Exhibit 10.1

 

PLx Pharma Inc.

 

2018 Incentive Plan

 

Article 1

Establishment and Purpose

 

1.1     Establishment of the Plan. PLx Pharma Inc., a Delaware corporation (the
“Company”), hereby establishes an incentive compensation plan (the “Plan”), as
set forth in this document.

 

1.2     Purpose of the Plan. The purpose of the Plan is to promote the success
and enhance the value of the Company by linking the personal interests of
Participants to those of the Company’s stockholders, and by providing
Participants with an incentive for outstanding performance.

 

1.3     Effective Date of the Plan. The Plan is effective as of the date the
Plan is approved by the Company’s stockholders (the “Effective Date”). The Plan
will be deemed to be approved by the stockholders if it receives the affirmative
vote of the holders of a majority of the shares of stock of the Company present
or represented and entitled to vote at a meeting duly held in accordance with
the applicable provisions of the Company’s Bylaws. The PLx Pharma Inc. 2015
Omnibus Incentive Plan (the “Prior Plan”) shall be frozen on the date on which
this Plan is approved by the Company’s stockholders and no new awards shall be
issued under the Prior Plan. With respect to outstanding awards under the Prior
Plan, the Prior Plan shall remain in place and any awards granted under the
Prior Plan shall continue to be subject to the terms of the Prior Plan and
applicable Award Agreements (as defined below) (including any such terms that
are intended to survive the termination of the Prior Plan or the settlement of
such Award (as defined below)) and shall remain in effect pursuant to their
terms.

 

1.4     Duration of the Plan. Unless sooner terminated as provided herein, the
Plan shall terminate ten (10) years from the Effective Date. After the Plan is
terminated, no Awards may be granted but Awards previously granted shall remain
outstanding in accordance with their applicable terms and conditions and the
Plan’s terms and conditions.

 

Article 2

Definitions

 

Whenever used in the Plan, the following terms shall have the meanings set forth
below and, when the meaning is intended, the initial letter of the word is
capitalized:

 

2.1     “Affiliate” means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question, including
any subsidiary. As used herein, the term “control” means the possession, direct
or indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, by
contract or otherwise. As used herein, the term “subsidiary” means any
corporation, partnership, venture or other entity in which the Company holds,
directly or indirectly, a fifty percent (50%) or greater ownership interest.

 

2.2     “Applicable Law” means any applicable law, including without limitation:
(a) provisions of the Code, the Securities Act, the Exchange Act and any rules
or regulations thereunder; (b) corporate, securities, tax or other laws,
statutes, rules, requirements or regulations, whether federal, state, local or
foreign; and (c) rules of any securities exchange or automated quotation system
on which the Shares are listed, quoted or traded.

 

2.3     “Award” means, individually or collectively, a grant or award under this
Plan of Options, Stock Appreciation Rights, Restricted Stock (including
unrestricted Stock), Restricted Stock Units, Performance Stock Units,
Performance Shares, Deferred Stock Awards, Other Stock-Based Awards, Dividend
Equivalent Awards and Performance Bonus Awards, in each case subject to the
terms of the Plan.

 

2.4     “Award Agreement” means an agreement, certificate, resolution or other
type or form of writing or other evidence approved by the Committee which sets
forth the terms and conditions of an Award. An Award Agreement may be in any
electronic medium, may be limited to a notation on the books and records of the
Company and, with the approval of the Committee, need not be signed by a
representative of the Company or a Participant. In the event of any
inconsistency between the Plan and an Award Agreement, the terms of the Plan
shall govern.

 

 

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2.5     “Beneficial Owner” or “Beneficial Ownership” has the meaning ascribed to
such term in Rule 13d-3 under the Exchange Act.

 

2.6     “Board” or “Board of Directors” means the Company’s Board of Directors.

 

2.7     “Cause” means, except as otherwise defined in an Award Agreement, a
Participant’s (i) conviction of, or the entry of a plea of guilty or no contest
to, a felony or any other crime that causes the Company or its Affiliates public
disgrace or disrepute, or materially and adversely affects the Company’s or its
Affiliates’ operations or financial performance or the relationship the Company
has with its customers, (ii) gross negligence or willful misconduct with respect
to the Company or any of its Affiliates, including, without limitation fraud,
embezzlement, theft or proven dishonesty in the course of his or her employment
or other service; (iii) refusal to perform any lawful, material obligation or
fulfill any duty (other than any duty or obligation of the type described in
clause (v) below) to the Company or its Affiliates (other than due to a
Disability), which refusal, if curable, is not cured within fifteen (15) days
after delivery of written notice thereof; (iv) material breach of any agreement
with or duty owed to the Company or any of its Affiliates, which breach, if
curable, is not cured within fifteen (15) days after the delivery of written
notice thereof; or (v) any breach of any obligation or duty to the Company or
any of its Affiliates (whether arising by statute, common law or agreement)
relating to confidentiality, noncompetition, nonsolicitation or proprietary
rights. Notwithstanding the foregoing, if a Participant and the Company (or any
of its Affiliates) have entered into an employment agreement, consulting
agreement or other similar agreement that specifically defines “cause,” then
with respect to such Participant, “Cause” shall have the meaning defined in that
employment agreement, consulting agreement or other agreement.

 

2.8     “Change in Control” shall be deemed to have occurred if:

 

(a)     any Person, 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, becomes the Beneficial
Owner, directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the total voting power represented by the Company’s
then outstanding voting securities;

 

(b)     during any period of two (2) consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the Company and
any new Director whose election by the Board of Directors or nomination for
election by the Company’s stockholders was approved by a vote of a majority 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;

 

(c)     the consummation of a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which 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 total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation; or

 

(d)     the stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of all
or substantially all the Company’s assets.

 

Notwithstanding the foregoing, if a Change in Control constitutes a payment
event with respect to any Award (or any portion of an Award) that provides for
the deferral of compensation that is subject to Section 409A of the Code, to the
extent required to avoid the imposition of additional taxes under Section 409A
of the Code, the transaction or event described in subsection (a), (b), (c) or
(d) with respect to such Award (or portion thereof) shall only constitute a
Change in Control for purposes of the payment timing of such Award if such
transaction also constitutes a “change in control event,” as defined in Treasury
Regulation Section 1.409A-3(i)(5).

 

The Committee shall have full and final authority, which shall be exercised in
its sole discretion, to determine conclusively whether a Change in Control has
occurred pursuant to the above definition, the date of the occurrence of such
Change in Control and any incidental matters relating thereto; provided that any
exercise of authority in conjunction with a determination of whether a Change in
Control is a “change in control event” as defined in Treasury Regulation Section
1.409A-3(i)(5) shall be consistent with such regulation.

 

2.9     “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and the Treasury Regulations issued thereunder.

 

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2.10     “Committee” has the meaning set forth in Section 3.1.

 

2.11     “Company” has the meaning set forth in Section 1.1.

 

2.12     “Consultant” means any consultant or advisor who renders bona fide
services to the Company or an Affiliate, other than as an Employee or Director,
provided that such services are not in connection with the offer or sale of
securities in a capital-raising transaction and do not, directly or indirectly,
promote or maintain a market for the Company’s or its Affiliates’ securities.

 

2.13     “Deferred Stock” means a right to receive a specified number of shares
of Stock during specified time periods pursuant to Article 9.

 

2.14     “Director” means a member of the Board.

 

2.15     “Disability” means, unless otherwise determined by the Committee in the
applicable Award Agreement, absence of an Employee from work under the relevant
Company or Subsidiary long term disability plan; provided, however, that to
entitle a Participant to an extended exercise period for an Incentive Stock
Option, the Participant must be described in Section 22(e)(3) of the Code.
Notwithstanding the foregoing, for Awards subject to Section 409A of the Code,
Disability shall mean that a Participant is disabled under Section
409A(a)(2)(C)(i) or (ii) of the Code.

 

2.16     “Dividend Equivalent” means a right granted to a Participant pursuant
to Article 9 to receive the equivalent value (in cash or Stock) of dividends
paid on Stock.

 

2.17     “Effective Date” has the meaning set forth in Section 1.3.

 

2.18     “Eligible Person” means any person who is an employee, officer,
director, consultant, advisor or other individual service provider of the
Company or any Affiliate, or any person who is determined by the Committee to be
a prospective employee, officer, director, consultant, advisor or other
individual service provider of the Company or any Affiliate.

 

2.19      “Employee” means any person employed by the Company, its Affiliates
and/or Subsidiaries; provided, that, for purposes of determining eligibility to
receive Incentive Stock Options, an Employee shall mean an employee of the
Company or a parent or subsidiary corporation within the meaning of Section 424
of the Code. Mere service as a Director or payment of a director’s fee by the
Company or an Affiliate shall not be sufficient to constitute “employment” by
the Company or an Affiliate.

 

2.20     “Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time, or any successor Act thereto.

 

2.21     “Exercise Price” means the price at which a Share may be purchased by a
Participant pursuant to an Option, as determined by the Committee.

 

2.22     “Fair Market Value” or “FMV” means, as of any date, the value of Stock
determined as follows:

 

(a)     If the Stock is listed on one or more established stock exchanges or
national market systems, including without limitation, the NASDAQ Global Select
Market, The NASDAQ Global Market or The NASDAQ Capital Market of The NASDAQ
Stock Market LLC, its Fair Market Value shall be the closing sales price for
such Stock (or the closing bid, if no sales were reported) as quoted on the
principal exchange or system on which the Stock is listed (as determined by the
Committee) on the date of determination (or, if no closing sales price or
closing bid was reported on that date, as applicable, on the last immediately
preceding trading date such closing sales price or closing bid was reported), as
reported in The Wall Street Journal or such other source as the Committee deems
reliable;

 

(b)     If the Stock is regularly quoted on an automated quotation system
(including the OTC Bulletin Board) or by a recognized securities dealer, its
Fair Market Value shall be the closing sales price for such Stock as quoted on
such system or by such securities dealer on the date of determination, but if
selling prices are not reported, the Fair Market Value of a share of Stock shall
be the mean between the high bid and low asked prices for the Stock on the date
of determination (or, if no such prices were reported on that date, on the last
date such prices were reported), as reported in The Wall Street Journal or such
other source as the Committee deems reliable; or

 

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(c)     In the absence of an established market for the Stock of the type
described in (a) and (b), above, the Fair Market Value thereof shall be
determined by the Committee in good faith using any reasonable method of
valuation, which method may be set forth with greater specificity in the Award
Agreement, (and, to the extent necessary or advisable, in a manner consistent
with Section 409A of the Code and Section 422 of the Code for Incentive Stock
Options), which determination shall be conclusive and binding on all interested
parties. Such reasonable method may be determined by reference to (i) the
placing price of the latest private placement of the Shares and the development
of the Company’s business operations and the general economic and market
conditions since such latest private placement; (ii) other third party
transactions involving the Shares and the development of the Company’s business
operation and the general economic and market conditions since such sale; (iii)
an independent valuation of the Shares (by a qualified valuation expert) or (iv)
such other methodologies or information as the Committee determines to be
indicative of Fair Market Value.

 

2.23     “Good Reason” means, unless the applicable Award Agreement states
otherwise, (i) if an Employee or Consultant is a party to an employment or
service agreement with the Company or its Affiliates and such agreement provides
for a definition of “good reason,” the definition contained therein, or (ii) if
no such agreement exists or if such agreement does not define “good reason,” in
connection with a Termination of Employment by a Participant within one (1) year
following a Change in Control, (1) a material adverse alteration in the
Participant’s position or in the nature or status of the Participant’s
responsibilities from those in effect immediately prior to the Change in
Control, or (2) any material reduction in the Participant’s base salary rate or
target annual bonus, in each case as in effect immediately prior to the Change
in Control, or (3) the relocation of the Participant’s principal place of
employment to a location that is more than fifty (50) miles from the location
where the Participant was principally employed at the time of the Change in
Control or materially increases the time of the Participant’s commute as
compared to the Participant’s commute at the time of the Change in Control
(except for required travel on the Company’s business to an extent substantially
consistent with the Participant’s customary business travel obligations in the
ordinary course of business prior to the Change in Control).

 

In order to invoke a Termination of Employment for Good Reason, a Participant
must provide written notice to the Company or the Employer with respect to which
the Participant is employed or providing services of the existence of one or
more of the conditions constituting Good Reason within ninety (90) days
following the Participant’s knowledge of the initial existence of such condition
or conditions, specifying in reasonable detail the conditions constituting Good
Reason, and the Company shall have thirty (30) days following receipt of such
written notice (the “Cure Period”) during which it may remedy the condition. In
the event that the Company or the Employer fails to remedy the condition
constituting Good Reason during the applicable Cure Period, the Participant’s
“separation from service” (within the meaning of Section 409A of the Code) must
occur, if at all, within one (1) year following such Cure Period in order for
such termination as a result of such condition to constitute a Termination of
Employment for Good Reason.

 

2.24     “Incentive Stock Option” means an Option that is intended to qualify as
an “incentive stock option” within the meaning of Section 422 of the Code and
that meets the requirements set out in the Plan.

 

2.25     “Insider” means an individual who is, on the relevant date, an officer,
director, or ten percent (10%) beneficial owner of the Company, as those terms
are defined under Section 16 of the Exchange Act, who is required to file
reports pursuant to Rule 16a-3 under the Exchange Act.

 

2.26     “Non-Employee Director” means a member of the Board who is not an
Employee of the Company.

 

2.27     “Non-Qualified Stock Option” means an Option that, by its terms, does
not qualify or is not intended to qualify as an Incentive Stock Option.

 

2.28     “Option” means the right to purchase Stock granted to a Participant in
accordance with Article 6. Options granted under the Plan may be Non-Qualified
Stock Options, Incentive Stock Options or a combination thereof.

 

2.29    “Other Stock-Based Award” means an equity-based or equity-related Award
not otherwise described by the terms of the Plan, granted pursuant to Article 9.

 

2.30     “Participant” means an Eligible Person to whom an Award is granted
under the Plan.

 

2.31     “Performance Goal” means any goals established by the Committee
pursuant to an Award.

 

2.32     “Performance Period” means one or more periods of time, which may be of
varying and overlapping durations, as the Committee may select, over which the
attainment of one or more Performance Goals will be measured for the purpose of
determining a Participant’s right to, and the payment of, Performance Stock
Units and Performance Shares.

 

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2.33     “Performance Stock Unit” and “Performance Share” each mean an Award
granted to an Employee pursuant to Article 9 herein.

 

2.34     “Permitted Transferee” shall mean, with respect to a Participant, any
“family member” of the Participant, as defined in the General Instructions to
Form S-8 Registration Statement under the Securities Act (or any successor form
thereto), or to any other transferee specifically approved by the Committee
after taking into account Applicable Law, but excluding any third-party
financial institutions.

 

2.35     “Person” has the meaning ascribed to such term in Section 3(a)(9) of
the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a
“group” as defined in Section 13(d) thereof.

 

2.36     “Plan” means this PLx Pharma Inc. 2018 Incentive Plan, as it may be
amended from time to time.

 

2.37     “Prior Plan” has the meaning set forth in Section 1.3.

 

2.38     “Restricted Stock” means Stock awarded to a Participant pursuant to
Article 8 as to which the Restriction Period has not lapsed.

 

2.39     “Restricted Stock Unit” means an Award granted pursuant to Section 8.9
as to which the Restriction Period has not lapsed.

 

2.40     “Restriction Period” means the period when Restricted Stock or
Restricted Stock Units are subject to a “substantial risk of forfeiture” within
the meaning of Section 83 of the Code (based on the passage of time, the
achievement of performance goals, or upon the occurrence of other events as
determined by the Committee, in its discretion), as provided in Article 8.

 

2.41     “Securities Act” means the Securities Act of 1933, as amended.

 

2.42     “Share” means a share of Stock of the Company.

 

2.43     “Stock” means the common stock of the Company, par value $0.01 per
share.

 

2.44     “Stock Appreciation Right” or “SAR” means a right granted pursuant to
Article 7 to receive an amount payable in cash or Shares equal to the excess of
(i) the Fair Market Value of a specified number of Shares on the date the SAR is
exercised over (ii) the Fair Market Value of such Shares on the date the SAR was
granted as set forth in the applicable Award Agreement.

 

2.45     “Subsidiary” means any corporation, partnership, venture,
unincorporated association or other entity in which the Company holds, directly
or indirectly, a fifty percent (50%) or greater ownership interest, provided,
however, that with respect to an Incentive Stock Option, a Subsidiary must be a
corporation. The Committee may, at its sole discretion, designate, on such terms
and conditions as the Committee shall determine, any other corporation,
partnership, limited liability company, venture, or other entity a Subsidiary
for purposes of this Plan.

 

2.46     “Ten Percent Owner” means a person who owns, or is deemed within the
meaning of Section 422(b)(6) of the Code to own, stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company (or
any parent or subsidiary corporations of the Company, as defined in
Sections 424(e) and (f), respectively, of the Code). Whether a person is a Ten
Percent Owner shall be determined with respect to an Option based on the facts
existing immediately prior to the grant date of the Option.

 

2.47     “Termination of Employment” or a similar reference means the event
where the Employee is no longer an Employee of the Company or of any Subsidiary,
including but not limited to where the employing company ceases to be a
Subsidiary. With respect to any Participant who is not an Employee, “Termination
of Employment” shall mean cessation of the performance of services. With respect
to any Award that provides “non-qualified deferred compensation” within the
meaning of Section 409A of the Code, “Termination of Employment” shall mean a
“separation from service” as defined under Section 409A of the Code. Military or
sick leave or other bona fide leave shall not be deemed a termination of
employment, provided that it does not exceed the longer of three (3) months or
the period during which the absent Participant’s reemployment rights, if any,
are guaranteed by statute or by contract.

 

2.48     “Treasury Regulation” or “Treas. Reg.” means any regulation promulgated
under the Code, as such regulation may be amended from to time.

 

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Article 3

Administration

 

3.1     The Committee. Except as otherwise provided herein, the Plan shall be
administered by the Compensation Committee of the Board (the “Committee”).
Unless otherwise determined by the Board, the Committee shall consist solely of
two or more members of the Board each of whom is (a) a “non-employee director”
within the meaning of Rule 16b-3 of the Exchange Act, and (b) an “independent
director” under the rules of the Nasdaq Capital Market (or any similar rule or
listing requirement that may be applicable to the Company from time to time);
provided, that any action taken by the Committee shall be valid and effective,
whether or not members of the Committee at the time of such action are later
determined not to have satisfied the requirements for membership set forth in
this Section 3.1 or otherwise provided in any charter of the Committee.
Notwithstanding the foregoing: (a) the full Board, acting by a majority of its
members in office, shall conduct the general administration of the Plan with
respect to all Awards granted to Non-Employee Directors and for purposes of such
Awards the term “Committee” as used in this Plan shall be deemed to refer to the
Board and (b) the Committee may delegate its authority hereunder to the extent
permitted by Section 3.4. In its sole discretion, the Board may at any time and
from time to time exercise any and all rights and duties of the Committee under
the Plan except with respect to matters which under Rule 16b-3 under the
Exchange Act, or any regulations or rules issued thereunder, are required to be
determined in the sole discretion of the Committee. Except as may otherwise be
provided in any charter of the Committee, appointment of Committee members shall
be effective upon acceptance of appointment; Committee members may resign at any
time by delivering written notice to the Board; and vacancies in the Committee
may only be filled by the Board.

 

3.2     Authority of the Committee. Subject to the general purposes, terms and
conditions of this Plan and Applicable Law, and to the direction of the Board,
the Committee shall have complete control over the administration of the Plan
and shall have full authority to (a) exercise all of the powers granted to it
under the Plan, (b) construe, interpret and implement the Plan, grant terms and
grant notices, and all Award Agreements, (c) prescribe, amend and rescind rules
and regulations relating to the Plan, including rules governing its own
operations, (d) make all determinations necessary or advisable in administering
the Plan, (e) correct any defect, supply any omission and reconcile any
inconsistency in the Plan, (f) amend the Plan to reflect changes in applicable
law (whether or not the rights of the holder of any Award are adversely
affected, unless otherwise provided by the Committee), (g) grant Awards and
determine who shall receive Awards, when such Awards shall be granted and the
terms and conditions of such Awards, including, but not limited to, conditioning
the exercise, vesting, payout or other term of condition of an Award on the
achievement of Performance Goals, (h) unless otherwise provided by the
Committee, amend any outstanding Award in any respect, not materially adverse to
the Participant, including, without limitation, to (1) accelerate the time or
times at which the Award becomes vested, unrestricted or may be exercised (and,
in connection with such acceleration, the Committee may provide that any Shares
acquired pursuant to such Award shall be restricted Shares, which are subject to
vesting, transfer, forfeiture or repayment provisions similar to those in the
Participant’s underlying Award), (2) accelerate the time or times at which
Shares are delivered under the Award (and, without limitation on the Committee’s
rights, in connection with such acceleration, the Committee may provide that any
shares of Stock delivered pursuant to such Award shall be Restricted Shares,
which are subject to vesting, transfer, forfeiture or repayment provisions
similar to those in the Participant’s underlying Award), or (3) waive or amend
any goals, restrictions or conditions applicable to such Award, or impose new
goals, restrictions and (i) determine at any time whether, to what extent and
under what circumstances and method or methods (1) Awards may be (A) settled in
cash, Shares, other securities, other Awards or other property (in which event,
the Committee may specify what other effects such settlement will have on the
Participant’s Award), (B) exercised or (C) canceled, forfeited or suspended, (2)
Shares, other securities, cash, other Awards or other property and other amounts
payable with respect to an Award may be deferred either automatically or at the
election of the Participant or of the Committee, or (3) Awards may be settled by
the Company or any of its Subsidiaries or any of its or their designees.

 

No Award may be made under the Plan after the tenth (10th) anniversary of the
Effective Date.

 

3.3     Committee Decisions Final. The act or determination of a majority of the
Committee shall be the act or determination of the Committee and any decision
reduced to writing and signed by all of the members of the Committee shall be
fully effective as if it had been made by a majority at a meeting duly held. The
Committee may employ attorneys, consultants, accountants, agents, and other
persons, any of whom may be an Employee, and the Committee, the Company, and its
officers and Directors shall be entitled to rely upon the advice, opinions, or
valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee pursuant to the provisions of the Plan and
all related orders or resolutions shall be final and binding upon the
Participants, the Company, and all other interested persons, including but not
limited to the Company, its stockholders, Employees, Participants, and their
estates and beneficiaries.

 

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3.4     Delegation of Authority. The Board or Committee may from time to time
delegate to a committee of one or more members of the Board or one or more
officers of the Company the authority to grant or amend Awards or to take other
administrative actions pursuant to this Article 3; provided, however, that in no
event shall an officer of the Company be delegated the authority to grant Awards
to, or amend Awards held by, the following individuals: (a) individuals who are
subject to Section 16 of the Exchange Act, or (b) officers of the Company (or
Directors) to whom authority to grant or amend Awards has been delegated
hereunder; provided, further, that any delegation of administrative authority
shall only be permitted to the extent it is permissible under the Company’s
Certificate of Incorporation, Bylaws and Applicable Law. Any delegation
hereunder shall be subject to the restrictions and limits that the Board or
Committee specifies at the time of such delegation or that are otherwise
included in the applicable Organizational Documents, and the Board or Committee,
as applicable, may at any time rescind the authority so delegated or appoint a
new delegatee. At all times, the delegatee appointed under this Section 3.4
shall serve in such capacity at the pleasure of the Board or the Committee, as
applicable, and the Board or the Committee may abolish any committee at any time
and re-vest in itself any previously delegated authority

 

3.5     Indemnification. To the extent allowable pursuant to applicable law,
each member of the Committee or of the Board shall be indemnified and held
harmless by the Company from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by such member in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action or failure
to act pursuant to the Plan and against and from any and all amounts paid by him
or her in satisfaction of judgment in such action, suit, or proceeding against
him or her; provided he or she gives the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled pursuant to the Company’s Certificate 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.

 

Article 4

Shares Subject to the Plan

 

4.1     Number of Shares. Subject to adjustment as provided in Sections 4.2 and
4.3, the aggregate number of Shares of Stock which may be issued or transferred
pursuant to Awards under the Plan shall be the sum of: (i) 1,250,000 shares,
plus (ii) the number of shares of common stock of the Company which remain
available for grants of options or other awards under the Prior Plan as of the
Effective Date, plus (iii) the number of Shares that, after the Effective Date,
would again become available for issuance pursuant to the reserved share
replenishment provisions of the Prior Plan as a result of, stock options issued
thereunder expiring or becoming unexercisable for any reason before being
exercised in full, or, as a result of restricted stock being forfeited to the
Company or repurchased by the Company pursuant to the terms of the agreements
governing such shares. The share replenishment provision of the immediately
preceding clause (iii) shall be effective regardless of whether the Prior Plan
has terminated or remains in effect. Notwithstanding the foregoing, in order
that the applicable regulations under the Code relating to Incentive Stock
Options be satisfied, the maximum number of shares of Stock that may be
delivered upon exercise of Incentive Stock Options shall be 1,000,000, as
adjusted under Sections 4.2 and 4.3. Shares of Stock issued pursuant to the Plan
may be either authorized but unissued Shares or Shares held by the Company in
its treasury.

 

4.2     Share Accounting. Without limiting the discretion of the Committee under
this section, the following rules will apply for purposes of the determination
of the number of Shares available for grant under the Plan or compliance with
the foregoing limits:

 

(a)     If an outstanding Award for any reason expires or is terminated or
canceled without having been exercised or settled in full, or if Shares acquired
pursuant to an Award subject to forfeiture are forfeited under the terms of the
Plan or the relevant Award, the Shares allocable to the terminated portion of
such Award or such forfeited Shares shall again be available for issuance under
the Plan.

 

(b)     Shares shall not be deemed to have been issued pursuant to the Plan with
respect to any portion of an Award that is settled in cash, other than an
Option.

 

(c)     If the exercise price of an Option is paid by tender to the Company, or
attestation to the ownership, of Shares owned by the Participant, or an Option
is settled without the payment of the exercise price, or the payment of taxes
with respect to any Award is settled by a net exercise, the number of shares
available for issuance under the Plan shall be reduced by the gross number of
shares for which the Option is exercised or other Awards that have vested.

 

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4.3     Adjustments in Authorized Plan Shares and Outstanding Awards. In the
event of any merger, reorganization, consolidation, recapitalization,
separation, split-up, liquidation, Share combination, Stock split, Stock
dividend, an extraordinary cash distribution on Stock, a corporate separation or
other reorganization or liquidation or other change in the corporate or capital
structure of the Company affecting the Shares, an adjustment shall be made in a
manner consistent with Sections 422 and 424(h)(3) of the Code for Incentive
Stock Options and in a manner consistent with Section 409A of the Code for
Non-Qualified Stock Options and in the number and class of and/or price of
Shares subject to outstanding Awards granted under the Plan, and/or the number
of outstanding Options, Shares of Restricted Stock, and Performance Shares (and
Restricted Stock Units, Performance Stock Units and other Awards whose value is
based on a number of Shares) constituting outstanding Awards, as may be
determined to be appropriate and equitable by the Committee, in its sole
discretion, to prevent dilution or enlargement of rights. The Committee may make
adjustments in the terms and conditions of, and the criteria included in Awards
in recognition of unusual or nonrecurring events (including, without limitation,
the events described in this Section) affecting the Company or the financial
statements of the Company or of changes in applicable laws, regulations, or
accounting principles, whenever the Committee determines that such adjustments
are appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan. Adjustments
under this Section 4.3 shall be consistent with Section 409A of the Code and
adjustments pursuant to determination of the Committee shall be conclusive and
binding on all Participants under the Plan.

 

4.4     Limitation on Number of Shares Granted to Non-Employee Directors.
Notwithstanding any provision in the Plan to the contrary, the sum of the grant
date Fair Market Value of equity-based Awards and the amount of any cash-based
Awards granted to a Non-Employee Director during any calendar year shall not
exceed five hundred thousand dollars ($500,000).

 

Article 5

Eligibility and Participation

 

5.1     Eligibility and Participation. Subject to the provisions of the Plan,
the Committee may, from time to time, select from all Eligible Persons, those to
whom Awards shall be granted and shall determine, in its sole discretion, the
nature of, any and all terms permissible by law, and the amount of each Award.
In making this determination, the Committee may consider any factors it deems
relevant, including without limitation, the office or position held by a
Participant or the Participant’s relationship to the Company, the Participant’s
degree of responsibility for and contribution to the growth and success of the
Company or any Subsidiary or Affiliate, the Participant’s length of service,
promotions and potential. No individual shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award. In addition, there is no obligation for uniformity of
treatment of Participants or holders or beneficiaries of Awards. The terms and
conditions of Awards and the Committee’s determinations and interpretations with
respect thereto need not be the same with respect to each Participant and may be
made selectively among Participants, whether or not such Participants are
similarly situated.

 

5.2     Foreign Participants. In order to assure the viability of Awards granted
to Participants employed in foreign countries, the Committee may provide for
such special terms as it may consider necessary or appropriate to accommodate
differences in local law, tax policy, or custom. 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; provided, however, that no such supplements, amendments,
restatements, or alternative versions shall increase the share limitations
contained in Section 4.1 of the Plan.

 

Article 6

Options

 

6.1     Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Participants in such number, and upon such terms and
conditions, and at any time and from time to time as shall be determined by the
Committee, in its sole discretion, subject to the limitations set forth in
Article 4 and the following terms and conditions:

 

(a)     Award Agreement. Each Option grant shall be evidenced by an Award
Agreement that shall specify the terms and conditions of the Option, including
the Exercise Price, the maximum duration of the Option, the number of Shares to
which the Option pertains, the conditions upon which an Option shall become
vested and exercisable, and such other provisions as the Committee shall
determine which are not inconsistent with the terms of the Plan. The Award
Agreement also shall specify whether the Option is intended to be an Incentive
Stock Option or a Non-Qualified Stock Option.

 

(b)     Exercise Period. Unless a shorter period is otherwise provided by the
Committee at the time of grant, each Option will expire on the tenth (10th)
anniversary date of its grant or on the fifth (5th) anniversary of its grant
date if the Participant is a Ten Percent Owner.

 

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(c)     Exercise Price. Unless a greater Exercise Price is determined by the
Committee, the Exercise Price for each Option awarded under this Plan shall be
equal to one hundred percent (100%) of the Fair Market Value of a Share on the
date the Option is granted.

 

(d)     Vesting of Options. Subject to Section 13.1, a grant of Options shall
vest at such times and under such terms and conditions as determined by the
Committee including, without limitation, suspension of a Participant’s vesting
during all or a portion of a Participant’s leave of absence.

 

6.2     Limitations on Incentive Stock Options. In addition to the general
requirements of Article 6, the terms of any ISO granted pursuant to the Plan
must comply with the provisions of this Section 6.2.

 

(a)     ISO Eligibility. ISOs may be granted only to Employees of the Company or
of any parent or subsidiary corporation (as permitted under Sections 422 and 424
of the Code). No ISO Award may be made pursuant to this Plan after the tenth
(10th) anniversary of the Effective Date.

 

(b)     ISO Individual Dollar Limitation. The aggregate Fair Market Value
(determined as of the date the Option is granted) of all Shares with respect to
which Incentive Stock Options are first exercisable by a Participant in any
calendar year may not exceed one hundred thousand dollars ($100,000.00) or such
other limitation as imposed by Section 422(d) of the Code. To the extent that
Incentive Stock Options are first exercisable by a Participant in excess of such
limitation, the excess shall be considered Non-Qualified Stock Options.

 

(c)     ISO Expiration. An ISO will expire and may not be exercised to any
extent by anyone after the first to occur of the following events:

 

(i)     Ten (10) years from the date of grant, unless an earlier time is set in
the Award Agreement;

 

(ii)     Three (3) months after the date of the Participant’s Termination of
Employment other than on account of Disability or death. Whether a Participant
continues to be an employee shall be determined in accordance with Treas. Reg.
Section 1.421-1(h)(2); and

 

(iii)     One (1) year after the date of the Participant’s Termination of
Employment on account of Disability or death. Upon the Participant’s Disability
or death, any ISOs exercisable at the Participant’s Disability or death may be
exercised by the Participant’s legal representative or representatives, by the
person or persons entitled to do so pursuant to the Participant’s last will and
testament, or, if the Participant fails to make testamentary disposition of such
ISO or dies intestate, by the person or persons entitled to receive the ISO
pursuant to the applicable laws of descent and distribution.

 

Any ISO that remains exercisable pursuant to a Participant’s agreement with the
Company following Termination of Employment and is unexercised more than one (1)
year following Termination of Employment by reason of death or Disability or
more than three (3) months following Termination of Employment for any reason
other than death or Disability will thereafter be deemed to be a Non-Qualified
Stock Option.

 

(d)     Ten Percent Owners. In the case of an ISO granted to a Ten Percent
Owner, such ISO shall be granted at an exercise price that is not less than one
hundred and ten percent (110%) of Fair Market Value on the date of grant and,
unless a shorter period is otherwise provided by the Committee at the time of
grant, each ISO will expire on the fifth (5th) anniversary of its grant date.

 

(e)     Notification of Disposition. If a Participant disposes of Shares
acquired upon exercise of an ISO within two (2) years from the date the Option
is granted or within one (1) year after the issuance of such Shares to the
Participant, the Participant shall notify the Company of such disposition and
provide information regarding the date of disposition, sale price, number of
Shares disposed of, and any other information relating thereto that the Company
may reasonably request.

 

(f)      Right to Exercise. During a Participant’s lifetime, an Incentive Stock
Option may be exercised only by the Participant.

 

(g)     Failure to Meet ISO Requirements. If an Option is intended to be an
Incentive Stock Option, and if, for any reason, such Option (or any portion
thereof) shall not qualify as an Incentive Stock Option, then, to the extent of
such nonqualification, such Option (or portion thereof) shall be regarded as a
Non-Qualified Stock Option appropriately granted under the Plan; provided that
such Option (or portion thereof) otherwise complies with the Plan’s requirements
relating to Non-Qualified Stock Options.

 

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6.3     Exercise of Options.

 

(a)     Options granted under the Plan shall be exercisable at such times and be
subject to such restrictions and conditions as the Committee shall in each
instance approve, which need not be the same for each grant or for each
Participant. Exercises of Options may be effected only on days and during the
hours NASDAQ is open for regular trading. The Company may change or limit the
times or days Options may be exercised. If an Option expires on a day or at a
time when exercises are not permitted, then the Options may be exercised no
later than the immediately preceding date and time that the Options were
exercisable.

 

(b)     An Option shall be exercised by providing notice to the designated agent
selected by the Company (if no such agent has been designated, then to the
Company), in the manner and form determined by the Company, which notice shall
be irrevocable, setting forth the exact number of Shares with respect to which
the Option is being exercised and including with such notice payment of the
Exercise Price, as applicable. When an Option has been transferred, the Company
or its designated agent may require appropriate documentation that the person or
persons exercising the Option, if other than the Participant, has the right to
exercise the Option. No Option may be exercised with respect to a fraction of a
Share.

 

6.4     Termination of Employment. Unless otherwise provided by the Committee in
the applicable Award Agreement, the following limitations on the exercise of
Options shall apply upon Termination of Employment:

 

(a)     Termination by Death or Disability. In the event of the Participant’s
Termination of Employment by reason of death or Disability, all outstanding
Options granted to such Participant which are vested and exercisable as of the
effective date of Termination of Employment by reason of death or Disability may
be exercised, if at all, no more than one (1) year from such date of Termination
of Employment, unless the Options, by their terms, expire earlier. All unvested
Options granted to such Participant shall immediately become forfeited.

 

(b)     Involuntary Termination Without Cause. If a Participant’s Termination of
Employment is by involuntary termination without Cause, all Options held by such
Participant that are vested and exercisable at the time of the Participant’s
Termination of Employment may be exercised by the Participant at any time within
a period of ninety (90) days from the date of such Termination of Employment,
but in no event beyond the expiration of the stated term of such Options. All
Options held by the Participant which are not vested on or before the effective
date of Termination of Employment shall immediately be forfeited to the Company
(and the Shares subject to such forfeited Options shall once again become
available for issuance under the Plan).

 

(c)     Voluntary Termination. If a Participant’s Termination of Employment is
voluntary (other than a voluntary termination described in Section 6.4(d)), all
Options held by such Participant that are vested and exercisable at the time of
the Participant’s Termination of Employment may be exercised by the Participant
at any time within a period of ninety (90) days from the date of such
Termination of Employment, but in no event beyond the expiration of the stated
terms of such Options. All Options held by the Participant which are not vested
on or before the effective date of Termination of Employment shall immediately
be forfeited to the Company (and the Shares subject to such forfeited Options
shall once again become available for issuance under the Plan).

 

(d)     Termination for Cause. If the Participant’s Termination of Employment
(i) is by the Company for Cause or (ii) is a voluntary Termination (as provided
in Subsection (c) above) after the occurrence of an event that would be grounds
for Termination of Employment for Cause, all outstanding Options held by the
Participant shall immediately be forfeited to the Company and no additional
exercise period shall be allowed, regardless of the vested status of the Options
(and the Shares subject to such forfeited Options shall once again become
available for issuance under the Plan).

 

(e)     Other Terms and Conditions. Notwithstanding the foregoing, the Committee
may, in its sole discretion, establish different, or waive, terms and conditions
pertaining to the effect of Termination of Employment on Options, whether or not
the Options are outstanding, but no such modification shall shorten the terms of
Options issued prior to such modification or otherwise be materially adverse to
the Participant.

 

6.5     Payment. The Committee shall determine the methods by which payments by
any Participant with respect to any Awards granted under the Plan may be paid
and the form of payment. Unless otherwise determined by the Committee, the
Exercise Price shall be paid in full at the time of exercise. No Shares shall be
issued or transferred until full payment has been received or the next business
day thereafter, as determined by the Company. The Committee may, from time to
time, determine or modify the method or methods of exercising Options or the
manner in which the Exercise Price is to be paid. Unless otherwise provided by
the Committee in full or in part, to the extent permitted by Applicable Law,
payment may be made by any of the following:

 

(a)     cash or certified or bank check;

 

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(b)     delivery of Shares owned by the Participant duly endorsed for transfer
to the Company, with a Fair Market Value of such Shares delivered on the date of
delivery equal to the Exercise Price (or portion thereof) due for the number of
Shares being acquired;

 

(c)     if the Company has designated a stockbroker to act as the Company’s
agent to process Option exercises, an Option may be exercised by issuing an
exercise notice together with instructions to such stockbroker irrevocably
instructing the stockbroker: (i) to immediately sell (which shall include an
exercise notice that becomes effective upon execution of a sale order) a
sufficient portion of the Shares to be received from the Option exercise to pay
the Exercise Price of the Options being exercised and the required tax
withholding, and (ii) to deliver on the settlement date the portion of the
proceeds of the sale equal to the Exercise Price and tax withholding to the
Company. In the event the stockbroker sells any Shares on behalf of a
Participant, the stockbroker shall be acting solely as the agent of the
Participant, and the Company disclaims any responsibility for the actions of the
stockbroker in making any such sales. However, if the Participant is an Insider,
then the instruction to the stock broker to sell in the preceding sentence is
intended to comply with the requirements of Rule 10b5-1(c)(1)(i)(B) of the
Exchange Act to the extent permitted by law. No Shares shall be issued until the
settlement date and until the proceeds (equal to the Exercise Price and tax
withholding) are paid to the Company;

 

(d)     at any time, the Committee may, in addition to or in lieu of the
foregoing, provide that an Option may be “stock settled,” which shall mean upon
exercise of an Option, the Company may fully satisfy its obligation under the
Option by delivering that number of shares of Stock found by taking the
difference between (i) the Fair Market Value of the Stock on the exercise date,
multiplied by the number of Options being exercised and (ii) the total Exercise
Price of the Options being exercised, and dividing such difference by the Fair
Market Value of the Stock on the exercise date; or

 

(e)     any combination of the foregoing methods.

 

Notwithstanding any other provision of the Plan to the contrary, no Participant
who is a Director or an “executive officer” of the Company shall be permitted to
pay the Exercise Price of an Option in any method which would violate Section
13(h) of the Exchange Act.

 

Article 7

 

Stock Appreciation Rights

 

7.1     Grant of SARs. Any Participant selected by the Committee may be granted
one or more SARs. SARs may be granted alone or in tandem with Options. Each SAR
shall be evidenced by an Award Agreement that shall specify the exercise price,
the term of the SAR, and such other provisions as the Committee shall determine.
With respect to SARs granted in tandem with Options, the exercise of either such
Options or such SARs shall result in the simultaneous cancellation of the same
number of tandem SARs or Options, as the case may be.

 

7.2     Exercise Price. The exercise price per Share covered by a SAR granted
pursuant to the Plan shall be equal to or greater than Fair Market Value on the
date the SAR was granted.

 

7.3     Term. The term of each SAR shall be determined by the Committee in its
sole discretion, but in no event shall the term exceed ten (10) years from the
date of grant.

 

7.4     Payment. SARs may be settled in the form of cash, shares of Stock or a
combination of cash and shares of Stock, as determined by the Committee.

 

7.5     Other Provisions. Except as the Committee may deem inappropriate or
inapplicable in the circumstances, SARs shall be subject to terms and conditions
substantially similar to those applicable to Non-Qualified Options as set forth
in Article 6.

 

Article 8

Restricted Stock Awards

 

8.1     Grant of Restricted Stock. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant shares of
Restricted Stock to Eligible Persons in such amounts and upon such terms and
conditions as the Committee shall determine. In addition to any other terms and
conditions imposed by the Committee, vesting of Restricted Stock may be
conditioned upon the achievement of Performance Goals.

 

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8.2     Restricted Stock Agreement. The Committee may require, as a condition to
receiving a Restricted Stock Award, that the Participant enter into a Restricted
Stock Award Agreement, setting forth the terms and conditions of the Award. In
lieu of a Restricted Stock Award Agreement, the Committee may provide the terms
and conditions of an Award in a notice to the Participant of the Award, on the
Stock certificate representing the Restricted Stock, in the resolution approving
the Award, or in such other manner as it deems appropriate. If certificates
representing the Restricted Stock are registered in the name of the Participant,
any certificates so issued shall be printed with an appropriate legend referring
to the terms, conditions, and restrictions applicable to such Award as
determined or authorized in the sole discretion of the Committee. Shares
recorded in book-entry form shall be recorded with a notation referring to the
terms, conditions, and restrictions applicable to such Award as determined or
authorized in the sole discretion of the Committee. The Committee may require
that the stock certificates or book-entry registrations evidencing shares of
Restricted Stock be held in custody by a designated escrow agent (which may but
need not be the Company) until the restrictions thereon shall have lapsed, and
that the Participant deliver a stock power, endorsed in blank, relating to the
Stock covered by such Award.

 

8.3     Restrictions. Subject to Section 13.1, the Restricted Stock shall be
subject to such vesting terms, including the achievement of Performance Goals,
as may be determined by the Committee. Unless otherwise provided by the
Committee, to the extent Restricted Stock is subject to any condition to
vesting, if such condition or conditions are not satisfied by the time the
period for achieving such condition has expired, such Restricted Stock shall be
forfeited. The Committee may impose such other conditions and/or restrictions on
any shares of Restricted Stock granted pursuant to the Plan as it may deem
advisable including but not limited to a requirement that Participants pay a
stipulated purchase price for each share of Restricted Stock and/or restrictions
under Applicable Law. The Committee may also grant Restricted Stock without any
terms or conditions in the form of vested Stock Awards.

 

8.4     Removal of Restrictions. Except as otherwise provided in this Article 8
or otherwise provided in the grant thereof, Shares of Restricted Stock covered
by each Restricted Stock grant made under the Plan shall become freely
transferable by the Participant after completion of all conditions to vesting,
if any. However, the Committee, in its sole discretion, shall have the right to
immediately vest the shares and waive all or part of the restrictions and
conditions with regard to all or part of the shares held by any Participant at
any time.

 

8.5     Voting Rights, Dividends and Other Distributions. Participants holding
shares of Restricted Stock granted hereunder may exercise full voting rights
and, subject to the provisions of this Section 8.5, may receive all dividends
and distributions paid with respect to such Shares. If any such dividends or
distributions are paid in Shares, the Shares shall automatically be subject to
the same restrictions and conditions as the Restricted Stock with respect to
which they were paid. In addition, with respect to a share of Restricted Stock,
dividends shall only be paid out to the extent that the Share of Restricted
Stock vests. Any cash dividends and stock dividends with respect to the
Restricted Stock shall be withheld by the Company for the Participant’s account,
and interest may be credited on the amount of the cash dividends withheld at a
rate and subject to such terms as determined by the Committee. The cash
dividends or stock dividends so withheld by the Committee and attributable to
any particular share of Restricted Stock (and earnings thereon, if applicable)
shall be distributed to the Participant in cash or, at the discretion of the
Committee, in shares of Stock having a Fair Market Value equal to the amount of
such dividends, if applicable, upon the release of restrictions on such share
and, if such share is forfeited, the Participant shall have no right to such
dividends.

 

8.6     Termination of Employment Due to Death or Disability. In the event of
the Participant’s Termination of Employment by reason of death or Disability,
unless otherwise determined by the Committee, all restrictions imposed on
outstanding Shares of Restricted Stock held by the Participant shall immediately
lapse and the Restricted Stock shall immediately become fully vested as of the
date of Termination of Employment.

 

8.7     Termination of Employment for Other Reasons. Unless otherwise provided
by the Committee, in the event of the Participant’s Termination of Employment
for any reason other than those specifically set forth in Section 8.6 herein,
subject to Section 10.2, all shares of Restricted Stock held by the Participant
which are not vested as of the effective date of Termination of Employment shall
immediately be forfeited and returned to the Company.

 

8.8     Section 83(b) Election. The Committee may provide in an Award Agreement
that the Award of Restricted Stock is conditioned upon the Participant making or
refraining from making an election with respect to the Award under Section 83(b)
of the Code. If a Participant makes an election pursuant to Section 83(b) of the
Code concerning a Restricted Stock Award, the Participant shall be required to
file a copy of such election with the Company within thirty (30) days following
the date of grant.

 

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8.9     Restricted Stock Units. In lieu of or in addition to Restricted Stock,
the Committee may grant Restricted Stock Units under such terms and conditions
as shall be determined by the Committee in accordance with Section 3.2.
Restricted Stock Units shall be subject to the same terms and conditions under
this Plan as Restricted Stock except as otherwise provided in this Plan or as
otherwise provided by the Committee. Except as otherwise provided by the
Committee, the award shall be settled and paid out promptly upon vesting (to the
extent permitted by Section 409A of the Code), and the Participant holding such
Restricted Stock Units shall receive, as determined by the Committee, Shares (or
cash equal to the Fair Market Value of the number of Shares as of the date the
Award becomes payable) equal to the number of such Restricted Stock Units.
Restricted Stock Units shall not be transferable, shall have no voting rights,
and, unless otherwise determined by the Committee, shall not receive dividends
or Dividend Equivalents (which in any event shall only be paid out to the extent
that the Restricted Stock Units vest). Upon a Participant’s Termination of
Employment due to death or Disability, the Committee will determine whether
there should be any acceleration of vesting.

 

Article 9

Other Types of Awards

 

9.1     Performance Share Awards. Any Participant selected by the Committee may
be granted one or more Performance Share awards which shall be denominated in a
number of shares of Stock and which may be linked to any one or more of the
Performance Goals or other specific performance criteria determined appropriate
by the Committee, in each case on a specified date or dates or over any period
or periods determined by the Committee. In making such determinations, the
Committee shall consider (among such other factors as it deems relevant in light
of the specific type of award) the contributions, responsibilities and other
compensation of the particular Participant.

 

9.2     Performance Stock Units. Any Participant selected by the Committee may
be granted one or more Performance Stock Unit awards which shall be denominated
in units of value including dollar value of shares of Stock and which may be
linked to any one or more of the Performance Goals or other specific performance
criteria determined appropriate by the Committee, in each case on a specified
date or dates or over any period or periods determined by the Committee. In
making such determinations, the Committee shall consider (among such other
factors as it deems relevant in light of the specific type of award) the
contributions, responsibilities and other compensation of the particular
Participant.

 

9.3     Dividend Equivalents. Any Participant selected by the Committee may be
granted Dividend Equivalents based on the dividends declared on the Shares that
are subject to any Award, to be credited as of dividend payment dates, during
the period between the date the Award is granted and the date the Award is
exercised, vests or expires, as determined by the Committee. Such Dividend
Equivalents shall be converted to cash or additional shares of Stock by such
formula and at such time and subject to such limitations as may be determined by
the Committee, in a matter consistent with the rules of Section 409A of the
Code; provided that, to the extent Shares subject to an Award are subject to
vesting conditions, any Dividend Equivalents relating to such Shares shall be
subject to the same vesting conditions.

 

9.4     Deferred Stock. Any Participant selected by the Committee may be granted
an award of Deferred Stock in the manner determined from time to time by the
Committee. The number of shares of Deferred Stock shall be determined by the
Committee and may be linked to the Performance Criteria or other specific
performance criteria determined to be appropriate by the Committee, in each case
on a specified date or dates or over any period or periods determined by the
Committee. Stock underlying a Deferred Stock Award will not be issued until the
Deferred Stock Award has vested, pursuant to a vesting schedule or performance
criteria set by the Committee. Unless otherwise provided by the Committee, a
Participant awarded Deferred Stock shall have no rights as a Company stockholder
with respect to such Deferred Stock until such time as the Deferred Stock Award
has vested and the Stock underlying the Deferred Stock Award has been issued.

 

9.5     Other Stock-Based Awards. Any Participant selected by the Committee may
be granted one or more Awards that provide Participants with shares of Stock or
the right to purchase shares of Stock or that have a value derived from the
value of, or an exercise or conversion privilege at a price related to, or that
are otherwise payable in shares of Stock and which may be linked to any one or
more of the Performance Goals or other specific performance criteria determined
appropriate by the Committee, in each case on a specified date or dates or over
any period or periods determined by the Committee. In making such
determinations, the Committee shall consider (among such other factors as it
deems relevant in light of the specific type of Award) the contributions,
responsibilities and other compensation of the particular Participant.

 

9.6     Performance Bonus Awards. Any Participant selected by the Committee may
be granted one or more Awards in the form of a cash bonus (a “Performance Bonus
Award”) payable upon the attainment of Performance Goals that are established by
the Committee, in each case on a specified date or dates or over any period or
periods determined by the Committee.

 

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9.7     Term. Except as otherwise provided herein, the term of any Award of
Performance Shares, Performance Stock Units, Dividend Equivalents, Deferred
Stock, Other Stock-Based Award and Performance Bonus Award shall be set by the
Committee in its discretion.

 

9.8     Exercise or Purchase Price. The Committee may establish the exercise or
purchase price, if any, of any Award of Performance Shares, Performance Stock
Units, Deferred Stock, Other Stock-Based Award and Performance Bonus Award;
provided, however, that such price shall not be less than the Fair Market Value
of a share of Stock on the date of grant, unless otherwise permitted by
Applicable Law.

 

9.9     Exercise Upon Termination of Employment or Service. An Award of
Performance Shares, Performance Stock Units, Deferred Stock, Other Stock-Based
Award and Performance Bonus Award shall only be exercisable or payable while the
Participant is an Employee, Consultant or Non-Employee Director, as applicable;
provided, however, that the Committee in its sole and absolute discretion may
provide that an Award of Performance Shares, Performance Stock Units, Deferred
Stock, Stock Appreciation Rights, Other Stock-Based Award and Performance Bonus
Award may be exercised or paid subsequent to a Termination of Employment without
Cause. In the event of the Termination of Employment of a Participant by the
Company for Cause, all Awards under this Article 9 shall be forfeited by the
Participant to the Company.

 

9.10     Form of Payment. Payments with respect to any Awards granted under this
Article 9 shall be made in cash, in Stock or a combination of both, as
determined by the Committee.

 

9.11     Award Agreement. All Awards under this Article 9 shall be subject to
such additional terms and conditions as determined by the Committee and shall be
evidenced by a written Award Agreement.

 

Article 10

Change in Control

 

10.1     Vesting Upon Change in Control. For the avoidance of doubt, the
Committee may not accelerate the vesting and exercisability (as applicable) of
any outstanding Awards, in whole or in part, solely upon the occurrence of a
Change in Control except as provided in this Section 10.1. In the event of a
Change in Control after the date of the adoption of the Plan, then:

 

(a)     to the extent an outstanding Award subject solely to time-based vesting
is not assumed or replaced by a comparable Award referencing shares of the
capital stock of the 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) which is publicly traded on a national stock
exchange or quotation system, as determined by the Committee in its sole
discretion, with appropriate adjustments as to the number and kinds of shares
and the exercise prices, if applicable, then any outstanding Award subject
solely to time-based vesting then held by Participants that is unexercisable,
unvested or still subject to restrictions or forfeiture shall, in each case as
specified by the Committee in the applicable Award Agreement or otherwise, be
deemed exercisable or otherwise vested, as the case may be, as of immediately
prior to such Change in Control;

 

(b)     all Awards that vest subject to the achievement of any performance goal,
target performance level, or similar performance-related requirement shall, in
each case as specified by the Committee in the applicable Award Agreement or
otherwise, either (A) be canceled and terminated without any payment or
consideration therefor; or (B) automatically vest based on: (1) actual
achievement of any applicable Performance Goals through the date of the Change
in Control, as determined by the Committee in its sole discretion; or (2)
achievement of target performance levels (or the greater of actual achievement
of any applicable Performance Goals through the date of the Change in Control,
as determined by the Committee in its sole discretion, and target performance
levels); provided that in the case of vesting based on target performance
levels, such Awards shall also be prorated based on the portion of the
Performance Period elapsed prior to the Change in Control; and, in the case of
this clause (B), shall be paid at the earliest time permitted under the terms of
the applicable agreement, plan or arrangement that will not trigger a tax or
penalty under Section 409A of the Code, as determined by the Committee; and

 

(c)     Each outstanding Award that is assumed in connection with a Change in
Control, or is otherwise to continue in effect subsequent to the Change in
Control, will be appropriately adjusted, immediately after the Change in
Control, as to the number and class of securities and other relevant terms in
accordance with Section 4.3.

 

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10.2     Termination of Employment Upon Change in Control. Notwithstanding any
other provision of the Plan to the contrary, and except as may otherwise be
provided in any applicable Award Agreement or other written agreement entered
into between the Company or Affiliate and a Participant, upon (i) a
Participant’s involuntary Termination of Employment without Cause on or within
one (1) year following a Change in Control, or (ii) a Participant’s Termination
of Employment for Good Reason (including the Termination of Employment of the
Participant if he or she is employed by an Affiliate at the time the Company
sells or otherwise divests itself of such Affiliate), all outstanding Awards
shall immediately become fully vested and exercisable; provided that Restricted
Stock Units shall be settled in accordance with the terms of the grant without
regard to the Change in Control unless the Change in Control constitutes a
“change in control event” within the meaning of Section 409A of the Code and
such Termination of Employment occurs within one (1) year following such Change
in Control, in which case the Restricted Stock Units shall be settled and paid
out with such Termination of Employment.

 

10.3     Cancellation and Termination of Awards. The Committee may, in
connection with any merger, consolidation, share exchange or other transaction
entered into by the Company in good faith, determine that any outstanding Awards
granted under the Plan, whether or not vested, will be canceled and terminated
and that in connection with such cancellation and termination the holder of such
Award may receive for each Share subject to such Award a cash payment (or the
delivery of shares of stock, other securities or a combination of cash, stock
and securities equivalent to such cash payment) equal to the difference, if any,
between the amount determined by the Committee to be the Fair Market Value of
the Stock and the purchase price per Share (if any) under the Award multiplied
by the number of Shares subject to such Award; provided that if such product is
zero or less or to the extent that the Award is not then exercisable, the Award
will be canceled and terminated without payment therefor.

 

Article 11

Amendment, Modification, and Termination

 

11.1     Amendment, Modification, and Termination of Plan. At any time and from
time to time, the Board may amend, modify, alter, suspend, discontinue or
terminate the Plan, in whole or in part, without stockholder approval; provided,
however, that (a) to the extent necessary and desirable to comply with any
Applicable Law, regulation, or stock exchange rule, the Company shall obtain
stockholder approval of any Plan amendment in such a manner and to such a degree
as required, and (b) stockholder approval is required for any amendment to the
Plan that (i) increases the number of shares available under the Plan (other
than any adjustment as provided by Section 4.3) or the number of shares
available for issuance as ISOs, or (ii) permits the Committee to grant Options
with an Exercise Price that is below Fair Market Value on the date of grant, or
(iii) permits the Committee to extend the exercise period for an Option beyond
ten (10) years from the date of grant, or (iv) results in a material increase in
benefits or a change in eligibility requirements, or (v) change the granting
corporation or (vi) the type of stock.

 

11.2     Amendment of Awards. Subject to Section 4.3, at any time and from time
to time, the Committee may amend the terms of any one or more outstanding
Awards, provided that the Award as amended is consistent with the terms of the
Plan or if necessary or advisable for the purpose of conforming the Plan or an
Award Agreement to any present or future law relating to plans of this or
similar nature (including, without limitation, Section 409A and, to the extent
applicable, Section 162(m) of the Code), and to the administrative regulations
and rulings promulgated thereunder. Notwithstanding any provision in this Plan
to the contrary, absent approval of the stockholders of the Company, no Option
may be amended to reduce the per share Exercise Price of the shares subject to
such Option below the per share exercise price as of the date the Option is
granted and, except as permitted by Section 4.3, no Option may be granted in
exchange for, or in connection with, the cancellation or surrender of an Option
having a higher per share Exercise Price.

 

11.3     Awards Previously Granted. No termination, amendment, or modification
of the Plan or any Award shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant holding such Award; provided, however, that any such modification
made for the purpose of complying with Section 409A of the Code may be made by
the Company without the consent of any Participant.

 

11.4     Repricing and Backdating Prohibited. Notwithstanding anything in this
Plan to the contrary, except as provided under Section 4.3 and Section 11.2,
neither the Committee nor any other person may (i) amend the terms of
outstanding Options or SARs to reduce the exercise or grant price of such
outstanding Options or SARs; (ii) cancel outstanding Options or SARs in exchange
for Options or SARs with an exercise or grant price that is less than the
exercise price of the original Options or SARs; or (iii) cancel outstanding
Options or SARs with an exercise or grant price above the current Share price in
exchange for cash or other securities. In addition, the Committee may not make a
grant of an Option or SAR with a grant date that is effective prior to the date
the Committee takes action to approve such Award.

 

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Article 12

Withholding

 

12.1     Tax Withholding. Unless otherwise provided by the Committee, the
Company shall deduct or withhold any amount needed to satisfy any foreign,
federal, state, or local tax (including but not limited to the Participant’s
employment tax obligations) required by law to be withheld with respect to any
taxable event arising or as a result of this Plan (“Withholding Taxes”).

 

12.2     Share Withholding. Unless otherwise provided by the Committee, upon the
exercise of Options, the lapse of restrictions on Restricted Stock, the vesting
of Restricted Stock Units the distribution of Performance Shares in the form of
Stock, or any other taxable event hereunder involving the transfer of Stock to a
Participant, the Company shall withhold Stock equal in value, using the Fair
Market Value on the date determined by the Company to be used to value the Stock
for tax purposes, to the Withholding Taxes applicable to such transaction.

 

Any fractional Share of Stock payable to a Participant shall be withheld as
additional Federal withholding, or, at the option of the Company, paid in cash
to the Participant.

 

Unless otherwise determined by the Committee, when the method of payment for the
Exercise Price is from the sale by a stockbroker pursuant to Section 6.5(c),
herein, of the Stock acquired through the Option exercise, then the tax
withholding shall be satisfied out of the proceeds. For administrative purposes
in determining the amount of taxes due, the sale price of such Stock shall be
deemed to be the Fair Market Value of the Stock.

 

If permitted by the Committee, prior to the end of any Performance Period a
Participant may elect to have a greater amount of Stock withheld from the
distribution of Performance Shares to pay withholding taxes; provided, however,
the Committee may prohibit or limit any individual election or all such
elections at any time.

 

Alternatively, or in combination with the foregoing, the Committee may require
Withholding Taxes to be paid in cash by the Participant or by the sale of a
portion of the Stock being distributed in connection with an Award, or by a
combination thereof.

 

The withholding of taxes is intended to comply with the requirements of Rule
10b5-1(c)(1)(i)(B) of the Exchange Act to the extent permitted by law.

 

Article 13

General Provisions Applicable to Awards

 

13.1     Minimum Vesting. Subject to Section 10.1, each Award shall have a
minimum vesting period of one (1) year; provided that the Committee may
determine in its sole discretion that up to five percent (5%) of the Shares
available for issuance under the Plan may be granted free of such minimum
vesting requirements.

 

13.2     Form of Payment. Subject to the provisions of this Plan, the Award
Agreement and any Applicable Law, payments or transfers to be made by the
Company or any Affiliate on the grant, exercise, or settlement of any Award may
be made in such form as determined by the Committee including, without
limitation, cash, Stock, other Awards, other property, or any combination
thereof, and may be made in a single payment or transfer, in installments, or
any combination thereof, in each case determined by rules adopted by the
Committee.

 

13.3     Treatment of Dividends and Dividend Equivalents on Unvested Awards.
Notwithstanding any other provision of the Plan to the contrary, with respect to
any Award that provides for or includes a right to dividends or Dividend
Equivalents, if dividends are declared during the period that an equity Award is
outstanding, such dividends (or Dividend Equivalents) shall either (i) not be
paid or credited with respect to such Award or (ii) be accumulated but remain
subject to vesting requirement(s) to the same extent as the applicable Award and
shall only be paid at the time or times such vesting requirement(s) are
satisfied.

 

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13.4     Limits on Transfer.

 

(a)     Except as otherwise provided in Section 13.4(b),

 

(i)     no Award may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or the laws of descent and
distribution or pursuant to a domestic relations order, unless and until such
Award has been exercised, or the Shares underlying such Award have been issues,
and all restrictions applicable to such Shares have lapsed;

 

(ii)     no Award or interest or right therein shall be liable for or otherwise
subject to the debts, contracts or engagements of the Participant or the
Participant’s successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, hypothecation, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any other legal or equitable proceedings (including bankruptcy) unless and until
such Award has been exercised, or the Shares underlying such Award have been
issued, and all restrictions applicable to such Shares have lapsed, and any
attempted disposition of an Award prior to satisfaction of these conditions
shall be null and void and of no effect, except to the extent that such
disposition is permitted by Section 13.4(a)(i); and

 

(iii)     during a Participant’s lifetime, only the Participant or the
Participant’s guardian or legal representative may exercise an Award (or any
portion thereof) granted to him or her under the Plan, unless it has been
disposed of pursuant to a domestic relations order. After a Participant’s death,
any exercisable portion of an Award may, prior to the time when such portion
becomes unexercisable under the Plan or the applicable Award Agreement, be
exercised by such Participant’s personal representative or by any person
empowered to do so under the deceased Participant’s will or under the then
applicable laws of descent and distribution.

 

(b)     Notwithstanding Section 13.4(a), the Committee, in its sole discretion,
may determine to permit a Participant or a Permitted Transferee of such
Participant to transfer an Award other than an Incentive Stock Option (unless
such Incentive Stock Option is intended to become a Nonqualified Stock Option)
to any one or more Permitted Transferees of such Participant without
consideration, subject to the following terms and conditions: (i) an Award
transferred to a Permitted Transferee shall not be assignable or transferable by
the Permitted Transferee other than (A) to another Permitted Transferee of the
applicable Participant or (B) by will or the laws of descent and distribution
or, subject to the consent of the Committee, pursuant to a domestic relations
order; (ii) an Award transferred to a Permitted Transferee shall continue to be
subject to all the terms and conditions of the Award as applicable to the
original Participant (other than the ability to further transfer the Award to
any person other than another Permitted Transferee of the applicable
Participant); and (iii) the Participant (or transferring Permitted Transferee)
and the receiving Permitted Transferee shall execute any and all documents
requested by the Committee, including, without limitation documents to (A)
confirm the status of the transferee as a Permitted Transferee, (B) satisfy any
requirements for an exemption for the transfer under Applicable Law and (C)
evidence the transfer. In addition, and further notwithstanding Section 13.4(a),
hereof, the Committee, in its sole discretion, may determine to permit a
Participant to transfer Incentive Stock Options to a trust that constitutes a
Permitted Transferee if, under Section 671 of the Code and other Applicable Law,
the Participant is considered the sole beneficial owner of the Incentive Stock
Option while it is held in the trust.

 

13.5     Beneficiaries. Notwithstanding Section 13.4, if provided in the
applicable Award Agreement, a Participant may, in the manner determined by the
Committee, designate a beneficiary to exercise the rights of the Participant and
to receive any distribution with respect to any Award upon the Participant’s
death. A beneficiary, legal guardian, legal representative, or other person
claiming any rights pursuant to the Plan is subject to all terms and conditions
of the Plan and any Award Agreement applicable to the Participant, except to the
extent the Plan and Award Agreement otherwise provide, and to any additional
restrictions deemed necessary or appropriate by the Committee. If the
Participant is married and resides in a community property state, a designation
of a person other than the Participant’s spouse as his or her beneficiary with
respect to more than fifty percent (50%) of the Participant’s interest in the
Award shall not be effective without the prior written consent of the
Participant’s spouse. If no beneficiary has been designated or survives the
Participant, payment shall be made to the person entitled thereto pursuant to
the Participant’s will or the laws of descent and distribution. Subject to the
foregoing, a beneficiary designation may be changed or revoked by a Participant
at any time provided the change or revocation is filed with the Committee.

 

13.6     Forfeiture Events/Representations. The Committee may specify in an
Award Agreement at the time of the Award that the Participant’s rights, payments
and benefits with respect to an Award shall be subject to reduction,
cancellation, forfeiture or recoupment upon the occurrence of certain specified
events, in addition to any otherwise applicable vesting or performance
conditions of an Award. Such events shall include, but shall not be limited to,
termination of Service for Cause, violation of material Company policies, breach
of noncompetition, confidentiality or other restrictive covenants that may apply
to the Participant, or other conduct by the Participant that is detrimental to
the business or reputation of the Company. The Committee may also specify in an
Award Agreement that the Participant’s rights, payments and benefits with
respect to an Award shall be conditioned upon the Participant making a
representation regarding compliance with noncompetition, confidentiality or
other restrictive covenants that may apply to the Participant and providing that
the Participant’s rights, payments and benefits with respect to an Award shall
be subject to reduction, cancellation, forfeiture or recoupment on account of a
breach of such representation. In addition and without limitation of the
foregoing, any amounts paid hereunder shall be subject to recoupment in
accordance with The Dodd–Frank Wall Street Reform and Consumer Protection Act
and any implementing regulations thereunder, any “clawback” policy adopted by
the Company or as is otherwise required by applicable law or stock exchange
listing condition.

 

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13.7     No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award. The Committee shall determine whether cash,
Awards, or other property shall be issued or paid in lieu of fractional Shares
or whether such fractional Shares or any rights thereto shall be forfeited or
otherwise eliminated.

 

13.8     Reservation of Stock. The Company shall at all times during the term of
the Plan and any outstanding Awards granted hereunder reserve or otherwise keep
available such number of Shares of Stock as will be sufficient to satisfy the
requirements of the Plan (if then in effect) and the Awards and shall pay all
fees and expenses necessarily incurred by the Company in connection therewith.

 

13.9     Reimbursement of Company for Unearned or Ill-gotten Gains. Unless
otherwise specifically provided in an Award Agreement, and to the extent
permitted by Applicable Law, if the Company is required to prepare an accounting
restatement due to the material noncompliance of the Company with any financial
reporting requirement under the securities laws, the Committee may, without
obtaining the approval or consent of the Company’s shareholders or of any
Participant, require that any Participant who personally engaged in one of more
acts of fraud or misconduct that have caused or partially caused the need for
such restatement or any current or former chief executive officer, chief
financial officer, or executive officer, regardless of their conduct, to
reimburse the Company in a manner consistent with Section 409A of the Code, if
the Award constitutes “Non-Qualified Deferred Compensation,” for all or any
portion of any Awards granted or settled under this Plan (with each such case
being a “Reimbursement”), or the Committee may require the termination or
rescission of, or the recapture associated with, any Award, in excess of the
amount the Participant would have received under the accounting restatement.

 

13.10     Delay in Payment. To the extent required in order to avoid the
imposition of any interest and/or additional tax under Section 409A(a)(1)(B) of
the Code, any amount that is considered deferred compensation under the Plan or
Award Agreement and that is required to be postponed pursuant to Section 409A of
the Code, following the a Participant’s Termination of Employment shall be
delayed for six (6) months if a Participant is deemed to be a “specified
employee” as defined in Section 409A(a)(2)(i)(B) of the Code; provided that, if
the Participant dies during the postponement period prior to the payment of the
postponed amount, the amounts withheld on account of Section 409A of the Code
shall be paid to the executor or administrator of the decedent’s estate within
60 days following the date of his death. A “Specified Employee” means any
Participant who is a “key employee” (as defined in Section 416(i) of the Code
without regard to paragraph (5) thereof), as determined by the Company in
accordance with its uniform policy with respect to all arrangements subject to
Section 409A of the Code, based upon the twelve (12) month period ending on each
December 31st (the “Identification Period”). All Participants who are determined
to be key employees under Section 416(i) of the Code (without regard to
paragraph (5) thereof) during the identification period shall be treated as
Specified Employees for purposes of the Plan during the twelve (12) month period
that begins on the first day of the 4th month following the close of such
identification period.

 

Article 14

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.

 

Article 15

 

Miscellaneous Provisions

 

15.1     Substitute Awards in Corporate Transactions. Nothing contained in the
Plan shall be construed to limit the right of the Committee to grant Awards
under the Plan in connection with the acquisition, whether by purchase, merger,
consolidation or other corporate transaction, of the business or assets of any
corporation or other entity. Without limiting the foregoing, the Committee may
grant Awards under the Plan to an employee or director of another corporation
who becomes an Eligible Person by reason of any such corporate transaction in
substitution for awards previously granted by such corporation or entity to such
person. The terms and conditions of the substitute Awards may vary from the
terms and conditions that would otherwise be required by the Plan solely to the
extent the Committee deems necessary for such purpose. Any shares of Stock
subject to these substitute Awards shall not be counted against any of the
maximum share limitations set forth in the Plan.

 

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15.2     409A Compliance. It is intended that all Awards issued under the Plan
be in a form and administered in a manner that will comply with the requirements
of Section 409A of the Code, or the requirements of an exception to Section 409A
of the Code, and the Award Agreement and this Plan will be construed and
administered in a manner that is consistent with and gives effect to such
intent. The Committee is authorized to adopt rules or regulations deemed
necessary or appropriate to qualify for an exception from or to comply with the
requirements of Section 409A of the Code. With respect to an Award that
constitutes a deferral of compensation subject to Section 409A of the Code: (i)
if any amount is payable under such Award upon a termination of service, a
termination of service will be treated as having occurred only at such time the
Participant has experienced a “separation from service” as such term is defined
for purposes of Section 409A of the Code; (ii) if any amount is payable under
such Award upon a disability, a disability will be treated as having occurred
only at such time the Participant has experienced a “disability” as such term is
defined for purposes of Section 409A of the Code; (iii) if any amount is payable
under such Award on account of the occurrence of a Change in Control, a Change
in Control will be treated as having occurred only at such time a “change in the
ownership or effective control of the corporation or in the ownership of a
substantial portion of the assets of the corporation” has occurred as such terms
are defined for purposes of Section 409A of the Code, (iv) if any amount becomes
payable under such Award on account of a Participant’s separation from service
at such time as the Participant is a “specified employee” within the meaning of
Section 409A of the Code, then no payment shall be made, except as permitted
under Section 409A of the Code, prior to the first business day after the
earlier of (y) the date that is six months after the date of the Participant’s
separation from service or (z) the Participant’s death, (v) any right to receive
any installment payments under this Plan shall be treated as a right to receive
a series of separate payments and, accordingly, each installment payment
hereunder shall at all times be considered a separate and distinct payment, and
(vi) no amendment to or payment under such Award will be made except and only to
the extent permitted under Section 409A of the Code.

 

Notwithstanding the foregoing, the tax treatment of the benefits provided under
the Plan or any Award Agreement is not warranted or guaranteed, and in no event
shall the Company be liable for all or any portion of any taxes, penalties,
interest or other expenses that may be incurred by the Participant on account of
non-compliance with Section 409A of the Code.

 

15.3     Section 16(b) of the Exchange Act. All elections and transactions under
the Plan by persons subject to Section 16 of the Exchange Act involving shares
of Stock are intended to comply with any applicable exemptive condition under
Rule 16b‑3. The Committee may, in its sole discretion, establish and adopt
written administrative guidelines, designed to facilitate compliance with
Section 16(b) of the Exchange Act, as it may deem necessary or proper for the
administration and operation of the Plan and the transaction of business
thereunder.

 

15.4     Unfunded Status of the Plan. The Plan is intended to constitute an
“unfunded” plan for incentive compensation, and the Plan is not intended to
constitute a plan subject to the provisions of ERISA. With respect to any
payments not yet made to a Participant by the Company, nothing contained herein
shall give any such Participant any rights that are greater than those of a
general creditor of the Company. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver Stock or payments with respect to Options,
Stock Appreciation Rights and other Awards hereunder, provided, however, that
the existence of such trusts or other arrangements is consistent with the
unfunded status of the Plan.

 

15.5     Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor the submission of the Plan to the stockholders of the Company shall be
construed as creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including without
limitation, the granting of stock options and restricted stock other than under
the Plan, and such arrangements may be either applicable generally or only in
specific cases.

 

15.6     Investment Representations. The Company shall be under no obligation to
issue any shares covered by any Award unless the shares to be issued pursuant to
Awards granted under the Plan have been effectively registered under the
Securities Act of 1933, as amended, or the Participant shall have made such
written representations to the Company (upon which the Company believes it may
reasonably rely) as the Company may deem necessary or appropriate for purposes
of confirming that the issuance of such shares will be exempt from the
registration requirements of that Act and any applicable state securities laws
and otherwise in compliance with all applicable laws, rules and regulations,
including but not limited to that the Participant is acquiring the shares for
his or her own account for the purpose of investment and not with a view to, or
for sale in connection with, the distribution of any such shares.

 

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15.7     Registration. If the Company shall deem it necessary or desirable to
register under the Securities Act of 1933, as amended or other applicable
statutes any Shares of Stock issued or to be issued pursuant to Awards granted
under the Plan, or to qualify any such Shares of Stock for exemption from the
Securities Act of 1933, as amended or other applicable statutes, then the
Company shall take such action at its own expense. The Company may require from
each recipient of an Award, or each holder of Shares of Stock acquired pursuant
to the Plan, such information in writing for use in any registration statement,
prospectus, preliminary prospectus or offering circular as is reasonably
necessary for that purpose and may require reasonable indemnity to the Company
and its officers and directors from that holder against all losses, claims,
damage and liabilities arising from use of the information so furnished and
caused by any untrue statement of any material fact therein or caused by the
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
under which they were made. In addition, the Company may require of any such
person that he or she agree that, without the prior written consent of the
Company or the managing underwriter in any public offering of Shares of Stock,
he or she will not sell, make any short sale of, loan, grant any option for the
purchase of, pledge or otherwise encumber, or otherwise dispose of, any shares
of Stock during the 180 day period commencing on the effective date of the
registration statement relating to the underwritten public offering of
securities. Without limiting the generality of the foregoing provisions of this
Section 15.7, if in connection with any underwritten public offering of
securities of the Company the managing underwriter of such offering requires
that the Company’s directors and officers enter into a lock-up agreement
containing provisions that are more restrictive than the provisions set forth in
the preceding sentence, then (a) each holder of shares of Stock acquired
pursuant to the Plan (regardless of whether such person has complied or complies
with the provisions of clause (b) below) shall be bound by, and shall be deemed
to have agreed to, the same lock-up terms as those to which the Company’s
directors and officers are required to adhere; and (b) at the request of the
Company or such managing underwriter, each such person shall execute and deliver
a lock-up agreement in form and substance equivalent to that which is required
to be executed by the Company’s directors and officers.

 

15.8     Placement of Legends; Stop Orders; etc. Each share of Stock to be
issued pursuant to Awards granted under the Plan may bear a reference to the
investment representation made in accordance with Section 15.6  in addition to
any other applicable restriction under the Plan, the terms of the Award and to
the fact that no registration statement has been filed with the Securities and
Exchange Commission in respect to such shares of Stock. All shares of Stock or
other securities delivered under the Plan shall be subject to such stock
transfer orders and other restrictions as the Committee may deem advisable under
the rules, regulations, and other requirements of any stock exchange upon which
the Stock is then listed, and any applicable federal or state securities law,
and the Committee may cause a legend or legends to be put on any certificates or
recorded in connection with book-entry accounts representing the shares to make
appropriate reference to such restrictions.

 

15.9     Uncertificated Shares. To the extent that the Plan provides for
issuance of certificates to reflect the transfer of Shares, the transfer of such
Shares may be effected on a noncertificated basis, to the extent not prohibited
by Applicable Law.

 

15.10     Limitation of Rights in Stock. A Participant shall not be deemed for
any purpose to be a stockholder of the Company with respect to any of the Shares
of Stock subject to an Award, unless and until Shares shall have been issued
therefor and delivered to the Participant or his agent. Any Stock to be issued
pursuant to Awards granted under the Plan shall be subject to all restrictions
upon the transfer thereof which may be now or hereafter imposed by the
Certificate of Incorporation and the Bylaws of the Company.

 

15.11     Employment Not Guaranteed. Nothing in the Plan shall interfere with or
limit in any way the right of the Company (or any Affiliate) to terminate any
Participant’s Employment at any time, nor confer upon any Participant any right
to continue in the employ of the Company (or any Affiliate), subject to the
terms of any separate employment or consulting agreement or provision of law or
corporate articles or by-laws to the contrary, at any time to terminate such
employment or consulting agreement or to increase or decrease, or otherwise
adjust, the other terms and conditions of the recipient’s employment or other
association with the Company and its Affiliates.

 

15.12     Other Compensation Arrangements. Nothing contained in this Plan shall
prevent the Board from adopting other or additional compensation arrangements,
subject to shareholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in specific
cases.

 

15.13     Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

 

15.14     Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.

 

15.15     Requirements of Law. The granting of Awards and the issuance of Shares
under the Plan shall be subject to Applicable Law and to such approvals by any
governmental agencies or national securities exchanges as may be required.

 

15.16     Errors. At any time the Company may correct any error made under the
Plan without prejudice to the Company. Such corrections may include, among other
things, changing or revoking an issuance of an Award.

 

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15.17     Elections and Notices. Notwithstanding anything to the contrary
contained in this Plan, all elections and notices of every kind shall be made on
forms prepared by the Company or the General Counsel, Secretary or Assistant
Secretary, or their respective delegates or shall be made in such other manner
as permitted or required by the Company or the General Counsel, Secretary or
Assistant Secretary, or their respective delegates, including but not limited to
elections or notices through electronic means, over the Internet or otherwise.
An election shall be deemed made when received by the Company (or its designated
agent, but only in cases where the designated agent has been appointed for the
purpose of receiving such election), which may waive any defects in form. The
Company may limit the time an election may be made in advance of any deadline.

 

Where any notice or filing required or permitted to be given to the Company
under the Plan, it shall be delivered to the principal office of the Company,
directed to the attention of the General Counsel of the Company or his or her
successor. Such notice shall be deemed given on the date of delivery.

 

Notice to the Participant shall be deemed given when mailed (or sent by
telecopy) to the Participant’s work or home address as shown on the records of
the Company or, at the option of the Company, to the Participant’s e-mail
address as shown on the records of the Company.

 

It is the Participant’s responsibility to ensure that the Participant’s
addresses are kept up to date on the records of the Company. In the case of
notices affecting multiple Participants, the notices may be given by general
distribution at the Participants’ work locations.

 

15.18     Governing Law. To the extent not preempted by Federal law, the Plan,
and all awards and agreements hereunder, and any and all disputes in connection
therewith, shall be governed by and construed in accordance with the substantive
laws of the State of Delaware, without regard to conflict or choice of law
principles which might otherwise refer the construction, interpretation or
enforceability of this Plan to the substantive law of another jurisdiction.

 

15.19     Venue. The Company and the Participant to whom an Award under this
Plan is granted, for themselves and their successors and assigns, irrevocably
submit to the exclusive and sole jurisdiction and venue of the state or federal
courts of Delaware with respect to any and all disputes arising out of or
relating to this Plan, the subject matter of this Plan or any awards under this
Plan, including but not limited to any disputes arising out of or relating to
the interpretation and enforceability of any awards or the terms and conditions
of this Plan. To achieve certainty regarding the appropriate forum in which to
prosecute and defend actions arising out of or relating to this Plan, and to
ensure consistency in application and interpretation of the Governing Law to the
Plan, the parties agree that (a) sole and exclusive appropriate venue for any
such action shall be an appropriate federal or state court in Delaware, and no
other, (b) all claims with respect to any such action shall be heard and
determined exclusively in such Delaware court, and no other, (c) such Delaware
court shall have sole and exclusive jurisdiction over the person of such parties
and over the subject matter of any dispute relating hereto and (d) that the
parties waive any and all objections and defenses to bringing any such action
before such Delaware court, including but not limited to those relating to lack
of personal jurisdiction, improper venue or forum non conveniens.

 

15.20     No Obligation to Notify. The Company shall have no duty or obligation
to any holder of an Option to advise such holder as to the time or manner of
exercising such Option. Furthermore, the Company shall have no duty or
obligation to warn or otherwise advise such holder of a pending transaction or
expiration of an Option or a possible period in which the Option may not be
exercised. The Company has no duty or obligation to minimize the tax
consequences of an Option to the holder of such Option.

 

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