Exhibit 10.16
ZOETIS INC.
2013 EQUITY AND INCENTIVE PLAN
ARTICLE I
PURPOSE
The purposes of the Zoetis Inc. 2013 Equity and Incentive Plan (as it may be
amended, the “Plan”) are to provide long-term incentives to those individuals
with significant responsibility for the success and growth of the Company and
its Affiliates, to align the interests of such individuals with those of the
Company’s stockholders, to assist the Company in recruiting, retaining and
motivating qualified employees and to provide an effective means to link pay to
performance for such employees.
ARTICLE II
DEFINITIONS AND CONSTRUCTION
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.
2.1 “Administrator” shall have the meaning provided in Section 12.1 hereof.
2.2 “Affiliate” shall mean (i) any Parent or Subsidiary, (ii) any entity that,
directly or through one or more intermediaries, is controlled by the Company, or
(iii) any entity in which the Company has a significant equity interest, in each
case as determined by the Committee.
2.3 “Applicable Accounting Standards” shall mean Generally Accepted Accounting
Principles in the United States, International Financial Reporting Standards or
such other accounting principles or standards as may apply to the Company’s
financial statements under United States federal securities laws from time to
time.
2.4 “Award” shall mean an Option, a Restricted Stock award, a Restricted Stock
Unit award, a Performance Award (which includes, but is not limited to, cash
bonuses as set forth in Article IX), a Dividend Equivalent award, a Stock
Payment award, an award of Stock Appreciation Rights, or Other Incentive Award,
which may be awarded or granted under the Plan.
2.5 “Award Agreement” shall mean the written notice, agreement, contract or
other instrument or document evidencing an Award, including through an
electronic medium, which shall contain such terms and conditions with respect to
an Award as the Administrator shall determine, consistent with the Plan.
2.6 “Beneficial Owner” (or any variant thereof) has the meaning defined in Rule
13d-3 under the Exchange Act.
2.7 “Board” shall mean the Board of Directors of the Company.
2.8 “Change in Capitalization” shall have the meaning provided in Section 3.2(a)
hereof.
2.9 “Change in Control” shall be deemed to have occurred if an event set forth
in any one of the following paragraphs shall have occurred:
(a) any Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including the securities beneficially owned by
such Person or any securities acquired directly from the Company or any
Affiliate thereof) representing 20% or more of the combined voting power of the
Company’s then outstanding securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction described in clause (1) of
paragraph (c) below; or
(b) the following individuals cease for any reason to constitute a majority of
the number of directors then serving on the Board: individuals who, on the date
hereof, constitute the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including, but not limited to, a consent solicitation,
relating to the election of directors of the Company) whose appointment or
election by the Board or nomination for election by the Company’s stockholders
was approved or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on the date hereof or
whose appointment, election or nomination for election was previously so
approved or recommended; or

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(c) there is consummated a merger, amalgamation or consolidation of the Company
or any Subsidiary thereof with any other corporation, other than (1) a merger,
amalgamation or consolidation which results in the voting securities of the
Company outstanding immediately prior to such merger, amalgamation or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof) at least 50% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding immediately
after such merger, amalgamation or consolidation or (2) a merger, amalgamation
or consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities Beneficially Owned by such Person any securities acquired directly
from the Company or its Affiliates) representing 50% or more of the combined
voting power of the Company’s then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets,
other than (1) a sale or disposition by the Company of all or substantially all
of the Company’s assets to an entity, at least fifty percent (50%) of the
combined voting power of the voting securities of which are owned by
stockholders of the Company following the completion of such transaction in
substantially the same proportions as their ownership of the Company immediately
prior to such sale or (2) a sale or disposition of all or substantially all of
the Company’s assets immediately following which the individuals who comprise
the Board immediately prior thereto constitute at least a majority of the board
of directors of the entity to which such assets are sold or disposed or, if such
entity is a subsidiary, the ultimate parent thereof.
Notwithstanding the foregoing, a Change in Control shall not be deemed to have
occurred by virtue of (i) the consummation of any transaction or series of
integrated transactions immediately following which the holders of Common Stock
immediately prior to such transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity which owns all or
substantially all of the assets of the Company immediately following such
transaction or series of transactions, or (ii) the consummation of the
Distribution (as such term is defined in that certain Global Separation
Agreement entered into between Pfizer Inc. and the Company).
For each Award that constitutes deferred compensation under Section 409A of the
Code, a Change in Control shall be deemed to have occurred under the Plan with
respect to such Award, resulting in the payment of such Award, only if a change
in the ownership or effective control of the Company or a change in ownership of
a substantial portion of the assets of the Company shall also be deemed to have
occurred under Section 409A of the Code.
2.10 “Code” shall mean the Internal Revenue Code of 1986, as amended.
2.11 “Committee” shall mean the Compensation Committee of the Board, or another
committee or subcommittee of the Board described in Article XII hereof.
2.12 “ Common Stock” shall mean the Class A common stock of the Company, par
value $0.01 per share.
2.13 “Company” shall mean Zoetis Inc., a Delaware corporation, and any successor
corporation.
2.14 “Covered Employee” shall mean any Employee who is a “covered employee”
within the meaning of Section 162(m) of the Code.
2.15 “Director” or “Non-Employee Director” shall mean a non-employee member of
the Board, as constituted from time to time.
2.16 “Disaffiliation” means a Subsidiary’s or Affiliate’s ceasing to be a
Subsidiary or Affiliate for any reason (including, without limitation, as a
result of a public offering, or a spinoff or sale by the Company, of the stock
of the Subsidiary or Affiliate) or a sale of a division of the Company or its
Affiliates.
2.17 “Dividend Equivalent” shall mean a right to receive the equivalent value
(in cash or Shares) of dividends paid on Shares, awarded under Section 9.2
hereof.
2.18 “Effective Date” shall mean January 28, 2013.
2.19 “Eligible Individual” shall mean any natural person who is an Employee or a
Non-Employee Director, as determined by the Administrator.
2.20 “Employee” shall mean any officer or other employee (as determined in
accordance with Section 3401(c) of the Code) of the Company or any Affiliate.

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2.21 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended
from time to time.
2.22 “Fair Market Value” shall mean, as of any given date, the value of a Share
determined as follows:
(a) if the Common Stock is (i) listed on any established securities exchange
(such as the New York Stock Exchange, the NASDAQ Global Market and the NASDAQ
Global Select Market), (ii) listed on any national market system or
(iii) listed, quoted or traded on any automated quotation system, its Fair
Market Value shall be the closing sales price for a Share as quoted on such
exchange or system for such date or, if there is no closing sales price for a
Share on the date in question, the closing sales price for a Share 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 traded only otherwise than on a securities exchange
and is not quoted on the NASDAQ, the closing quoted selling price of the Common
Stock on such date as quoted in “pink sheets” published by the National Daily
Quotation Bureau;
(c) if the Common Stock is not listed on an established securities exchange,
national market system or automated quotation system, but the Common Stock is
regularly quoted by a recognized securities dealer, its Fair Market Value 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 on such date, the high bid and low
asked prices for a Share 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
(d) if the Common Stock is neither listed on an established securities exchange,
national market system or automated quotation system nor regularly quoted by a
recognized securities dealer, its Fair Market Value shall be established by the
Committee in good faith on the date awarded.
2.23 “Greater Than 10% Stockholder” shall mean an individual then-owning (within
the meaning of Section 424(d) of the Code) more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or any
“parent corporation” or “subsidiary corporation” (as defined in Sections 424(e)
and 424(f) of the Code, respectively).
2.24 “Incentive Stock Option” shall mean an Option that is intended to qualify
as an incentive stock option and conforms to the applicable provisions of
Section 422 of the Code.
2.25 “Individual Award Limit” shall mean the cash and Share limits applicable to
Awards granted under the Plan, as set forth in Section 3.3 hereof.
2.26 “Non-Qualified Stock Option” shall mean an Option that is not an Incentive
Stock Option or which is designated as an Incentive Stock Option but does not
meet the applicable requirements of the Code.
2.27 “Option” shall mean a right to purchase Shares at a specified exercise
price, granted under Article VI hereof. An Option shall be either a
Non-Qualified Stock Option or an Incentive Stock Option; provided, however, that
Options granted to Non-Employee Directors shall only be Non-Qualified Stock
Options.
2.28 “Other Incentive Award” shall mean an Award denominated in, linked to or
derived from Shares or value metrics related to Shares, granted pursuant to
Section 9.4 hereof.
2.29 “Parent” shall mean any entity (other than the Company), whether domestic
or foreign, in an unbroken chain of entities ending with the Company if each of
the entities other than the Company 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.
2.30 “Participant” shall mean an Eligible Individual who has been granted an
Award.
2.31 “Performance Award” shall mean an Award that is granted under Section 9.1
hereof.
2.32 “Performance-Based Compensation” shall mean any compensation that is
intended to qualify as “performance-based compensation” as described in
Section 162(m)(4)(C) of the Code.
2.33 “Performance Goals” shall mean the performance goals (and adjustments)
established by the Committee for a Performance Period, based on one or more of
the following criteria:
(a)(i) net earnings (either before or after one or more of the following:
(A) interest, (B) taxes, (C) depreciation, (D) amortization and (E) non-cash
equity-based compensation expense); (ii) gross or net sales or revenue;
(iii) net income (either before or after taxes); (iv) adjusted net income;
(v) operating earnings or profit; (vi) cash flow (including, but not limited to,
operating cash flow and free cash flow); (vii) return on assets; (viii) return
on capital; (ix) return

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on stockholders’ equity; (x) total stockholder return; (xi) return on sales;
(xii) gross or net profit or operating margin; (xiii) costs; (xiv) funds from
operations; (xv) expenses; (xvi) working capital; (xvii) earnings per Share;
(xviii) adjusted earnings per Share; (xix) price per Share; (xx) implementation
or completion of critical projects; (xxi) market share; (xxii) debt
levels or reduction; (xxiii) customer retention; (xxiv) sales-related goals;
(xxv) customer satisfaction and/or growth; (xxvi) research and development
achievements; (xxvii) financing and other capital raising transactions;
(xxviii) capital expenditures, and (xxix) economic profit, any of which may be
measured either in absolute terms for the Company or any operating unit of the
Company or as compared to any incremental increase or decrease or as compared to
results of a peer group or to market performance indicators or indices.
(b) Performance Goals may be expressed in terms of overall Company performance,
or the performance of an Affiliate or one or more divisions, business units or
product lines. In addition, such Performance Goals may be based upon the
attainment of specified levels of performance under one or more of the measures
described above relative to the performance of other corporations or the
performance of an index, survey or other benchmark.
(c) The Committee may, in its sole discretion, provide that one or more
objectively determinable adjustments shall be made to one or more of the
Performance Goals. Such adjustments may include, but are not limited to, one or
more of the following: (i) items related to a change in accounting principles;
(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 or sale of a business or segment of a business; (viii) items
related to discontinued operations that do not qualify as a segment of a
business under Applicable Accounting Standards; (ix) items attributable to any
stock dividend, stock split, combination or exchange of stock occurring during
the Performance Period; (x) any other items of significant income or expense
which are determined to be appropriate adjustments; (xi) items relating to
unusual or extraordinary corporate transactions, events or developments;
(xii) items related to amortization of acquired intangible assets; (xiii) items
that are outside the scope of the Company’s core, on-going business activities;
(xiv) items related to acquired in-process research and development; (xv) items
relating to changes in tax laws; (xvi) items relating to major licensing or
partnership arrangements; (xvii) items relating to asset impairment charges;
(xviii) items relating to gains or losses for litigation, arbitration and
contractual settlements; or (xix) items relating to any other unusual or
nonrecurring events or changes in applicable laws, accounting principles or
business conditions.
2.34 “Performance Period” shall mean one or more periods of time, which may be
of varying and overlapping durations, as the Administrator may select, over
which the attainment of one or more Performance Goals will be measured for the
purpose of determining a Participant’s right to, and the payment of, a
Performance Award. Notwithstanding the foregoing, in no event shall the
Performance Period be less than one (1) year in duration.
2.35 “Person” shall have the meaning given in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Company or any Subsidiary thereof, (ii) a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or any Subsidiary thereof, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of Shares of the Company.
2.36 “Plan” shall have the meaning set forth in Article I.
2.37 “Restricted Stock” shall mean an Award of Shares made under Article VII
hereof that is subject to certain restrictions and may be subject to risk of
forfeiture or repurchase.
2.38 “Restricted Stock Unit” shall mean a contractual right awarded under
Article VIII hereof to receive in cash or Shares the Fair Market Value of a
Share of Common Stock.
2.39 “Restriction Period” shall mean the period of time specified by the
Administrator during which an Award of Restricted Stock shall be subject to
restrictions.
2.40 “Securities Act” shall mean the Securities Act of 1933, as amended.
2.41 “Share Limit” shall have the meaning provided in Section 3.1(a) hereof.
2.42 “Shares” shall mean shares of Common Stock.
2.43 “Stock Appreciation Right” shall mean a stock appreciation right granted
under Article X hereof.
2.44 “Stock Payment” shall mean a payment in the form of Shares awarded under
Section 9.3 hereof.

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2.45 “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.
2.46 “Substitute Award” means any Award granted in assumption of, or in
substitution for, an award of a company or business (that is not, prior to the
applicable transaction, a Subsidiary or Affiliate of the Company) acquired by
the Company or a Subsidiary or Affiliate or with which the Company or a
Subsidiary or Affiliate combines.
2.47 “Termination of Employment” shall mean, unless otherwise provided in the
Award Agreement, the termination of the applicable Participant’s employment
with, or performance of services for, the Company and any of its Subsidiaries or
Affiliates. Unless otherwise determined by the Committee, a Participant employed
by, or performing services for, a Subsidiary or an Affiliate or a division of
the Company or its Affiliates shall be deemed to incur a Termination of
Employment if, as a result of a Disaffiliation, such Subsidiary, Affiliate, or
division ceases to be a Subsidiary, Affiliate or division, as the case may be,
and the Participant does not immediately become an employee of, or service
provider for, the Company or another Subsidiary or Affiliate. Temporary absences
from employment because of illness, vacation, or
leave of absence, and transfers among the Company and its Subsidiaries and
Affiliates, shall not be considered Terminations of Employment. Notwithstanding
the foregoing, with respect to any Award that constitutes “nonqualified 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.
2.48 “Vesting Period” shall mean the period of time before unrestricted Shares
become non-forfeitable and issuable to a Participant pursuant to the applicable
Award Agreement.
ARTICLE III
SHARES SUBJECT TO THE PLAN
3.1 Number of Shares.
(a) Subject to Section 3.2 hereof, the maximum aggregate number of Shares
available for issuance under the Plan (the "Share Limit") shall be equal shall
be equal to 25,000,000 Shares. Notwithstanding the generality of the foregoing,
subject to Sections 3.2 hereof, the maximum number of Shares available for
issuance under the Plan with respect to Incentive Stock Options shall be the
number of Shares that is equal to fifty percent (50%) of the Share Limit. Any
Shares granted in connection with Options and Stock Appreciation Rights shall be
counted against this limit as one (1) Share for every one (1) Option or Stock
Appreciation Right awarded. Any Shares granted in connection with Awards other
than Options and Stock Appreciation Rights shall be counted against this limit
as one (1) Share for every one (1) Share granted in connection with such Award
or by which the Award is valued by reference.
(b) Shares issued under the Plan may, in whole or in part, be authorized but
unissued Shares or Shares that shall have been or may be reacquired by the
Company in the open market, in private transactions, or otherwise. If any Shares
subject to an Award are forfeited, cancelled, exchanged or surrendered or if an
Award otherwise terminates or expires without a distribution of Shares to the
Participant, the Shares with respect to such Award shall, to the extent of any
such forfeiture, cancellation, exchange, surrender, termination or expiration,
again be available for Awards under the Plan. Notwithstanding the foregoing,
Shares surrendered or withheld as payment of either the exercise price of an
Award and/or withholding taxes in respect of an Award shall no longer be
available for grant under the Plan. In addition, in the case of any Substitute
Award, Shares delivered or deliverable in connection with such Substitute Award
shall not be deemed granted or issued under the Plan for purposes of Sections
3.1 or 3.3.
3.2 Adjustments.
(a) In the event of any stock dividend, stock split, combination or exchange of
Shares, merger, consolidation or other distribution (other than normal cash
dividends) of Company assets to stockholders, amalgamation, consolidation,
reclassification, recapitalization, spin-off, spin-out, repurchase or other
reorganization or corporate transaction or
event, or any other change affecting the Shares or the Share price (any such
occurrence or event, a “Change in Capitalization”), the Administrator shall make
equitable adjustments, if any, to reflect such change with respect to (i) the
aggregate number and kind of Shares that may be issued under the Plan
(including, but not limited to, adjustments of the Share Limit and Individual
Award Limits); (ii) the number and kind of Shares (or other securities or
property) subject to outstanding Awards; (iii) the terms and conditions of any
outstanding Awards (including, without limitation, any applicable performance
targets or criteria with respect thereto); and/or (iv) the grant or exercise
price per Share for any outstanding Awards under the Plan; provided, however,
that the Administrator shall make such equitable adjustments as it determines to
be appropriate and equitable, in its sole

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discretion, to prevent dilution or enlargement of rights. Without limiting the
generality of the foregoing, in connection with a Change in Capitalization, the
Administrator may provide, in its sole discretion, for the cancellation of any
outstanding Award granted hereunder in exchange for payment in cash or other
property having an aggregate Fair Market Value of the Shares covered by such
award, reduced by the aggregate exercise price or purchase price thereof, if
any. In the case where the exercise price per Share of an Option or Stock
Appreciation Right exceeds the Fair Market Value per Share, the Administrator
may cancel, in its sole discretion, such Option or Stock Appreciation Right for
no payment. The Administrator’s determinations pursuant to this Section 3.2(a)
shall be final, binding and conclusive.
(b) Any adjustment affecting an Award intended as Performance-Based Compensation
shall be made consistent with the requirements of Section 162(m) of the Code
unless otherwise determined by the Administrator. No action shall be taken under
this Section 3.2(b) which shall cause an Award to fail to comply with
Section 409A of the Code or an exemption therefrom, in either case, to the
extent applicable to such Award.
3.3 Individual Award Limits. Notwithstanding any provision in the Plan to the
contrary, and subject to Section 3.2, to the extent required to comply with
Section 162(m):
(a) the aggregate number of Shares subject to Options and Stock Appreciation
Rights awarded to any one Participant during any calendar year may not exceed
1.5 million Shares;
(b) the aggregate number of Shares subject to Awards other than Options and
Stock Appreciation Rights (excluding Awards referenced in Section 3.3(c) below)
awarded to any one Participant during any calendar year may not exceed
1.5 million Shares;
(c) the aggregate amount of compensation to be paid to any one Participant in
respect to all Awards that are intended to constitute Performance-Based
Compensation denominated in cash in any calendar year is $10 million; and
(d) the aggregate grant date fair value (computed as of the date of grant in
accordance with applicable financial accounting rules) of all Awards granted to
any Director during any single calendar year shall not exceed $500,000.
ARTICLE IV
GRANTING OF AWARDS
4.1 Participation. The Committee may, from time to time, select from among all
Eligible Individuals, those to whom one or more Awards shall be granted and
shall determine the nature and amount of each Award, which shall not be
inconsistent with the requirements of the Plan. No Eligible Individual shall
have any right to be granted an Award pursuant to the Plan.
4.2 Award Agreement. Each Award shall be evidenced by an Award Agreement stating
the terms and conditions applicable to such Award, consistent with the
requirements of the Plan.
4.3 Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan may, in
the sole discretion of the Administrator, be granted either alone, in addition
to or in tandem with, any other Award granted pursuant to the Plan. Awards
granted in addition to or in tandem with other Awards may be granted either at
the same time as or at a different time from the grant of such other Awards.
ARTICLE V
PROVISIONS APPLICABLE TO AWARDS INTENDED TO QUALIFY AS PERFORMANCE-BASED
COMPENSATION
5.1 Purpose. The Committee, in its sole discretion, may determine whether any
Award is intended to qualify as Performance-Based Compensation. If the
Committee, in its sole discretion, decides to grant an Award to an Eligible
Individual that is intended to qualify as Performance-Based Compensation, then
the provisions of this Article V shall control over any contrary provision
contained in the Plan. The Administrator may in its sole discretion grant Awards
to Eligible Individuals that are based on Performance Goals but that do not
satisfy the requirements of this Article V and that are not intended to qualify
as Performance-Based Compensation.
5.2 Payment of Performance-Based Awards. Performance Awards shall be paid,
unless otherwise determined by the Committee, no later than 2  1/2 months after
the tax year in which the Performance Award vests, consistent with the
requirements of Section 409A of the Code. Unless otherwise provided in the
applicable Performance Goals or Award

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Agreement, a Participant shall be eligible to receive payment pursuant to such
Awards for a Performance Period only if and to the extent the Performance Goals
for such applicable Performance Period are achieved. The achievement of each
Performance Goal shall be (i) determined in accordance with Applicable
Accounting Standards, to the extent applicable and (ii) for all Awards intended
to qualify as Performance-Based Compensation, certified in accordance with the
requirements of Section 162(m) of the Code.
5.3 Additional Limitations. Notwithstanding any other provision of the Plan and
except as otherwise determined by the Committee, any Award which is granted to
an Eligible Individual and is intended to qualify as Performance-Based
Compensation shall be
subject to any additional limitations imposed under Section 162(m) of the Code
that are requirements for qualification as Performance-Based Compensation, and
the Plan and the Award Agreement shall be deemed amended to the extent necessary
to conform to such requirements. Determinations by the Committee in respect of
all Awards intended to qualify as Performance-Based Compensation shall be made
within the time prescribed by, and otherwise in compliance with, Section 162(m)
of the Code, and payment in respect of such Awards may be decreased, but not
increased, in the discretion of the Committee.
ARTICLE VI
OPTIONS
6.1 Granting of Options to Eligible Individuals. The Administrator is authorized
to grant Options to Eligible Individuals from time to time, in its sole
discretion, on such terms and conditions as it may determine which shall not be
inconsistent with the Plan.
6.2 Eligibility for Incentive Stock Options. No Incentive Stock Option shall be
granted to any individual who is not an Employee of the Company or any “parent
corporation” or “subsidiary corporation” of the Company (as defined in Sections
424(e) and 424(f) of the Code, respectively).
6.3 Option Exercise Price. The exercise price per Share subject to each Option
shall be set by the Administrator, but shall not be less than one hundred
percent (100%) of the Fair Market Value of a Share on the date the Option is
granted (or, as to Incentive Stock Options, on the date the Option is modified,
extended or renewed for purposes of Section 424(h) of the Code). In addition, in
the case of Incentive Stock Options granted to a Greater Than 10% Stockholder,
such price shall not be less than one hundred ten percent (110%) of the Fair
Market Value of a Share 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).
6.4 Option Term. The term of each Option shall be set forth in the Award
Agreement; provided, however, that the term shall not be more than ten
(10) years from the date the Option is granted, or five (5) years from the date
an Incentive Stock Option is granted to a Greater Than 10% Stockholder. The
Award Agreement shall set forth the time period, including the time period
following a Termination of Employment, during which the Participant has the
right to exercise the vested Options, which time period may not extend beyond
the stated term of the Option. Except as limited by the requirements of
Section 409A or Section 422 of the Code, the Administrator may extend the term
of any outstanding Option, and may extend the time period during which vested
Options may be exercised, and, subject to Section 13.1 hereof, may amend any
other term or condition of such Option relating to a Termination of Employment.
6.5 Option Vesting.
(a) The terms and conditions pursuant to which an Option vests in the
Participant and becomes exercisable shall be set forth in the applicable Award
Agreement. Such vesting may be based on service with the Company or any
Affiliate, attainment of one or more of the Performance Goals, or any other
criteria selected by the Administrator. At any time after the
grant of an Option, the Administrator may, in its sole discretion and subject to
whatever terms and conditions it selects, accelerate the vesting of the Option,
including following a Termination of Employment; provided, that in no event
shall an Option become exercisable following its expiration, termination or
forfeiture.
(b) No portion of an Option which is unexercisable at a Participant’s
Termination of Employment shall thereafter become exercisable, except as may be
otherwise provided in the applicable Award Agreement or by action of the
Administrator following the grant of the Option.
6.6 Treatment of Options upon Certain Events. The applicable Award Agreement
shall provide for the treatment of each Option upon a Termination of Employment.
6.7 Substitution of Stock Appreciation Rights. The Administrator may, in its
sole discretion, substitute an Award of Stock Appreciation Rights for an
outstanding Option at any time prior to or upon exercise of such Option;
provided, however,

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that such Stock Appreciation Rights shall be exercisable with respect to the
same number of Shares for which such substituted Option would have been
exercisable, and shall also have the same exercise price and remaining term as
the substituted Option.
6.8 Partial Exercise of Options. 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 must be with respect to a minimum number of Shares.
6.9 Manner of Exercise of Options. A Participant may exercise an exercisable
Option, subject to applicable requirements, by paying the full exercise price
and applicable withholding taxes to the stock administrator of the Company for
the Shares with respect to which the Option, or portion thereof, is exercised,
in one or more of the following manners: (i) cash or check, (ii) Shares
(including, in the case of payment of the exercise price of an Option, Shares
issuable pursuant to the exercise of the Option), in each case, having a Fair
Market Value on the date of delivery equal to the aggregate payments required,
or (iii) other form of legal consideration acceptable to the Administrator
(including cashless exercise via a broker). Notwithstanding any other provision
of the Plan to the contrary, no Participant who is a Director or an “executive
officer” of the Company within the meaning of Section 13(k) of the Exchange Act
shall be permitted to make payment with respect to any Awards granted under the
Plan, or continue any extension of credit with respect to such payment, with a
loan from the Company or a loan arranged by the Company in violation of Section
13(k) of the Exchange Act.
6.10 Notification Regarding Disposition. The Participant shall give the Company
prompt written or electronic notice of any disposition of Shares acquired by
exercise of an Incentive Stock Option which occurs within (a) two (2) 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
Participant, or (b) one (1) year after the transfer of such Shares to such
Participant.
ARTICLE VII
RESTRICTED STOCK
7.1 Award of Restricted Stock.
(a) The Administrator is authorized to grant Restricted Stock to Eligible
Individuals, and shall determine the terms and conditions, including the
restrictions, applicable to each award of Restricted Stock, which terms and
conditions shall be set forth in the Award Agreement and shall not be
inconsistent with the Plan, and may impose such conditions on the issuance of
such Restricted Stock as it deems appropriate.
(b) The Award Agreement shall set forth the purchase price, if any, and form of
payment for Restricted Stock; provided, however, that if a purchase price is
charged, such purchase price shall be no less than the par value of the Shares
to be purchased, unless otherwise permitted by applicable law. In all cases,
legal consideration shall be required for each issuance of Restricted Stock to
the extent required by applicable law.
(c) The Award Agreement shall set forth the treatment of each Award of
Restricted Stock upon a Termination of Employment.
7.2 Rights as Stockholders. Upon issuance of Restricted Stock, the Participant
shall have, unless otherwise provided herein or in the Award Agreement, all the
rights of a stockholder with respect to said Shares. This includes, but is not
limited to, the right to vote Shares of Restricted Stock as the record owner
thereof, and the right to receive dividends and other distributions payable to
an Eligible Individual during the restriction period; provided, however, that,
the Award Agreement may provide that any distributions with respect to the
Shares shall be subject to the restrictions set forth in Section 7.3 hereof.
7.3 Restrictions. All Shares of Restricted Stock (including any Shares received
by Participants thereof with respect to Shares of Restricted Stock as a result
of a Change in Capitalization) shall be subject to restrictions and vesting
requirements as set forth in the Award Agreement. Such restrictions may include,
without limitation, restrictions concerning voting rights and transferability.
Such restrictions may lapse separately or in combination at such times and
pursuant to such circumstances or based on such criteria as set forth in the
Award Agreement, including, without limitation, criteria based on the
Participant’s duration of employment or directorship with the Company, the
Performance Goals, Company or Affiliate performance, individual performance or
other criteria set forth in the Award Agreement. Restricted Stock may not be
sold or encumbered until all restrictions are terminated or expire.
7.4 Restriction Period. All Shares of Restricted Stock shall have a Restriction
Period of not less than three (3) years, which may include pro-rata lapsing of
restrictions thereon. Notwithstanding the foregoing, Awards covering up to five
(5) percent of the total number of Shares that may be issued or delivered under
the Plan and any Awards made in respect of

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or in substitution for Pfizer Inc. equity awards, may contain no restrictions or
be subject to a Restriction Period of less than three (3) years.
7.5 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, and the Company may, in it sole discretion,
retain physical possession of any stock certificate until such time as all
applicable restrictions lapse.
7.6 Section 83(b) Election. If a Participant makes an election under
Section 83(b) of the Code 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 Participant would otherwise be taxable under Section 83(a) of the
Code, the Participant shall be required to deliver a copy of such election to
the Company promptly after filing such election with the Internal Revenue
Service.
ARTICLE VIII
RESTRICTED STOCK UNITS
8.1 Award of Restricted Stock Units.
(a) The Administrator is authorized to grant Restricted Stock Units to Eligible
Individuals, and shall determine the terms and conditions, including the
restrictions, applicable to each award of Restricted Stock Units, which terms
and conditions shall be set forth in the Award Agreement and shall not be
inconsistent with the Plan, and may impose such conditions on the issuance of
such Restricted Stock Units as it deems appropriate. The Award Agreement shall
set forth the time and form of payment of each Award of Restricted Stock Units.
(b) All Restricted Stock Units shall have a Vesting Period of not less than
three (3) years, which may include pro-rata lapsing of restrictions thereon.
Notwithstanding the foregoing, Awards covering up to five (5) percent of the
total number of Shares that may be issued or delivered under the Plan and any
Awards made in respect of or in substitution for Pfizer Inc. equity awards, may
contain no restrictions or be subject to a Vesting Period of less than three
(3) years.
(c) The Administrator shall specify, or permit the Participant to elect, the
conditions and dates upon which the Shares underlying the Restricted Stock Units
shall be issued (or cash in lieu thereof shall be paid), which dates shall not
be earlier than the date as of which the Restricted Stock Units vest and become
nonforfeitable. Such conditions and dates shall be established in accordance
with the applicable provisions of Section 409A of the Code or an exemption
therefrom.
(d) The Award Agreement shall set forth the treatment of each Award of
Restricted Stock Units upon a Termination of Employment.
(e) On the distribution dates, the Company shall issue to the Participant one
unrestricted, fully transferable Share (or if provided in the Award Agreement,
the Fair Market Value of one such Share in cash) for each vested and
nonforfeitable Restricted Stock Unit.
ARTICLE IX
PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, STOCK PAYMENTS, OTHER INCENTIVE AWARDS
9.1 Performance Awards.
(a) The Administrator is authorized to grant Performance Awards to any Eligible
Individual and to determine whether such Performance Awards shall be
Performance-Based Compensation per Article V of this Plan. The vesting and value
of Performance Awards may be linked to any one or more of the Performance Goals
or other specific criteria determined by the Administrator, in each case on a
specified date or dates or over any period or periods as set forth in the
applicable Award Agreement. Performance Awards may be paid in cash, Shares or a
combination of both.
(b) Without limiting Section 9.1(a) hereof, the Administrator may grant
Performance Awards to any Eligible Individual in the form of a cash bonus
payable upon the attainment of objective Performance Goals, or such other
criteria, whether or not objective, 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 cash bonuses paid to a Participant
which are intended to be Performance-Based Compensation shall be based upon
objectively determinable bonus formulas established in accordance with the
provisions of Article V hereof.
9.2 Dividend Equivalents.

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(a) Subject to Section 9.2(b) hereof, Dividend Equivalents may be granted by the
Administrator, either alone or in tandem with another Award, based on dividends
declared on the Common Stock, to be credited as of dividend payment dates during
the period between the date the Dividend Equivalents are granted to a
Participant and the date such Dividend Equivalents terminate or expire, as
determined by the Administrator. Such Dividend Equivalents shall be converted to
cash or additional Shares by such formula, at such time and subject to such
limitations as set forth in the applicable Award Agreement. In addition, the
Award Agreement may provide that Dividend Equivalents with respect to Shares
covered by an Award shall only be paid out to the Participant at the same time
or times and to the same extent that the vesting conditions and/or performance
goals, if any, are subsequently satisfied and the Award vests with respect to
such Shares.
(b) Notwithstanding the foregoing, no Dividend Equivalents shall be payable with
respect to Options or Stock Appreciation Rights, unless otherwise determined by
the Administrator.
9.3 Stock Payments. The Administrator is authorized to make one or more Stock
Payments to any Eligible Individual. The number or value of Shares of any Stock
Payment shall be determined by the Administrator and may be based upon one or
more Performance Goals or any other specific criteria, including service to the
Company or any Affiliate, determined by the Administrator.
9.4 Other Incentive Awards. The Administrator is authorized to grant Other
Incentive Awards to any Eligible Individual, which Awards may cover Shares or
the right to purchase Shares or 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 or based on, Shares, stockholder value or stockholder return, in each
case, on a specified date or dates or over any period or periods determined by
the Administrator. The terms and conditions applicable to such Other Incentive
Awards shall be set forth in the applicable Award Agreement. Other Incentive
Awards may be linked to any one or more of the Performance Goals or other
specific criteria determined appropriate by the Administrator and may be payable
in cash or Shares.
9.5 Other Terms and Conditions. All applicable terms and conditions of each
Award described in this Article IX, including without limitation, as applicable,
the term, vesting conditions and exercise/purchase price applicable to the
Award, shall be set by the Administrator in its sole discretion, provided,
however, that the value of the consideration paid by a Participant for an Award
shall not be less than the par value of a Share, unless otherwise permitted by
applicable law. The rights of Participants granted Performance Awards, Dividend
Equivalents, or Other Incentive Awards upon Termination of Employment shall be
set forth in the Award Agreement.
ARTICLE X
STOCK APPRECIATION RIGHTS
10.1 Grant of Stock Appreciation Rights.
(a) The Administrator is authorized to grant Awards of Stock Appreciation Rights
to Eligible Individuals from time to time, in its sole discretion, on such terms
and conditions as it may determine consistent with the Plan.
(b) Each Award of Stock Appreciation Rights shall entitle the Participant (or
other individual entitled to exercise the Award of Stock Appreciation Rights
pursuant to the Plan) to exercise all or a specified portion of the Award of
Stock Appreciation Rights (to the extent then exercisable pursuant to its terms)
and to receive from the Company an amount determined by multiplying the
difference obtained by subtracting the exercise price per Share of the Stock
Appreciation Rights from the Fair Market Value on the date of exercise of the
Stock Appreciation Right by the number of Stock Appreciation Rights that shall
have been exercised, subject to any limitations the Administrator may impose or
set forth in the Award Agreement. Such amount shall be payable in Shares or in
cash, as determined by the Administrator. The exercise price per Share subject
to each Award of Stock Appreciation Rights shall be set by the Administrator,
but shall not be less than one hundred percent (100%) of the Fair Market Value
on the date the Stock Appreciation Rights are granted.
(c) The Award Agreement shall set forth the treatment of each Award of Stock
Appreciation Rights upon a Termination of Employment.
10.2 Stock Appreciation Right Vesting.
(a) The Award Agreement shall set forth the period during which a Participant
shall vest in an Award of Stock Appreciation Rights and have the right to
exercise such Stock Appreciation Rights (subject to Section 10.4 hereof) in
whole or in part. Such vesting may be based on service with the Company or any
Affiliate, any of the Performance Goals or any other criteria selected by the
Administrator. At any time after grant of an Award of Stock Appreciation Rights,
the Administrator may, in its sole discretion and subject to whatever terms and
conditions it selects, accelerate the period during which the Stock Appreciation
Rights vest.

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(b) No portion of an Award of Stock Appreciation Rights which is unexercisable
upon Termination of Employment shall thereafter become exercisable, except as
may be otherwise provided in an Award Agreement or by action of the
Administrator following the grant of the Stock Appreciation Rights; provided,
that in no event shall an Award of Stock Appreciation Rights become exercisable
following its expiration, termination or forfeiture.
10.3 Manner of Exercise. A Participant may exercise an exercisable Stock
Appreciation Right as follows, subject to applicable requirements established by
the Administrator; full payment of the applicable withholding taxes shall be
made to the stock administrator of the Company for the Shares with respect to
which the Stock Appreciation Rights, or portion thereof, are exercised, in a
manner permitted by Section 6.9 in respect of Options.
10.4 Stock Appreciation Right Term. The term of each Award of Stock Appreciation
Rights shall be set forth in the Award Agreement; provided, however, that the
term shall not be more than ten (10) years from the date the Stock Appreciation
Rights are granted. The Award Agreement shall set forth the time period,
including any time period following a Termination of Employment, during which
the Participant has the right to exercise any vested Stock Appreciation Rights,
which time period may not extend beyond the expiration date of the Award term.
Except as limited by the requirements of Section 409A of the Code, the
Administrator may extend the term of any outstanding Stock Appreciation Rights,
and may extend the time period during which vested Stock Appreciation Rights may
be exercised in connection with any Termination of Employment, and, subject to
Section 13.1 hereof, may amend any other term or condition of such Stock
Appreciation Rights relating to such a Termination of Employment.
ARTICLE XI
ADDITIONAL TERMS OF AWARDS
11.1 Change in Control. Unless otherwise set forth in an Award Agreement, in the
event of a Change in Control:
(a) With respect to each outstanding Award that is assumed or substituted in
connection with a Change in Control, in the event the Participant incurs a
Termination of Employment other than for “cause,” as defined in the applicable
Award
Agreement, during the 24-month period following such Change in Control, on the
date of such Termination of Employment (i) such Award shall become fully vested
and, if applicable, exercisable, (ii) the restrictions, payment conditions, and
forfeiture conditions applicable to any such Award granted shall lapse and
(iii) and any performance conditions imposed with respect to such Award shall be
deemed to be achieved at target performance levels.
(b) With respect to each outstanding Award that is not assumed or substituted in
connection with a Change in Control, immediately upon the occurrence of the
Change in Control (i) such Award shall become fully vested and, if applicable,
exercisable, (ii) the restrictions, payment conditions, and forfeiture
conditions applicable to any such Award granted shall lapse and (iii) and any
performance conditions imposed with respect to such Award shall be deemed to be
achieved at target performance levels.
(c) For purposes of this Section 11.1, an Award shall be considered assumed or
substituted for if, following the Change in Control, the Award is of comparable
value and remains subject to the same terms and conditions that were applicable
to the Award immediately prior to the Change in Control except that, if the
Award related to Shares, the Award instead confers the right to receive common
stock of the acquiring entity or in the case of an amalgamation, the amalgamated
company or its parent.
(d) Notwithstanding the foregoing, if any Award is subject to Section 409A of
the Code, this Section 11.1 shall be applicable only to the extent specifically
provided in the Award Agreement and as permitted pursuant to Section 13.5.
11.2 Tax Withholding. The Company and its Affiliates shall have the authority
and the right to deduct or withhold, or require a Participant to remit to the
Company or an Affiliate, an amount sufficient to satisfy federal, state, local
and foreign taxes (including the Participant’s social security, Medicare and any
other employment tax obligation) required by law to be withheld with respect to
any taxable event concerning a Participant arising in connection with any Award.
The Administrator may in its sole discretion and in satisfaction of the
foregoing requirement allow a Participant to elect to have the Company or an
Affiliate withhold Shares otherwise issuable under an Award (or allow the
surrender of Shares), provided that the number of Shares which may be so
withheld or surrendered shall be limited to the number of Shares which have a
Fair Market Value on the date of withholding no greater than the amount
necessary to satisfy the minimum statutory withholding requirements.
11.3 Transferability of Awards.

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(a) 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;
(b) No Award or interest or right therein shall be liable for the debts,
contracts or engagements of the Participant or his or her 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
the satisfaction of these conditions shall be null and void and of no effect;
(c) During the lifetime of the Participant, only the Participant may exercise an
Award (or any portion thereof) granted to him or her under the Plan. After the
death of the Participant, any exercisable portion of an Award may, prior to the
time when such portion becomes unexercisable under the Plan or Award Agreement,
be exercised by his personal representative or by any individual empowered to do
so under the deceased Participant’s will or under the then-applicable laws of
descent and distribution; and
(d) Notwithstanding the foregoing, the Administrator may, in its sole
discretion, permit (on such terms, conditions and limitations as it may
establish) Non-Qualified Stock Options and/or Shares issued in connection with
an Option or a Stock Appreciation Right exercise that are subject to
restrictions on transferability, to be transferred to a member of a
Participant’s immediate family or to a trust or similar vehicle for the benefit
of a Participant’s immediate family members.
11.4 Conditions to Issuance of Shares.
(a) Notwithstanding anything herein to the contrary, neither the Company nor its
Affiliates shall be required to issue or deliver any certificates or make any
book entries evidencing Shares pursuant to the exercise of any Award, unless and
until the Administrator has determined, with advice of counsel, that the
issuance of such Shares is in compliance with all applicable laws, regulations
of governmental authorities and, if applicable, the requirements of any exchange
on which the Shares are listed or traded, and the Shares are covered by an
effective registration statement or applicable exemption from registration. In
addition to the terms and conditions provided herein, the Administrator may
require that a Participant make such reasonable covenants, agreements, and
representations as the Administrator, in its discretion, deems advisable in
order to comply with any laws, regulations, or requirements.
(b) All Share certificates delivered pursuant to the Plan and all Shares issued
pursuant to book entry procedures are subject to any stop-transfer orders and
other restrictions as the Administrator deems necessary or advisable to comply
with federal, state, or foreign securities or other laws, rules and regulations
and the rules of any securities exchange or automated quotation system on which
the Shares are listed, quoted, or traded. The Administrator may place legends on
any Share certificate or book entry to reference restrictions applicable to the
Shares.
(c) The Administrator shall have the right to require any Participant to comply
with any timing or other restrictions with respect to the settlement,
distribution or exercise of any Award, including a window-period limitation, as
may be imposed in the sole discretion of the Administrator.
(d) No fractional Shares shall be issued and the Administrator shall determine,
in its sole discretion, whether cash shall be given in lieu of fractional Shares
or whether such fractional Shares shall be eliminated by rounding down.
(e) Notwithstanding any other provision of the Plan, unless otherwise determined
by the Administrator or required by any applicable law, rule or regulation, the
Company and/or its Affiliates may, in lieu of delivering to any Participant
certificates evidencing Shares issued in connection with any Award, record the
issuance of Shares in the books of the Company (or, as applicable, its transfer
agent or stock plan administrator).
11.5 Forfeiture and Recoupment Provisions. Pursuant to its general authority to
determine the terms and conditions applicable to Awards under the Plan, the
Administrator shall have the right to provide, in the terms of Awards made under
the Plan, or to require a Participant to agree by separate written or electronic
instrument, that: any proceeds, gains or other economic benefit must be paid to
the Company, and the Award shall terminate and any unexercised portion of the
Award (whether or not vested) shall be forfeited, if (i) a Termination of
Employment occurs prior to a specified date, or within a specified time period
following receipt or exercise of the Award, (ii) the Participant at any time, or
during a specified time period, engages in any activity which violates any
applicable restrictive covenants of the Company, as may be further specified in
the Award Agreement or (iii) the Participant incurs a Termination of Employment
for “cause,” as defined in the applicable Award Agreement. In addition, all
Awards made under the Plan shall be subject to any clawback or recoupment
policies of the Company, as in effect from time to time, or as otherwise
required by law.

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11.6 Prohibition on Repricing. Subject to limitations imposed by Section 409A of
the Code or other applicable law and the limitations contained in Section 13.1
below, in no event shall the exercise price with respect to an Award be reduced
following the grant of an Award, nor shall an Award be cancelled in exchange for
a replacement Award with a lower exercise price or in exchange for another type
of Award or cash payment without stockholder approval.
11.7 Leave of Absence. Unless the Administrator provides otherwise, vesting of
Awards granted hereunder shall be suspended during any unpaid leave of absence.
A Participant shall not cease to be considered an Employee or Non-Employee
Director, as applicable, in the case of any (a) leave of absence approved by the
Company, or (b) transfer between locations of the Company or between the Company
and any of its Affiliates or any successor thereof.
ARTICLE XII
ADMINISTRATION
12.1 Administrator. The Committee (or another committee or a subcommittee of the
Board assuming the functions of the Committee under the Plan) shall administer
the Plan (except as otherwise permitted herein) and shall be referred to herein
as the “Administrator.” Unless otherwise determined by the Board, the Committee
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 a “non-employee director” as
defined by Rule 16b-3 of the Exchange Act, an “outside director” for purposes of
Section 162(m) of the Code and an “independent director” under the rules of any
securities exchange or automated quotation system on which the Shares are
listed, quoted or traded, in each case, to the extent required under such
provision; provided, however, 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 12.l 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 Awards granted to Non-Employee Directors and (b) the
Board or Committee may delegate its authority hereunder to the extent permitted
by Section 12.5 hereof.
12.2 Duties and Powers of Administrator. It shall be the duty of the
Administrator to conduct the general administration of the Plan in accordance
with its provisions. The Administrator shall have the power to interpret the
Plan and all Award Agreements, and to adopt such rules for the administration,
interpretation and application of the Plan as are not inconsistent with the
Plan, to interpret, amend or revoke any such rules 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 by
such amendment unless the consent of the Participant is obtained or such
amendment is otherwise permitted under Section 13.1 hereof. 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, Section 162(m) of the Code, or
the rules of any securities exchange or automated quotation system on which the
Shares are listed, quoted or traded are required to be determined in the sole
discretion of the Committee.
12.3 Authority of Administrator. Subject to any specific designation in the
Plan, the Administrator has the exclusive power, authority and sole discretion
to:
(a) Designate Eligible Individuals to receive Awards;
(b) Determine the type or types of Awards to be granted to Eligible Individuals;
(c) Determine the number of Awards to be granted and the number of Shares to
which an Award will relate;
(d) Determine the terms and conditions of any Award granted pursuant to the
Plan, including, but not limited to, the exercise price, grant price, or
purchase price, any performance criteria, any restrictions or limitations on the
Award, any schedule for vesting, lapse of forfeiture restrictions or
restrictions on the exercisability of an Award, and accelerations or waivers
thereof, and any provisions related to non-competition and recapture of gain on
an Award, based in each case on such considerations as the Administrator in its
sole discretion determines;
(e) Determine whether, to what extent, and pursuant to what circumstances an
Award may be settled in, or the exercise price of an Award may be paid in cash,
Shares, other Awards, or other property, or an Award may be canceled, forfeited,
or surrendered;
(f) Prescribe the form of each Award Agreement, which need not be identical for
each Participant;
(g) Decide all other matters that must be determined in connection with an
Award;

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(h) Establish, adopt, or revise any rules and regulations as it may deem
necessary or advisable to administer the Plan;
(i) Interpret the terms of, and any matter arising pursuant to, the Plan or any
Award Agreement; and
(j) Make all other decisions and determinations that may be required pursuant to
the Plan or as the Administrator deems necessary or advisable to administer the
Plan.
12.4 Decisions Binding. The Administrator’s interpretation of the Plan, any
Awards granted pursuant to the Plan or any Award Agreement and all decisions and
determinations by the Administrator with respect to the Plan are final, binding,
and conclusive on all parties.
12.5 Delegation of Authority. To the extent permitted by applicable law or the
rules of any securities exchange or automated quotation system on which the
Shares are listed, quoted or traded, the Board or Committee may from time to
time delegate to a committee of one or more members of the Board, to one or more
officers of the Company the authority to grant or amend Awards or to take other
administrative actions pursuant to this Article XII; 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, (b) Covered Employees with
respect to Awards intended to constitute Performance-Based Compensation, or
(c) 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 Section 162(m) of the Code and applicable securities laws or the rules of
any securities exchange or automated quotation system on which the Shares are
listed, quoted or traded. Any delegation hereunder shall be subject to the
restrictions and limits that the Board or Committee specifies at the time of
such delegation, and the Board may at any time rescind the authority so
delegated or appoint a new delegatee. At all times, the delegatee appointed
under this Section 12.5 shall serve in such capacity at the pleasure of the
Board and the Committee.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 Amendment, Suspension or Termination of the Plan. The Plan may be amended
or terminated at any time by action of the Board. However, no amendment may,
without stockholder approval, except as set forth in Section 3.2 herein,
(i) increase the aggregate number of Shares available for Awards, (ii) extend
the term of the Plan, (iii) materially expand the types of awards available
under the Plan, (iv) change the definition of Eligible Individual to add a
category or categories of individuals who are eligible to participate in the
Plan, (v) delete or limit the prohibition against repricing of Awards contained
in Section 11.6, or (vi) make other changes which require approval by the
stockholders of the Company in order to comply with applicable law or applicable
stock market rules. No amendment or termination of the Plan may adversely modify
any individual’s rights under an outstanding Award unless such individual
consents to the modification in writing.
13.2 Paperless Administration. In the event that the Company establishes, for
itself or using the services of a third party, an automated system for the
documentation, granting or exercise of Awards, such as a system using an
internet website or interactive voice response, then the paperless
documentation, granting or exercise of Awards by a Participant may be permitted
through the use of such an automated system.
13.3 Titles and Headings, References to Sections of the Code or Exchange Act.
The titles and headings of the sections in the Plan are for convenience of
reference only and, in the event of any conflict, the text of the Plan, rather
than such titles or headings, shall control. References to sections of the Code
or the Exchange Act shall include any amendment or successor thereto.
13.4 Governing Law. The Plan and any programs and agreements hereunder shall be
administered, interpreted and enforced under the internal laws of the State of
Delaware without regard to conflicts of laws thereof.
13.5 Section 409A. The intent of the parties is that payments and benefits under
the Plan comply with Section 409A of the Code to the extent subject thereto,
and, accordingly, to the maximum extent permitted, the Plan shall be interpreted
and be administered to be in compliance therewith. Any payments described in the
Plan that are due within the “short-term deferral period” as defined in
Section 409A of the Code shall not be treated as deferred compensation unless
applicable law requires otherwise. Notwithstanding anything contained herein to
the contrary, to the extent required in order to avoid accelerated taxation
and/or tax penalties under Section 409A of the Code, the Participant shall not
be considered to have terminated employment with the Company for purposes of the
Plan and no payment shall be due to the Participant under the Plan or any Award
until the Participant would be considered to have incurred a “separation from
service” from the Company within the meaning of Section 409A of the Code.
Notwithstanding anything to the contrary in the Plan, to the extent required in

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order to avoid accelerated taxation and/or tax penalties under Section 409A of
the Code, amounts that would otherwise be payable and benefits that would
otherwise be provided pursuant to the Plan during the six (6) month period
immediately following the Participant’s Termination of
Employment shall instead be paid on the first business day after the date that
is six (6) months following the Participant’s separation from service (or upon
the Participant’s death, if earlier). In addition, for purposes of the Plan,
each amount to be paid or benefit to be provided to the Participant pursuant to
the Plan, which constitute deferred compensation subject to Section 409A of the
Code, shall be construed as a separate identified payment for purposes of
Section 409A of the Code.
13.6 No Rights to Awards. No Eligible Individual or other individual shall have
any claim to be granted any Award pursuant to the Plan, and neither the Company
nor the Administrator is obligated to treat Eligible Individuals, Participants
or any other individuals uniformly.
13.7 Foreign Employees and Foreign Law Considerations. The Administrator may
grant Awards to Eligible Individuals who are foreign nationals, who are located
outside the United States, who are United States citizens or resident aliens on
global assignments in foreign nations, who are not compensated from a payroll
maintained in the United States, or who are otherwise subject to (or could cause
the Company to be subject to) legal or regulatory provisions of countries or
jurisdictions outside the United States, on such terms and conditions different
from those specified in the Plan as may, in the judgment of the Administrator,
be necessary or desirable to foster and promote achievement of the purposes of
the Plan, and, in furtherance of such purposes, the Administrator may make such
modifications, amendments, procedures, or subplans as may be necessary or
advisable to comply with such legal or regulatory provisions.
13.8 Unfunded Status of Awards. The Plan is intended to be an “unfunded” plan
for incentive compensation. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or Award
Agreement shall give the Participant any rights that are greater than those of a
general creditor of the Company or any Affiliate.
13.9 Indemnification. To the extent allowable pursuant to applicable law, each
member of the Board and any officer or other employee to whom authority to
administer any component of the Plan is delegated 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, however, that 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 individuals 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.
13.10 Relationship to other Benefits. No payment pursuant to the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare, or other benefit plan of the
Company or any Affiliate except to the extent otherwise expressly provided in
writing in such other plan or an agreement thereunder.
13.11 Successors. The obligations of the Company under the Plan shall be binding
upon any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Company, or upon any successor
corporation or organization succeeding to substantially all of the assets and
business of the Company.
13.12 Expenses. The expenses of administering the Plan shall be borne by the
Company and its Affiliates.
13.13 Term of Plan. The Plan shall terminate on the tenth anniversary of the
Effective Date; provided, however, any Awards that are outstanding as of the
date of the Plan’s termination shall remain in effect, and the terms of the Plan
shall apply until such Awards terminate as provided in the applicable Award
Agreements.

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