Exhibit 10.27

ZYLA LIFE SCIENCES

AMENDED AND RESTATED

2019 STOCK-BASED

INCENTIVE COMPENSATION PLAN

(Amended and Restated effective March 4, 2020)

 

1.         Purpose of the Plan

The purpose of the Plan is to assist the Company, its Subsidiaries and Company
Affiliates in attracting and retaining valued Employees, Consultants and
Non-Employee Directors by offering them a greater stake in the Company’s success
and a closer identity with it, and to encourage ownership of the Company’s stock
by such Employees, Consultants and Non-Employee Directors.

2.         Definitions

As used herein, the following definitions shall apply:

2.1.      “Affiliate” means as to any Person, any other Person that directly or
indirectly controls, or is under common control with, or is controlled by, such
first Person.  As used in this definition, “control” (including, with its
correlative meanings, “controlled by” and “under common control with”) shall
mean the possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).

2.2.      “Associated Funds” means, with respect to any Person, any funds
managed by such Person or under common management with such Person.

2.3.      “Award” means a grant of Common Stock, Deferred Stock, Restricted
Stock, Restricted Stock Units, Options or SARs under the Plan.

2.4.      “Award Agreement” means the written agreement, instrument or document
evidencing an Award, including any such item in an electronic medium.

2.5.      “Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended
and codified in title 11 of the United States Code, 11 U.S.C. §§ 101-1532, as in
effect on the date of the Chapter 11 Plan but, with respect to amendments to the
Bankruptcy Code subsequent to commencement of the Chapter 11 Cases, only to the
extent that such amendments were made expressly applicable to bankruptcy cases
which were filed as of the enactment of such amendments.

2.6.      “Bankruptcy Court” means the United States Bankruptcy Court for the
District of Delaware or such other court as may have jurisdiction over the
Chapter 11 Cases.

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

2.8.      “Change in Control” means, after the Effective Date, any of the
following events:

 

 

 

(a)        a “person” (as such term is used in Sections 13(d) and 14(d) of the
1934 Act), other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, is or becomes the
“beneficial owner” (as defined in Rule 13D-3 under the 1934 Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the combined voting power of the Company’s then outstanding securities
(provided that, notwithstanding the foregoing, any such acquisition of 50% or
more of the combined voting power of the Company’s then outstanding securities
by a Permitted Holder shall not constitute a Change in Control); or

(b)        during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board and any new director (other than a
director designated by a person who has entered into an agreement with the
Company to effect a transaction described in Section 2.5(a), Section 2.5(c) or
Section 2.5(d) hereof) whose election by the Board or nomination for election by
the Company’s stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof; or

(c)        the Company merges or consolidates with any other corporation, other
than in a merger or consolidation that would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least fifty percent (50%) of the combined voting power
of the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or

(d)        the complete liquidation of the Company or the sale or other
disposition of all or substantially all of the Company’s and its Subsidiaries’
assets determined on a consolidated basis (other than a sale or other
disposition to the holders of a majority of the voting power of the Company’s
voting securities immediately prior to such sale or other disposition (or to an
entity in which such holders own a majority of the voting power, directly or
indirectly)).

(e)        Notwithstanding the foregoing or anything in the Chapter 11 Plan or
an Award Agreement to the contrary, (x) if an Award is subject to Section 409A
of the Code, then no event shall be a Change in Control for purposes of such
Award unless such event also satisfies the requirements of Treasury Regulation
Section 1.409A-3(i)(5)(v), (vi) or (vii) and (y) neither of the following events
shall constitute a Change in Control:  (i) a transfer of any note or security,
including Common Stock, by a Person that received such note or security under
the Chapter 11 Plan or the Purchase Agreement to either an Affiliate of such
Person or to another Person that received notes or securities under the Chapter
11 Plan or the Purchase Agreement or (ii) any acquisition by any such Person
described in clause (y)(i) or its Affiliates of any note or security, whether in
connection with a new issuance by the Company, on the open market, or otherwise.

2.9.      “Chapter 11 Cases” means the joint chapter 11 case of the Company and
its Subsidiaries, under Case No. 18-12439 (BLS) in the Bankruptcy Court.

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2.10.    “Chapter 11 Plan” means the First Amended Joint Chapter 11 Plan of
Reorganization of the Issuer and its affiliated debtors, dated December 3, 2018,
as amended, for the resolution of outstanding claims and interests in the
Chapter 11 Cases, as may be modified in accordance with the Bankruptcy Code,
including all exhibits, supplements, appendices and schedules.

2.11.    “Code” means the Internal Revenue Code of 1986, as amended, and the
Treasury regulations promulgated thereunder.  A reference to any provision of
the Code or the Treasury regulations promulgated thereunder shall include
reference to any successor provision of the Code or the Treasury regulations.

2.12.    “Committee” means the committee designated by the Board to administer
the Plan under Section 4.  The Committee shall have at least two members and
each member of the Committee shall be a Non-Employee Director and, upon the
listing of the Common Stock on the NASDAQ Stock Market (or other securities
exchange), each member of the Committee shall be an “independent director”
within the meaning of Rule 5605(a)(2) of the NASDAQ Stock Market Rules (or any
equivalent rule of such other exchange).

2.13.    “Common Stock” means the common stock of the Company, par value $0.001
per share, or such other class or kind of shares or other securities resulting
from the application of Section 12.

2.14.    “Company” means Zyla Life Sciences, a Delaware corporation, or any
successor corporation.

2.15.    “Company Affiliate” means any entity other than the Subsidiaries in
which the Company has a substantial direct or indirect equity interest, as
determined by the Board.

2.16.    “Consultant” means an individual who renders services to the Company, a
Subsidiary or a Company Affiliate as a consultant, advisor or independent
contractor.

2.17.    “Deferral Period” means the period during which the receipt of a
Deferred Stock Award under Section 7 will be deferred.

2.18.    “Deferred Stock” means Common Stock to be delivered at the end of a
Deferral Period and awarded by the Committee under Section 7.

2.19.    “Effective Date” has the meaning set forth in Section 25.

2.20.    “Employee” means an individual, including an officer or director, who
is employed by the Company, a Subsidiary or a Company Affiliate.

2.21.    “Fair Market Value” means the fair market value of Common Stock
determined by such methods or procedures as shall be established from time to
time by the Committee in good faith and in accordance with applicable law.  If
the Common Stock is listed on a national securities exchange following the
Effective Date, then the Fair Market Value of Common Stock shall mean, unless
otherwise determined by the Committee, on any given date, the closing price of a
share of Common Stock on the principal national securities exchange on which the
Common Stock is listed

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on such date or, if Common Stock was not traded on such date, on the last
preceding day on which the Common Stock was traded after the Effective Date.

2.22.    “Incentive Stock Option” means an Option or a portion thereof intended
to meet the requirements of an incentive stock option as defined in Section 422
of the Code and designated as an Incentive Stock Option in the applicable Award
Agreement.

2.23.    “1934 Act” means the Securities Exchange Act of 1934, as amended, and
the rules promulgated thereunder.  A reference to any provision of the 1934 Act
or rule promulgated under the 1934 Act shall include reference to any successor
provision or rule.

2.24.    “Non-Employee Director” means a member of the Board who meets the
definition of a “non-employee director” under Rule 16b-3(b)(3) promulgated by
the Securities and Exchange Commission under the 1934 Act.

2.25.    “Non-Qualified Stock Option” means an Option or a portion thereof not
intended to be an Incentive Stock Option and not designated as an Incentive
Stock Option in the applicable Award Agreement.  Any Option (or portion thereof)
which is intended to be an Incentive Stock Option but which does not qualify as
such shall be a Non-Qualified Stock Option.

2.26.    “Option” means a right to purchase a specified number of shares of
Common Stock at a specified price awarded by the Committee under Section 6 of
the Plan.

2.27.    “Participant” means any Employee, Consultant or Non-Employee Director
who receives an Award.

2.28.    “Performance Goal” means a goal that must be met by the end of a period
specified by the Committee, including, without limitation, any one or more of
the following as they relate to the Company, its Subsidiaries or Company
Affiliates (or any business unit or department thereof): (i) stock price,
(ii) market share, (iii) sales, (iv) earnings per share, (v) diluted earnings
per share, (vi) diluted net income per share, (vii) return on shareholder
equity, (viii) costs, (ix) cash flow, (x) return on total assets, (xi) return on
capital or invested capital, (xii) return on net assets, (xiii) operating
income, (xiv) net income, (xv) earnings (or net income) before interest, taxes,
depreciation and amortization, (xvi) improvements in capital structure,
(xvii) gross, operating or other margins, (xviii) budget and expense management,
(xix) productivity ratios, (xx) working capital targets, (xxi) enterprise value,
(xxii) safety record, (xxiii) completion of acquisitions or business expansion
of the Company, its Subsidiaries or Company Affiliates (or any business unit or
department thereof) (xxiv) economic value added or other value added
measurements, (xxv) expenses targets, (xxvi) operating efficiency,
(xxvii) regulatory body approvals for commercialization of products, 
(xxviii) implementation or completion of critical projects or related milestones
(including, without limitation, milestones such as clinical trial enrollment
targets, commencement of phases of clinical trials and completion of phases of
clinical trials) or (xxix) partnering or similar transactions, in all cases,
whether measured absolutely or relative to an index or peer group.  The
Committee shall have discretion to determine the specific targets with respect
to each of these categories of Performance Goals.

2.29.    “Person” means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated

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organization, investment fund, any other business entity and a governmental
entity or any department, agency or political subdivision thereof.

2.30.    “Permitted Holders” means, at any time, each of (i) Iroko
Pharmaceuticals Inc., a business company incorporated in the British Virgin
Islands (registered number 1732699) and its Affiliates, (ii) CR Group L.P. and
its Affiliates and Associated Funds, including, without limitation, CRG
Servicing LLC, CRG Partners III L.P., CRG Partners III – Parallel Fund “A” L.P.,
CRG Partners III (Cayman) L.P.,  CRG Partners III (Cayman) LEV AIV I L.P., CRG
Partners III (Cayman) UNLEV AIV I, L.P. and CRG Partners III – Parallel Fund “B”
(Cayman) L.P., (iii) CI Investments Inc. and its Affiliates and Associated
Funds, (iv) Highbridge Capital Management, LLC, and its Affiliates and
Associated Funds, (v) Honeywell Capital Management LLC, and its Affiliates and
Associated Funds and (vi) any group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act, or any successor provision) the members of
which include any of the Permitted Holders specified in clauses (i) through
(v) above and that, directly or indirectly, hold or acquire beneficial ownership
of the Voting Stock of the Issuer (a “Permitted Holder Group”), so long as
(1) each member of the Permitted Holder Group has voting rights proportional to
the percentage of ownership interests held or acquired by such member and (2) no
Person or other “group” (other than Permitted Holders specified in clauses (i)
through (v) above) beneficially owns more than 50% on a fully diluted basis of
the Voting Stock held by the Permitted Holder Group. Any Person or group whose
acquisition of beneficial ownership constitutes a Change of Control in respect
of which a Change of Control Offer (as defined in the Indenture, hereafter
defined) is made in accordance with the requirements of the Indenture in respect
of the 13% Senior Secured Notes due 2024 dated as of January 31, 2019 with the
Company, the guarantors party thereto and U.S. Bank National Association, as
trustee and collateral agent (the “Indenture”) will thereafter, together with
its Affiliates and funds (or portions of funds) managed by any of the foregoing
or under common management with any of the foregoing, constitute an additional
Permitted Holder.

2.31.    “Plan” means the Zyla Life Sciences Amended and Restated 2019
Stock-Based Incentive Compensation Plan herein set forth, as amended and/or
restated from time to time.

2.32.    “Purchase Agreement” means that certain asset purchase agreement, dated
as of October 30, 2018, by and among Egalet Corporation (now known as Zyla Life
Sciences) (and one or more of its direct or indirect subsidiaries) and Iroko
Pharmaceuticals Inc. (and one or more of its direct or indirect subsidiaries)
(including, without limitation, all exhibits, supplements, appendices, and
schedules thereto), as may be amended, modified, or supplemented from time to
time in accordance with the terms thereof, which agreement was approved by the
Bankruptcy Court in the Chapter 11 Cases.

2.33.    ”Restricted Stock” means Common Stock awarded by the Committee under
Section 8 of the Plan.

2.34.    “Restricted Stock Unit” means the right to a payment in Common Stock or
in cash, or in a combination thereof, awarded by the Committee under Section 9
of the Plan.

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2.35.    “Restriction Period” means the period during which Restricted Stock
awarded under Section 8 of the Plan and Restricted Stock Units awarded under
Section 9 of the Plan are subject to forfeiture.

2.36.    “SAR” means a stock appreciation right awarded by the Committee under
Section 11 of the Plan.

2.37.    “Subsidiary” means any corporation (other than the Company),
partnership, joint venture or other business entity of which 50% or more of the
outstanding voting power is beneficially owned, directly or indirectly, by the
Company.

2.38.    “Ten Percent Shareholder” means a person who on any given date owns,
either directly or indirectly (taking into account the attribution
rules contained in Section 424(d) of the Code), stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company or a
Subsidiary.

2.39.    “Voting Stock” of any Person as of any date means the capital stock of
such Person that is at the time entitled to vote in the election of the board of
directors of such Person.

2.40.    “Underwater Option” means an Option for which the Fair Market Value of
the underlying Common Stock is less than the exercise price of that Option.

2.41.    “Underwater SAR” means a SAR for which the Fair Market Value of the
Common Stock relating to such SAR is less than the grant price of that SAR.

3.         Eligibility

Any Employee, Consultant or Non-Employee Director is eligible to receive an
Award, provided that as long as the Company is subject to the 1934 Act, the
shares subject to Awards hereunder are granted to individuals who qualify as
recipients of awards whose equity is permitted to be included on a Form S-8 .

4.         Administration and Implementation of Plan; No Repricings

4.1.      The Plan shall be administered by the Committee.  Any action of the
Committee in administering the Plan shall be final, conclusive and binding on
all persons, including the Company, its Subsidiaries and Company Affiliates,
their Employees, Consultants and directors, Participants, persons claiming
rights from or through Participants and stockholders of the Company.  No member
of the Committee shall be personally liable for any action, determination, or
interpretation taken or made in good faith by the Committee with respect to the
Plan or any Awards granted hereunder, and all members of the Committee shall be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.

4.2.      Subject to the provisions of the Plan, the Committee shall have full
and final authority in its discretion (a) to select the Employees, Consultants
and Non-Employee Directors who will receive Awards pursuant to the Plan, (b) to
determine the type or types of Awards to be granted to each Participant, (c) to
determine the number of shares of Common Stock to which an Award will relate,
the terms and conditions of any Award granted under the Plan (including, but

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not limited to, restrictions as to vesting, transferability or forfeiture,
exercisability or settlement of an Award and waivers or accelerations thereof,
and waivers of or modifications to performance conditions relating to an Award,
based in each case on such considerations as the Committee shall determine) and
all other matters to be determined in connection with an Award; (d) to determine
whether, to what extent, and under what circumstances an Award may be canceled,
forfeited, or surrendered; (e) to determine whether Performance Goals to which
the settlement of an Award is subject are satisfied; (f) to correct any defect
or supply any omission or reconcile any inconsistency in the Plan, and to adopt,
amend and rescind such rules and regulations as, in its opinion, may be
advisable in the administration of the Plan; and (g) to construe and interpret
the Plan and to make all other determinations as it may deem necessary or
advisable for the administration of the Plan.

4.3.      The Committee’s powers shall also include responsibility to determine
the effect, if any, of a Change in Control of the Company upon outstanding
Awards.  Upon a Change in Control, the Committee may, at its discretion,
(i) fully vest any or all Awards made under the Plan, (ii) determine whether all
applicable Performance Goals have been achieved and the applicable level of
performance, (iii) cancel any outstanding Option or SAR in exchange for a
payment of an amount (including zero) equal to the difference between the then
Fair Market Value of the shares of Common Stock underlying the portion of such
Award being cancelled less the aggregate option or base price of the portion of
such Award being cancelled (if the per share option or base price of such award
equals or exceeds the Fair Market Value of one share of Common Stock, such Award
may be cancelled with no payment due to the holder thereof), (iv) after having
given the Participant a reasonable chance to exercise any vested outstanding
Options or SARs, terminate any or all of the Participant’s unexercised Options
and/or SARs, (v) where the Company is not the surviving corporation, cause the
surviving corporation to assume all outstanding Awards or replace all
outstanding Awards with comparable awards or (vi) take such other action as the
Committee shall determine to be appropriate.

4.4.      The Committee may impose on any Award or the exercise thereof, at the
date of grant or thereafter, such terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of the Participant’s termination of
employment or service with the Company or any Subsidiary or Company Affiliate;
provided, however, that the Committee shall retain full power to accelerate or
waive any such term or condition as it may have previously imposed, including,
without limitation, any minimum vesting period.  All Awards shall be evidenced
by an Award Agreement.  The right of a Participant to exercise or receive a
grant or settlement of any Award, and the timing thereof, may be subject to such
Performance Goals as may be specified by the Committee.

4.5.      To the extent permitted by applicable law, the Committee may delegate
some or all of its authority with respect to the Plan and Awards to any
executive officer of the Company or any other person or persons designated by
the Committee, in each case, acting individually or as a committee, provided
that the Committee may not delegate its authority hereunder to make awards to
Employees who are (i) “officers” as defined in Rule 16a-1(f) under the 1934 Act
or (ii) officers or other Employees who are delegated authority by the Committee
pursuant to this Section.  Any delegation hereunder shall be subject to the
restrictions and limits that the Committee specifies at the time of such
delegation or thereafter.  The Committee may at any time rescind the authority
delegated to any person pursuant to this Section.  Any action undertaken by any
such person or

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persons in accordance with the Committee’s delegation of authority pursuant to
this Section shall have the same force and effect as if undertaken directly by
the Committee.

4.6.      Notwithstanding anything in the Plan or an Award Agreement to the
contrary, no Underwater Option or Underwater SAR may be repriced, replaced or
regranted through cancellation, nor may any Underwater Option or Underwater SAR
be repurchased for cash, in any case, without the approval of the stockholders
of the Company, provided that nothing herein shall prevent the Committee from
taking any action provided for in Sections 4.3 and 12.

5.         Shares of Stock Subject to the Plan

5.1.      Subject to adjustment as provided in Section 12, the total number of
shares of Common Stock available for Awards under the Plan shall be 3,450,000
shares (the “Equity Pool”).

5.2.      Subject to adjustment as provided in Section 12, the maximum number of
shares of Common Stock available for Awards that are intended to be Incentive
Stock Options shall not exceed 3,450,000 (the “ISO Limit”).

5.3.      If any shares subject to an Award are forfeited or such Award
otherwise terminates, any shares counted against the number of shares available
for issuance pursuant to the Plan with respect to such Award shall, to the
extent of any such forfeiture or termination, again be available for Awards
under the Plan; provided, however, that the Committee may adopt procedures for
the counting of shares relating to any Award to ensure appropriate counting,
avoid double counting, and provide for adjustments in any case in which the
number of shares actually distributed differs from the number of shares
previously counted in connection with such Award.  SARs and Restricted Stock
Units, in each case, to be settled in shares of Common Stock shall be counted in
full against the number of shares available for award under the Plan based on
the number of shares to which such Awards relate, regardless of the number of
shares of Common Stock issued upon settlement of the SAR or Restricted Stock
Unit.  If any shares subject to an Award are retained or reacquired by the
Company in payment of an exercise price or satisfaction of a withholding or
other tax obligation in connection with any Award, such shares shall not be made
available for future Awards under the Plan.

5.4.      Any shares issued hereunder may consist, in whole or in part, of
authorized and unissued shares or treasury shares.  Any shares issued by the
Company through the assumption or substitution of outstanding grants in
connection with the acquisition of another entity shall not reduce the maximum
number of shares available for delivery under the Plan.

6.         Common Stock

An Award of Common Stock is a grant by the Company of a specified number of
shares of Common Stock to the Participant, which shares are not subject to
forfeiture except as set forth in Section 20.  Upon the Award of Common Stock,
the Committee may direct the number of shares of Common Stock subject to such
Award be issued to the Participant, designating the Participant as the
registered owner.  The Participant shall have all of the customary rights of a
stockholder with respect to the Award of Common Stock, including the right to
vote shares of the Common Stock and receive dividends with respect to the Common
Stock.

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7.         Deferred Stock

An Award of Deferred Stock is an agreement by the Company to deliver to the
Participant a specified number of shares of Common Stock at the end of a
specified Deferral Period or Periods.  Such an Award shall be subject to the
following terms and conditions:

7.1.      Upon the Award of Deferred Stock, the Committee shall direct that the
number of shares subject to such Award be credited to the Participant’s account
on the books of the Company but that issuance and delivery of the same shall be
deferred until the date or dates provided in the Award Agreement.  Prior to
issuance and delivery of the Deferred Stock, the Participant shall have no
rights as a stockholder with respect to any shares of Deferred Stock credited to
the Participant’s account.

7.2.      During the Deferral Period, no dividend shall be paid with respect to
shares covered by a Deferred Stock Award and the Participant shall have no
future right to any dividend paid during the Deferral Period.

7.3.      The Deferral Period may consist of one or more installments.  Provided
that the Deferred Stock has not been previously forfeited, at the end of the
Deferral Period or any installment thereof, the shares of Deferred Stock
applicable to such installment, shall be issued and delivered to the Participant
(or, where appropriate, the Participant’s legal representative) in accordance
with the terms of the Award Agreement.

8.         Restricted Stock

An Award of Restricted Stock is a grant by the Company of a specified number of
shares of Common Stock to the Participant, which shares are subject to
forfeiture upon the happening of specified events.  Such an Award shall be
subject to the following terms and conditions:

 

8.1.      Upon the Award of Restricted Stock, the Committee may direct the
number of shares of Common Stock subject to such Award be issued to the
Participant or placed in a restricted stock account (including an electronic
account) with the transfer agent and in either case designating the Participant
as the registered owner.  The certificate(s), if any, representing such shares
shall be physically or electronically legended, as applicable, as to sale,
transfer, assignment, pledge or other encumbrances during the Restriction Period
and, if issued to the Participant, returned to the Company to be held in escrow
during the Restriction Period.  In all cases, the Participant shall sign a stock
power endorsed in blank to the Company to be held in escrow during the
Restriction Period.

8.2.      During the Restriction Period, the Participant shall have the right to
vote shares of Restricted Stock.  During the Restriction Period, no dividend
shall be paid with respect to the number of shares covered by a Restricted Stock
Award and the Participant shall have no future right to any dividend paid during
the Restriction Period.

8.3.      Provided that the Restricted Stock has not been previously forfeited,
at the end of the Restriction Period the restrictions imposed under the Award
Agreement shall lapse with respect to the number of shares specified thereunder,
and the legend, if any, imposed hereunder shall be

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removed and such number of shares delivered to the Participant (or, where
appropriate, the Participant’s legal representative).

9.         Restricted Stock Units

An Award of Restricted Stock Units is a grant by the Company of the right to
receive a payment in Common Stock or in cash, or in a combination thereof, that
is equal to the Fair Market Value of a share of Common Stock as of the date of
vesting or payment, as set forth in the applicable Award Agreement, which right
is subject to forfeiture upon the happening of specified events. Such an Award
shall be subject to the following terms and conditions:

9.1.      Any amount payable upon the end of the Restriction Period with respect
to a Restricted Stock Unit shall be paid by the Company in shares of Common
Stock, in cash or in a combination of shares of Common Stock and cash, as
determined by the Committee in its sole discretion and as set forth in the Award
Agreement.

9.2.      Provided that the Restricted Stock Units have not been previously
forfeited, at the end of the Restriction Period the restrictions imposed under
the Award Agreement shall lapse with respect to the number of Restricted Stock
Units specified thereunder, and shares of Common Stock or cash with a value
equal to the Fair Market Value of the shares of Common Stock underlying such
Restricted Stock Units shall be delivered to the Participant (or, where
appropriate, the Participant’s legal representative).

10.       Options

Options give a Participant the right to purchase a specified number of shares of
Common Stock from the Company for a specified time period at a fixed price. 
Options may be either Incentive Stock Options or Non-Qualified Stock Options. 
The grant of Options shall be subject to the following terms and conditions:

10.1.    Option Price:  The price per share at which Common Stock may be
purchased upon exercise of an Option shall be determined by the Committee, but
shall be not less than 100% of the Fair Market Value of a share of Common Stock
on the date of grant (or 110% of such Fair Market Value in the case of an
Incentive Stock Option granted to a Ten Percent Shareholder), unless the Option
was granted through the assumption of, or in substitution for, outstanding
awards previously granted by an entity acquired by the Company or any Subsidiary
or Company Affiliate or with which the Company or any Subsidiary or Company
Affiliate combines.

10.2.    Term of Options:  The term of an Option shall in no event be greater
than ten years (five years in the case of an Incentive Stock Option granted to a
Ten Percent Shareholder).

10.3.    Incentive Stock Options:  Each provision of the Plan and each Award
Agreement relating to an Incentive Stock Option shall be construed so that each
Incentive Stock Option shall be an incentive stock option as defined in
Section 422 of the Code, and any provisions of an Award Agreement that cannot be
so construed shall be disregarded.  Incentive Stock Options may be granted only
to employees of the Company and to employees of a “subsidiary corporation”
(within the meaning of Code Section 424(f)) of the Company.

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10.4.    Payment of Option Price:  The option price of the shares of Common
Stock received upon the exercise of an Option shall be paid within three days of
the date of exercise: (i) in cash, (ii) with the proceeds received from a
broker-dealer whom the Participant has authorized to sell all or a portion of
the Common Stock covered by the Option, or (iii) with the consent of the
Committee, in whole or in part in Common Stock held by the Participant and
valued at Fair Market Value on the date of exercise.  Notwithstanding the
foregoing, a Participant who is subject to Section 16 of the 1934 Act may direct
the Company to withhold Shares otherwise to be delivered upon the exercise of an
Option in order to pay the exercise price due on such exercise.  An Option may
be exercised only for a whole number of shares of Common Stock.

11.       Stock Appreciation Rights

SARs give the Participant the right to receive, upon exercise of the SAR, the
excess of (i) the Fair Market Value of one share of Common Stock on the date of
exercise over (ii) the grant price of the SAR as determined by the Committee,
but which may never be less than 100% of the Fair Market Value of a share of
Common Stock on the date of grant.  The grant of SARs shall be subject to the
following terms and conditions:

11.1.    The term of a SAR shall in no event be greater than ten years.

11.2.    The Committee shall determine the time or times at which a SAR may be
exercised in whole or in part, the method of exercise, the method of settlement,
form of consideration payable in settlement, method by which Common Stock will
be delivered or deemed to be delivered to Participants, whether or not a SAR
shall be in tandem with any other Award, and any other terms and conditions of
any SAR.

11.3.    The Committee may provide that a SAR shall be deemed to be exercised at
the close of business on the scheduled expiration date of such SAR.

12.       Adjustments upon Changes in Capitalization

12.1.    In order to prevent dilution or enlargement of the rights of
Participants under the Plan as a result of any stock dividend, recapitalization,
forward stock split or reverse stock split, reorganization, division, merger,
consolidation, spin-off, extraordinary or unusual cash distribution or other
similar corporate transaction or event that affects the Common Stock, the
Committee shall adjust (i) the number and kind of shares of Common Stock which
may thereafter be issued in connection with Awards, (ii) the number and kind of
shares of Common Stock issuable in respect of outstanding Awards, (iii) the
aggregate number and kind of shares of Common Stock available under the Plan,
(iv) the ISO Limit and (v) the exercise or grant price relating to any Award. 
Any such adjustment shall be made in an equitable manner which reflects the
effect of such transaction or event.  It is provided, however, that in the case
of any such transaction or event, the Committee may make any additional
adjustments to the items in (i) through (v) above which it deems appropriate in
the circumstances, or make provision for a cash payment with respect to any
outstanding Award; and it is provided, further, that no adjustment shall be made
under this Section that would cause the Plan to violate Section 422 of the Code
with respect to Incentive Stock Options.  If a Change in Control occurs, then
notwithstanding anything contained in this

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Section 12.1 to the contrary, the Committee may take any of the actions set
forth in Section 4.3 with respect to Awards.

12.2.    In addition, the Committee is authorized to make adjustments in the
terms and conditions of, and the criteria included in, Awards, including any
Performance Goals, in recognition of unusual or nonrecurring events (including,
without limitation, events described in Section 12.1) affecting the Company, any
Subsidiary or Company Affiliate, or in response to changes in applicable laws,
regulations, or accounting principles.

13.       Termination and Amendment

13.1.    The Board may amend, alter, suspend, discontinue, or terminate the Plan
without the consent of the Company’s stockholders or Participants, except that
any such amendment, alteration, suspension, discontinuation, or termination
shall be subject to the approval of the Company’s stockholders if (i) such
action results in the repricing, replacement or repurchase of any Underwater
Option or Underwater SAR or (ii) such stockholder approval is required by any
federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Common Stock may then be listed or
quoted, in each case, except as provided in Section 12.1; provided, however,
that without the consent of an affected Participant, no amendment, alteration,
suspension, discontinuation, or termination of the Plan may materially and
adversely affect the rights of such Participant under any Award theretofore
granted and any Award Agreement relating thereto, except as otherwise provided
in Section 4.3.  The Committee may waive any condition or right under, or amend,
alter, suspend, discontinue, or terminate, any Award theretofore granted and any
Award Agreement relating thereto; provided, however, that without the consent of
an affected Participant, no such amendment, alteration, suspension,
discontinuation, or termination of any Award may materially and adversely affect
the rights of such Participant under such Award, except as  otherwise provided
in Section 4.3.

13.2.    The foregoing notwithstanding, any Performance Goal or other
performance condition specified in connection with an Award shall not be deemed
a fixed contractual term, but shall remain subject to adjustment by the
Committee, in its discretion at any time in view of the Committee’s assessment
of the Company’s strategy, performance of comparable companies, and other
circumstances.

14.       No Right to Award, Employment or Service

Neither the Plan nor any Award nor any action taken hereunder shall be construed
as giving any Employee, Consultant or Non-Employee Director any right to be
retained in the employ or service of the Company, any Subsidiary or Company
Affiliate.  For purposes of the Plan, transfer of employment or service between
the Company and its Subsidiaries and Company Affiliates shall not be deemed a
termination of employment or service, except as may be necessary or advisable to
comply with Section 409A of the Code or an exemption therefrom.

15.       Taxes

The Company, any Subsidiary or Company Affiliate is authorized to withhold from
any payment relating to an Award under the Plan, including from a distribution
of Common Stock or any payroll or other payment to a Participant, amounts of
withholding and other taxes due in

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connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company, the Subsidiary
or Company Affiliate and Participants to satisfy obligations for the payment of
withholding taxes and other tax obligations relating to any Award.  This
authority shall include authority to withhold or receive Common Stock or other
property and to make cash payments in respect thereof in satisfaction of a
Participant’s tax obligations.  Participants who are subject to the reporting
requirements of Section 16 of the 1934 Act may elect to pay all or a portion of
any withholding taxes due in connection with an Award by directing the Company
to withhold shares of Common Stock that would otherwise be received in
connection with such Award.  Withholding of shares of Common Stock to satisfy
the tax withholding obligation relating to an Award shall not occur at a rate
that exceeds the maximum applicable tax withholding rate.

16.       Limits on Transferability; Beneficiaries

No Award or other right or interest of a Participant under the Plan shall be
pledged, encumbered, or hypothecated to, or in favor of, or subject to any lien,
obligation, or liability of such Participant to, any party, other than the
Company, any Subsidiary or Company Affiliate, or assigned or transferred by such
Participant otherwise than by will or the laws of descent and distribution, and
such Awards and rights shall be exercisable during the lifetime of the
Participant only by the Participant or his or her guardian or legal
representative. Notwithstanding the foregoing, the Committee may, in its
discretion, provide that Awards or other rights or interests of a Participant
granted pursuant to the Plan (other than an Incentive Stock Option) be
transferable, without consideration, to immediate family members (i.e.,
children, grandchildren or spouse), to trusts for the benefit of such immediate
family members and to partnerships in which such family members are the only
partners.  The Committee may attach to such transferability feature such terms
and conditions as it deems advisable.  In addition, a Participant may, in the
manner established by the Committee, designate a beneficiary (which may be a
person or a trust) to exercise the rights of the Participant, and to receive any
distribution, with respect to any Award upon the death of the Participant.  A
beneficiary, guardian, legal representative or other person claiming any rights
under the Plan from or through any Participant shall be subject to all terms and
conditions of the Plan and any Award Agreement applicable to such Participant,
except as otherwise determined by the Committee, and to any additional
restrictions deemed necessary or appropriate by the Committee.

17.       No Rights to Awards; No Stockholder Rights

No Participant shall have any claim to be granted any Award under the Plan, and
there is no obligation for uniformity of treatment of Participants.  No Award
shall confer on any Participant any of the rights of a stockholder of the
Company unless and until Common Stock is duly issued or transferred to the
Participant in accordance with the terms of the Award .

18.       Foreign Nationals.

Without amending the Plan, Awards may be granted to Employees, Consultants and
Non-Employee Directors who are foreign nationals or are employed or providing
services outside the United States or both, on such terms and conditions
different from those specified in the Plan as may, in the judgment of the
Committee, be necessary or desirable to further the purpose of the

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Plan. Moreover, the Committee may approve such supplements to, or amendments,
restatements or alternative versions of, the Plan as it may consider necessary
or appropriate for such purposes without thereby affecting the terms of the Plan
as in effect for any other purpose.

19.       Securities Law Requirements

19.1.    No Award granted hereunder shall be exercisable or settled if the
Company shall at any time determine that (a) the listing upon any securities
exchange, or the registration or qualification under any state or federal law of
any Common Stock otherwise deliverable upon such exercise or settlement, or
(b) the consent or approval of any regulatory body or the satisfaction of
withholding tax or other withholding liabilities, is necessary or appropriate in
connection with such exercise or settlement.  In any of the events referred to
in clause (a) or clause (b) above, the exercisability and settlement of such
Awards shall be suspended and shall not be effective unless and until such
withholding, listing, registration, qualifications or approval shall have been
effected or obtained free of any conditions not acceptable to the Company in its
sole discretion, notwithstanding any termination of any Award or any portion of
any Award during the period when exercisability or settlement has been
suspended.

19.2.    The Committee may require, as a condition to the right to exercise, or
receive shares of Common Stock in respect of, any Award that the Company receive
from the Participant, at the time any such Award is exercised, vests, settled or
any applicable restrictions lapse, representations, warranties and agreements to
the effect that the shares are being purchased or acquired by the Participant
for investment only and without any present intention to sell or otherwise
distribute such shares and that the Participant will not dispose of such shares
in transactions which, in the opinion of counsel to the Company, would violate
the registration provisions of the Securities Act of 1933, as then amended, and
the rules and regulations thereunder.  The certificates issued to evidence such
shares shall bear appropriate legends summarizing such restrictions on the
disposition thereof.

20.       Recoupment

Any Award granted pursuant to the Plan (and shares of Common Stock or cash
received in respect thereof) shall be subject to mandatory repayment by the
Participant to the Company pursuant to the terms of any Company “clawback” or
recoupment policy directly applicable to the Plan and (i) set forth in the
Participant’s Award Agreement or (ii) required by law, or the rules of any
national securities exchange on which the Common Stock is listed.

21.       Termination

Unless the Plan previously shall have been terminated by action of the Board,
the Plan shall terminate on the 10-year anniversary of the Effective Date, and
no Awards under the Plan shall thereafter be granted.  Notwithstanding the
termination of the Plan, the terms of the Plan shall remain in effect with
respect to any Awards outstanding at the time of such termination.

22.       Fractional Shares

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The Company will not be required to issue any fractional shares of Common Stock
pursuant to the Plan.  The Committee may provide for the elimination of
fractions and for the settlement of fractions in cash.

23.       Governing Law

To the extent that Federal laws do not otherwise control, the validity and
construction of the Plan and any Award Agreement entered into thereunder shall
be construed and enforced in accordance with the laws of the State of Delaware,
but without giving effect to the choice of law principles thereof.

24.       Code Section 409A.

The Plan and all Awards are intended to comply with, or be exempt from, Code
Section 409A and all regulations, guidance, compliance programs and other
interpretative authority thereunder, and shall be interpreted in a manner
consistent therewith.  In the event that a Participant is a “specified employee”
within the meaning of Code Section 409A, and a payment or benefit provided for
under the Plan would be subject to additional tax under Code Section 409A if
such payment or benefit is paid within six (6) months after such Participant’s
separation from service (within the meaning of Code Section 409A), then such
payment or benefit shall not be paid (or commence) during the six (6) month
period immediately following such Participant’s separation from service except
as provided in the immediately following sentence. In such an event, any
payments or benefits that would otherwise have been made or provided during such
six (6) month period and which would have incurred such additional tax under
Code Section 409A shall instead be paid to the Participant in a lump-sum,
without interest, on the earlier of (i) the first business day of the seventh
month following the month in which such Participant’s separation from service
occurs or (ii) the tenth business day following such Participant’s death (but
not earlier than if such delay had not applied). A Participant’s right to
receive any installment payments under an Award Agreement, including without
limitation as the result of any deferral of an Award in accordance with Code
Section 409A, shall be treated as a right to receive a series of separate
payments and, accordingly, each such installment payment shall at all times be
considered a separate and distinct payment as permitted under Code Section
409A.  Notwithstanding anything contained in the Plan or in an Award Agreement
to the contrary, neither the Company, any member of the Committee (in their
capacity as such), any Subsidiary nor any Company Affiliate shall have any
liability or obligation to any Participant or any other Person for taxes,
interest, penalties or fines (including without limitation any of the foregoing
resulting from the failure of any Award granted hereunder to comply with, or be
exempt from, Code Section 409A).  Any Award that is to be settled or paid upon a
termination of employment or service and that constitutes “non-qualified
deferred compensation” under Code Section 409A shall not be paid or settled
unless such termination of employment or service constitutes a “separation from
service” within the meaning of Code Section 409A.

25.       Effective Date

The Plan shall be effective as of the date it is approved by the Board (the
“Effective Date”).

[End of Plan.]

 

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