INSMED INCORPORATED
2019 INCENTIVE PLAN
1.Purpose
The purpose of the Plan is to advance the interests of the Company by aligning
the individual interests of employees, officers, non-employee directors and
other service providers, in each case who are selected to be participants, with
the interests of Company shareholders and by providing such individuals with an
incentive to continue working toward and contributing to the success and
progress of the Company. The Plan provides for the grant of Options, Stock
Appreciation Rights, Restricted Stock and Restricted Stock Units, any of which
may be performance-based, as determined by the Administrator. The Plan replaces
the Insmed Incorporated 2017 Incentive Plan (the “2017 Plan”) with respect to
future awards granted by the Company, and no future awards will made under the
2017 Plan after the Effective Date (as defined herein) of the Plan except as
otherwise provided herein.
2.Definitions
As used in the Plan, the following terms shall have the meanings set forth
below:
a.“Administrator” means the Administrator of the Plan in accordance with Section
6 of the Plan.
b.“Affiliate” means any entity in which the Company has a substantial direct or
indirect equity interest, as determined by the Committee from time to time.
c.“Act” means the Securities Exchange Act of 1934, as amended from time to time,
or any successor thereto.
d.“Approval Date” has the meaning set forth in Section 4 of the Plan.
e.“Award” means an Option, Stock Appreciation Right, Restricted Stock, or
Restricted Stock Unit granted to a Participant pursuant to the provisions of the
Plan.
f.“Award Agreement” means any written or electronic agreement or other
instrument evidencing any Award, which may (but need not) require execution or
acknowledgment by a Participant.
g.“Board” means the board of directors of the Company.
h.“Change in Control” means the occurrence of any one of the following:

--------------------------------------------------------------------------------

i.any Person becomes the beneficial owner (as such term is defined in Rule 13d-3
under the Act) of at least 50% of either (A) the value of the then outstanding
shares of Common Stock (the “Outstanding Company Common Stock”) or (B) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”) (the foregoing beneficial ownership hereinafter
being referred to as a “Controlling Interest”); provided, however, that for
purposes of this definition, the following acquisitions shall not constitute or
result in a Change in Control: (v) any acquisition directly from the Company;
(w) any acquisition by the Company; (x) any acquisition by any Person that as of
the Effective Date has beneficial ownership of a Controlling Interest; (y) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or an Affiliate; or (z) any acquisition by any
corporation pursuant to a transaction which complies with clauses (A), (B) and
(C) of subsection (3) below; or
ii.during any period of two consecutive years (not including any period prior to
the Effective Date) individuals who constitute the Board on the Effective Date
(the “Incumbent Board”) cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the Effective Date whose election, or nomination for election by
the Company’s shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs after the
Effective Date as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or
2

--------------------------------------------------------------------------------

iii.consummation of a reorganization, merger, statutory share exchange or
consolidation or similar corporate transaction involving the Company or any of
its subsidiaries, a sale or other disposition of all or substantially all of the
assets of the Company, or the acquisition of assets or stock of another entity
by the Company or any of its subsidiaries (each a “Business Combination”), in
each case, unless, following such Business Combination, (A) all or substantially
all of the Persons who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) (such resulting or acquiring corporation is referred to herein as
the “Acquiring Corporation”) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may
be, (B) no Person (excluding the Acquiring Corporation or any employee benefit
plan (or related trust) of the Company or such Acquiring Corporation)
beneficially owns, directly or indirectly, more than 50% of the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination, and (C) at least a majority of the members of
the Board of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or
iv.the complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, to the extent an Award provides for deferred
compensation under Section 409A of the Code and payment is made upon a Change in
Control, no event or transaction will constitute a Change in Control hereunder
unless it also constitutes a “change in control event” under Section 409A of the
Code.
i.“Code” means the Internal Revenue Code of 1986, as amended from time to time,
or any successor thereto, and the rulings and regulations issued thereunder.
j.“Committee” means the Compensation Committee of the Board (or any successor
committee).
k.“Common Stock” means the common stock of the Company, par value $0.01 per
share, or such other class or kind of shares or other securities as may be
applicable under Section 14 of the Plan.
l.“Company” means Insmed Incorporated, a Virginia corporation, and except as
utilized in the definition of Change in Control, any successor corporation.
m.“Dividend Equivalents” mean an amount payable in cash or Common Stock, as
determined by the Administrator, with respect to a Restricted Stock Unit Award
equal to what would have been received if the shares underlying the Award had
been owned by the Participant.
n.“Effective Date” has the meaning set forth in Section 4 of the Plan.
o.“Fair Market Value” means as of any date, the value of the Common Stock
determined as follows: (i) if the Common Stock is listed on any established
stock exchange, system or market, the closing price for the Common Stock on such
date (or if Common Stock was not traded on such exchange, system, or market on
such date, then on the next preceding date on which shares of Common Stock were
traded) as quoted on such exchange, system or market as reported in the Wall
Street Journal or such other source as the Administrator deems reliable; and
(ii) in the absence of an established market for the Common Stock, as determined
in good faith by the Administrator by the reasonable application of a reasonable
valuation method, taking into account factors consistent with Treas. Reg. §
409A-1(b)(5)(iv)(B) as the Administrator deems appropriate.
p.“Freestanding SARs” has the meaning set forth in Section 9(a) of the Plan.
3

--------------------------------------------------------------------------------

q.“Full-Value Award” means an Award that results in the Company transferring the
full value of a share of Common Stock under the Award, whether or not an actual
share of stock is issued. Full-Value Awards shall include Restricted Stock and
Restricted Stock Units to the extent payable in Common Stock (including, but not
limited to, Awards that are performance-based) for which the Company transfers
the full value of a share of Common Stock under the Award, but shall not include
Dividend Equivalents.
r. “Incentive Stock Option” means a stock option that is designated as
potentially eligible to qualify as an “incentive stock option” within the
meaning of Section 422 of the Code.
s.“Nonqualified Stock Option” means a stock option that is not intended to
qualify as an “incentive stock option” within the meaning of Section 422 of the
Code.
t.“Option” means a stock option awarded under Section 8 of the Plan, which may
be an Incentive Stock Option or a Nonqualified Stock Option.
u.“Participant” means any individual described in Section 3 of the Plan to whom
Awards have been granted or who has received a Substitute Award and any
authorized transferee of such individual.
v. “Person” shall have the meaning given in Section 3(a)(9) of the Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such term
shall not include (i) the Company or any of its Affiliates, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any of its Subsidiaries, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities or (iv) a corporation owned, directly
or indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
w.“Plan” means the Insmed Incorporated 2019 Incentive Plan as set forth herein
and as amended from time to time.
x.“Prior Plan” means the Insmed Incorporated 2013 Incentive Plan, Insmed
Incorporated 2015 Incentive Plan or the 2017 Plan.
y.“Restricted Stock” means an Award or issuance of Common Stock the grant,
issuance, retention, vesting and/or transferability of which is subject during
specified periods of time to such conditions (including continued employment or
performance conditions) and terms as the Administrator deems appropriate.
z.“Restricted Stock Unit” means an Award denominated in units of Common Stock
under which the issuance of shares of Common Stock (or cash payment in lieu
thereof) is subject to such conditions (including continued employment or
performance conditions) and terms as the Administrator deems appropriate.
aa.“Separation from Service” means the termination of Participant’s employment
with the Company and all Subsidiaries that constitutes a “separation from
service” within the meaning of Section 409A of the Code.
ab.“Share Pool” has the meaning set forth in Section 5(a) of the Plan.
4

--------------------------------------------------------------------------------

ac.“Stock Appreciation Right” means a right granted pursuant to Section 9 of the
Plan that entitles the Participant to receive, in cash or Common Stock or a
combination thereof, value equal to the excess of (i) the aggregate market price
of a specified number of shares of Common Stock at the time of exercise over
(ii) the exercise price of the right, as established by the Administrator on the
date of grant.
ad.“Subsidiary” means any entity in which the Company, directly or indirectly,
possesses 50% or more of the total combined voting power of all classes of its
equity interests or, for Incentive Stock Options, a “subsidiary corporation” (as
defined in Section 424(f) of the Code).
ae.“Substitute Awards” means Awards granted or Common Stock issued by the
Company in assumption of, or in substitution or exchange for, awards previously
granted, or the right or obligation to make future awards, by a company acquired
by the Company or any Subsidiary or with which the Company or any Subsidiary
combines.
af.“Tandem SARs” has the meaning set forth in Section 9(a) of the Plan.
ag.“2017 Plan” has the meaning set forth in Section 1 of the Plan.
3.Eligibility
Any employee of the Company or an Affiliate (including an officer or director
who is such an employee), member of the Board (whether or not such Board member
is employed by the Company or an Affiliate), or other non-employee advisor or
service provider of the Company or an Affiliate shall be eligible to receive an
Award under the Plan. Notwithstanding the foregoing, a person who would
otherwise be eligible to receive an Award under the Plan shall not be eligible
in any jurisdiction where such person’s participation in the Plan would be
unlawful.
4.Effective Date and Termination of Plan
The Plan was adopted by the Board on April 3, 2019 (the “Approval Date”), and it
will become effective when it is approved by the Company’s shareholders (the
“Effective Date”). All Awards granted under the Plan are subject to, and may not
be exercised before, the approval of the Plan by the shareholders prior to the
first (1st) anniversary of the Approval Date; provided that if such approval by
the shareholders of the Company is not forthcoming prior to such date, all
Awards previously granted under the Plan shall be void and the 2017 Plan shall
remain in effect. The Plan shall remain available for the grant of Awards until
the tenth (10th) anniversary of the Approval Date. Notwithstanding the
foregoing, the Plan may be terminated at such earlier time as the Board may
determine. Termination of the Plan will not affect the rights and obligations of
the Participants and the Company arising under Awards theretofore granted.
5.Shares Subject to the Plan and to Awards
5

--------------------------------------------------------------------------------

a.Aggregate Limits. The aggregate number of shares of Common Stock issuable
under the Plan (the “Share Pool”) shall be equal to the sum of 3,500,000 shares
of Common Stock plus any shares of Common Stock subject to outstanding awards
under the Prior Plans as of the Effective Date that, after the Effective Date,
are canceled, terminate unearned, expire, are forfeited, lapse for any reason,
or are settled in cash without the delivery of shares. On the grant date of an
Award, the Share Pool shall be reduced either by 1 share of Common Stock for
each share subject to an Award other than a Full-Value Award or by 1.25 shares
of Common Stock for each share subject to a Full-Value Award. The aggregate
number of shares of Common Stock available for grant under the Plan and the
number of shares of Common Stock subject to Awards outstanding shall be subject
to adjustment as provided in Section 14 of the Plan. The shares of Common Stock
issued pursuant to Awards granted under the Plan may be shares that are
authorized and unissued or shares that were reacquired by the Company, including
shares purchased in the open market.
b.Issuance of Shares. The Share Pool shall be increased when and to the extent
that an Award (or an award under any Prior Plan that is outstanding as of the
Effective Date) is canceled, terminates unearned, expires, is forfeited, or
lapses for any reason, or an Award (or an award under any Prior Plan that is
outstanding as of the Effective Date) is settled in cash without the delivery of
shares to the Participant, such that any shares of Common Stock subject to such
Award (or such award under any Prior Plan that is outstanding as of the
Effective Date) shall again be available for the grant of an Award pursuant to
the Plan. Notwithstanding anything to the contrary contained herein, shares
subject to an Award (or an award under any Prior Plan that is outstanding as of
the Effective Date) shall not again be made available for issuance or delivery
under the Plan if such shares are (a) shares tendered in payment of an Option,
(b) shares delivered or withheld by the Company to satisfy any tax withholding
obligation, or (c) shares covered by a stock-settled Stock Appreciation Right
that were not issued upon full settlement. The payment of Dividend Equivalents
in cash in conjunction with any outstanding Awards shall not be counted against
the shares available for issuance under the Plan. Any shares of Common Stock
with respect to Awards issued under the Plan (or awards issued under a Prior
Plan) that again become available for future grants pursuant to this Section 5
shall be added back to the Share Pool as 1 share for each share subject to an
Award other than a Full-Value Award or as 1.25 shares for each share subject to
a Full-Value Award, and, for purposes of this sentence, awards issued under a
Prior Plan shall be (i) considered Full-Value Awards if they would have been
Full-Value Awards if issued under this Plan and (ii) added back to the Share
Pool as 1 share in all other cases.
c.Tax Code Limit. The aggregate number of shares of Common Stock that may be
issued pursuant to the exercise of Incentive Stock Options granted under the
Plan shall not exceed 3,500,000 (subject to adjustment pursuant to Section 14 of
the Plan).
6

--------------------------------------------------------------------------------

d.Substitute Awards. Substitute Awards shall not reduce the shares of Common
Stock authorized for issuance under the Plan or authorized for grant to a
Participant in any calendar year. Additionally, in the event that a company
acquired by the Company or any Subsidiary, or with which the Company or any
Subsidiary combines, has shares available under a pre-existing plan approved by
such acquired company’s shareholders and not adopted in contemplation of such
acquisition or combination, the shares available for grant pursuant to the terms
of such pre-existing plan (as adjusted, to the extent appropriate, using the
exchange ratio or other adjustment or valuation ratio or formula used in such
acquisition or combination to determine the consideration payable to the holders
of common stock of the entities party to such acquisition or combination) may be
used for Awards under the Plan and shall not reduce the shares of Common Stock
authorized for issuance under the Plan; provided that Awards using such
available shares shall not be made after the last day awards or grants could
have been made under the terms of the pre-existing plan, absent the acquisition
or combination, and shall not be granted to individuals who were employed by the
Company or its Subsidiaries at the time the acquisition or combination was
consummated.
6.Administration of the Plan
a.Administrator of the Plan. The Plan shall be administered by the
Administrator, which shall be the Committee, or, in the absence of the
Committee, the Board itself. Any power of the Administrator may also be
exercised by the Board. To the extent that any permitted action taken by the
Board conflicts with action taken by the Administrator, the Board action shall
control.
b.Powers of Administrator. Subject to the express provisions of the Plan, the
Administrator shall be authorized and empowered to do all things that it
determines to be necessary or appropriate in connection with the administration
of the Plan, including, without limitation:
i.to prescribe, amend and rescind rules and regulations relating to the Plan and
to define terms not otherwise defined herein;
ii.to determine which persons are eligible to receive Awards under the Plan, to
which of such persons, if any, Awards shall be granted hereunder, and the timing
of any such Awards;
iii.to prescribe and amend the terms of the Award Agreements, to grant Awards
and determine the terms and conditions thereof;
iv.to establish and verify the extent of satisfaction of any performance goals
or other conditions applicable to the grant, issuance, retention, vesting,
exercisability or settlement of any Award;
v.to prescribe and amend the terms of or form of any document or notice required
to be delivered to the Company by Participants under the Plan;
vi.to determine the extent to which adjustments are required pursuant to Section
14 of the Plan;
7

--------------------------------------------------------------------------------

vii.to interpret and construe the Plan, any rules and regulations under the Plan
and the terms and conditions of any Award granted hereunder, and to make
exceptions to any such provisions if the Administrator, in good faith,
determines that it is appropriate to do so;
viii.to approve corrections in the documentation or administration of any Award;
and
ix.to make all other determinations deemed necessary or advisable for the
administration of the Plan.
The Administrator may, in its sole and absolute discretion, without amendment to
the Plan but subject to the limitations otherwise set forth in Section 18 of the
Plan, waive or amend the operation of Plan provisions respecting exercise after
termination of employment or service to the Company or an Affiliate. The
Administrator may, in its sole and absolute discretion and, except as otherwise
provided in Section 18 of the Plan, waive, settle or adjust any of the terms of
any Award so as to avoid unanticipated consequences or address unanticipated
events (including any temporary closure of an applicable stock exchange,
disruption of communications or natural catastrophe).
c.Determinations by the Administrator. All decisions, determinations and
interpretations by the Administrator regarding the Plan, any rules and
regulations under the Plan and the terms and conditions of or operation of any
Award granted hereunder, shall be final and binding on all Participants,
beneficiaries, heirs, assigns or other persons holding or claiming rights under
the Plan or any Award. The Administrator shall consider such factors as it deems
relevant, in its sole and absolute discretion, to making such decisions,
determinations and interpretations including, without limitation, the
recommendations or advice of any officer or other employee of the Company and
such attorneys, consultants and accountants as it may select. Members of the
Board and members of the Committee acting under the Plan shall be fully
protected in relying in good faith upon the advice of counsel and shall incur no
liability except for gross negligence or willful misconduct in the performance
of their duties.
d.Delegation of Authority. To the maximum extent permitted by applicable law,
the Committee may by resolution delegate to a committee of one or more members
of the Board or one or more officers of the Company the authority to perform any
or all things that the Administrator is authorized and empowered to do or
perform under the Plan, and for all purposes under the Plan, such officer or
officers shall be treated as the Administrator; provided, however, that the
resolution so authorizing such officer or officers shall specify the total
number of Awards (if any) such officer or officers may award pursuant to such
delegated authority; and provided further that in no event shall an officer of
the Company be delegated the authority to grant Awards to, or amend Awards held
by, individuals who are subject to Section 16 of the Act or who report directly
to such officer. No such officer shall designate himself or herself as a
recipient of any Awards granted under authority delegated to such officer. In
addition, the Administrator may delegate any or all aspects of the day-to-day
administration of the Plan to one or more officers or employees of the Company
or any Subsidiary, and/or to one or more agents.
8

--------------------------------------------------------------------------------

e.Subsidiary Awards. In the case of a grant of an Award to any Participant
employed by a Subsidiary, such grant may, if the Administrator so directs, be
implemented by the Company issuing any subject shares of Common Stock to the
Subsidiary, for such lawful consideration as the Administrator may determine,
upon the condition or understanding that the Subsidiary will transfer the shares
of Common Stock to the Participant in accordance with the terms of the Award
specified by the Administrator pursuant to the provisions of the Plan.
Notwithstanding any other provision hereof, such Award may be issued by and in
the name of the Subsidiary and shall be deemed granted on such date as the
Administrator shall determine.
7.Plan Awards
a.Terms Set Forth in Award Agreement. The terms and conditions of each Award
shall be set forth in an Award Agreement in a form approved by the Administrator
for such Award, which Award Agreement may contain such terms and conditions as
specified from time to time by the Administrator, provided such terms and
conditions do not conflict with the Plan. The Award Agreement for any Award, as
applicable, shall include the time or times at or within which and the
consideration, if any, for which any shares of Common Stock may be acquired from
the Company. The terms of Awards may vary among Participants, and the Plan does
not impose upon the Administrator any requirement to make Awards subject to
uniform terms. Accordingly, the terms of individual Award Agreements may vary.
b.Separation from Service. Subject to the express provisions of the Plan, the
Administrator shall specify before, at, or after the time of grant of an Award
the provisions governing the effect(s) upon an Award of a Participant’s
Separation from Service or other termination of service.
c.Rights of a Shareholder. A Participant shall have no rights as a shareholder
with respect to shares of Common Stock covered by an Award until the date the
Participant becomes the holder of record of such shares of Common Stock. No
adjustment shall be made for dividends or other rights for which the record date
is prior to such date, except as provided in Section 10(b) or Section 14 of the
Plan or as otherwise provided by the Administrator.
d.Minimum Vesting. Notwithstanding anything in the Plan to the contrary, all
Awards granted under the Plan shall be subject to a vesting period of not less
than one year from the date of grant; provided, that up to 5% of the Share Pool
may be issued pursuant to Awards that are not subject to the minimum vesting
requirement set forth in this Section 7(d); provided, further, that the minimum
vesting requirement set forth in this Section 7(d) shall not apply with respect
to Substitute Awards or with respect to Awards that vest in connection with a
Change in Control or upon a Participant’s death, disability, or involuntary
termination of employment.
e.No Payment of Dividends Prior to Vesting. Notwithstanding anything in the Plan
to the contrary, to the extent a Participant is eligible to receive dividends or
Dividend Equivalents with respect to an Award granted under the Plan, such
dividends or Dividend Equivalents shall in no case be paid to the Participant
before the vesting of the portion of the Award to which such dividends or
Dividend Equivalents relate.
8.Options
9

--------------------------------------------------------------------------------

a.Grant, Term and Price. The grant, issuance, retention, vesting and/or
settlement of any Option shall occur at such time and be subject to such terms
and conditions as determined by the Administrator or under criteria established
by the Administrator, which may include conditions based on continued
employment, passage of time, attainment of age and/or service requirements,
and/or satisfaction of performance conditions. The term of an Option shall in no
event be greater than ten years; provided, however, the term of an Option (other
than an Incentive Stock Option) shall be automatically extended if, at the time
of its scheduled expiration, the Participant holding such Option is prohibited
by law or the Company’s insider trading policy from exercising the Option, which
extension shall expire on the thirtieth (30th) day following the date such
prohibition no longer applies. The Administrator will establish the price at
which Common Stock may be purchased upon exercise of an Option, which, in no
event will be less than the Fair Market Value of such shares on the date of
grant; provided, however, that the exercise price per share of Common Stock with
respect to an Option that is granted as a Substitute Award may be less than the
Fair Market Value of the shares of Common Stock on the date such Option is
granted if such exercise price is based on a formula set forth in the terms of
the options held by such optionees or in the terms of the agreement providing
for such merger or other acquisition that satisfies the requirements of Section
409A and/or Section 424 of the Code, as applicable. The exercise price of any
Option may be paid in cash or such other method as determined by the
Administrator, including an irrevocable commitment by a broker to pay over such
amount from a sale of the Shares issuable under an Option, the delivery of
previously owned shares of Common Stock or withholding of shares of Common Stock
deliverable upon exercise.
b.No Repricing without Shareholder Approval. Other than in connection with a
change in the Company’s capitalization (as described in Section 14 of the Plan),
at any time when the exercise price of an Option is above the Fair Market Value
of a share of Common Stock, the Company shall not, without shareholder approval,
(i) reduce the exercise price of such Option, (ii) exchange such Option for
cash, another Award or a new Option or Stock Appreciation Right with a lower
exercise or base price or (iii) otherwise reprice such Option.
c.No Reload Grants. Options shall not be granted under the Plan in consideration
for and shall not be conditioned upon the delivery of shares of Common Stock to
the Company in payment of the exercise price and/or tax withholding obligation
under any other employee stock option.
10

--------------------------------------------------------------------------------

d.Incentive Stock Options. Notwithstanding anything to the contrary in this
Section 8, in the case of the grant of an Option intended to qualify as an
Incentive Stock Option, if the Participant owns stock possessing more than 10%
of the combined voting power of all classes of stock of the Company, the
exercise price of such Option must be at least 110% of the Fair Market Value of
the shares of Common Stock on the date of grant and the Option must expire
within a period of not more than five (5) years from the date of grant.
Notwithstanding anything in this Section 8 to the contrary, options designated
as Incentive Stock Options shall not be eligible for treatment under the Code as
Incentive Stock Options (and will be deemed to be Nonqualified Stock Options) to
the extent that either (a) the aggregate Fair Market Value of shares of Common
Stock (determined as of the time of grant) with respect to which such Options
become exercisable for the first time by the Participant during any calendar
year (under all plans of the Company and any Subsidiary) exceeds $100,000,
taking Options into account in the order in which they were granted, or (b) such
Options otherwise remain exercisable but are not exercised within three (3)
months (or such other period of time provided in Section 422 of the Code) of
separation of service (as determined in accordance with Section 3401(c) of the
Code).
e.No Shareholder Rights. Participants shall have no voting rights and will have
no rights to receive dividends or Dividend Equivalents in respect of an Option
or any shares of Common Stock subject to an Option until the Participant has
become the holder of record of such shares.
9.Stock Appreciation Rights
a.General Terms. The grant, issuance, retention, vesting and/or settlement of
any Stock Appreciation Right shall occur at such time and be subject to such
terms and conditions as determined by the Administrator or under criteria
established by the Administrator, which may include conditions based on
continued employment, passage of time, attainment of age and/or service
requirements, and/or satisfaction of performance conditions. Stock Appreciation
Rights may be granted to Participants from time to time either in tandem with or
as a component of Options granted under the Plan (“tandem SARs”) or not in
conjunction with other Awards (“freestanding SARs”). Upon exercise of a tandem
SAR as to some or all of the shares covered by the grant, the related Option
shall be canceled automatically to the extent of the number of shares covered by
such exercise. Conversely, if the related Option is exercised as to some or all
of the shares covered by the grant, the related tandem SAR, if any, shall be
canceled automatically to the extent of the number of shares covered by the
Option exercise. Any Stock Appreciation Right granted in tandem with an Option
may be granted at the same time such Option is granted or at any time thereafter
before exercise or expiration of such Option, provided that the Fair Market
Value of Common Stock on the date of the tandem SAR’s grant is not greater than
the exercise price of the related Option. All freestanding SARs shall be granted
subject to the same terms and conditions applicable to Options as set forth in
Section 8 of the Plan and all tandem SARs shall have the same exercise price as
the Option to which they relate. Subject to the provisions of Section 8 of the
Plan and the immediately preceding sentence, the Administrator may impose such
other conditions or restrictions on any Stock Appreciation Right as it shall
deem appropriate. Stock Appreciation Rights may be settled in Common Stock, cash
or a combination thereof, as determined by the Administrator and set forth in
the applicable Award Agreement.
b.No Repricing without Shareholder Approval. Other than in connection with a
change in the Company’s capitalization (as described in Section 14 of the Plan),
at any time when the exercise price of a Stock Appreciation Right is above the
Fair Market Value of a share of Common Stock, the Company shall not, without
shareholder approval (i) reduce the exercise or base price of such Stock
Appreciation Right, (ii) exchange such Stock Appreciation Right for cash,
another Award or a new Option or Stock Appreciation Right with a lower exercise
or base price or (iii) otherwise reprice such Stock Appreciation Right.
11

--------------------------------------------------------------------------------

c.No Shareholder Rights. Participants shall have no voting rights and will have
no rights to receive dividends or Dividend Equivalents in respect of an Award of
Stock Appreciation Rights or any shares of Common Stock subject to an Award of
Stock Appreciation Rights until the Participant has become the holder of record
of such shares.
10.Restricted Stock and Restricted Stock Units
a.Vesting and Performance Conditions. The grant, issuance, retention, vesting
and/or settlement of any Restricted Stock or Restricted Stock Unit Award shall
occur at such time and be subject to such terms and conditions as determined by
the Administrator or under criteria established by the Administrator, which may
include conditions based on continued employment, passage of time, attainment of
age and/or service requirements, and/or satisfaction of performance conditions.
b.Dividends and Distributions. Participants in whose name Restricted Stock is
granted shall be entitled to receive all dividends and other distributions paid
with respect to those shares of Common Stock, unless determined otherwise by the
Administrator. The Administrator will determine whether any such dividends or
distributions will be automatically reinvested in additional Restricted Stock
and/or subject to the same restrictions on transferability as the Restricted
Stock with respect to which they were distributed or whether such dividends or
distributions will be paid in cash. Unless otherwise provided in the Award
Agreement, during the period prior to shares being issued in the name of a
Participant under any Restricted Stock Unit, the Company shall pay or accrue
Dividend Equivalents on each date dividends on Common Stock are paid, subject to
such conditions as the Administrator may deem appropriate. The time and form of
any such payment of Dividend Equivalents shall be specified in the Award
Agreement. Notwithstanding anything herein to the contrary, in no event will
dividends or Dividend Equivalents be paid with respect to any Award of
Restricted Stock or Restricted Stock Units prior to the time specified in
Section 7(e).
c.Voting Rights. Unless otherwise determined by the Administrator, Participants
holding shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those shares during the period of restriction.
Participants shall have no voting rights with respect to shares of Common Stock
underlying Restricted Stock Units unless and until such shares are reflected as
issued and outstanding shares on the Company’s stock ledger.
11.Performance Awards
a.General Terms. The Administrator may establish performance conditions and
level of achievement versus such conditions that shall determine the number of
Options, Stock Appreciation Rights or shares of Common Stock to be granted,
retained, vested, issued or issuable under or in settlement of, or the cash
amount payable pursuant to, an Award.
b.Timing and Form of Payment. The Administrator shall determine the timing of
payment of any award subject to performance conditions. Payment of the amount
due under such an award may be made in cash or in Common Stock, as determined by
the Administrator.
12

--------------------------------------------------------------------------------

c.Discretionary Adjustments. Notwithstanding satisfaction of any performance
goals, the amount paid under an award subject to either financial performance
and/or personal performance evaluations may be adjusted by the Administrator on
the basis of such further considerations as the Administrator shall determine.
12.Deferral of Payment and Section 409A
The Administrator may, in an Award Agreement or otherwise, provide for the
deferred delivery of shares of Common Stock upon settlement, vesting or other
events with respect to Restricted Stock or Restricted Stock Units.
Notwithstanding anything herein to the contrary, the Administrator may, in its
sole and absolute discretion, deny any deferral of the delivery of shares of
Common Stock or any other payment with respect to any Award if the Administrator
determines, in its sole and absolute discretion, that the deferral would result
in the imposition of the additional tax under Section 409A(a)(1)(B) of the Code.
The Plan and each Award Agreement shall be interpreted such that each Award
complies with, or is exempt from, Section 409A of the Code. However, the Company
shall have no liability to a Participant, or any other party, if an Award that
is intended to be exempt from, or compliant with, Section 409A of the Code is
not so exempt or compliant or for any action taken by the Administrator or the
Board.
13.Conditions and Restrictions Upon Securities Subject to Awards
The Administrator may provide that the Common Stock issued upon exercise of an
Option or Stock Appreciation Right or otherwise subject to or issued under an
Award shall be subject to such further agreements, restrictions, conditions or
limitations as the Administrator in its discretion may specify prior to the
exercise of such Option or Stock Appreciation Right or the grant, vesting or
settlement of such Award, including without limitation, conditions on vesting or
transferability, forfeiture or repurchase provisions and method of payment for
the Common Stock issued upon exercise, vesting or settlement of such Award
(including the actual or constructive surrender of Common Stock already owned by
the Participant) or payment of taxes arising in connection with an Award.
Without limiting the foregoing, such restrictions may address the timing and
manner of any resales by the Participant or other subsequent transfers by the
Participant of any shares of Common Stock issued under an Award, including
without limitation (i) restrictions under an insider trading policy or pursuant
to applicable law, (ii) restrictions designed to delay and/or coordinate the
timing and manner of sales by the Participant and holders of other Company
equity compensation arrangements, (iii) restrictions as to the use of a
specified brokerage firm for such resales or other transfers and (iv) provisions
requiring Common Stock be sold on the open market or to the Company in order to
satisfy tax withholding or other obligations.
14.Adjustment of and Changes in the Stock; Change in Control
13

--------------------------------------------------------------------------------

a.Adjustments Upon Certain Unusual or Nonrecurring Events. The number and kind
of shares of Common Stock available for issuance under the Plan (including under
any Awards then outstanding), and the number and kind of shares of Common Stock
subject to the limits set forth in Section 5 of the Plan, shall be equitably
adjusted by the Administrator to reflect any reorganization, reclassification,
combination of shares, stock split, reverse stock split, spin-off, dividend or
distribution of securities, property or cash (other than regular, quarterly cash
dividends), or any other event or transaction that affects the number or kind of
shares of Common Stock outstanding. Such adjustment may be designed to comply
with Section 424 of the Code or may be designed to treat the shares of Common
Stock available under the Plan and subject to Awards as if they were all
outstanding on the record date for such event or transaction or to increase the
number of such shares of Common Stock to reflect a deemed reinvestment in shares
of Common Stock of the amount distributed to the Company’s security holders. The
terms of any outstanding Award shall also be equitably adjusted by the
Administrator as to price, number or kind of shares of Common Stock subject to
such Award, vesting, and other terms to reflect the foregoing events, which
adjustments need not be uniform as between different Awards or different types
of Awards. No fractional shares of Common Stock shall be issued pursuant to such
an adjustment.
b.Adjustments Upon Other Events. In the event there shall be any other change in
the number or kind of outstanding shares of Common Stock, or any stock or other
securities into which such Common Stock shall have been changed, or for which it
shall have been exchanged, by reason of a Change in Control, other merger,
consolidation or otherwise, then the Administrator shall determine the
appropriate and equitable adjustment to be effected, which adjustments need not
be uniform between different Awards or different types of Awards. In addition,
in the event of such change described in this paragraph, the Administrator may
accelerate the time or times at which any Award may be exercised, consistent
with and as otherwise permitted under Section 409A of the Code, and may provide
for cancellation of such accelerated Awards that are not exercised within a time
prescribed by the Administrator in its sole and absolute discretion.
c.Change in Control. Unless otherwise provided in the applicable Award
Agreement, in the event of a Change in Control after the Effective Date, unless
provision is made in connection with the Change in Control for (i) assumption of
Awards previously granted or (ii) substitution for such Awards of new awards
covering stock of a successor corporation or its “parent corporation” (as
defined in Section 424(e) of the Code) or “subsidiary corporation” (as defined
in Section 424(f) of the Code) with appropriate adjustments as to the number and
kinds of shares and the exercise prices, if applicable, (A) the Administrator
shall make an adjustment to any or all Awards as the Administrator deems
appropriate to reflect such Change in Control or (B) (1) in the case of an
Option or Stock Appreciation Right, the Participant shall have the ability to
exercise such Option or Stock Appreciation Right, including any portion of the
Option or Stock Appreciation Right not previously exercisable, and the
unexercised portion of such Option or Stock Appreciation Right shall be
cancelled upon consummation of the Change in Control; (2) in the case of an
Award subject to performance conditions, the Participant shall have the right to
receive a payment based on performance through a date determined by the
Administrator prior to the Change in Control (unless such performance cannot be
determined, in which case the Participant shall have the right to receive a
payment equal to the target amount payable); and (3) in the case of outstanding
Restricted Stock and/or Restricted Stock Units not subject to performance
conditions, all conditions to the grant, issuance, retention, vesting or
transferability of or any other restrictions applicable to, such Award shall
immediately lapse.
14

--------------------------------------------------------------------------------

d.Termination Following a Change in Control. Unless otherwise expressly provided
for in the Award Agreement or another contract, including an employment
agreement, or under the terms of a transaction constituting a Change in Control,
the following shall occur upon a Participant’s involuntary termination of
employment within twenty-four (24) months following a Change in Control,
provided that such termination does not result from the Participant’s
termination for disability, cause or gross misconduct: (i) in the case of an
Option or Stock Appreciation Right, each Option or Stock Appreciation Right
shall immediately become exercisable and shall remain exercisable for three (3)
years following such termination (or until the expiration of such Option or
Stock Appreciation Right, if earlier); (ii) in the case of an Award subject to
performance conditions, the Participant shall have the right to receive a
payment based on performance through a date determined by the Administrator
prior to the Change in Control (unless such performance cannot be determined, in
which case the Participant shall have the right to receive a payment equal to
the target amount payable); and (iii) in the case of outstanding Restricted
Stock and/or Restricted Stock Units not subject to performance conditions, all
conditions to the grant, issuance, retention, vesting or transferability of, or
any other restrictions applicable to, such Award shall immediately lapse.
e.The Company shall notify Participants holding Awards subject to any
adjustments pursuant to this Section 14 of such adjustment, but (whether or not
notice is given) such adjustment shall be effective and binding for all purposes
of the Plan.
15.Transferability
No Award may be sold, transferred for value, pledged, assigned, or otherwise
alienated or hypothecated by a Participant other than by will or the laws of
descent and distribution, and each Option or Stock Appreciation Right shall be
exercisable only by the Participant during his or her lifetime. Notwithstanding
the foregoing, outstanding Options may be exercised following the Participant’s
death by the Participant’s beneficiaries or as permitted by the Administrator.
16.Compliance with Laws and Regulations
The Plan, the grant, issuance, vesting, exercise and settlement of Awards
hereunder, and the obligation of the Company to sell, issue or deliver shares of
Common Stock under such Awards, shall be subject to all applicable foreign,
federal, state and local laws, rules and regulations, stock exchange rules and
regulations, and to such approvals by any governmental or regulatory agency as
may be required. The Company shall not be required to register in a
Participant’s name or deliver Common Stock prior to the completion of any
registration or qualification of such shares under any foreign, federal, state
or local law or any ruling or regulation of any government body which the
Administrator shall determine to be necessary or advisable. To the extent the
Company is unable to or the Committee deems it infeasible to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any shares
of Common Stock hereunder, the Company and its Subsidiaries shall be relieved of
any liability with respect to the failure to issue or sell such shares of Common
Stock as to which such requisite authority shall not have been obtained. No
Option shall be exercisable and no Common Stock shall be issued and/or
transferable under any other Award unless a registration statement with respect
to
15

--------------------------------------------------------------------------------

the Common Stock underlying such Option is effective and current or the Company
has determined that such registration is unnecessary.
In the event an Award is granted to or held by a Participant who is employed or
providing services outside the United States, the Administrator may, in its sole
and absolute discretion, modify the provisions of the Plan or of such Award as
they pertain to such individual to comply with applicable foreign law or
practice, to recognize differences in local law, currency or tax policy, or to
foster and promote achievement of the purposes of the Plan locally. The
Administrator may also amend the terms of Awards and impose conditions on the
grant, issuance, exercise, vesting, settlement or retention of Awards in order
to comply with such foreign law or practice, to achieve such purposes, and/or to
minimize the Company’s obligations with respect to tax equalization for
Participants employed outside their home country.
17.Withholding
To the extent required by applicable federal, state, local or foreign law, the
Administrator may and/or a Participant shall make arrangements satisfactory to
the Company for the satisfaction of any withholding tax obligations that arise
with respect to any Award, or the issuance or sale of any shares of Common
Stock. The Company shall not be required to recognize any Participant rights
under an Award, to issue shares of Common Stock or to recognize the disposition
of such shares of Common Stock until such obligations are satisfied. To the
extent permitted or required by the Administrator, these obligations may or
shall be satisfied by the Company withholding cash from any compensation
otherwise payable to or for the benefit of a Participant, the Company
withholding a portion of the shares of Common Stock that otherwise would be
issued to a Participant under such Award or any other award held by the
Participant or by the Participant tendering to the Company cash or, if allowed
by the Administrator, shares of Common Stock.
18.Amendment of the Plan or Awards
The Board may amend, alter or discontinue the Plan and the Administrator may
amend, or alter any agreement or other document evidencing an Award made under
the Plan but, except as provided pursuant to the provisions of Section 14 of the
Plan, no such amendment shall, without the approval of the shareholders of the
Company:
a.increase the maximum number of shares of Common Stock for which Awards may be
granted under the Plan;
b.reduce the price at which Options may be granted below the price provided for
in Section 8(a) of the Plan;
c.reprice outstanding Options or Stock Appreciation Rights as described in 8(b)
and 9(b);
d.extend the term of the Plan;
16

--------------------------------------------------------------------------------

e.change the class of persons eligible to be Participants; or
f.otherwise amend the Plan in any manner requiring shareholder approval by law
or the rules of any stock exchange or market or quotation system on which the
Common Stock is traded, listed or quoted.
No amendment or alteration to the Plan or an Award or Award Agreement shall be
made which would impair the rights of the holder of an Award, without such
holder’s consent, provided that no such consent shall be required if the
Administrator determines in its sole and absolute discretion and prior to the
date of any Change in Control that such amendment or alteration either (i) is
required or advisable in order for the Company, the Plan or the Award to satisfy
any law or regulation or to meet the requirements of or avoid adverse financial
accounting consequences under any accounting standard, or (ii) is not reasonably
likely to significantly diminish the benefits provided under such Award, or that
any such diminishment has been adequately compensated.
19.No Liability of Company
The Company, any Subsidiary or Affiliate which is in existence or hereafter
comes into existence, the Board and the Administrator shall not be liable to a
Participant or any other person as to: (a) the non-issuance or sale of shares of
Common Stock as to which the Company has been unable to obtain from any
regulatory body having jurisdiction the authority deemed by the Company’s
counsel to be necessary for the lawful issuance and sale of any shares of Common
Stock hereunder; and (b) any tax consequence expected, but not realized, by any
Participant or other person due to the receipt, exercise or settlement of any
Award granted hereunder.
20.Non-Exclusivity of Plan
Neither the adoption of the Plan by the Board nor the submission of the Plan to
the shareholders of the Company for approval shall be construed as creating any
limitations on the power of the Board or the Committee to adopt such other
incentive arrangements as either may deem desirable, including without
limitation, the granting of inducement or retention shares or stock options
otherwise than under the Plan, and such arrangements may be either generally
applicable or applicable only in specific cases.
21.Governing Law
The Plan and any agreements or other documents hereunder shall be interpreted
and construed in accordance with the laws of the Commonwealth of Virginia
(without regard to any rule or principle of conflicts of laws that otherwise
would result in the application of the substantive laws of another jurisdiction)
and applicable federal law. Any reference in the Plan or in the agreement or
other document evidencing any Awards to a provision of law or to a rule or
regulation shall be deemed to include any successor law, rule or regulation of
similar effect or applicability.
22.No Right to Employment, Reelection or Continued Service

17

--------------------------------------------------------------------------------

Nothing in the Plan or an Award Agreement shall interfere with or limit in any
way the right of the Company, its Subsidiaries and/or its Affiliates to
terminate any Participant’s employment, service on the Board or service for the
Company at any time or for any reason not prohibited by law, nor shall the Plan
or an Award itself confer upon any Participant any right to continue his or her
employment or service for any specified period of time. Neither an Award nor any
benefits arising under the Plan shall constitute an employment contract with the
Company, any Subsidiary and/or its Affiliates. Subject to Sections 4 and 18 of
the Plan, the Plan and the benefits hereunder may be terminated at any time in
the sole and absolute discretion of the Board without giving rise to any
liability on the part of the Company, its Subsidiaries and/or its Affiliates.
23.Forfeiture upon Termination of Employment
Except as otherwise provided by the Administrator in the Award Agreement,
unvested Awards shall be forfeited immediately if the Participant terminates his
or her employment with the Company, a Subsidiary or an Affiliate for any reason.
24.Specified Employee Delay
To the extent any payment under the Plan is considered deferred compensation
subject to the restrictions contained in Section 409A of the Code, such payment
may not be made to a specified employee (as determined in accordance with a
uniform policy adopted by the Company with respect to all arrangements subject
to Section 409A of the Code) upon Separation from Service before the date that
is six months after the specified employee’s Separation form Service (or, if
earlier, the specified employee’s death). Any payment that would otherwise be
made during this period of delay shall be accumulated and paid on the sixth
month plus one day following the specified employee’s Separation from Service
(or, if earlier, as soon as administratively practicable after the specified
employee’s death).
25.No Liability of Committee Members
No member of the Committee shall be personally liable by reason of any contract
or other instrument executed by such member or on his or her behalf in his or
her capacity as a member of the Committee nor for any mistake of judgment made
in good faith, and the Company shall indemnify and hold harmless each member of
the Committee and each other employee, officer or director of the Company to
whom any duty or power relating to the administration or interpretation of the
Plan may be allocated or delegated, against any cost or expense (including
counsel fees) or liability (including any sum paid in settlement of a claim)
arising out of any act or omission to act in connection with the Plan unless
arising out of such person’s own fraud or willful bad faith; provided, however,
that approval of the Board shall be required for the payment of any amount in
settlement of a claim against any such person. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company’s Articles of Incorporation
or Bylaws, as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.
18

--------------------------------------------------------------------------------

26.Severability
If any provision of the Plan or any Award is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction or as to any Person or
Award, or would disqualify the Plan or any Award under any law deemed applicable
by the Administrator, such provision shall be construed or deemed amended to
conform to the applicable laws, or if it cannot be construed or deemed amended
without, in the determination of the Administrator, materially altering the
intent of the Plan or the Award, such provision shall be stricken as to such
jurisdiction, Person or Award and the remainder of the Plan and any such Award
shall remain in full force and effect.
27.Unfunded Plan
The Plan is intended to be an unfunded plan. Participants are and shall at all
times be general creditors of the Company with respect to their Awards. If the
Administrator or the Company chooses to set aside funds in a trust or otherwise
for the payment of Awards under the Plan, such funds shall at all times be
subject to the claims of the creditors of the Company in the event of its
bankruptcy or insolvency.
28.Successors
All obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
29.Recoupment Policy
Subject to the terms and conditions of the Plan, the Administrator may provide
that any Participant and/or any Award, including any shares of Common Stock
subject to an Award, is subject to any recovery, recoupment, clawback and/or
other forfeiture policy maintained by the Company from time to time.
19