, the optionee and the broker shall comply with
such procedures and enter into such agreements of indemnity and other agreements
as the Administrator shall prescribe as a condition of such payment procedure.
Payment instruments will be received subject to collection. The transfer to the
optionee on the records of the Company or of the transfer agent of the shares of
Stock to be purchased pursuant to the exercise of a Stock Option will be
contingent upon receipt from the optionee (or a purchaser acting in his stead in
accordance with the provisions of the Stock Option) by the Company of the full
purchase price for such shares and the fulfillment of any other requirements
contained in the Option Award Certificate or applicable provisions of laws
(including the satisfaction of any withholding taxes that the Company is
obligated to withhold with respect to the optionee). In the event an optionee
chooses to pay the purchase price by previously-owned shares of Stock through
the attestation method, the number of shares of Stock transferred to the
optionee upon the exercise of the Stock Option shall be net of the number of
attested shares. In the event that the Company establishes, for itself or using
the services of a third party, an automated system for the exercise of Stock
Options, such as a system using an internet website or interactive voice
response, then the paperless exercise of Stock Options may be permitted through
the use of such an automated system.
     (v) Annual Limit on Incentive Stock Options. To the extent required for
“incentive stock option” treatment under Section 422 of the Code, the aggregate
Fair Market Value (determined as of the time of grant) of the shares of Stock
with respect to which Incentive Stock Options granted under this Plan and any
other plan of the Company or its parent and subsidiary corporations become
exercisable for the first time by an optionee during any calendar year shall not
exceed $100,000. To the extent that any Stock Option exceeds this limit, it
shall constitute a Non-Qualified Stock Option.
     (b) Stock Options Granted to Non-Employee Directors.
     (i) Automatic Grant of Options.
     (A) Upon becoming a member of the Board, each Non-Employee Director who is
not then a consultant to the Company shall be granted on such day a
Non-Qualified Stock Option to acquire 20,000 shares of Stock, plus an additional
Stock Option to acquire a number of shares of Stock equal to the product of
20,000 multiplied by a fraction, the numerator of which equals the number of
months remaining until the next annual meeting of shareholders of the Company
and the denominator of which equals 12.

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     (B) Each Non-Employee Director who is serving as Director of the Company on
each annual meeting of stockholders, beginning with the 2008 annual meeting,
shall automatically be granted on such day a Non-Qualified Stock Option to
acquire 20,000 shares of Stock; provided, however, that no grant shall be made
to an individual who ceases to be a member of the Board on such day.
     (C) The exercise price per share for the Stock covered by a Stock Option
granted under this Section 5(b) shall be equal to the Fair Market Value of the
Stock on the date the Stock Option is granted.
     (D) The Administrator, in its discretion, may grant additional
Non-Qualified Stock Options to Non-Employee Directors. Any such grant may vary
among individual Non-Employee Directors.
     (ii) Exercise; Termination.
     (A) Unless otherwise determined by the Administrator, an Option granted
under Section 5(b) shall be exercisable in full six months after the grant date.
An Option issued under this Section 5(b) shall not be exercisable after the
expiration of ten years from the date of grant.
     (B) Options granted under this Section 5(b) may be exercised only by notice
to the Company (or the Company’s delegate) specifying the number of shares to be
purchased. Payment of the full purchase price of the shares to be purchased may
be made by one or more of the methods specified in Section 5(a)(iv). An optionee
shall have the rights of a stockholder only as to shares acquired upon the
exercise of a Stock Option and not as to unexercised Stock Options.
     (C) Unless otherwise determined by the Administrator on or after the date
of grant, if a Non-Employee Director’s relationship with the Company and its
Subsidiaries terminates for any reason, the portion of each Stock Option held by
the Non-Employee Director that is not then exercisable shall be immediately
forfeited. Unless otherwise determined by the Administrator on or after the date
of grant, the Non-Employee Director may exercise the exercisable portion of his
Stock Options only to the extent set forth in his Option Award Certificates.

SECTION 6.   RESTRICTED STOCK AWARDS

     (a) Nature of Restricted Stock Awards. The Administrator shall determine
the restrictions and conditions applicable to each Restricted Stock Award at the
time of grant. Conditions may be based on continuing employment (or other
service relationship) and/or achievement of pre-established performance goals
and objectives. The terms and conditions of each Restricted Stock Award
Certificate shall be determined by the Administrator, and such terms and
conditions may differ among individual Awards and grantees.
     (b) Rights as a Stockholder. Upon the grant of a Restricted Stock Award and
payment of any applicable purchase price, a grantee shall have the rights of a
stockholder with respect to the voting of the Restricted Stock, subject to such
conditions contained in the

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Restricted Stock Award Certificate. Unless the Administrator shall otherwise
determine, (i) uncertificated Restricted Stock shall be accompanied by a
notation on the records of the Company or the transfer agent to the effect that
they are subject to forfeiture until such Restricted Stock are vested as
provided in Section 6(d) below, and (ii) certificated Restricted Stock shall
remain in the possession of the Company until such Restricted Stock is vested as
provided in Section 6(d) below, and the grantee shall be required, as a
condition of the grant, to deliver to the Company such instruments of transfer
as the Administrator may prescribe.
     (c) Restrictions. Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of except as specifically provided
herein or in the Restricted Stock Award Certificate. If a grantee’s employment
(or other service relationship) with the Company and its Subsidiaries terminates
for any reason, any Restricted Stock that has not vested at the time of
termination shall automatically, without any requirement of notice to such
grantee from, or other action by or on behalf of, the Company, be deemed to have
been reacquired by the Company at its original purchase price (if any) from such
grantee or such grantee’s legal representative simultaneously with such
termination of employment (or other service relationship), and thereafter shall
cease to represent any ownership of the Company by the grantee or rights of the
grantee as a stockholder. Following such deemed reacquisition of unvested
Restricted Stock that are represented by physical certificates, a grantee shall
surrender such certificates to the Company upon request without consideration.
     (d) Vesting of Restricted Stock. The Administrator at the time of grant
shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the
non-transferability of the Restricted Stock and the Company’s right of
repurchase or forfeiture shall lapse. Notwithstanding the foregoing, in the
event that any such Restricted Stock granted to employees shall have a
performance-based goal, the restriction period with respect to such shares shall
not be less than one year, and in the event any such Restricted Stock granted to
employees shall have a time-based restriction, the total restriction period with
respect to such shares shall not be less than three years; provided, however,
that Restricted Stock with a time-based restriction may become vested
incrementally over such three-year period. The Administrator may waive the
foregoing restriction in the case of a grantee’s death, disability or retirement
or upon a Sale Event. Subsequent to such date or dates and/or the attainment of
such pre-established performance goals, objectives and other conditions, the
shares on which all restrictions have lapsed shall no longer be Restricted Stock
and shall be deemed “vested.” Except as may otherwise be provided by the
Administrator pursuant to the authority reserved in this Section 6, a grantee’s
rights in any shares of Restricted Stock that have not vested shall
automatically terminate upon the grantee’s termination of employment (or other
service relationship) with the Company and its Subsidiaries and such shares
shall be subject to the provisions of Section 6(c) above.

SECTION 7.   RESTRICTED STOCK UNIT AWARDS

     (a) Nature of Restricted Stock Unit Awards. The Administrator shall
determine the restrictions and conditions applicable to each Restricted Stock
Unit Award at the time of grant. Conditions may be based on continuing
employment (or other service relationship) and/or achievement of pre-established
performance goals and objectives. The terms and conditions of each Restricted
Stock Unit Award Certificate shall be determined by the Administrator, and such

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terms and conditions may differ among individual Awards and grantees.
Notwithstanding the foregoing, in the event that any such Restricted Stock Unit
Award granted to employees shall have a performance-based goal, the restriction
period with respect to such Award shall not be less than one year, and in the
event any such Restricted Stock Unit Award granted to employees shall have a
time-based restriction, the total restriction period with respect to such Award
shall not be less than three years; provided, however, that any Restricted Stock
Unit Award with a time-based restriction may become vested incrementally over
such three-year period. The Administrator may waive the foregoing restriction in
the case of a grantee’s death, disability or retirement or upon a Sale Event. At
the end of the deferral period, the Restricted Stock Unit Award, to the extent
vested, shall be settled in the form of shares of Stock. To the extent that a
Restricted Stock Unit Award is subject to Section 409A, it may contain such
additional terms and conditions as the Administrator shall determine in its sole
discretion in order for such Award to comply with the requirements of
Section 409A.
     (b) Election to Receive Restricted Stock Unit Awards in Lieu of
Compensation. The Administrator may, in its sole discretion, permit a grantee to
elect to receive a portion of future cash compensation otherwise due to such
grantee in the form of a Restricted Stock Unit Award. Any such election shall be
made in writing and shall be delivered to the Company no later than the date
specified by the Administrator and in accordance with Section 409A and such
other rules and procedures established by the Administrator. Any such future
cash compensation that the grantee elects to defer shall be converted to a fixed
number of phantom stock units (which may be fully vested) based on the Fair
Market Value of Stock on the date the compensation would otherwise have been
paid to the grantee if such payment had not been deferred as provided herein.
The Administrator shall have the sole right to determine whether and under what
circumstances to permit such elections and to impose such limitations and other
terms and conditions thereon as the Administrator deems appropriate.
     (c) Rights as a Stockholder. A grantee shall have the rights as a
stockholder only as to shares of Stock acquired by the grantee upon settlement
of a Restricted Stock Unit Award; provided, however, that the grantee may be
credited with dividend equivalent rights with respect to the phantom stock units
underlying his Restricted Stock Unit Award, subject to such terms and conditions
as the Administrator may determine.
     (d) Termination. Except as may otherwise be provided by the Administrator
pursuant to the authority reserved in Section 7(a), a grantee’s right in all
Restricted Stock Unit Awards that have not vested shall automatically terminate
upon the grantee’s termination of employment (or cessation of service
relationship) with the Company and its Subsidiaries for any reason.

SECTION 8.   CASH-BASED AWARDS

     Grant of Cash-Based Awards. The Administrator may, in its sole discretion,
grant Cash-Based Awards to any grantee in such number or amount and upon such
terms, and subject to such conditions, as the Administrator shall determine at
the time of grant. The Administrator shall determine the maximum duration of the
Cash-Based Award, the amount of cash to which the Cash-Based Award pertains, the
conditions upon which the Cash-Based Award shall become vested or payable, and
such other provisions as the Administrator shall determine. Each Cash-Based
Award shall specify a cash-denominated payment amount, formula or payment ranges
as determined by the Administrator. Payment, if any, with respect to a
Cash-Based Award shall be made in accordance with the terms of the Award and may
be made in cash or in shares of Stock, as the Administrator determines.

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SECTION 9.   PERFORMANCE SHARE AWARDS

     (a) Nature of Performance Share Awards. The Administrator may, in its sole
discretion, grant Performance Share Awards independent of, or in connection
with, the granting of any other Award under the Plan. The Administrator shall
determine whether and to whom Performance Share Awards shall be granted, the
Performance Goals, the periods during which performance is to be measured, which
may not be less than one year, and such other limitations and conditions as the
Administrator shall determine.
     (b) Rights as a Stockholder. A grantee receiving a Performance Share Award
shall have the rights of a stockholder only as to shares actually received by
the grantee under the Plan and not with respect to shares subject to the Award
but not actually received by the grantee. A grantee shall be entitled to receive
shares of Stock under a Performance Share Award only upon satisfaction of all
conditions specified in the Performance Share Award Certificate (or in a
performance plan adopted by the Administrator).
     (c) Termination. Except as may otherwise be provided by the Administrator
either in the Award Certificate or, subject to Section 15 below, in writing
after the Award Certificate is issued, a grantee’s rights in all Performance
Share Awards shall automatically terminate upon the grantee’s termination of
employment (or cessation of service relationship) with the Company and its
Subsidiaries for any reason.

SECTION 10.   PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES

     (a) Performance-Based Awards. Any employee or other key person providing
services to the Company and who is selected by the Administrator may be granted
one or more Performance-Based Awards in the form of a Restricted Stock Award,
Restricted Stock Unit Award, Performance Share Awards or Cash-Based Award
payable upon the attainment of Performance Goals that are established by the
Administrator and relate to one or more of the Performance Criteria, in each
case on a specified date or dates or over any period or periods determined by
the Administrator. The Administrator shall define in an objective fashion the
manner of calculating the Performance Criteria it selects to use for any
Performance Cycle. Depending on the Performance Criteria used to establish such
Performance Goals, the Performance Goals may be expressed in terms of overall
Company performance or the performance of a division, business unit, or an
individual. The Administrator, in its discretion, may adjust or modify the
calculation of Performance Goals for such Performance Cycle in order to prevent
the dilution or enlargement of the rights of an individual (i) in the event of,
or in anticipation of, any unusual or extraordinary corporate item, transaction,
event or development, (ii) in recognition of, or in anticipation of, any other
unusual or nonrecurring events affecting the Company, or the financial
statements of the Company, or (iii) in response to, or in anticipation of,
changes in applicable laws, regulations, accounting principles, or business
conditions provided however, that the Administrator may not exercise such
discretion in a manner that would increase the Performance-Based Award granted
to a Covered Employee. Each Performance-Based Award shall comply with the
provisions set forth below.

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     (b) Grant of Performance-Based Awards. With respect to each
Performance-Based Award granted to a Covered Employee, the Administrator shall
select, within the first 90 days of a Performance Cycle (or, if shorter, within
the maximum period allowed under Section 162(m) of the Code) the Performance
Criteria for such grant, and the Performance Goals with respect to each
Performance Criterion (including a threshold level of performance below which no
amount will become payable with respect to such Award). Each Performance-Based
Award will specify the amount payable, or the formula for determining the amount
payable, upon achievement of the various applicable performance targets. The
Performance Criteria established by the Administrator may be (but need not be)
different for each Performance Cycle and different Performance Goals may be
applicable to Performance-Based Awards to different Covered Employees.
     (c) Payment of Performance-Based Awards. Following the completion of a
Performance Cycle, the Administrator shall meet to review and certify in writing
whether, and to what extent, the Performance Goals for the Performance Cycle
have been achieved and, if so, to also calculate and certify in writing the
amount of the Performance-Based Awards earned for the Performance Cycle. The
Administrator shall then determine the actual size of each Covered Employee’s
Performance-Based Award, and, in doing so, may reduce or eliminate the amount of
the Performance-Based Award for a Covered Employee if, in its sole judgment,
such reduction or elimination is appropriate.
     (d) Maximum Award Payable. The maximum Performance-Based Award payable to
any one Covered Employee under the Plan for a Performance Cycle is 4,000,000
Shares (subject to adjustment as provided in Section 3(b) hereof) or $25 million
in the case of a Performance-Based Award that is a Cash-Based Award.

SECTION 11.   TRANSFERABILITY OF AWARDS

     (a) Transferability. Except as provided in Section 11(b) below, during a
grantee’s lifetime, his or her Awards shall be exercisable only by the grantee,
or by the grantee’s legal representative or guardian in the event of the
grantee’s incapacity. No Awards shall be sold, assigned, transferred or
otherwise encumbered or disposed of by a grantee other than by will or by the
laws of descent and distribution or pursuant to a domestic relations order. No
Awards shall be subject, in whole or in part, to attachment, execution, or levy
of any kind, and any purported transfer in violation hereof shall be null and
void.
     (b) Administrator Action. Notwithstanding Section 11(a), the Administrator,
in its discretion, may provide either in the Award Certificate regarding a given
Award or by subsequent written approval that the grantee (who is an employee or
director) may transfer his or her Non-Qualified Stock Options to his or her
immediate family members, to trusts for the benefit of such family members, or
to partnerships in which such family members are the only partners, provided
that the transferee agrees in writing with the Company to be bound by all of the
terms and conditions of this Plan and the applicable Award.

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     (c) Family Member. For purposes of Section 11(b), “family member” shall
mean a grantee’s child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, any person sharing the grantee’s household (other than a
tenant of the grantee), a trust in which these persons (or the grantee) have
more than 50 percent of the beneficial interest, a foundation in which these
persons (or the grantee) control the management of assets, and any other entity
in which these persons (or the grantee) own more than 50 percent of the voting
interests.
     (d) Designation of Beneficiary. Each grantee to whom an Award has been made
under the Plan may designate a beneficiary or beneficiaries to exercise any
Award or receive any payment under any Award payable on or after the grantee’s
death. Any such designation shall be on a form provided for that purpose by the
Administrator and shall not be effective until received by the Administrator. If
no beneficiary has been designated by a deceased grantee, or if the designated
beneficiaries have predeceased the grantee, the beneficiary shall be the
grantee’s estate.

SECTION 12.   TAX WITHHOLDING

     (a) Payment by Grantee. Each grantee shall, no later than the date as of
which the value of an Award or of any Stock or other amounts received thereunder
first becomes includable in the gross income of the grantee for Federal income
tax purposes, pay to the Company, or make arrangements satisfactory to the
Administrator regarding payment of, any Federal, state, or local taxes of any
kind required by law to be withheld by the Company with respect to such income.
The Company and its Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
grantee. The Company’s obligation to deliver evidence of book entry (or stock
certificates) to any grantee is subject to and conditioned on tax withholding
obligations being satisfied by the grantee.
     (b) Payment in Stock. In connection with its obligations to withhold
Federal, state, city or other taxes from amounts paid to grantees, the Company
may make any arrangements that are consistent with the Plan as it may deem
appropriate. Without limitation of the preceding sentence, the Company shall
have the right to reduce the number of shares of Stock otherwise required to be
issued to a grantee (or other recipient) in an amount that would have a Fair
Market Value on the date of such issuance equal to all Federal, state, city or
other taxes as shall be required to be withheld by the Company pursuant to any
statute or other governmental regulation or ruling and paid to any Federal,
state, city or other taxing authority.

SECTION 13.   SECTION 409A AWARDS.

     To the extent that any Award is determined to constitute “nonqualified
deferred compensation” within the meaning of Section 409A (a “409A Award”), the
Award shall be subject to such additional rules and requirements as specified by
the Administrator from time to time in order to comply with Section 409A. In
this regard, if any amount under a 409A Award is payable upon a “separation from
service” (within the meaning of Section 409A) to a grantee who is then
considered a “specified employee” (within the meaning of Section 409A), then no
such

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payment shall be made prior to the date that is the earlier of (i) six months
and one day after the grantee’s separation from service, or (ii) the grantee’s
death, but only to the extent such delay is necessary to prevent such payment
from being subject to interest, penalties and/or additional tax imposed pursuant
to Section 409A. Further, the settlement of any such Award may not be
accelerated except to the extent permitted by Section 409A.

SECTION 14.   TRANSFER, LEAVE OF ABSENCE, ETC.

     For purposes of the Plan, the following events shall not be deemed a
termination of employment:
     (a) a transfer to the employment of the Company from a Subsidiary or from
the Company to a Subsidiary, or from one Subsidiary to another;
     (b) an approved leave of absence for military service or sickness, or for
any other purpose approved by the Company, if the employee’s right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the
Administrator otherwise so provides in writing; or
     (c) the transfer in status from one eligibility category under Section 4
hereof to another category.

SECTION 15.   AMENDMENTS AND TERMINATION

     The Board may, at any time, amend or discontinue the Plan and the
Administrator may, at any time, amend or cancel any outstanding Award for the
purpose of satisfying changes in law or for any other lawful purpose, but no
such action shall adversely affect rights under any outstanding Award without
the holder’s consent. Except as provided in Section 3(c) or 3(d), without prior
stockholder approval, in no event may the Administrator exercise its discretion
to reduce the exercise price of outstanding Stock Options or effect repricing
through cancellation and re-grants. To the extent required under the rules of
any securities exchange or market system on which the Stock is listed, to the
extent determined by the Administrator to be required by the Code to ensure that
Incentive Stock Options granted under the Plan are qualified under Section 422
of the Code, or to ensure that compensation earned under Awards qualifies as
performance-based compensation under Section 162(m) of the Code, Plan amendments
shall be subject to approval by the Company stockholders entitled to vote at a
meeting of stockholders. Nothing in this Section 15 shall limit the
Administrator’s authority to take any action permitted pursuant to Section 3(d).

SECTION 16.   STATUS OF PLAN

     With respect to the portion of any Award that has not been exercised and
any payments in cash, Stock or other consideration not received by a grantee, a
grantee shall have no rights greater than those of a general creditor of the
Company unless the Administrator shall otherwise expressly determine in
connection with any Award or Awards. In its sole discretion, the Administrator
may authorize the creation of trusts or other arrangements to meet the Company’s
obligations to deliver Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the foregoing sentence.

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SECTION 17.   GENERAL PROVISIONS

     (a) No Distribution. The Administrator may require each person acquiring
Stock pursuant to an Award to represent to and agree with the Company in writing
that such person is acquiring the shares without a view to distribution thereof.
     (b) Delivery of Stock Certificates. Stock certificates to grantees under
this Plan shall be deemed delivered for all purposes when the Company or a stock
transfer agent of the Company shall have mailed such certificates in the United
States mail, addressed to the grantee, at the grantee’s last known address on
file with the Company. Uncertificated Stock shall be deemed delivered for all
purposes when the Company or a Stock transfer agent of the Company shall have
given to the grantee by electronic mail (with proof of receipt) or by United
States mail, addressed to the grantee, at the grantee’s last known address on
file with the Company, notice of issuance and recorded the issuance in its
records (which may include electronic “book entry” records). Notwithstanding
anything herein to the contrary, the Company shall not be required to issue or
deliver any certificates evidencing shares of Stock pursuant to the exercise of
any Award, unless and until the Administrator has determined, with advice of
counsel (to the extent the Administrator deems such advice necessary or
advisable), that the issuance and delivery of such certificates is in compliance
with all applicable laws, regulations of governmental authorities and, if
applicable, the requirements of any exchange on which the shares of Stock are
listed, quoted or traded. All Stock certificates delivered pursuant to the Plan
shall be subject to any stop-transfer orders and other restrictions as the
Administrator deems necessary or advisable to comply with federal, state or
foreign jurisdiction, securities or other laws, rules and quotation system on
which the Stock is listed, quoted or traded. The Administrator may place legends
on any Stock certificate to reference restrictions applicable to the Stock. In
addition to the terms and conditions provided herein, the Administrator may
require that an individual make such reasonable covenants, agreements, and
representations as the Administrator, in its discretion, deems necessary or
advisable in order to comply with any such laws, regulations, or requirements.
The Administrator shall have the right to require any individual to comply with
any timing or other restrictions with respect to the settlement or exercise of
any Award, including a window-period limitation, as may be imposed in the
discretion of the Administrator.
     (c) Stockholder Rights. Until Stock is deemed delivered in accordance with
Section 17(b), no right to vote or receive dividends or any other rights of a
stockholder will exist with respect to shares of Stock to be issued in
connection with an Award, notwithstanding the exercise of a Stock Option or any
other action by the grantee with respect to an Award.
     (d) Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Awards do not confer upon any employee any right to
continued employment with the Company or any Subsidiary.

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     (e) Trading Policy Restrictions. Option exercises and other Awards under
the Plan shall be subject to the Company’s insider trading policies and
procedures, as in effect from time to time.
     (f) Forfeiture of Awards under Sarbanes-Oxley Act. If the Company is
required to prepare an accounting restatement due to the material noncompliance
of the Company, as a result of misconduct, with any financial reporting
requirement under the securities laws, then any grantee who is one of the
individuals subject to automatic forfeiture under Section 304 of the
Sarbanes-Oxley Act of 2002 shall reimburse the Company for the amount of any
Award received by such individual under the Plan during the 12-month period
following the first public issuance or filing with the United States Securities
and Exchange Commission, as the case may be, of the financial document embodying
such financial reporting requirement.

SECTION 18.   EFFECTIVE DATE OF PLAN

     This Plan shall become effective upon approval by the holders of a majority
of the votes cast at a meeting of stockholders at which a quorum is present. No
grants of Stock Options and other Awards may be made hereunder after the tenth
anniversary of the Effective Date and no grants of Incentive Stock Options may
be made hereunder after the tenth anniversary of the date the Plan is approved
by the Board.

SECTION 19.   GOVERNING LAW

     This Plan and all Awards and actions taken thereunder shall be governed by,
and construed in accordance with, the laws of the Commonwealth of Pennsylvania,
applied without regard to conflict of law principles.
DATE APPROVED BY BOARD OF DIRECTORS: JULY 15, 2008
DATE APPROVED BY STOCKHOLDERS: OCTOBER 7, 2008

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