Exhibit 10.1

RESMED INC. 2009 INCENTIVE AWARD PLAN

ResMed Inc., a Delaware corporation (the “Company”), maintains the ResMed Inc.
2009 Incentive Award Plan (the “Plan”). The Plan initially became effective on
November 9, 2006 (the “Effective Date”), the date upon which the Company’s
stockholders approved the Plan. The Plan was amended and restated effective on
October 1, 2008. The Plan was further amended on September 30, 2009, subject to
the approval of the Company’s stockholders.

The purpose of the Plan is to promote the success and enhance the value of the
Company by linking the personal interests of the members of the Board,
Employees, and Consultants to those of the Company’s stockholders and by
providing such individuals with an incentive for outstanding performance to
generate superior returns to the Company’s stockholders. The Plan is further
intended to provide flexibility to the Company in its ability to motivate,
attract, and retain the services of members of the Board, Employees, and
Consultants upon whose judgment, interest, and special effort the successful
conduct of the Company’s operation is largely dependent.

ARTICLE I.

DEFINITIONS

Wherever the following terms are used in the Plan they shall have the meanings
specified below, unless the context clearly indicates otherwise. The singular
pronoun shall include the plural where the context so indicates.

1.1 “Administrator” shall mean the entity that conducts the general
administration of the Plan as provided in Article X. With reference to the
duties of the Committee under the Plan which have been delegated to one or more
persons pursuant to Section 10.5, or as to which the Board has assumed, the term
“Administrator” shall refer to such person(s) unless the Committee has revoked
such delegation.

1.2 “Award” shall mean an Option, a Restricted Stock award, a Restricted Stock
Unit award, a Performance Award, a Dividend Equivalents award, a Deferred Stock
award, a Stock Payment award or a Stock Appreciation Right, which may be awarded
or granted under the Plan (collectively, “Awards”).

1.3 “Award Agreement” shall mean a written agreement, which shall contain such
terms and conditions with respect to an Award as the Administrator shall
determine, which terms and conditions shall not be inconsistent with the terms
of the Plan.

1.4 “Award Limit” shall mean one million five hundred thousand
(1,500,000) shares of Common Stock, as adjusted pursuant to Section 11.3;
provided, however, that each share of Common Stock subject to an Award shall be
counted as one share against the Award Limit. Solely with respect to Performance
Awards granted pursuant to Section 8.2(b), “Award Limit” shall mean $3,000,000.

1.5 “Board” shall mean the Board of Directors of the Company.

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1.6 “Change in Control” shall mean the occurrence of any of the following
events:

(a) a transaction or series of transactions (other than an offering of Stock to
the general public through a registration statement filed with the Securities
and Exchange Commission) whereby any “person” or related “group” of “persons”
(as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act)
(other than the Company, any of its subsidiaries, an employee benefit plan
maintained by the Company or any of its subsidiaries or a “person” that, prior
to such transaction, directly or indirectly controls, is controlled by, or is
under common control with, the Company) directly or indirectly acquires
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of securities of the Company possessing more than 50% of the total combined
voting power of the Company’s securities outstanding immediately after such
acquisition; or

(b) During any 36-month period, individuals who, at the beginning of such
period, constitute the Board together with any new director(s) (other than a
director designated by a person who shall have entered into an agreement with
the Company to effect a transaction described in Section 1.6(a) or
Section 1.6(c)) whose election by the Board or nomination for election by the
Company’s stockholders was approved by a vote of at least a majority of the
directors then still in office who either were directors at the beginning of the
36-month period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; or

(c) The consummation by the Company (whether directly involving the Company or
indirectly involving the Company through one or more intermediaries) of (x) a
merger, consolidation, reorganization, or business combination or (y) a sale or
other disposition of all or substantially all of the Company’s assets in any
single transaction or series of related transactions or (z) the acquisition of
assets or stock of another entity, in each case other than a transaction:

(i) Which results in the Company’s voting securities outstanding immediately
before the transaction continuing to represent (either by remaining outstanding
or by being converted into voting securities of the Company or the person that,
as a result of the transaction, controls, directly or indirectly, the Company or
owns, directly or indirectly, all or substantially all of the Company’s assets
or otherwise succeeds to the business of the Company (the Company or such
person, the “Successor Entity”) directly or indirectly, at least a majority of
the combined voting power of the Successor Entity’s outstanding voting
securities immediately after the transaction, and

(ii) After which no person or group beneficially owns voting securities
representing 50% or more of the combined voting power of the Successor Entity;
provided, however, that no person or group shall be treated for purposes of this
Section 1.6(c)(ii) as beneficially owning 50% or more of combined voting power
of the Successor Entity solely as a result of the voting power held in the
Company prior to the consummation of the transaction; or

(d) The Company’s stockholders approve a liquidation or dissolution of the
Company.

For purposes of subsection (a) above, the calculation of voting power shall be
made as if the date of the acquisition were a record date for a vote of the
Company’s stockholders, and for purposes of subsection (c) above, the
calculation of voting power shall be made as if the date of the consummation of
the transaction were a record date for a vote of the Company’s stockholders.

 

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1.7 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.

1.8 “Committee” shall mean the Compensation Committee of the Board, or another
committee or subcommittee of the Board, appointed as provided in Section 10.1.

1.9 “Common Stock” shall mean the common stock of the Company, par value $0.004
per share.

1.10 “Company” shall mean ResMed Inc., a Delaware corporation.

1.11 “Consultant” shall mean any consultant or adviser if: (a) the consultant or
adviser is a natural person, (b) the consultant or adviser renders bona fide
services to the Company or any Subsidiary; and (c) the services rendered by the
consultant or adviser 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 securities.

1.12 “Covered Employee” shall mean any Employee who is, or could be, a “covered
employee” within the meaning of Section 162(m) of the Code.

1.13 “Deferred Stock” shall mean rights to receive Common Stock awarded under
Article VIII of the Plan.

1.14 “Director” shall mean a member of the Board.

1.15 “Dividend Equivalent” shall mean a right to receive the equivalent value
(in cash or Common Stock) of dividends paid on Common Stock, awarded with
respect to Full Value Awards pursuant to Article VIII of the Plan.

1.16 “DRO” shall mean a domestic relations order as defined by the Code or Title
I of the Employee Retirement Income Security Act of 1974, as amended from time
to time, or the rules thereunder.

1.17 “Effective Date” shall mean November 9, 2006 (the initial date the Plan was
approved by the Company’s stockholders).

1.18 “Employee” shall mean any officer or other employee (as defined in
accordance with Section 3401(c) of the Code) of the Company, or of any
Subsidiary.

1.19 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended
from time to time.

 

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1.20 “Fair Market Value” shall mean, as of any date, the value of a share of
Common Stock determined as follows:

(a) If the Common Stock is listed on any established stock exchange (such as the
New York Stock Exchange, the NASDAQ Global Market and the NASDAQ Global Select
Market) or any national market system, including without limitation any market
system of The NASDAQ Stock Market, the value of a share of Common Stock shall be
the closing sales price for a share of Common Stock as quoted on such exchange
or system for such date, or if there is no closing sales price for a share of
Common Stock on the date in question, the closing sales price for a share of
Common Stock on the last preceding date for which such quotation exists, as
reported in The Wall Street Journal or such other source as the Administrator
deems reliable;

(b) If the Common Stock is regularly quoted by a recognized securities dealer
but closing sales prices are not reported, the value of a share of Common Stock
shall be the mean of the high bid and low asked prices for such date or, if
there are no high bid and low asked prices for a share of Common Stock on the
date in question, the high bid and low asked prices for a share of Common Stock
on the last preceding date for which such information exists, as reported in The
Wall Street Journal or such other source as the Administrator deems reliable; or

(c) If the Common Stock is neither listed on an established stock exchange or a
national market system nor regularly quoted by a recognized securities dealer,
the value of a share of Common Stock shall be established by the Administrator
in good faith.

1.21 “Fiscal Year” shall mean the fiscal year of the Company.

1.22 “Full Value Award” shall mean any Award other than an Option, Stock
Appreciation Right or other Award for which the Holder pays the intrinsic value
(whether directly or by forgoing a right to receive a payment from the Company).

1.23 “Holder” shall mean a person who has been granted or awarded an Award.

1.24 “Incentive Stock Option” shall mean an option which conforms to the
applicable provisions of Section 422 of the Code and which is designated as an
Incentive Stock Option by the Administrator.

1.25 “Non-Employee Director” shall mean a member of the Board who is not an
Employee.

1.26 “Non-Qualified Stock Option” shall mean an Option which is not designated
as an Incentive Stock Option by the Administrator.

1.27 “Option” shall mean a stock option granted under Article IV of the Plan. An
Option granted under the Plan shall, as determined by the Administrator, be
either a Non-Qualified Stock Option or an Incentive Stock Option; provided,
however, that Options granted to Non-Employee Directors and Consultants shall be
Non-Qualified Stock Options.

1.28 “Performance Award” shall mean a cash bonus, stock bonus or other
performance or incentive award that is paid in cash, Common Stock or a
combination of both, awarded under Article VIII of the Plan.

 

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1.29 “Performance Criteria” shall mean the criteria (and adjustments) that the
Committee selects for an Award for purposes of establishing the Performance Goal
or Performance Goals for a Performance Period, determined as follows:

(a) The Performance Criteria that will be used to establish Performance Goals
are limited to the following, or increase or decrease in the following, alone or
in combination: (i) net earnings (either before or after (A) interest,
(B) taxes, (C) depreciation and (D) amortization), (ii) gross or net sales or
revenue, (iii) net income (either before or after taxes), (iv) operating income
(either before or after taxes), (v) cash flow or cash flow per share (including,
but not limited to, operating cash flow and free cash flow and either before or
after dividends), (vi) cash flow return on investment, (vii) return on assets or
net assets, (viii) return on capital (including, but not limited to, total
return on capital and return on invested capital), (ix) return on stockholders’
equity, (x) total stockholder return, (xi) economic value added, (xii) return on
sales, (xiii) gross or net profit, cash or operating margin, (xiv) costs,
(xv) funds from operations, (xvi) expense, (xvii) working capital,
(xviii) earnings per share, (xix) price per share of Common Stock or any other
publicly-traded security of the Company, (xx) FDA or other regulatory body
approval for commercialization of a product, (xxi) implementation or completion
of critical projects, (xxii) market share, (xxiii) debt, (xxiv) cash,
(xxv) stockholder equity, (xxvi) factoring transactions, (xxvii) initiating or
completing clinical studies or phases of clinical studies, (xxviii) initiating
enrollment, completing enrollment or enrolling particular numbers of subjects in
clinical studies, (xxix) financing and other capital raising transactions
(including sales of the Company’s equity or debt securities), (xxx) in-licensing
and out-licensing of intellectual property, (xxxi) third-party validation of any
manufacturing process of the Company, any Subsidiary or any third-party
manufacturer, (xxxii) sales or licenses of assets (including, but not limited
to, intellectual property) and (xxxiii) manufacturing yields, any of which may
be measured either in absolute terms or as compared to any incremental increase
or decrease or as compared to the performance of one or more other companies.

(b) The Committee may, in its discretion, at the time of grant or within the
time prescribed by Section 162(m) of the Code, specify in the Award that one or
more objectively determinable adjustments shall be made to one or more of the
Performance Goals. Such adjustments may include one or more of the following:
(i) items related to a changes in applicable laws, regulations, accounting
principles, or business conditions; (ii) items relating to financing activities;
(iii) expenses for restructuring or productivity initiatives; (iv) other
non-operating items; (v) items related to acquisitions; (vi) items attributable
to the business operations of any entity acquired by the Company during the
Performance Period; (vii) items related to the disposal of a business or segment
of a business; (viii) items related to any unusual or extraordinary corporate
item, transaction, event, or development, or (ix) items related to discontinued
operations that do not qualify as a segment of a business under United States
generally accepted accounting principles (“GAAP”).

1.30 “Performance Goals” shall mean, for a Performance Period, the goals
established in writing by the Committee for the Performance Period based upon
the Performance Criteria. Depending on the Performance Criteria used to
establish such Performance Goals, the Performance Goals may be expressed in
terms of overall Company performance or the performance of a product, division,
business unit, or an individual. The achievement of each Performance Goal and
adjustments thereto shall be determined in accordance with generally accepted
accounting principles to the extent applicable.

 

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1.31 “Performance Period” shall mean 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 Holder’s right to, and the payment of, a Performance Award.

1.32 “Plan” shall mean the ResMed Inc. 2009 Incentive Award Plan, as the same
may be further amended or restated from time to time.

1.33 “Restricted Stock” shall mean Common Stock awarded under Article VII of the
Plan.

1.34 “Restricted Stock Units” shall mean rights to receive Common Stock awarded
under Article VIII of the Plan.

1.35 “Rule 16b-3” shall mean Rule 16b-3 promulgated under the Exchange Act, as
such Rule may be amended from time to time.

1.36 “Securities Act” shall mean the Securities Act of 1933, as amended from
time to time.

1.37 “Stock Appreciation Right” or “SAR” shall mean a stock appreciation right
granted under Article IX of the Plan.

1.38 “Stock Payment” shall mean: (a) a payment in the form of shares of Common
Stock, or (b) an option or other right to purchase shares of Common Stock, as
part of a deferred compensation arrangement, made in lieu of all or any portion
of the compensation, including without limitation, salary, bonuses, commissions
and directors’ fees, that would otherwise become payable to a Employee,
Non-Employee Director or Consultant in cash, awarded under Article VIII of the
Plan.

1.39 “Subsidiary” shall mean any entity (other than the Company), whether
domestic or foreign, in an unbroken chain of entities beginning with the Company
if each of the entities other than the last entity in the unbroken chain
beneficially owns, at the time of the determination, securities or interests
representing more than fifty percent (50%) of the total combined voting power of
all classes of securities or interests in one of the other entities in such
chain.

1.40 “Subsidiary Corporation” shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.

1.41 “Substitute Award” shall mean an Option granted under this Plan upon the
assumption of, or in substitution for, outstanding equity awards previously
granted by a company or other entity in connection with a corporate transaction,
such as a merger, combination, consolidation or acquisition of property or
stock; provided, however, that in no event shall the term “Substitute Award” be
construed to refer to an award made in connection with the cancellation and
repricing of an Option or Stock Appreciation Right.

 

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1.42 “Termination of Consultancy” shall mean the time when the engagement of a
Holder as a Consultant to the Company or a Subsidiary is terminated for any
reason, with or without cause, including, without limitation, by resignation,
discharge, death or retirement, but excluding terminations where there is a
simultaneous commencement of employment with the Company or any Subsidiary. The
Administrator, in its absolute discretion, shall determine the effect of all
matters and questions relating to Termination of Consultancy, including, without
limitation, the question of whether a Termination of Consultancy resulted from a
discharge for cause. Notwithstanding any other provision of the Plan, the
Company or any Subsidiary has an absolute and unrestricted right to terminate a
Consultant’s service at any time for any reason whatsoever, with or without
cause, except to the extent expressly provided otherwise in writing.

1.43 “Termination of Directorship” shall mean the time when a Holder who is a
Non-Employee Director ceases to be a Director for any reason, including, without
limitation, a termination by resignation, failure to be elected, death or
retirement. The Administrator, in its sole and absolute discretion, shall
determine the effect of all matters and questions relating to Termination of
Directorship with respect to Non-Employee Directors.

1.44 “Termination of Employment” shall mean the time when the employee-employer
relationship between a Holder and the Company or any Subsidiary is terminated
for any reason, with or without cause, including, without limitation, a
termination by resignation, discharge, death, disability or retirement; but
excluding: (a) terminations where there is a simultaneous reemployment or
continuing employment of a Holder by the Company or any Subsidiary, and
(b) terminations which are followed by the simultaneous establishment of a
consulting relationship by the Company or a Subsidiary with the former employee.
The Administrator, in its absolute discretion, shall determine the effect of all
matters and questions relating to Termination of Employment, including, without
limitation, the question of whether a Termination of Employment resulted from a
discharge for cause; provided, however, that, with respect to Incentive Stock
Options, unless the Administrator otherwise provides in the terms of the Award
Agreement or otherwise, a leave of absence, change in status from an employee to
an independent contractor or other change in the employee-employer relationship
shall constitute a Termination of Employment if, and to the extent that, such
leave of absence, change in status or other change interrupts employment for the
purposes of Section 422(a)(2) of the Code and the then applicable regulations
and revenue rulings under said Section.

1.45 “Termination of Service” shall mean the time when a Holder experiences a
Termination of Consultancy, a Termination of Directorship or a Termination of
Employment, as applicable.

ARTICLE II.

SHARES SUBJECT TO PLAN

2.1 Shares Subject to Plan.

(a) Subject to Section 11.3 and Section 2.1(b), the aggregate number of shares
of Common Stock that may be issued or transferred pursuant to Awards under the
restated Plan shall be equal to eleven million four hundred sixty thousand eight
hundred twenty-five (11,460,825) shares, representing an increase of one million
five hundred sixty thousand eight hundred twenty-five shares (1,560,825) from
the amounts previously authorized. The aggregate number of shares of Common
Stock available for grant under the Plan shall be reduced by two (2) shares for
each share of Common Stock granted subject to any Full Value Award and shall be
reduced by one (1) share for each share of Common Stock granted subject to any
Award that is not a Full Value Award.

 

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(b) To the extent that an Award terminates, expires, lapses or is forfeited for
any reason, any shares of Common Stock then subject to such Award shall again be
available for grant pursuant to the Plan; provided, however, that the number of
shares that shall again be available for grant pursuant to the Plan shall be
increased by two (2) shares for each share of Common Stock subject to a Full
Value Award at the time such Full Value Award terminates, expires, lapses or is
forfeited for any reason. To the extent permitted by applicable law or any
exchange rule, shares of Common Stock issued in assumption of, or in
substitution for, any outstanding awards of any entity acquired in any form of
combination by the Company or any Subsidiary, and all Substitution Awards, shall
not be counted against shares of Common Stock available for grant pursuant to
this Plan. Further, available shares under a stockholder approved plan of an
entity acquired by the Company or any Subsidiary (as appropriately adjusted to
reflect the acquisition transaction using the exchange ratio or other adjustment
or valuation ratio or formula used in such acquisition or combination to
determine the consideration payable to the holders of common stock of the
entities party to such acquisition or combination) may be used for Awards under
the Plan and shall not be counted against shares of Common Stock available for
grant pursuant to this Plan, subject to applicable law and exchange rules. If
any shares of Restricted Stock are surrendered by the Holder or repurchased by
the Company pursuant to Section 7.4 or 7.5 hereof, such shares may again be
granted or awarded hereunder, subject to the limitations of Section 2.1(a).
Shares of Common Stock withheld by the Company or delivered to the Company in
payment of the exercise price or tax withholding obligations of any Award and
shares of Common Stock subject to a Stock Appreciation Right that are not issued
in connection with the stock settlement of such Stock Appreciation Right shall
not be available for grant under the Plan. Shares of Common Stock reacquired by
the Company on the open market or otherwise using cash proceeds from the
exercise of Options shall not be available for grant under the Plan. The payment
of Dividend Equivalents in cash in conjunction with any outstanding Awards shall
not be counted against the shares available for issuance under the Plan.
Notwithstanding the provisions of this Section 2.1(b), no shares of Common Stock
may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an incentive stock option under
Section 422 of the Code.

2.2 Stock Distributed. Any Common Stock distributed pursuant to an Award shall
consist, in whole or in part, of authorized and unissued Common Stock, shares of
Common Stock held in treasury or shares of Common Stock purchased on the open
market.

2.3 Limitation on Number of Shares Subject to Awards. Notwithstanding any
provision in the Plan to the contrary, and subject to Article XI, the maximum
number of shares of Common Stock with respect to one or more Awards that may be
granted to any one individual during any calendar year shall not exceed the
Award Limit; provided, however, that in the year of initial hiring of an
Employee, the maximum number of shares of Common Stock with respect to one or
more Awards that may be granted to such Employee during such year of initial
hiring shall not exceed 150% of the Award Limit. To the extent required by
Section 162(m) of the Code, shares subject to Awards which are canceled shall
continue to be counted against the Award Limit.

 

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ARTICLE III.

GRANTING OF AWARDS

3.1 Award Agreement. Each Award shall be evidenced by an Award Agreement. Award
Agreements evidencing Awards intended to qualify as performance-based
compensation (as described in Section 162(m)(4)(C) of the Code) shall contain
such terms and conditions as may be necessary to meet the applicable provisions
of Section 162(m) of the Code. Award Agreements evidencing Incentive Stock
Options shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.

3.2 Provisions Applicable to Covered Employees.

(a) The Committee, in its discretion, may determine whether an Award is to
qualify as performance-based compensation (as described in Section 162(m)(4)(C)
of the Code).

(b) Notwithstanding anything in the Plan to the contrary, the Committee may
grant any Award to a Covered Employee, including Restricted Stock the
restrictions with respect to which lapse upon the attainment of specified
Performance Goals and any performance or incentive award described in Article
VIII that vests or becomes exercisable or payable upon the attainment of one or
more specified Performance Goals.

(c) To the extent necessary to comply with the performance-based compensation
requirements of Section 162(m)(4)(C) of the Code, with respect to any Award
granted under Articles VII and VIII which may be granted to one or more Covered
Employees, no later than ninety (90) days following the commencement of any
Fiscal Year in question or any other designated fiscal period or period of
service (or such earlier time as may be required or permitted by Section 162(m)
of the Code), the Committee shall, in writing, (i) designate one or more Covered
Employees, (ii) select the Performance Criteria (including any adjustments)
applicable to the Fiscal Year or other designated fiscal period or period of
service, (iii) establish the various performance targets, in terms of an
objective formula or standard, and amounts of such Awards, as applicable, which
may be earned for such Fiscal Year or other designated fiscal period or period
of service, and (iv) specify the relationship between Performance Criteria and
the performance targets and the amounts of such Awards, as applicable, to be
earned by each Covered Employee for such Fiscal Year or other designated fiscal
period or period of service. Following the completion of each Fiscal Year or
other designated fiscal period or period of service, the Committee shall certify
in writing whether the applicable performance targets have been achieved for
such Fiscal Year or other designated fiscal period or period of service. In
determining the amount earned by a Covered Employee, the Committee shall have
the right to reduce (but not to increase) the amount payable at a given level of
performance to take into account additional factors that the Committee may deem
relevant to the assessment of individual or corporate performance for the Fiscal
Year or other designated fiscal period or period of service.

(d) Furthermore, notwithstanding any other provision of the Plan, any Award
which is granted to a Covered Employee and is intended to qualify as
performance-based compensation (as described in Section 162(m)(4)(C) of the
Code) shall be subject to any additional limitations set forth in Section 162(m)
of the Code (including any amendment to Section 162(m) of the Code) or any
regulations or rulings issued thereunder that are requirements for qualification
as performance-based compensation (as described in Section 162(m)(4)(C) of the
Code), and the Plan shall be deemed amended to the extent necessary to conform
to such requirements.

 

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3.3 Limitations Applicable to Section 16 Persons. Notwithstanding any other
provision of the Plan, the Plan, and any Award granted or awarded to any
individual who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan and Awards granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule.

3.4 At-Will Employment. Nothing in the Plan or in any Award Agreement hereunder
shall confer upon any Holder any right to continue in the employ of, or as a
Consultant for, the Company or any Subsidiary, or as a Director of the Company,
or shall interfere with or restrict in any way the rights of the Company and any
Subsidiary, which rights are hereby expressly reserved, to discharge any Holder
at any time for any reason whatsoever, with or without cause, except to the
extent expressly provided otherwise in a written agreement between the Holder
and the Company and any Subsidiary.

3.5 Foreign Laws. Notwithstanding any provision of the Plan to the contrary, in
order to comply with the laws in other countries in which the Company or its
Subsidiaries operate or have Employees, Non-Employee Directors or Consultants,
or in order to comply with the listing standards of any foreign stock exchange
on which the Company’s shares are listed or traded, the Administrator, in its
discretion, shall have the power and authority to: (i) determine which
Subsidiaries shall be covered by the Plan; (ii) determine which Employees,
Non-Employee Directors or Consultants outside the United States are eligible to
participate in the Plan; (iii) modify the terms and conditions of any Awards to
comply with applicable foreign laws or listing requirements of any such foreign
stock exchange; (iv) establish subplans and modify exercise procedures and other
terms and procedures, to the extent such actions may be necessary or advisable
(any such subplans and/or modifications shall be attached to this Plan as
appendices); provided, however, that no such subplans and/or modifications shall
increase the share limitation contained in Section 2.1 of the Plan; and (v) take
any action, before or after an Award is made, that it deems advisable to obtain
approval or comply with any necessary local governmental regulatory exemptions
or approvals or listing requirements of any such foreign stock exchange.
Notwithstanding the foregoing, the Administrator may not take any actions under
this Section 3.5 that would violate the Code, any applicable federal, state or
foreign securities law or governing statute or any other applicable law or that
would require prior stockholder approval (until such approval was obtained).

3.6 Awards in Lieu of Cash Compensation. Subject to compliance with Section 409A
of the Code, Awards may be granted under the Plan to Employees and Consultants
in lieu of cash bonuses which would otherwise be payable to such Employees and
Consultants, and to Non-Employee Directors in lieu of directors’ fees which
would otherwise be payable to such Non-Employee Directors, pursuant to such
policies which may be adopted by the Administrator from time to time.

 

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ARTICLE IV.

GRANTING OF OPTIONS TO EMPLOYEES,

CONSULTANTS AND NON-EMPLOYEE DIRECTORS

4.1 Eligibility. Each Employee, Consultant and Non-Employee Director selected by
the Administrator shall be eligible to be granted an Option.

4.2 Disqualification for Stock Ownership. No person may be granted an Incentive
Stock Option under the Plan if such person, at the time the Incentive Stock
Option is granted, owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any then existing
Subsidiary Corporation or parent corporation (as defined in Section 424(e) of
the Code) unless such Incentive Stock Option conforms to the applicable
provisions of Section 422 of the Code.

4.3 Qualification of Incentive Stock Options. No Incentive Stock Option shall be
granted to any person who is not an Employee of the Company or a Subsidiary
Corporation.

4.4 Granting of Options to Employees and Consultants.

(a) The Administrator shall from time to time, in its discretion, and, subject
to applicable limitations of the Plan:

(i) Select from among the Employees or Consultants (including Employees or
Consultants who have previously received Awards under the Plan) such of them as
in its opinion should be granted Options;

(ii) Subject to Section 2.3, determine the number of shares to be subject to
such Options granted to the selected Employees or Consultants;

(iii) Subject to Section 4.3, determine whether such Options are to be Incentive
Stock Options or Non-Qualified Stock Options and whether such Options are to
qualify as performance-based compensation (as described in Section 162(m)(4)(C)
of the Code); and

(iv) Determine the terms and conditions of such Options, which terms and
conditions shall not be inconsistent with the terms of the Plan.

(b) Upon the selection of an Employee or Consultant to be granted an Option, the
Administrator shall instruct the Secretary of the Company to issue the Option
and may impose such conditions on the grant of the Option as it deems
appropriate.

(c) Any Incentive Stock Option granted under the Plan may be modified by the
Administrator, with the consent of the Holder, to disqualify such Option from
treatment as an “incentive stock option” under Section 422 of the Code.

 

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4.5 Granting of Options to Non-Employee Director. The Administrator shall from
time to time, in its discretion, and subject to applicable limitations of the
Plan:

(a) Select from among the Non-Employee Directors (including Non-Employee
Directors who have previously received Awards under the Plan) such of them as in
its opinion should be granted Options;

(b) Subject to Section 2.3, determine the number of shares to be subject to such
Options granted to the selected Non-Employee Directors; and

(c) Determine the terms and conditions of such Options, which terms and
conditions shall not be inconsistent with the terms of the Plan.

ARTICLE V.

TERMS OF OPTIONS

5.1 Option Price. The price per share of Common Stock subject to each Option
granted to Employees, Non-Employee Directors and Consultants shall be set by the
Administrator; provided, however, that:

(a) Such price shall not be less than 100% of the Fair Market Value of a share
of Common Stock on the date the Option is granted; and

(b) In the case of Incentive Stock Options granted to an individual then owning
(within the meaning of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or any Subsidiary
Corporation or parent corporation thereof (as defined in Section 424(e) of the
Code), such price shall not be less than 110% of the Fair Market Value of a
share of Common Stock on the date the Option is granted (or the date the Option
is modified, extended or renewed for purposes of Section 424(h) of the Code).

5.2 Option Term. The term of an Option granted to an Employee, Non-Employee
Director or Consultant shall be set by the Administrator in its discretion;
provided, however, that the term shall not be more than seven (7) years from the
date the Option is granted, or five (5) years from the date the Option is
granted if the Option is an Incentive Stock Option granted to an individual then
owning (within the meaning of Section 424(d) of the Code) more than 10% of the
total combined voting power of all classes of stock of the Company or any
Subsidiary Corporation or parent corporation thereof (as defined in
Section 424(e) of the Code). Except as limited by requirements of Section 409A
or Section 422 of the Code and regulations and rulings thereunder, the
Administrator may extend the term of any outstanding Option in connection with
any Termination of Service of the Holder, or amend any other term or condition
of such Option relating to such a Termination of Service.

5.3 Option Vesting.

(a) The period during which the right to exercise, in whole or in part, an
Option vests in the Holder shall be set by the Administrator and the
Administrator may determine that an Option may not be exercised in whole or in
part for a specified period after it is granted. At any time after grant of an
Option, the Administrator may, in its discretion and subject to whatever terms
and conditions it selects, accelerate the period during which an Option vests.

 

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(b) No portion of an Option granted to an Employee, Non-Employee Director or
Consultant which is unexercisable at Termination of Service shall thereafter
become exercisable, except as may be otherwise provided by the Administrator
either in the Award Agreement or by action of the Administrator following the
grant of the Option.

(c) To the extent that the aggregate fair market value of stock with respect to
which “incentive stock options” (within the meaning of Section 422 of the Code,
but without regard to Section 422(d) of the Code) are exercisable for the first
time by a Holder during any calendar year under the Plan, and all other plans of
the Company and any Subsidiary Corporation or parent corporation thereof (as
defined in Section 424(e) of the Code) exceeds $100,000, the Options shall be
treated as Non-Qualified Stock Options to the extent required by Section 422 of
the Code. The rule set forth in the preceding sentence shall be applied by
taking Options and other “incentive stock options” into account in the order in
which they were granted. For purposes of this Section 5.3(c), the fair market
value of stock shall be determined as of the time the Option or other “incentive
stock options” with respect to such stock is granted.

5.4 Substitute Awards. Notwithstanding the foregoing provisions of this Article
V to the contrary, in the case of an Option that is granted upon the assumption
of, or in substitution for, outstanding equity awards previously granted by a
company or other entity in connection with a corporate transaction, such as a
merger, combination, consolidation or acquisition of property or stock, the
price per share of the shares subject to such Option may be less than the Fair
Market Value per share on the date of grant, provided, that the excess
of: (a) the aggregate Fair Market Value (as of the date such Substitute Award is
granted) of the shares subject to the Substitute Award, over (b) the aggregate
exercise price thereof does not exceed the excess of: (x) the aggregate fair
market value (as of the time immediately preceding the transaction giving rise
to the Substitute Award, such fair market value to be determined by the
Administrator) of the shares of the predecessor entity that were subject to the
grant assumed or substituted for by the Company, over (y) the aggregate exercise
price of such shares, as determined in compliance with Section 409A of the Code.

ARTICLE VI.

EXERCISE OF OPTIONS

6.1 Partial Exercise. An exercisable Option may be exercised in whole or in
part. However, an Option shall not be exercisable with respect to fractional
shares and the Administrator may require that, by the terms of the Option, a
partial exercise be with respect to a minimum number of shares.

6.2 Manner of Exercise. All or a portion of an exercisable Option shall be
deemed exercised upon delivery of all of the following to the Secretary of the
Company, or such other person or entity designated by the Administrator, or his,
her or its office, as applicable:

(a) A written notice complying with the applicable rules established by the
Administrator stating that the Option, or a portion thereof, is to be exercised.
Such rules may provide that for administrative convenience or compliance with
applicable laws an Option may not be exercised during such period as is
specified in advance by the Administrator. The notice shall be signed by the
Holder or other person then entitled to exercise the Option or such portion of
the Option.

 

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(b) Such representations and documents as the Administrator, in its discretion,
deems necessary or advisable to effect compliance with all applicable provisions
of the Securities Act and any other federal, state or foreign securities laws or
regulations. The Administrator may, in its discretion, also take whatever
additional actions it deems appropriate to effect such compliance including,
without limitation, placing legends on share certificates and issuing
stop-transfer notices to agents and registrars;

(c) In the event that the Option shall be exercised pursuant to Section 11.1 by
any person or persons other than the Holder, appropriate proof of the right of
such person or persons to exercise the Option; and

(d) Full cash payment to the Secretary of the Company for the shares with
respect to which the Option, or portion thereof, is exercised. However, the
Administrator may, in its discretion, allow such payment to be made, in whole or
in part, (i) through the delivery (actual or constructive through attestation)
of shares of Common Stock with a Fair Market Value on the date of delivery equal
to the aggregate exercise price of the Option or exercised portion thereof;
(ii) through the surrender of shares of Common Stock then issuable upon exercise
of the Option having a Fair Market Value on the date of Option exercise equal to
the aggregate exercise price of the Option or exercised portion thereof;
(iii) through the delivery of property of any kind which constitutes good and
valuable consideration; (iv) through the delivery of a notice that the Holder
has placed a market sell order with a broker with respect to shares of Common
Stock then issuable upon exercise of the Option, and the broker timely pays a
sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the Option exercise price; or (v) through any combination of the
consideration provided in the foregoing subparagraphs (i), (ii), (iii) and (iv);
provided, however, that the payment in the manner prescribed in the preceding
paragraphs shall not be permitted to the extent that the Administrator
determines that payment in such manner shall result in an extension or
maintenance of credit, an arrangement for the extension of credit, or a renewal
or an extension of credit in the form of a personal loan to or for any Director
or executive officer of the Company that is prohibited by Section 13(k) of the
Exchange Act or other applicable law.

6.3 Conditions to Issuance of Stock Certificates. The Company shall not be
required to issue or deliver any certificate or certificates for shares of stock
purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:

(a) The admission of such shares to listing on all stock exchanges and quotation
systems on which such class of stock is then listed or traded;

(b) The completion of any registration or other qualification of such shares
under any local, state, federal or foreign law, or under the rulings or
regulations of the Securities and Exchange Commission or any other local, state,
federal or foreign governmental regulatory body which the Administrator shall,
in its discretion, deem necessary or advisable;

(c) The obtaining of any approval or other clearance from any local, state,
federal or foreign governmental agency which the Administrator shall, in its
discretion, determine to be necessary or advisable;

 

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(d) The lapse of such reasonable period of time following the exercise of the
Option as the Administrator may establish from time to time for reasons of
administrative convenience; and

(e) The receipt by the Company of full payment for such shares, including
payment of any applicable withholding tax, which in the discretion of the
Administrator may be in any of the permissible forms of consideration specified
under Section 6.2(d).

6.4 Rights as Stockholders. Holders shall not be, nor have any of the rights or
privileges of, stockholders of the Company in respect of any shares purchasable
upon the exercise of any part of an Option unless and until certificates
representing such shares have been issued by the Company to such Holders.

6.5 Ownership and Transfer Restrictions. The Administrator, in its discretion,
may impose such restrictions on the ownership and transferability of the shares
purchasable upon the exercise of an Option as it deems appropriate. Any such
restriction shall be set forth in the respective Award Agreement and may be
referred to on the certificates evidencing such shares. The Holder shall give
the Company prompt notice of any disposition of shares of Common Stock acquired
by exercise of an Incentive Stock Option within (a) two years from the date of
granting (including the date the Option is modified, extended or renewed for
purposes of Section 424(h) of the Code) such Option to such Holder, or (b) one
year after the transfer of such shares to such Holder.

6.6 Additional Limitations on Exercise of Options. Holders may be required to
comply with any timing or other restrictions with respect to the settlement or
exercise of an Option, including a window-period limitation, as may be imposed
in the discretion of the Administrator.

ARTICLE VII.

AWARD OF RESTRICTED STOCK

7.1 Eligibility. Subject to Section 2.3, Restricted Stock may be awarded to any
Employee, Non-Employee Director or Consultant who the Administrator determines
should receive such an Award.

7.2 Award of Restricted Stock.

(a) The Administrator may from time to time, in its discretion:

(i) Select from among the Employees, Non-Employee Directors or Consultants
(including Employees, Non-Employee Directors or Consultants who have previously
received Awards under the Plan) such of them as in its opinion should be awarded
Restricted Stock;

(ii) Subject to Section 2.3, determine the number of shares to be subject to
such Restricted Stock awards granted to the selected Employees, Non-Employee
Directors or Consultants; and

 

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(iii) Determine the terms and conditions applicable to such Restricted Stock,
which terms and conditions shall not be inconsistent with the terms of the Plan.

(b) The Administrator shall establish the purchase price, if any, and form of
payment for Restricted Stock; provided, however, that such purchase price shall
be no less than the par value of the Common Stock to be purchased, unless
otherwise permitted by applicable state law. In all cases, legal consideration
shall be required for each issuance of Restricted Stock.

(c) Upon the selection of an Employee, Non-Employee Director or Consultant to be
awarded Restricted Stock, the Administrator shall instruct the Secretary of the
Company to issue such Restricted Stock and may impose such conditions on the
issuance of such Restricted Stock as it deems appropriate.

7.3 Rights as Stockholders. Subject to Section 7.4, the Holder shall have,
unless otherwise provided by the Administrator, all the rights of a stockholder
with respect to said shares, subject to the restrictions in his or her Award
Agreement, including the right to receive all dividends and other distributions
paid or made with respect to the shares; provided, however, that, in the
discretion of the Administrator, any extraordinary distributions with respect to
the Common Stock shall be subject to the restrictions set forth in Section 7.4.

7.4 Restriction. All shares of Restricted Stock issued under the Plan (including
any shares received by Holders thereof with respect to shares of Restricted
Stock as a result of stock dividends, stock splits or any other form of
recapitalization) shall, in the terms of each individual Award Agreement, be
subject to such restrictions as the Administrator shall provide, which
restrictions may include, without limitation, restrictions concerning voting
rights and transferability and restrictions based on duration of employment,
directorship or consultancy with the Company, Company performance and individual
performance; provided, however, by action taken after the Restricted Stock is
issued, the Administrator may, on such terms and conditions as it may determine
to be appropriate, remove any or all of the restrictions imposed by the terms of
the Award Agreement. Restricted Stock may not be sold or encumbered until all
restrictions are terminated or expire. If no purchase price was paid by the
Holder upon issuance, a Holder’s rights in unvested Restricted Stock shall
lapse, and such Restricted Stock shall be surrendered to the Company without
consideration, upon Termination of Service; provided, however, that the
Administrator in its discretion may provide that such rights shall not lapse in
the event of a Termination of Service following a Change in Control or because
of the Holder’s retirement, death or disability or termination without cause, or
otherwise.

7.5 Repurchase of Restricted Stock. The Administrator shall provide in the terms
of each individual Award Agreement that the Company shall have the right to
repurchase from the Holder the Restricted Stock then subject to restrictions
under the Award Agreement immediately upon a Termination of Service at a cash
price per share equal to the price paid by the Holder for such Restricted Stock;
provided, however, that the Administrator in its discretion may provide that
such rights shall not lapse in the event of a Termination of Service following a
Change in Control or because of the Holder’s retirement, death or disability or
termination without cause, or otherwise.

 

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7.6 Escrow. The Secretary of the Company or such other escrow holder as the
Administrator may appoint shall retain physical custody of any certificate
representing Restricted Stock until all of the restrictions imposed under the
Award Agreement with respect to the shares evidenced by such certificate expire
or shall have been removed.

7.7 Certificates for Restricted Stock. Restricted Stock granted pursuant to the
Plan may be evidenced in such manner as the Administrator shall determine.
Certificates or book entries evidencing shares of Restricted Stock must include
an appropriate legend referring to the terms, conditions, and restrictions
applicable to such Restricted Stock.

7.8 Legend. In order to enforce the restrictions imposed upon shares of
Restricted Stock hereunder, the Administrator shall cause certificates or book
entries evidencing shares of Restricted Stock to include one or more legends or
notations referring to the terms, conditions, and restrictions applicable to
such Restricted Stock.

7.9 Section 83(b) Election. If a Holder makes an election under Section 83(b) of
the Code, or any successor section thereto, to be taxed with respect to the
Restricted Stock as of the date of transfer of the Restricted Stock rather than
as of the date or dates upon which the Holder would otherwise be taxable under
Section 83(a) of the Code, the Holder shall deliver a copy of such election to
the Company immediately after filing such election with the Internal Revenue
Service.

ARTICLE VIII.

PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,

DEFERRED STOCK, STOCK PAYMENTS,

RESTRICTED STOCK UNITS

8.1 Eligibility. Subject to Section 2.3, one or more Performance Awards,
Dividend Equivalent awards, Deferred Stock awards, Stock Payment awards, and/or
Restricted Stock Unit awards may be granted to any Employee, Non-Employee
Director or Consultant whom the Administrator determines should receive such an
Award.

8.2 Performance Awards.

(a) Any Employee, Non-Employee Director or Consultant selected by the
Administrator may be granted one or more Performance Awards. The value of such
Performance Awards may be linked to any one or more of the Performance Criteria
or other specific performance criteria determined appropriate by the
Administrator, in each case on a specified date or dates or over any period or
periods determined by the Administrator. In making such determinations, the
Administrator 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 Employee, Non-Employee Director or
Consultant.

(b) Without limiting Section 8.2(a), the Administrator may grant Performance
Awards to any Covered Employee in the form of a cash bonus payable upon the
attainment of objective Performance Goals which are established by the
Administrator, in each case on a specified date or dates or over any period or
periods determined by the Administrator. Any such bonuses paid to Covered
Employees shall be based upon objectively determinable bonus formulas
established in accordance with the provisions of Section 3.2. The maximum
aggregate amount of all Performance Awards granted to a Covered Employee under
this Section 8.2(b) during any calendar year shall not exceed the Award Limit.

 

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8.3 Dividend Equivalents. Any Employee, Non-Employee Director or Consultant
selected by the Administrator may be granted Dividend Equivalents based on the
dividends declared on Common Stock, to be credited as of dividend payment dates,
during the period between the date a Full Value Award is granted and the date
such Full Value Award vests, is exercised, is distributed or expires, as
determined by the Administrator. Such Dividend Equivalents shall be converted to
cash or additional shares of Common Stock by such formula and at such time and
subject to such limitations as may be determined by the Administrator.

8.4 Stock Payments. Any Employee, Non-Employee Director or Consultant selected
by the Administrator may receive Stock Payments in the manner determined from
time to time by the Administrator. The number of shares shall be determined by
the Administrator and may be based upon the Performance Criteria or other
specific performance criteria determined appropriate by the Administrator,
determined on the date such Stock Payment is made or on any date thereafter.

8.5 Deferred Stock. Any Employee, Non-Employee Director or Consultant selected
by the Administrator may be granted an award of Deferred Stock in the manner
determined from time to time by the Administrator. The number of shares of
Deferred Stock shall be determined by the Administrator and may be linked to the
satisfaction of one or more Performance Goals or other specific performance
goals as the Administrator determines to be appropriate at the time of grant, in
each case on a specified date or dates or over any period or periods determined
by the Administrator. Common 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 Administrator. Unless otherwise provided by
the Administrator, a Holder of Deferred Stock shall have no rights as a Company
stockholder with respect to such Deferred Stock until such time as the Award has
vested and the Common Stock underlying the Award has been issued.

8.6 Restricted Stock Units. Any Employee, Non-Employee Director or Consultant
selected by the Administrator may be granted an award of Restricted Stock Units
in the manner determined from time to time by the Administrator. The
Administrator is authorized to make awards of Restricted Stock Units in such
amounts and subject to such terms and conditions as determined by the
Administrator. The Administrator shall specify the date or dates on which the
Restricted Stock Units shall become fully vested and nonforfeitable, and may
specify such conditions to vesting as it deems appropriate, and may specify that
such Restricted Stock Units become fully vested and nonforfeitable pursuant to
the satisfaction of one or more Performance Goals or other specific performance
goals as the Administrator determines to be appropriate at the time of the
grant, in each case on a specified date or dates or over any period or periods
determined by the Administrator. The Administrator shall specify the
distribution dates applicable to each award of Restricted Stock Units which
shall be no earlier than the vesting dates or events of the award and may be
determined at the election of the Employee, Non-Employee Director or Consultant,
subject to compliance with Section 409A of the Code. On the distribution dates,
the Company shall issue to the Holder one unrestricted, fully transferable share
of Common Stock for each Restricted Stock Unit distributed.

 

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8.7 Term. The term of a Performance Award, Dividend Equivalent award, Deferred
Stock award, Stock Payment award and/or Restricted Stock Unit award shall be set
by the Administrator in its discretion.

8.8 Exercise or Purchase Price. The Administrator may establish the exercise or
purchase price of a Performance Award, shares of Deferred Stock, shares
distributed as a Stock Payment award or shares distributed pursuant to a
Restricted Stock Unit award; provided, however, that such price shall not be
less than the par value of a share of Common Stock, unless otherwise permitted
by applicable state law.

8.9 Exercise upon Termination of Service. A Performance Award, Dividend
Equivalent award, Deferred Stock award, Stock Payment award and/or Restricted
Stock Unit award is exercisable or distributable only while the Holder is an
Employee, Consultant or Non-Employee Director, as applicable; provided, however,
that the Administrator in its discretion may provide that the Performance Award,
Dividend Equivalent award, Deferred Stock award, Stock Payment award and/or
Restricted Stock Unit award may be exercised or distributed subsequent to a
Termination of Service following a “change of control or ownership” (within the
meaning of Section 1.162-27(e)(2)(v) or any successor regulation thereto) of the
Company; and, provided, further, that, except with respect to Performance Awards
granted to Covered Employees, the Administrator in its discretion may provide
that Performance Awards may be exercised or paid following a Termination of
Service or following a Change in Control, or because of the Holder’s retirement,
death or disability, or otherwise.

8.10 Form of Payment. Payment of the amount determined under Section 8.2 or 8.3
above shall be in cash, in Common Stock or a combination of both, as determined
by the Administrator. To the extent any payment under this Article VIII is
effected in Common Stock, it shall be made subject to satisfaction of all
provisions of Section 6.3.

ARTICLE IX.

STOCK APPRECIATION RIGHTS

9.1 Grant of Stock Appreciation Rights. A Stock Appreciation Right may be
granted to any Employee, Non-Employee Director or Consultant selected by the
Administrator. A Stock Appreciation Right may be granted: (a) in connection and
simultaneously with the grant of an Option, or (b) independent of an Option. A
Stock Appreciation Right shall be subject to such terms and conditions not
inconsistent with the Plan as the Administrator shall impose and shall be
evidenced by an Award Agreement.

9.2 Coupled Stock Appreciation Rights.

(a) A Coupled Stock Appreciation Right (“CSAR”) shall be related to a particular
Option and shall be exercisable only when and to the extent the related Option
is exercisable.

(b) A CSAR may be granted to the Holder for no more than the number of shares
subject to the simultaneously granted Option to which it is coupled.

(c) A CSAR shall entitle the Holder (or other person entitled to exercise the
Option pursuant to the Plan) to surrender to the Company unexercised a portion
of the Option to which the CSAR relates (to the extent then exercisable pursuant
to its terms) and to

 

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receive from the Company in exchange therefore an amount determined by
multiplying (i) the difference obtained by subtracting the exercise price per
share of the CSAR from (ii) the Fair Market Value of a share of Common Stock on
the date of exercise of the CSAR by the number of shares of Common Stock with
respect to which the CSAR shall have been exercised, subject to any limitations
the Administrator may impose.

9.3 Independent Stock Appreciation Rights.

(a) An Independent Stock Appreciation Right (“ISAR”) shall be unrelated to any
Option and shall have a term set by the Administrator but in no event longer
than seven (7) years following the grant date. An ISAR shall be exercisable in
such installments as the Administrator may determine. An ISAR shall cover such
number of shares of Common Stock as the Administrator may determine. The
exercise price per share of Common Stock subject to each ISAR shall be set by
the Administrator; provided that such exercise price per share shall not be less
than 100% of the Fair Market Value of a share of Common Stock on the date the
ISAR is granted. An ISAR is exercisable only while the Holder is an Employee,
Non-Employee Director or Consultant; provided, that the Administrator may
determine that the ISAR may be exercised subsequent to Termination of Service or
following a Change in Control, or because of the Holder’s retirement, death or
disability, or otherwise.

(b) An ISAR shall entitle the Holder (or other person entitled to exercise the
ISAR pursuant to the Plan) to exercise all or a specified portion of the ISAR
(to the extent then exercisable pursuant to its terms) and to receive from the
Company an amount determined by multiplying (i) the difference obtained by
subtracting the exercise price per share of the ISAR from the Fair Market Value
of a share of Common Stock on the date of exercise of the ISAR by (ii) the
number of shares of Common Stock with respect to which the ISAR shall have been
exercised, subject to any limitations the Administrator may impose.

9.4 Payment and Limitations on Exercise.

(a) Payment of the amounts determined under Section 9.2(c) and 9.3(b) above
shall be in cash, shares of Common Stock (based on its Fair Market Value as of
the date the Stock Appreciation Right is exercised), or a combination of both,
as determined by the Administrator. The Company shall not be required to issue
or deliver any certificate or certificates for shares of stock issuable upon the
exercise of any Stock Appreciation Right prior to fulfillment of the conditions
set forth in Section 6.3 above.

(b) Holders of Stock Appreciation Rights may be required to comply with any
timing or other restrictions with respect to the settlement or exercise of a
Stock Appreciation Right, including a window-period limitation, as may be
imposed in the discretion of the Administrator.

ARTICLE X.

ADMINISTRATION

10.1 Compensation Committee. The Compensation Committee (or another committee or
a subcommittee of the Board assuming the functions of the Committee under the
Plan) shall consist solely of two or more Non-Employee Directors appointed by
and holding office at the pleasure of the Board, each of whom is intended to
qualify as both a “non-employee director” as defined by Rule 16b-3

 

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and an “outside director” for purposes of Section 162(m) of the Code.
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. Vacancies in the Committee may be filled by the Board.

10.2 Duties and Powers of Committee. It shall be the duty of the Committee to
conduct the general administration of the Plan in accordance with its
provisions. The Committee shall have the power to interpret the Plan and the
Award Agreements, and to adopt such rules for the administration, interpretation
and application of the Plan as are not inconsistent therewith, to interpret,
amend or revoke any such rules, to delegate authority in accordance with
Section 10.5, and to amend any Award Agreement provided that the rights or
obligations of the Holder of the Award that is the subject of any such Award
Agreement are not affected adversely. Any such grant or award under the Plan
need not be the same with respect to each Holder. Any such interpretations and
rules with respect to Incentive Stock Options shall not be inconsistent with the
provisions of Section 422 of the Code. In its 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
or Section 162(m) of the Code, or any regulations or rules issued thereunder,
are required to be determined in the discretion of the Committee.
Notwithstanding the foregoing, the full Board, acting by a majority of its
members in office, shall conduct the general administration of the Plan with
respect to Awards granted to Non-Employee Directors.

10.3 Majority Rule; Unanimous Written Consent. The Committee shall act by a
majority of its members in attendance at a meeting at which a quorum is present
or by a memorandum or other written instrument signed by all members of the
Committee.

10.4 Compensation; Professional Assistance; Good Faith Actions. Members of the
Committee shall receive such compensation, if any, for their services as members
as may be determined by the Board. All expenses and liabilities which members of
the Committee incur in connection with the administration of the Plan shall be
borne by the Company. The Committee may employ attorneys, consultants,
accountants, appraisers, brokers or other persons. The Committee, the Company
and the Company’s 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 or the Board in good
faith shall be final and binding upon all Holders, the Company and all other
interested persons. No members of the Committee or Board shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan or Awards, and all members of the Committee and the Board
shall be fully protected by the Company in respect of any such action,
determination or interpretation.

10.5 Delegation of Authority to Grant Awards.

(a) The Board or Committee may, but need not, delegate from time to time some or
all of its authority to grant Awards under the Plan to one or more committees
consisting of one or more members of the Board or Committee, respectively,
subject to Section 10.5(c).

(b) The Board also may, but need not, delegate from time to time some or all of
its authority to grant rights or Options under the Plan to one or more
committees consisting of one or more officers of the Company, subject to
Section 10.5(c) and compliance with applicable law.

 

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(c) Notwithstanding anything to the contrary in this Section 10.5, the authority
to grant Awards to the following individuals may not be delegated:
(i) individuals who are subject on the date of the grant to the reporting rules
under Section 16(a) of the Exchange Act, (ii) individuals who are Covered
Employees, and (iii) individuals who are officers of the Company who are
delegated authority by the Committee hereunder.

(d) Any delegation pursuant to this Section 10.5 shall be subject to the
restrictions and limits that the Board or Committee specifies at the time of
such delegation of authority and may be rescinded at any time by the Board or
Committee authorizing such delegation. At all times, any committee appointed
under this Section 10.5 shall serve in such capacity at the pleasure of the
Board or Committee appointing such committee.

ARTICLE XI.

MISCELLANEOUS PROVISIONS

11.1 Transferability of Awards.

(a) Except as otherwise provided in Section 11.1(b):

(i) No Award under the Plan may be sold, pledged, assigned or transferred in any
manner other than by will or the laws of descent and distribution or, subject to
the consent of the Administrator, pursuant to a DRO, 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;

(ii) No Award or interest or right therein shall be liable for the debts,
contracts or engagements of the Holder or his 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), and any attempted disposition thereof shall be null and
void and of no effect, except to the extent that such disposition is permitted
by the preceding sentence; and

(iii) During the lifetime of the Holder, only the Holder may exercise an Option
or other Award (or any portion thereof) granted to him under the Plan, unless it
has been disposed of pursuant to a DRO; after the death of the Holder, any
exercisable portion of an Option or other Award may, prior to the time when such
portion becomes unexercisable under the Plan or the applicable Award Agreement,
be exercised by his personal representative or by any person empowered to do so
under the deceased Holder’s will or under the then applicable laws of descent
and distribution.

(b) Notwithstanding Section 11.1(a), the Administrator, in its discretion, may
determine to permit a Holder to transfer a Non-Qualified Stock Option to any one
or more Permitted Transferees (as defined below), subject to the following terms
and conditions: (i) a Non-Qualified Stock Option transferred to a Permitted
Transferee shall not be assignable or transferable by the

 

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Permitted Transferee other than by will or the laws of descent and distribution;
(ii) any Non-Qualified Stock Option which is transferred to a Permitted
Transferee shall continue to be subject to all the terms and conditions of the
Non-Qualified Stock Option as applicable to the original Holder (other than the
ability to further transfer the Non-Qualified Stock Option); and (iii) the
Holder and the Permitted Transferee shall execute any and all documents
requested by the Administrator, 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 federal,
state and foreign securities laws and (C) evidence the transfer. For purposes of
this Section 11.1(b), “Permitted Transferee” shall mean, with respect to a
Holder, any child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, any person sharing the Holder’s household (other than a
tenant or employee), a trust in which these persons (or the Holder) control the
management of assets, and any other entity in which these persons (or the
Holder) own more than fifty percent of the voting interests, after taking into
account any federal, state, local and foreign tax and securities laws applicable
to transferable Non-Qualified Stock Options.

11.2 Amendment, Suspension or Termination of the Plan. Except as otherwise
provided in this Section 11.2, the Plan may be wholly or partially amended or
otherwise modified, suspended or terminated at any time or from time to time by
the Board or the Compensation Committee of the Board. However, without approval
of the Company’s stockholders given within twelve (12) months before or after
the action by the Board or the Compensation Committee of the Board, no action of
the Board or the Compensation Committee of the Board may, except as provided in
Section 11.3, (i) increase the limits imposed in Section 2.1 on the maximum
number of shares which may be issued under the Plan, (ii) take any action in
violation of Section 11.6 to decrease the exercise price of any outstanding
Option or Stock Appreciation Right granted under the Plan, or (iii) result in a
material change in eligibility requirements. Except as provided in
Section 11.11, no amendment, suspension or termination of the Plan shall,
without the consent of the Holder, adversely alter or impair any rights or
obligations under any Award theretofore granted or awarded, unless the Award
itself otherwise expressly so provides. No Awards may be granted or awarded
during any period of suspension or after termination of the Plan, and in no
event may any Award be granted under the Plan after September 29, 2019.

11.3 Changes in Common Stock or Assets of the Company, Acquisition or
Liquidation of the Company and Other Corporate Events.

(a) Subject to Section 11.3(e), in the event of any dividend or other
distribution (whether in the form of cash, Common Stock, other securities or
other property), recapitalization, reclassification, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, liquidation, dissolution, or sale, transfer, exchange or other
disposition of all or substantially all of the assets of the Company, or
exchange of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Company, or other similar corporate transaction or event, the Administrator
shall make proportionate adjustments to any or all of:

(i) The number and kind of shares of Common Stock (or other securities or
property) with respect to which Awards may be granted or awarded (including,
without limitation, adjustments of the limitations in Section 2.1 on the maximum
number and kind of shares which may be issued under the Plan, adjustments of the
Award Limit, and adjustments of the manner in which shares subject to Full Value
Awards will be counted);

 

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(ii) The number and kind of shares of Common Stock (or other securities or
property) subject to outstanding Awards; and

(iii) The grant or exercise price with respect to any Award.

(b) Subject to Sections 11.3(c) and 11.3(e), in the event of any transaction or
event described in Section 11.3(a) or any unusual or nonrecurring transactions
or events affecting the Company, any affiliate of the Company, or the financial
statements of the Company or any affiliate, or of changes in applicable laws,
regulations or accounting principles, the Administrator, in its discretion, and
on such terms and conditions as it deems appropriate, either by the terms of the
Award or by action taken prior to the occurrence of such transaction or event
and either automatically or upon the Holder’s request, is hereby authorized to
take any one or more of the following actions whenever the Administrator
determines that such action is appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan or with respect to any Award under the Plan, to facilitate such
transactions or events or to give effect to such changes in laws, regulations or
principles:

(i) To provide for either the purchase of any such Award for an amount of cash
equal to the amount that could have been attained upon the exercise of such
Award or realization of the Holder’s rights had such Award been currently
exercisable or payable or fully vested or the replacement of such Award with
other rights or property selected by the Administrator in its discretion;

(ii) To provide that the Award cannot vest, be exercised or become payable after
such event;

(iii) To provide that such Award shall be exercisable as to all shares covered
thereby, notwithstanding anything to the contrary in Section 5.3 or the
provisions of such Award;

(iv) To provide that such Award be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be substituted for by
similar options, rights or awards covering the stock of the successor or
survivor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices;

(v) To make adjustments in the number and type of shares of Common Stock (or
other securities or property) subject to outstanding Awards, and/or in the terms
and conditions of (including the grant, exercise or purchase price), and the
criteria included in, outstanding options, rights and awards and options, rights
and awards which may be granted in the future; and

 

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(vi) To provide that, for a specified period of time prior to such event, the
restrictions imposed under an Award Agreement upon some or all shares of
Restricted Stock, Restricted Stock Units or Deferred Stock may be terminated,
and, in the case of Restricted Stock, some or all shares of such Restricted
Stock may cease to be subject to repurchase under Section 7.5 or forfeiture
under Section 7.4 after such event.

(c) Notwithstanding any other provision of the Plan, in the event of a Change in
Control, each outstanding Award shall be assumed or an equivalent Award
substituted by the successor corporation or a parent or subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Award, the Administrator may cause any or all of
such Awards to become fully exercisable immediately prior to the consummation of
such transaction and all forfeiture restrictions on any or all of such Awards to
lapse. If an Award is exercisable in lieu of assumption or substitution in the
event of a Change in Control, the Administrator shall notify the Holder that the
Award shall be fully exercisable for a period of fifteen (15) days from the date
of such notice, and the Award shall terminate upon the expiration of such
period. For the purposes of this Section 11.3(c), an Award shall be considered
assumed if, following the Change in Control, the Award confers the right to
purchase or receive, for each share of Common Stock subject to the Award
immediately prior to the Change in Control, the consideration (whether stock,
cash, or other securities or property) received in the Change in Control by
holders of Common Stock for each share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares);
provided, however, that if such consideration received in the Change in Control
was not solely common stock of the successor corporation or its parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of the Award, for each share
of Common Stock subject to an Award, to be solely common stock of the successor
corporation or its parent equal in fair market value to the per share
consideration received by holders of Common Stock in the Change in Control.

(d) Subject to Sections 11.3(e) and 3.2, the Administrator may, in its
discretion, include such further provisions and limitations in any Award,
agreement or certificate, as it may deem equitable and in the best interests of
the Company.

(e) With respect to Awards which are granted to Covered Employees and are
intended to qualify as performance-based compensation under
Section 162(m)(4)(C), no adjustment or action described in this Section 11.3 or
in any other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause such Award to fail to so qualify under
Section 162(m)(4)(C), or any successor provisions thereto, except as otherwise
determined by the Committee. No adjustment or action described in this
Section 11.3 or in any other provision of the Plan shall be authorized to the
extent that such adjustment or action would cause the Plan to violate
Section 422(b)(1) of the Code. Furthermore, no such adjustment or action shall
be authorized to the extent such adjustment or action would result in
short-swing profits liability under Section 16 or violate the exemptive
conditions of Rule 16b-3 unless the Administrator determines that the Award is
not to comply with such exemptive conditions. The number of shares of Common
Stock subject to any Award shall always be rounded down to the next whole
number.

 

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(f) The existence of the Plan, the Award Agreement and the Awards granted
hereunder shall not affect or restrict in any way the right or power of the
Company or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any issue
of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.

(g) No action shall be taken under this Section 11.3 which shall cause an Award
to fail to comply with Section 409A of the Code or the Treasury Regulations
thereunder, to the extent applicable to such Award.

11.4 Approval of Plan by Stockholders. The Plan will be submitted for the
approval of the Company’s stockholders within twelve (12) months after the date
of the Board’s initial adoption of the Plan. No Awards may be granted or awarded
prior to such stockholder approval. In addition, if the Board determines that
Awards other than Options or Stock Appreciation Rights which may be granted to
Covered Employees should continue to be eligible to qualify as performance-based
compensation under Section 162(m)(4)(C) of the Code, the Performance Criteria
must be disclosed to and approved by the Company’s stockholders no later than
the first stockholder meeting that occurs in the fifth year following the year
in which the Company’s stockholders previously approved the Plan.

11.5 Tax Withholding. The Company or any Subsidiary shall have the authority and
the right to deduct or withhold, or require a Holder to remit to the Company, an
amount sufficient to satisfy federal, state, local and foreign taxes (including
the Holder’s FICA obligation) required by law to be withheld with respect to any
taxable event concerning a Holder arising as a result of this Plan.
The Administrator may in its discretion and in satisfaction of the foregoing
requirement allow a Holder to elect to have the Company withhold shares of
Common Stock otherwise issuable under an Award (or allow the return of shares of
Common Stock) having a Fair Market Value equal to the sums required to be
withheld. Notwithstanding any other provision of the Plan, the number of shares
of Common Stock which may be withheld with respect to the issuance, vesting,
exercise or payment of any Award (or which may be repurchased from the Holder of
such Award within six months (or such other period as may be determined by the
Administrator) after such shares of Common Stock were acquired by the Holder
from the Company) in order to satisfy the Holder’s federal, state, local and
foreign income and payroll tax liabilities with respect to the issuance,
vesting, exercise or payment of the Award shall be limited to the number of
shares which have a Fair Market Value on the date of withholding or repurchase
equal to the aggregate amount of such liabilities based on the minimum statutory
withholding rates for federal, state, local and foreign income tax and payroll
tax purposes that are applicable to such supplemental taxable income.

11.6 Prohibition on Repricing. Subject to Section 11.3, the Administrator shall
not, without the approval of the stockholders of the Company, (i) authorize the
amendment of any outstanding Award to reduce the price per share, (ii) authorize
the cancellation of any outstanding Award in exchange for the grant of an Award
having a lesser price per share, or (iii) authorize the cancellation of any

 

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outstanding Option or SAR in exchange for cash, Restricted Stock or any other
Award. Subject to Section 11.2, the Administrator shall have the authority,
without the approval of the stockholders of the Company, to amend any
outstanding Option or SAR to increase its price per share or to cancel and
replace an Option or SAR with the grant of a Option or SAR having a price per
share that is greater than or equal to the price per share of the original
Option or SAR.

11.7 Effect of Plan upon Options and Compensation Plans. The adoption of the
Plan shall not affect any other compensation or incentive plans in effect for
the Company or any Subsidiary. Nothing in the Plan shall be construed to limit
the right of the Company or any Subsidiary: (a) to establish any other forms of
incentives or compensation for Employees, Directors or Consultants of the
Company or any Subsidiary, or (b) to grant or assume options or other rights or
awards otherwise than under the Plan in connection with any proper corporate
purpose including without limitation, the grant or assumption of options in
connection with the acquisition by purchase, lease, merger, consolidation or
otherwise, of the business, stock or assets of any corporation, partnership,
limited liability company, firm or association.

11.8 Compliance with Laws. The Plan, the granting and vesting of Awards under
the Plan and the issuance and delivery of shares of Common Stock and the payment
of money under the Plan or under Awards granted or awarded hereunder are subject
to compliance with all applicable federal, state, local and foreign laws, rules
and regulations (including but not limited to federal, state, and foreign
securities law and margin requirements) and to such approvals by any listing,
regulatory or governmental authority as may, in the opinion of counsel for the
Company, be necessary or advisable in connection therewith. Any securities
delivered under the Plan shall be subject to such restrictions, and the person
acquiring such securities shall, if requested by the Company, provide such
assurances and representations to the Company as the Company may deem necessary
or desirable to assure compliance with all applicable legal requirements. To the
extent permitted by applicable law, the Plan and Awards granted or awarded
hereunder shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.

11.9 Titles. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of the Plan.

11.10 Governing Law. The Plan and any agreements hereunder shall be
administered, interpreted and enforced under the internal laws of the State of
Delaware without regard to conflicts of laws thereof.

11.11 Section 409A. To the extent that the Administrator determines that any
Award granted under the Plan is subject to Section 409A of the Code, the Award
Agreement evidencing such Award shall incorporate the terms and conditions
required by Section 409A of the Code. To the extent applicable, the Plan and
Award Agreements shall be interpreted in accordance with Section 409A of the
Code and Department of Treasury regulations and other interpretive guidance
issued thereunder, including without limitation any such regulations or other
guidance that may be issued after the Effective Date. Notwithstanding any
provision of the Plan to the contrary, in the event that following the Effective
Date the Administrator determines that any Award may be subject to Section 409A
of the Code and related Department of Treasury guidance (including such
Department of Treasury guidance as may be issued after the Effective Date), the
Administrator may adopt such amendments to the Plan and the applicable Award
Agreement

 

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or adopt other policies and procedures (including amendments, policies and
procedures with retroactive effect), or take any other actions, that the
Administrator determines are necessary or appropriate to (a) exempt the Award
from Section 409A of the Code and/or preserve the intended tax treatment of the
benefits provided with respect to the Award, or (b) comply with the requirements
of Section 409A of the Code and related Department of Treasury guidance.

* * * * *

I hereby certify that the foregoing ResMed Inc. 2009 Incentive Award Plan was
duly adopted by the Board of Directors of ResMed Inc. on September 30, 2009.

 

/s/ David Pendarvis

Corporate Secretary

* * * * *

I hereby certify that the foregoing ResMed Inc. 2009 Incentive Award Plan was
approved by the stockholders of ResMed Inc. on November 17, 2009.

Executed on this 17th day of November, 2009.

 

/s/ David Pendarvis

Corporate Secretary

 

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