Exhibit 10.1

 

 

AMENDED AND RESTATED
PHARMACOPEIA DRUG DISCOVERY, INC.
2004 STOCK INCENTIVE PLAN

 

Originally Effective April 6, 2004
Amendment and Restatement Effective May 3, 2007

 

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TABLE OF CONTENTS

 

ARTICLE 1 PURPOSE AND TERM OF PLAN

3

 

 

ARTICLE 2 DEFINITIONS

3

 

 

ARTICLE 3 ELIGIBILITY

7

 

 

ARTICLE 4 PLAN ADMINISTRATION

8

 

 

ARTICLE 5 FORM OF AWARDS

9

 

 

ARTICLE 6 SHARES SUBJECT TO PLAN

9

 

 

ARTICLE 7 PERFORMANCE AWARDS

10

 

 

ARTICLE 8 STOCK OPTIONS

11

 

 

ARTICLE 9 STOCK APPRECIATION RIGHTS

13

 

 

ARTICLE 10 STOCK AWARDS

14

 

 

ARTICLE 11 PERFORMANCE UNITS

14

 

 

ARTICLE 12 PERFORMANCE SHARES

14

 

 

ARTICLE 13 VESTING AND PAYMENT OF AWARDS

15

 

 

ARTICLE 14 DIVIDEND AND DIVIDEND EQUIVALENTS

17

 

 

ARTICLE 15 DEFERRAL OF AWARDS

17

 

 

ARTICLE 16 CHANGE IN CONTROL

18

 

 

ARTICLE 17 MISCELLANEOUS

19

 

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PHARMACOPEIA DRUG DISCOVERY, INC.
AMENDED AND RESTATED 2004 STOCK INCENTIVE PLAN

 

Effective April 6, 2004

 

Effective as Amended and Restated May 3, 2007

 

ARTICLE 1
PURPOSE AND TERM OF PLAN

 

1.1.                 Purpose. The purpose of the Plan is to provide motivation
to selected Employees, Directors and Consultants to put forth maximum efforts
toward the continued growth, profitability, and success of the Company by
providing incentives to such Employees, Directors and Consultants through the
ownership and performance of Common Stock.

 

1.2.                 Term. The Plan was originally approved by the Board on
March 16, 2004, and became effective upon the date of the approval by
Pharmacopeia’s stockholders. This amendment and restatement was approved by the
Board effective March 15, 2007 and becomes effective on the date of the approval
by the Company’s stockholders.  The Plan and any Awards granted thereunder shall
be null and void if stockholder approval is not obtained.

 

ARTICLE 2
DEFINITIONS

 

In any necessary construction of a provision of this Plan, the masculine gender
may include the feminine, and the singular may include the plural, and vice
versa.

 

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

 

2.2.                 “Approved Reason” means a reason for terminating employment
with the Company, which, in the opinion of the Committee, is in the best
interests of the Company. The Committee must specifically designate that a
Participant has been terminated for an Approved Reason. Absent such
determination by the Committee, a Participant cannot be found to have terminated
for an Approved Reason.

 

2.3.                 “Award” means any form of Option, SAR, Stock Award,
performance unit, performance share, or Performance Award, whether singly, in
combination, or in tandem, to a Participant by the Committee pursuant to such
terms, conditions, restrictions and/or limitations, if any, as the Committee may
establish by the Award Notice or otherwise.

 

2.4.                 “Award Notice” means the written document establishing the
terms, conditions, restrictions, and/or limitations of an Award in addition to
those established by this Plan and by the Committee’s exercise of its
administrative powers. The Committee will establish the form of the written
document in the exercise of its sole and absolute discretion.

 

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

 

2.6.                 “Calendar Year Subaccount” means a notional bookkeeping
account to which all of a Participant’s deferred Awards are credited.

 

2.7.                 “Cause” means, unless otherwise provided in an employment,
change in control, severance or similar agreement between a Participant and the
Company or in an Award Notice: (a) any gross failure by the Participant (other
than by reason of Disability) to faithfully and professionally carry out his or
her duties or to comply with any other material provision of his or her
employment agreement, if any, which continues for thirty days after written
notice by the Company; provided, that the Company does not have to provide
notice in the event that the failure is not susceptible to remedy or relates to
the same type of acts or omissions as to which notice has been given on a prior
occasion; (b) the Participant’s dishonesty or other willful misconduct;  (c) the
Participant’s conviction of any felony or of any other crime involving moral
turpitude, whether or not relating to his or her employment; (d) the
Participant’s insobriety or use of drugs, chemicals or controlled substances
either in the course of performing his or her duties and responsibilities under
his or her employment agreement or otherwise affecting the ability of
Participant to perform those duties and responsibilities; (e) the Participant’s
failure to

 

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comply with a lawful written direction of the Company; (f) any wanton or willful
dereliction of duties by the Participant; or (g) breach of the Company’s Code of
Ethics or insider trading policies.

 

2.8.                 “CEO” means the Chief Executive Officer of the Company.

 

2.9.                 “Change In Control” means: (i) any “person” (within the
meaning of Section 13(d) or 14(d) of the Exchange Act, including a “group”
within the meaning of Section 13(d) but excluding the Company and any of its
Subsidiaries or Affiliates and any employee benefit plan sponsored or maintained
by the Company or any subsidiary thereof), shall become the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing thirty percent (30%) or more of the
combined voting power of the then outstanding securities entitled to vote
generally in the election of directors (“Voting Securities”) of the Company (the
“Company Voting Securities”); or (ii) the consummation of a merger,
consolidation, reorganization or any other business combination (any of the
foregoing, a “Business Combination”) of or involving the Company and another
person or persons where the persons who were the beneficial owners of Company
Voting Securities outstanding immediately prior to such Business Combination do
not beneficially own, directly or indirectly, immediately after such
transaction, securities representing fifty percent (50%) or more of the combined
voting power of the then outstanding Company Voting Securities or Voting
Securities of the entity acquiring the Company in such Business Combination;
(iii) shareholder approval of a complete liquidation or dissolution of the
Company; or (iv) a sale, lease, exchange or other disposition or transfer (in
one transaction or a series of related transactions) of all or substantially all
of the assets or business of the Company; provided, that a change in control
under this clause shall not be deemed to have occurred where (x) the Company
sells, exchanges or otherwise disposes of or transfers all or substantially all
of its assets or business to another corporation which is beneficially owned,
directly or indirectly, immediately following such transaction by the holders of
Company Voting Securities in substantially the same proportions as their
ownership of Company Voting Securities immediately prior to such transaction and
(y) such corporation assumes the Plan; or (v) during any period of two
consecutive years, the Continuing Directors (as defined below) cease for any
reason to constitute at least a majority of the Board (or, if applicable, of a
successor to the Company), where the term “Continuing Director” means at any
date a director of the Company who was (x) a director at the beginning of such
period or (y) nominated or elected subsequent to such date by at least a
majority of the directors who were Continuing Directors at the time of such
nomination or election or whose election to the board was recommended or
endorsed by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election (it being understood that no
individual whose initial assumption of office occurred as a result of an actual
or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a person other than the board shall be a Continuing Director).

 

2.10.               “Code” means the Internal Revenue Code of 1986, as amended
from time to time, including regulations thereunder and successor provisions and
regulations thereto.

 

2.11.               “Committe” means the Board or the committee designated by
the Board to administer the Plan under Article 4. The Committee shall have at
least two members, each of whom shall be a “non-employee director” as defined in
Rule 16b-3 under the Exchange Act and an “outside director” as defined in
Section 162(m) of the Code and the regulations thereunder, and, if applicable
meet the independence requirements of the applicable stock exchange, quotation
system or other self-regulatory organization on which the Common Stock is
traded. Notwithstanding the foregoing, the Board may designate one or more of
its members to serve as a Secondary Committee and delegate to the Secondary
Committee authority to grant Awards to eligible individuals who are not subject
to the requirements of Rule 16b-3 under the Exchange Act or Section 162(m) of
the Code and the regulations thereunder. The Secondary Committee shall have the
same authority with respect to selecting the individuals to whom such Awards are
granted and establishing the terms and conditions of such Awards as the
Committee has under the terms of the Plan.

 

2.12.               “Common Stock” means the common stock, $0.01 par value per
share, of the Company that may be newly issued or treasury stock.

 

2.13.               “Company” means with respect to Employees and consultants,
Pharmacopeia and its Subsidiaries and Affiliates provided, however, that with
respect to Directors, Company shall only mean Pharmacopeia.

 

2.14.               “Consultants” means the consultants, advisors and
independent contractors retained by the Company.

 

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2.15.               “Covered Employee” means an Employee who is a “Covered
Employee” within the meaning of Section 162(m) of the Code.

 

2.16.               “Director” means a non-Employee member of the Board.

 

2.17.               “Disability” means a physical or mental impairment that
satisfies the definition of disability under Section 22(e)(3) of the Code.

 

2.18.               “Effective Date” means the date an Award is determined to be
effective by the Committee upon its grant of such Award, which date shall be set
forth in the applicable Award Notice.

 

2.19.               “Employee” means any person employed by the Company on a
full or part-time basis.

 

2.20.               “Exchange Act” means the Securities Exchange Act of 1934, as
amended from time to time, including rules thereunder and successor provisions
and rules thereto.

 

2.21.               “Fair Market Value” means on any given date:

 

(a)           if the Common Stock is listed on an established stock exchange or
exchanges, the closing price of Common Stock on the principal exchange on which
it is traded on such date, or if no sale was made on such date on such principal
exchange, on the last preceding day on which the Common Stock was traded;

 

(b)           if the Common Stock is not then listed on an exchange, but is
quoted on NASDAQ or a similar quotation system, the closing price per share for
the Common Stock as quoted on NASDAQ or similar quotation system on such date;

 

(c)           if the Common Stock is not then listed on an exchange or quoted on
NASDAQ or a similar quotation system, the value, as determined in good faith by
the Committee and in accordance with applicable provisions of the Code or
regulations and rulings thereunder.

 

2.22.               “Incentive Stock Option” means an Option which meets the
requirements of Section 422 of the Code and which is designated as an Incentive
Stock Option by the Committee.

 

2.23.               “Negative Discretion” means the discretion authorized by the
Plan to be applied by the Committee in determining the size of an Award for a
Performance Period if, in the Committee’s sole judgment, such application is
appropriate. Negative Discretion may only be used by the Committee to eliminate
or reduce the size of an Award. In no event shall any discretionary authority
granted to the Committee by the Plan, including, but not limited to Negative
Discretion, be used to: (a) grant Awards for a Performance Period if the
Performance Goals for such Performance Period have not been attained under the
applicable Performance Formula; or (b) increase an Award above the maximum
amount payable under Section 6.3 of the Plan.

 

2.24.               “Non-Qualified Stock Option” means an Option not intended to
be an Incentive Stock Option, and designated as a Non-Qualified Stock Option by
the Committee.

 

2.25.               “Option” means the right, granted from time to time under
the Plan, to purchase Common Stock for a specified period of time at a stated
price. An Option may be an Incentive Stock Option or a Non-Qualified Stock
Option.

 

2.26.               “Participant” means either an Employee, Director or
Consultant to whom an Award has been granted by the Committee under the Plan.

 

2.27.               “Performance Awards” means the Stock Awards, performance
units and performance shares granted to Covered Employees pursuant to Article 7.
All Performance Awards are intended to qualify as “performance-based
compensation” under Section 162(m) of the Code.

 

2.28.               “Performance Criteria” means the one or more criteria that
the Committee shall select for purposes of establishing the Performance
Goal(s) for a Performance Period. The Performance Criteria that will be used to
establish such Performance Goal(s) shall be limited to the following:  revenue
growth; earnings before interest, taxes, depreciation and amortization (EBITDA);
operating income; net operating income after tax; pre- or after-tax income; cash
flow; cash flow per share; net earnings; earnings per share; return on equity;
return on capital employed; return on assets; economic value added (or an
equivalent metric); share price performance; total shareholder return;
improvement in or attainment of expense levels;

 

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improvement in or attainment of working capital levels; or debt reduction. To
the extent required by Section 162(m) of the Code, the Committee shall, within
the time period required by Section 162(m) of the Code (generally, the first 90
days of a Performance Period), define in an objective fashion the manner of
calculating the Performance Criteria it selects to use for such Performance
Period.

 

2.29.               “Performance Formula” means, for a Performance Period, the
one or more objective formulas (expressed as a percentage or otherwise) applied
against the relevant Performance Goal(s) to determine, with regards to the Award
of a particular Participant, whether all, some portion but less than all, or
none of the Award has been earned for the Performance Period.

 

2.30.               “Performance Goals” means, for a Performance Period, the one
or more goals established by the Committee for the Performance Period based upon
the Performance Criteria. Performance Goals may be based on the performance of
the Company, any Subsidiary or any division or business unit within the Company
or any Subsidiary, and if so desired by the Committee, by comparison with a peer
group of companies. Unless otherwise stated, such Performance Goals, need not be
based upon an increase or positive result and could include, for example,
maintaining the status quo or limiting economic loss (measured, in each case, by
reference to specific Performance Criteria.) The Committee is authorized at any
time during the time period permitted by Section 162(m) of the Code (generally,
the first 90 days of a Performance Period), or at any time thereafter, in its
sole and absolute discretion, to adjust or modify the calculation of a
Performance Goal for such Performance Period in order to prevent the dilution or
enlargement of the rights of Participants, (a) in the event of, or in
anticipation of, any unusual or extraordinary corporate item, transaction, event
or development; (b) in recognition of, or in anticipation of, any other unusual
or nonrecurring events affecting the Company, or the financial statements of the
Company, or in response to, or in anticipation of, changes in applicable laws,
regulations, accounting principles, or business conditions; and (c) in view of
the Committee’s assessment of the business strategy of the Company, performance
of comparable organizations, economic and business conditions, and any other
circumstances deemed relevant.

 

2.31.               “Performance Period” means the one or more periods of time
(of at least 12 months), which may be of varying and overlapping durations, as
the Committee may select, over which the attainment of one or more Performance
Goals will be measured for the purpose of determining a Participant’s right to
and the payment of a Performance Award.

 

2.32.               “Pharmacopeia” means Pharmacopeia, Inc., a Delaware
corporation, formerly known as Pharmacopeia Drug Discovery, Inc.

 

2.33.               “Plan” means this Pharmacopeia, Inc. 2004 Stock Incentive
Plan, as amended from time to time.

 

2.34.               “Restricted Stock” means a Stock Award granted pursuant to
Article 11 subject to the restrictions provided in the applicable Award Notice.

 

2.35.               “Retirement” means, unless otherwise provided, a termination
for other than Cause after attaining at least age 55 and completing at least 5
years of service with the Company.

 

2.36.               “SAR”, or stock appreciation right, means the right to
receive, in cash or in Common Stock, as determined by the Committee, the
increase in the Fair Market Value of the Common Stock underlying the SAR from
the date of grant to the date of exercise.

 

2.37.               “Stock Award” means an award granted pursuant to Article 10
in the form of shares of Common Stock, Restricted Stock, and/or Units of Common
Stock.

 

2.38.               “Subsidiary” means any corporation (other than Pharmacopeia)
in an unbroken chain of corporations beginning with Pharmacopeia (or any
subsequent parent of Pharmacopeia) if each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50 percent or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.

 

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

 

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2.40.               “Unit” means a bookkeeping entry used by Company to record
and account for the grant of the following Awards until such time as the Award
is paid, canceled, forfeited or terminated, as the case may be: Units of Common
Stock, performance units, and performance shares which are expressed in terms of
Units of Common Stock.

 

ARTICLE 3
ELIGIBILITY

 

3.1.                 In General. Subject to Section 3.2, all Employees,
Directors and Consultants are eligible to participate in the Plan. The Committee
may select, from time to time, Participants from those Employees and who, in the
opinion of the Committee, can further the Plan’s purposes. In addition, the
Committee may select, from time to time, Participants from those Directors and
Consultants (who may or may not be Committee members) who, in the opinion of the
Committee, can further the Plan’s purposes. Once a Participant is so selected,
the Committee shall determine the type(s) of Awards to be made to the
Participant and shall establish in the related Award Notice(s) the terms,
conditions, restrictions and/or limitations, if any, applicable to the
Award(s) in addition to those set forth in this Plan and the administrative
rules and regulations issued by the Committee.

 

3.2.                 Incentive Stock Options. Only Employees shall be eligible
to receive “incentive stock options” (within the meaning of Section 422 of the
Code).

 

ARTICLE 4
PLAN ADMINISTRATION

 

4.1.                 Members. Members of the Committee shall be appointed by and
hold office at the pleasure of the Board. Committee members may resign at any
time by delivering written notice to the Board. Vacancies in the Committee may
be filled by the Board.

 

4.2.                 Responsibility. The Committee shall have total and
exclusive responsibility to control, operate, manage and administer the Plan, in
accordance with its terms.

 

4.3.                 Authority of the Committee. The Committee shall have all
the authority that may be necessary or helpful to enable it to discharge its
responsibilities with respect to the Plan. Without limiting the generality of
the preceding sentence, the Committee shall have the exclusive right to:
(a) select the Participants and determine the type of Awards to be made to
Participants, the number of shares subject to Awards and the terms, conditions,
restrictions and limitations of the Awards; (b) interpret the Plan;
(c) determine eligibility for participation in the Plan; (d) decide all
questions concerning eligibility for and the amount of Awards payable under the
Plan; (e) construe any ambiguous provision of the Plan; (f) correct any default;
(g) supply any omission; (h) reconcile any inconsistency; (i) issue
administrative guidelines as an aid to administer the Plan and make changes in
such guidelines as it from time to time deems proper; (j) make regulations for
carrying out the Plan and make changes in such regulations as it from time to
time deems proper; (k) determine whether Awards should be granted singly, in
combination or in tandem; (l) to the extent permitted under the Plan, grant
waivers of Plan terms, conditions, restrictions, and limitations, (m) accelerate
the vesting, exercise, or payment of an Award or the performance period of an
Award when such action or actions would be in the best interest of the Company;
(n) subject to Section 17.3, grant Awards in replacement of Awards previously
granted under this Plan or any other executive compensation plan of the Company;
(o) establish; and administer the-Performance Goals and certify whether, and to
what extent, they have been attained; (p) determine the terms and provisions of
any agreements entered into hereunder; (q) take any and all other action it
deems necessary or advisable for the proper operation or administration of the
Plan; and (r) make all other determinations it deems necessary or advisable for
the administration of the Plan, including factual determinations.
Notwithstanding anything herein to the contrary and except as expressly provided
by the adjustment provisions of Section 6.2, Options and SARs granted under the
Plan shall not be directly or indirectly repriced, replaced or regranted through
cancellation without shareholder approval, including, but not limited to, an
exchange of an Option or SAR with an exercise price or base price less than Fair
Market Value for cash, restricted stock, stock options or other stock awards.

 

4.4.                 Discretionary Authority. The Committee shall have full
discretionary authority in all matters related to the discharge of its
responsibilities and the exercise of its authority under the Plan including,
without limitation, its construction of the terms of the Plan and its
determination of eligibility for participation and Awards under the Plan. It is
the

 

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intent of Plan that the decisions of the Committee and its actions with respect
to the Plan shall be final, binding and conclusive upon all persons having or
claiming to have any right or interest in or under the Plan.

 

4.5.                 Section 162(m) of the Code. With regards to all Covered
Employees, the Plan shall, for all purposes, be interpreted and construed in
accordance with Section 162(m) of the Code.

 

4.6.                 Action by the Committee. The Committee may act at a meeting
only by a majority of its members. Any determination of the Committee may be
made, without a meeting, by a writing or writings signed by all of the members
of the Committee. In addition, the Committee may authorize any one or more of
its number to execute and deliver documents on behalf of the Committee.

 

4.7.                 Allocation and Delegation of Authority. The Committee may
allocate all or any portion of its responsibilities and powers under the Plan to
any one or more of its members, the CEO or the Secondary Committee as the
Committee deems appropriate and may delegate all or any part of its
responsibilities and powers to any such person or persons, provided that any
such allocation or delegation be in writing; provided, however, that only the
Committee may select and grant Awards to Participants who are subject to
Section 16 of the Exchange Act or are Covered Employees. The Committee may
revoke any such allocation or delegation at any time for any reason with or
without prior notice.

 

ARTICLE 5
FORM OF AWARDS

 

5.1.                 In General. Awards may, at the Committee’s sole discretion,
be granted in the form of Performance Awards pursuant to Article 7, Options
pursuant to Article 8, SARs pursuant to Article 9, Stock Awards pursuant to
Article 10, performance units pursuant to Article 11, performance shares
pursuant to Article 12, or a combination thereof. All Awards shall be subject to
the terms, conditions, restrictions and limitations of the Plan. The Committee
may, in its sole judgment, subject an Award at any time to such other terms,
conditions, restrictions and/or limitations, (including, but not limited to, the
time and conditions of exercise and restrictions on transferability and
vesting), provided they are not inconsistent with the terms of the Plan. Awards
under a particular Article of the Plan need not be uniform and Awards under two
or more Articles may be combined into a single Award Notice. Any combination of
Awards may be granted at one time and on more than one occasion to the same
Participant.

 

5.2.                 Foreign Jurisdictions.

 

(a)           Special Terms. In order to facilitate the making of any Award to
Participants who are employed or retained by the Company outside the United
States as Employees, Directors or Consultants (or who are foreign nationals
temporarily within the United States), the Committee may provide for such
modifications and additional terms and conditions (“special terms”) in Awards as
the Committee may consider necessary or appropriate to accommodate differences
in local law, policy or custom or to facilitate administration of the Plan. The
special terms may provide that the grant of an Award is subject to
(1) applicable governmental or, regulatory approval or other compliance with
local legal requirements and/or (2) the execution by the Participant of a
written instrument in the form specified by the Committee, and that in the event
such conditions are not satisfied, the grant shall be void. The special terms
may also provide that an Award shall become exercisable or redeemable, as the
case may be, if an Employee’s employment or Director or Consultant’s
relationship with the Company ends as a result of workforce reduction,
realignment or similar measure and the Committee may designate a person or
persons to make such determination for a location. The Committee may adopt or
approve sub-plans, appendices or supplements to, or amendments, restatements, or
alternative versions of, the Plan as it may consider necessary or appropriate
for purposes of implementing any special terms, without thereby affecting the
terms of the Plan as in effect for any other purpose; provided, however, no such
sub-plans, appendices or supplements to, or amendments, restatements, or
alternative versions of, the Plan shall: (a) increase the limitations contained
in Section 6.3; (b) increase the number of available shares under Section 6.1;
(c) cause the Plan to cease to satisfy any conditions of Rule 16b-3 under the
Exchange Act or, with respect to Covered Employees whose compensation is subject
to Section 162(m) of the Code, Section 162(m) of the Code; or (d) revoke, remove
or reduce any vested right of a Participant without the prior written consent of
such Participant.

 

(b)           Currency Effects. Unless otherwise specifically determined by the
Committee, all Awards and payments pursuant to such Awards shall be determined
in U.S. currency. The Committee shall determine, in its

 

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discretion, whether and to the extent any payments made pursuant to an Award
shall be made in local currency, as opposed to U.S. dollars. In the event
payments are made in local currency, the Committee may determine, in its
discretion and without liability to any Participant, the method and rate of
converting the payment into local currency.

 

(c)           Modifications to Awards. The Committee shall have the right at any
time and from time to time and without prior notice to modify outstanding Awards
to comply with or satisfy local laws and regulations or to avoid costly
governmental filings. By means of illustration, but not limitation, the
Committee may restrict the method of exercise of an Award to facilitate
compliance with applicable securities laws or exchange control filings, laws or
regulations.

 

(d)           No Acquired Rights. No Employee in any country shall have any
right to receive an Award, except as expressly provided for under the Plan. All
Awards made at any time are subject to the prior approval of the Committee.

 

ARTICLE 6
SHARES SUBJECT TO PLAN

 

6.1.                 Available Shares. The maximum number of shares of Common
Stock which shall be available for grant of Awards under the Plan (including
Incentive Stock Options) during its term shall not exceed 3,400,000. All of the
shares of Common Stock reserved hereunder may be issuable as Incentive Stock
Options. Such amount shall be subject to adjustment as provided in Section 6.2.
Any shares of Common Stock related to Awards which terminate by expiration,
forfeiture, cancellation or otherwise without the issuance of such shares, are
settled in cash in lieu of Common Stock, or are exchanged with the Committee’s
permission for Awards not involving Common Stock, shall be available again for
grant under the Plan. Moreover, if the exercise price of any Option or the tax
withholding requirements with respect to any Option, Stock Award or performance
share or performance unit award are satisfied by tendering shares of Common
Stock to the Company (by either actual delivery or by attestation), only the
number of shares of Common Stock issued net of the shares of Common Stock
tendered or withheld will be deemed delivered for purposes of determining the
maximum number of shares of Common Stock available for delivery under the Plan.
The maximum number of shares available for issuance under the Plan shall not be
reduced to reflect any dividends or dividend equivalents that are reinvested
into additional shares, of Common Stock or credited as additional performance
shares. The maximum number of shares of Common Stock shall not be reduced by the
issuance of shares of Common Stock hereunder due to the assumption, conversion
or substitution of awards made by an entity acquired by the Company. The shares
of Common Stock available for issuance under the Plan may be authorized and
unissued shares or treasury shares. For the purpose of computing the total
number of shares of Common Stock granted under the Plan, where one or more types
of Awards, both of which are payable in shares of Common Stock, are granted in
tandem with each other, such that the exercise of one type of Award with respect
to a number of shares cancels an equal number of shares of the other, the number
of shares granted under both Awards shall be deemed to be equivalent to the
number of shares under one of the Awards.

 

6.2.                 Adjustment to Shares. The provisions of this
Section 6.2(a) are subject to the limitation contained in Section 6.2(b). If
there is any change in the number of outstanding shares of Common Stock through
the declaration of stock dividends, stock splits or the like, the number of
shares available for Awards, the shares subject to any Award and the exercise
prices of Awards shall be automatically adjusted. If there is any change in the
number of outstanding shares of Common Stock through any change in the capital
account of the Company, or through a merger, consolidation, separation
(including a spin off or other distribution of stock or property),
reorganization (whether or not such reorganization comes within the meaning of
such term in Section 368(a) of the Code) or partial or complete liquidation, the
Committee shall make appropriate adjustments in the maximum number of shares of
Common Stock which may be issued under the Plan and any adjustments and/or
modifications to outstanding Awards. In the event of any other change in the
capital structure or in the Common Stock of the Company, the Committee shall
also make such appropriate adjustments in the maximum number of shares of Common
Stock available for issuance under the Plan and any adjustments and/or
modifications to outstanding Awards as it, in its sole discretion, deems
appropriate. The maximum number of shares available for issuance under the Plan
shall be automatically adjusted to the extent necessary to reflect any dividend
equivalents paid in the form of Common Stock. Subject to Section 6.2(b), if the
maximum number of shares of Common Stock available for issuance under the Plan
are adjusted pursuant to this Section 6.2(a), corresponding adjustments shall be
made to the limitations set forth in Section 6.3.

 

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6.3.                 Maximum Award Payable. Notwithstanding any provision
contained in the Plan to the contrary, the maximum Award payable (or granted, if
applicable) to any one Participant under the Plan for a calendar year is:
(a) for Performance Awards, 200,000 shares of Common Stock or, in the event the
Performance Award is paid in cash, $500,000; (b) for Options and SARs, 500,000
shares of Common Stock; (c) for Stock Awards (including Restricted Stock and
those issued in the form of Performance Awards under Article 7), 200,000 shares
of Common Stock.

 

ARTICLE 7
PERFORMANCE AWARDS

 

7.1.                 Purpose. For purposes of grants issued to Covered
Employees, the provisions of this Article 7 shall apply in addition to and,
where necessary, in lieu of the provisions of Article 10, Article 11 and
Article 12. The purpose of this Article is to provide the Committee the ability
to qualify the Stock Awards authorized under Article 10, the performance units
under Article 11, and the performance shares under Article 12 as
“Performance-Based Compensation” under Section 162(m) of the Code. To the extent
applicable, the provisions of this Article 7 shall control over any contrary
provision contained in Article 10, Article 11 or Article 12.

 

7.2.                 Eligibility. Only Covered Employees and Participants that
are expected to become Covered Employees during an applicable Performance Period
shall be eligible to receive Performance Awards. The Committee will, in its sole
discretion, designate within the earlier of the (1) first 90 days of a
Performance Period  and (2) the lapse of 25% of the period of service to which
the Performance Goals relate, which Covered Employees will be Participants for
such period. However, designation of a Covered Employee as a Participant for a
Performance Period shall not in any manner entitle the Participant to receive an
Award for the period. The determination as to whether or not such Participant
becomes entitled to an Award for such Performance Period shall be decided solely
in accordance with the provisions of this Article 7. Moreover, designation of a
Covered Employee as a Participant for a particular Performance Period shall not
require designation of such Covered Employee as a Participant in any subsequent
Performance Period and designation of one Covered Employee as a Participant
shall not require designation of any other Covered Employee as a Participant in
such period or in any other period.

 

7.3.                 Discretion of Committee with Respect to Performance Awards.
With regards to a particular Performance Period, the Committee shall have full
discretion to select the length of such Performance Period, the types of
Performance Awards to be issued, the Performance Criteria that will be used to
establish the Performance Goals, the kinds and/or levels of the Performance
Goals, whether the Performance Goals are to apply to the Company or any one or
more subunits thereof, and the Performance Formula. Within the earlier of
(1) the first 90 days of a Performance Period and (2) the lapse of 25% of the
period of service, and in any event while the outcome is substantially
uncertain, the Committee shall, with regards to the Performance Awards to be
issued for such Performance Period, exercise its discretion with respect to each
of the matters enumerated in the immediately preceding sentence of this
Section and record the same in writing.

 

7.4.                 Payment of Performance Awards.

 

(a)           Condition to Receipt of Performance Award. Unless otherwise
provided in the relevant Award Notice, a Participant must be employed by the
Company on the last day of a Performance Period to be eligible for a Performance
Award for such Performance Period.

 

(b)           Limitation. A Participant shall be eligible to receive a
Performance Award for a Performance Period only to the extent that: (1) the
Performance Goals for such period are achieved; and (2) and the Performance
Formula as applied against such Performance Goals determines that all or some
portion of such Participant’s Performance Award has been earned for the
Performance Period.

 

(c)           Certification. Following the completion of a Performance Period,
the Committee shall meet to review and certify in writing whether, and to what
extent, the Performance Goals for the Performance Period have been achieved and,
if so, to also calculate and certify in writing the amount of the Performance
Awards earned for the period based upon the Performance Formula. The Committee
shall then determine the actual size of each Participant’s Performance Award for
the Performance Period and, in so doing, shall apply Negative Discretion, if and
when it deems appropriate.

 

(d)           Negative Discretion. In determining the actual size of an
individual Performance Award for a Performance Period, the Committee may reduce
or eliminate the amount of the Performance Award earned under the

 

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Performance Formula for the Performance Period through the use of Negative
Discretion, if in its sole judgment, such reduction or elimination is
appropriate.

 

(e)          Timing of Award Payments.  The Awards granted for a Performance
Period shall be paid to Participants as soon as administratively practicable
following completion of the certifications required by Section 7.4(c).

 

ARTICLE 8
STOCK OPTIONS

 

8.1.                 In General.  Awards may be granted in the form of Options.
These Options may be Incentive Stock Options, Non-Qualified Stock Options or a
combination of both. All Awards under the Plan issued to Covered Employees in
the form of Non-Qualified Stock Options shall qualify as “Performance-Based
Compensation” under Section 162(m) of the Code.

 

8.2.                 Exercise Price.  The price at which Common Stock may be
purchased upon exercise of a Non-Qualified Stock Option shall be not less than
100% of the Fair Market Value of the Common Stock, as determined by the
Committee, on the Effective Date of the option’s grant. Notwithstanding the
forgoing, the exercise price of any Incentive Stock Option shall not be less
than (i) 110% of the Fair Market Value on the Effective Date in the case of a
grant to a Ten Percent Stockholder, or (ii) 100% of the Fair Market Value on the
Effective Date in the case of a grant to any other Participant. Notwithstanding
the two immediately preceding sentences, if the Company acquires another entity,
the Company may substitute Options with exercise prices below the Fair Market
Value requirements stated above for any options previously issued by such
acquired company, to the extent permitted by Section 409A of the Code and/or
Section 424 of the Code.

 

8.3.                 Restrictions Relating to Incentive Stock
Options.  Incentive Stock Options shall, in addition to being subject to the
terms and conditions of Section 8.2, comply with Section 422 of the Code.
Accordingly, the aggregate Fair Market Value (determined at the time the option
was granted) of the Common Stock with respect to which Incentive Stock Options
are exercisable for the first time by a Participant during any calendar year
(under this Plan or any other plan of the Company) shall not exceed $100,000 (or
such other limit as may be required by the Code). Incentive Stock Options must
be issued within ten years from the effective date of the Plan, and the term of
such Incentive Stock Options may not exceed ten years (or any shorter period
required by Section 422 of the Code); provided, that the term of Incentive Stock
Options issued to Ten Percent Stockholders may not exceed five years. Incentive
Stock Options shall not be transferable other than by will or the laws of
descent and distribution.

 

8.4.                 Additional Terms and Conditions.  An Option shall be
exercisable in accordance with such terms and conditions and at such times and
during such periods as may be determined by the Committee; provided, that
Non-Qualified Stock Options must be issued within ten years from the effective
date of the Plan, and the term of such Non-Qualified Options may not exceed ten
years. The Committee may, by way of the Award Notice or otherwise, establish
such other terms, conditions, restrictions and/or limitations, including vesting
and post-termination exercise period if any, of any Option, provided they are
not inconsistent with the Plan.

 

8.5.                 Exercise of Option and Payment of Option Price.  An Option
may be exercised only for a whole number of shares of Common Stock. The
Committee shall establish the time and the manner in which an Option may be
exercised. The exercise price of the shares of Common Stock received upon the
exercise of an Option shall be paid in a manner that will not result in an
impermissible extension of credit under the Sarbanes-Oxley Act of 2002:  (i) in
cash, (ii) with the consent of the Committee in whole or in part in shares of
Common Stock held by the Participant (or to the extent permitted by the
Committee, in Common Stock which the Participant would otherwise receive upon
the exercise of such Option) and valued at their Fair Market Value on the date
of exercise, (iii) in cash received from a broker-dealer whom the Participant
has authorized to sell all or a portion of the Common Stock covered by the
Option, or (iv) in such other manner deemed appropriate by the Committee.

 

ARTICLE 9
STOCK APPRECIATION RIGHTS

 

9.1.                 In General.  Awards may be granted in the form of SARs. The
“exercise price” for a particular SAR shall be defined in the Award Notice for
that SAR An SAR may be granted in tandem with all or a portion of a related
Option

 

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under the Plan (“Tandem SARs”), or may be granted separately (“Freestanding
SARs”). A Tandem SAR may be granted either at the time of the grant of the
related Option or at any time thereafter during the term of the Option. All
Awards under the Plan issued to Covered Employees in the form of an SAR shall
qualify as “Performance-Based Compensation” under Section 162(m) of the Code.

 

9.2.                 Terms and Conditions of Tandem SARs.  A Tandem SAR shall be
exercisable to the extent, and only to the extent, that the related Option is
exercisable, and the “exercise price” of such an SAR (the base from which the
value of the SAR is measured at its exercise) shall be the exercise price under
the related Option. However, at no time shall a Tandem SAR be issued if the
exercise price of its related Option is less than the Fair Market Value of the
Common Stock, as determined by the Committee, on the Effective Date of the
Tandem SAR’s grant. If an Option is exercised as to some or all of the shares
covered by the Award, the related Tandem SAR, if any, shall be canceled
automatically to the extent of the number of shares covered by the Option
exercise. Upon exercise of a Tandem SAR as to some or all of the shares covered
by the Award, the related Option shall be canceled automatically to the extent
of the number of shares covered by such exercise. Moreover, all Tandem SARs
shall expire not later than 10 years from the Effective Date of the SAR’s grant.

 

9.3.                 Terms and Conditions of Freestanding SARs.  Freestanding
SARS shall be exercisable or automatically mature in accordance with such terms
and conditions and at such times and during such periods as may be determined by
the Committee. The exercise price of a Freestanding SAR shall be not less than
100% of the Fair Market Value of the Common Stock, as determined by the
Committee, on the Effective Date of the Freestanding SAR’s grant.
Notwithstanding the foregoing, if the Company acquires another entity, the
Company may substitute Freestanding SARs with exercise prices below the Fair
Market Value requirement stated above for any freestanding stock appreciation
right previously issued by such acquired company, to the extent permitted by
Section 409A of the Code and/or Section 424 of the Code. Moreover, all
Freestanding SARs shall expire not later than 10 years from the Effective Date
of the Freestanding SAR’s grant.

 

9.4.                 Deemed Exercise.  The Committee may provide that an SAR
shall be deemed to be exercised at the close of business on the scheduled
expiration date of such SAR if at such time the SAR by its terms remains
exercisable and, if so exercised, would result in a payment to the holder of
such SAR.

 

9.5.                 Additional Terms and Conditions.  The Committee may, by way
of the Award Notice or otherwise, determine such other terms, conditions,
restrictions and/or limitations, if any, including vesting and post-termination
exercise periods of any SAR Award, provided they are not inconsistent with the
Plan.

 

ARTICLE 10
STOCK AWARDS

 

10.1.               Grants.  Awards may be granted in the form of Stock Awards.
Stock Awards shall be awarded in such numbers and at such times during the term
of the Plan as the Committee shall determine.

 

10.2.               Stock Award Restrictions.  Stock Awards shall be subject to
such terms, conditions, restrictions, and/or limitations, if any, as the
Committee deems appropriate including, but not by way of limitation,
restrictions on transferability and continued employment, provided, however,
they are not inconsistent with the Plan. The Committee may modify or accelerate
the delivery of a Stock Award under such circumstances as it deems appropriate.

 

10.3.               Performance Criteria.  Stock Awards may be contingent on the
attainment during a Performance Period of certain performance objectives. The
length of the Performance Period, the Performance Goals to be achieved during
the Performance Period, and the measure of whether and to what degree such goals
have been attained shall be conclusively determined by the Committee in the
exercise of its absolute discretion. Performance Goals may be revised by the
Committee, at such times as it deems appropriate during the Performance Period,
in order to take into consideration any unforeseen events or changes in
circumstances.

 

10.4.               Rights as Stockholders.  During the period in which any
Restricted Stock are subject to any restrictions imposed under Section 10.2, the
Committee may, in its sole discretion, grant to the Participant to whom such
Restricted Stock have been awarded all or any of the rights of a stockholder
with respect to such shares, including, but not by way of limitation, the right
to vote such shares and, pursuant to Article 15, the right to receive dividends.

 

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10.5.               Evidence of Award.  Any Stock Award granted under the Plan
may be evidenced in such manner as the Committee deems appropriate, including,
without limitation, book-entry, registration or issuance of a stock certificate
or certificates.

 

ARTICLE 11
PERFORMANCE UNITS

 

11.1.               Grants.  Awards may be granted in the form of performance
units. Performance units, as that term is used in this Plan, shall refer to
Units valued by reference to designated criteria established by the Committee,
other than Common Stock.

 

11.2.               Performance Criteria.  Performance units shall be contingent
on the attainment during a Performance Period of certain performance objectives.
The length of the Performance Period, the performance objectives to be achieved
during the Performance Period, and the measure of whether and to what degree
such objectives have been attained shall be conclusively determined by the
Committee in the exercise of its absolute discretion. Performance objectives may
be revised by the Committee, at such times as it deems appropriate during the
Performance Period, in order to take into consideration any unforeseen events or
changes in circumstances.

 

11.3.               Additional Terms and Conditions.  The Committee may, by way
of the Award Notice or otherwise, determine such other terms, conditions,
restrictions, and/or limitations, if any, of any Award of performance units,
provided they are not inconsistent with the Plan.

 

ARTICLE 12
PERFORMANCE SHARES

 

12.1.               Grants.  Awards may be granted in the form of performance
shares. Performance shares, as that term is used in this Plan, shall refer to
shares of Common Stock or Units that are expressed in terms of Common Stock.

 

12.2.               Performance Criteria.  Performance shares shall be
contingent upon the attainment during a Performance Period of certain
performance objectives. The length of the Performance Period, the performance
objectives to be achieved during the Performance Period, and the measure of
whether and to what degree such objectives have been attained shall be
conclusively determined by the Committee in the exercise of its absolute
discretion. Performance objectives may be revised by the Committee, at such
times as it deems appropriate during the Performance Period, in order to take
into consideration any unforeseen events or changes in circumstances.

 

12.3.               Additional Terms and Conditions.  The Committee may, by way
of the Award Notice or otherwise, determine such other terms, conditions,
restrictions and/or limitations, if any, of any Award of performance shares,
provided they are not inconsistent with the Plan.

 

ARTICLE 13
VESTING AND PAYMENT OF AWARDS

 

13.1.               Vesting.  The time when an Option or SAR shall vest and
become exercisable shall be stated in the Award Notice. The restrictions, if
any, on Restricted Stock shall expire at the times designated in the Award
Notice. Notwithstanding the foregoing, (i) no Option shall vest before the
one-year anniversary of the Effective Date of such Option, unless such vesting
is accelerated in accordance with the other provisions of this Article 13 (not
including this Section 13.1) or Article 16, (ii) the Committee may determine an
appropriate vesting schedule for any Award granted by the Company in
substitution of an equity award previously granted by an entity acquired by the
Company, to the extent permitted by Section 409A of the Code and Section 424 of
the Code, and (iii) no Restricted Stock shall vest faster than pro rata over a
three-year period from the Effective Date, unless such Restricted Stock was
issued to a Director, as a form of payment of earned performance awards or other
incentive compensation, to replace a deferred Stock Award, to replace awards
that a new Employee has forfeited from his or her previous employer, or the
restrictions lapse earlier due to the other provisions of this Article 13 (not
including this Section 13.1) or Article 16.

 

13.2.               Payment.  Absent a Plan provision to the contrary, payment
of Awards may, at the discretion of the Committee, be made in cash, Common
Stock, a combination of cash and Common Stock, or any other form of property as

 

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the Committee shall determine. In addition, payment of Awards may include such
terms, conditions, restrictions and/or limitations, if any, as the Committee
deems appropriate, including, in the case of Awards paid in the form of Common
Stock, restrictions on transfer and forfeiture provisions; provided, however,
such terms, conditions, restrictions and/or limitations are not inconsistent
with the Plan. Further, payment of Awards may be made in the form of a lump sum
or installments, as determined ,by the Committee.

 

13.3.               Death.  The Committee shall have the authority to promulgate
rules and regulations to determine the treatment of a Participant under the Plan
in the event of such Participant’s death. Unless otherwise provided in an Award
Notice, in the event that a Participant shall die while he or she is an
Employee, Director or Consultant and prior to the complete exercise of Options
or complete maturity of SARs granted to him or her under the Plan, any such
remaining Options or SARs shall be fully vested and may be exercised in whole or
in part within one year after the date of the Participant’s death and then only:
(i) by the beneficiary designated by the Participant in a writing submitted to
the Company prior to the Participant’s death, or in the absence of same, by the
Participant’s estate or by or on behalf of such person or persons to whom the
Participant’s rights pass under his or her will or the laws of descent and
distribution, (ii) to the extent that the Participant would have been entitled
to exercise the Option or SAR at the date of his or her death had it been fully
vested, and subject to all of the conditions on exercise imposed by the Plan and
the Award Notice, and (iii) prior to the expiration of the term of the Option or
SAR. Notwithstanding this Section or the terms of an Award Notice, the Committee
shall have the right to extend the period for exercise of an Option or SAR to
the extent that such exercise period extension will not result in an additional
tax to the Participant under Section 409A of the Code, even if such extension
exceeds the original term of such Option or SAR.

 

13.4.               Disability.  The Committee shall have the authority to
promulgate rules and regulations to determine the treatment of a Participant
under the Plan in the event of such Participant’s Disability. Unless otherwise
provided in an Award Notice, in the event that a Participant’s status as an
Employee, Director or Consultant terminates due to the Participant’s Disability
prior to the complete exercise of Options or complete maturity of SARs granted
to him or her under the Plan, any such remaining Options or SARs shall be fully
vested and may be exercised in whole or in part up to three years after the
Participant’s termination of status due to Disability as an Employee, Director
or Consultant, as the case may be. Notwithstanding this Section or the terms of
an Award Notice, the Committee shall have the right to extend the period for
exercise of an Option or SAR to the extent that such exercise period extension
will not result in an additional tax to the Participant under Section 409A of
the Code, even if such extension exceeds the original term of such Option or
SAR.

 

13.5.               Retirement.  The Committee shall have the authority to
promulgate rules and regulations to determine the treatment of a Participant
under the Plan in the event of such Participant’s Retirement. Unless otherwise
provided in an Award Notice, in the event that a Participant’s status as an
Employee, Director or Consultant terminates due to Retirement prior to the
complete exercise of Options or complete maturity of SARs granted to him or her
under the Plan, any such remaining Options or SARs that were vested as of the
date of Retirement may be exercised in whole or in part up to three years after
the Participant’s Retirement. During such period, the Participant shall also
continue to vest in any unvested Options or SARs as if such Participant were
still an Employee, Director or Consultant hereunder, as applicable; provided
that the such Participant does not violate any applicable non-competition,
non-disparagement, non-solicitation, confidentiality or other similar
requirement. At the end of the three-year period, any remaining unvested Options
or SARs shall terminate, unless the Committee provides otherwise.
Notwithstanding this Section or the terms of an Award Notice, the Committee
shall have the right to extend the period for exercise of a Option or SAR to the
extent that such exercise period extension will not result in an additional tax
to the Participant under Section 409A of the Code, provided such extension does
not exceed the term of such Option or SAR and that the Participant does not
violate any applicable non-competition, non-disparagement, non-solicitation,
confidentiality or other similar requirement.

 

13.6.               Approved Reason.  The Committee shall have the authority to
promulgate rules and regulations to determine the treatment of a Participant
under the Plan in the event of a Participant’s termination for an Approved
Reason, to the extent such rules and regulations are not inconsistent with the
Plan.

 

13.7.               Termination for Cause.  A Participant who is terminated for
Cause shall, unless otherwise determined by the Committee, immediately: forfeit,
effective as of the date the Participant engages in such conduct, all
unexercised, unearned, and/or unpaid Awards, including, but not by way of
limitation, Awards earned but not yet paid, all unpaid dividends and dividend
equivalents, and all interest, if any, accrued on the foregoing.

 

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13.8.               Other Terminations.  Subject to the terms of any employment
or other agreement a Participant has with the Company, if a Participant’s
employment with the Company terminates for a reason other than death,
Disability, Retirement, Cause or an Approved Reason, and, unless otherwise
provided in an Award Notice, any Option or SAR shall be exercisable on
termination of a Participant’s status as an Employee, Director or Consultant
only to the extent such Option or SAR is vested and exercisable at the time of
the termination of such relationship; and further, no Option or SAR shall be
exercisable or mature after the later of 90 days or the expiration of the term
thereof. The Committee, in its absolute discretion, may: (i) accelerate the
vesting and exercisability of an Option or SAR in order to allow its exercise by
a terminating Participant; (ii) extend the period for exercise of an Option or
SAR to the extent that such exercise period extension will not result in an
additional tax to the Participant under Section 409A of the Code, provided such
extension does not exceed the term of such Option or SAR.

 

13.9.               Incentive Stock Options.  Unless otherwise provided in an
Award Notice, an Incentive Stock Option shall be exercisable, during the
lifetime of the Participant, only while he or she is an Employee and has been an
Employee continuously since the grant of the Incentive Stock Option or, subject
to the Award Notice, within three (3) months after termination of his or her
employment. In its sole discretion, the Committee may provide in the Award
Notice such further limitations on the survival of Incentive Stock Options, and
such limitations on the survival of Non-Qualified Stock Options and SARs, as it
may determine; provided, however that all Options and SARs shall be exercisable
for a minimum of sixty (60) days after termination of a Participant’s
employment, except in the case of termination for Cause, in which case the
exercise period shall lapse at termination.

 

13.10.             Other Awards.

 

(a)              The Committee shall have the authority to promulgate rules and
regulations to determine the treatment of the Stock Awards of a Participant
under the Plan in the event of such Participant’s death, Disability, Retirement,
or termination from the Company for an Approved Reason or Cause. Unless
otherwise provided in an Award Notice, upon a Participant’s death, Disability,
or Retirement, or termination from the Company for an Approved Reason, any Stock
Awards held by such Participant shall accelerate and become fully vested.

 

(b)             If a Participant’s employment with the Company terminates for
any reason other than death, Disability or Retirement, or an Approved Reason,
and except as otherwise provided by Section 13.7, all unexercised, unearned,
and/or unpaid Awards, including without limitation, Awards earned but not yet
paid, all unpaid dividends and dividend equivalents, and all interest accrued on
the foregoing shall be canceled or forfeited, as the case may be, unless the
Participant’s Award Notice or the Committee provides otherwise.

 

13.11.             Set-Off.  By accepting an Award under this Plan, a
Participant consents to a deduction from any amounts the Company owes the
Participant from time to time (including, but not limited to, amounts owed to
the Participant as wages or other compensation, fringe benefits, or vacation
pay), to the extent of the amounts the Participant owes the Company under
Section 13.11(a). Whether or not the Company elects to make any set-off in whole
or in part, if the Company does not recover by means of set-off the full amount
the Participant owes the Company, the Participant shall immediately pay the
unpaid balance to the Company.

 

ARTICLE 14
DIVIDEND AND DIVIDEND EQUIVALENTS

 

If an Award is granted in the form of a Stock Award, Option, SAR or performance
share, the Committee may choose, at the time of the grant of the Award or any
time thereafter up to the time of the Award’s payment, to include as part of
such Award an entitlement to receive dividends or dividend equivalents, subject
to such terms, conditions, restrictions and/or limitations, if any, as the
Committee may establish. Dividends and dividend equivalents shall be paid in
such form and manner (i.e., lump sum or installments), and at such time(s) as
the Committee shall determine. All dividends or dividend equivalents which are
not paid currently may, at the Committee’s discretion, accrue interest, be
reinvested into additional shares of Common Stock of, in the case of dividends
or dividend equivalents, credited in connection with Stock Awards or performance
shares, be credited as additional Stock Awards or performance shares and paid to
the Participant if and when, and to the extent that, payment is made pursuant to
such Award. The total number of shares available for grant under shall not be
reduced to reflect any dividends or dividend equivalents that are reinvested
into additional shares of Common Stock or credited as additional Stock Awards or
performance shares.

 

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ARTICLE 15
DEFERRAL OF AWARDS

 

15.1.               At the discretion of the Committee, payment of any Award,
dividend, or dividend equivalent, or any portion thereof, may be deferred by a
Participant until such time as the Committee may establish. All such deferrals
shall be accomplished by the delivery of a written, irrevocable election by the
Participant prior to the time established by the Committee for such purpose, on
a form provided by the Company. Further, all deferrals shall be made in
accordance with administrative guidelines established by the Committee to ensure
that such deferrals comply with all applicable requirements of the Code.
Deferred payments shall be paid in a lump sum or installments, as determined by
the Committee. Deferred Awards may also be credited with interest, at such rates
to be determined by the Committee, and, with respect to those deferred Awards
denominated in the form of Common Stock, with dividends or dividend equivalents.

 

15.2.               Elections to Defer.  Notwithstanding any provision of the
Plan to the contrary, any Participant may, at the discretion of the Committee,
elect to defer to a specified date the receipt of unrestricted Common Stock or
cash, or any portion thereof, that the Participant would otherwise be entitled
to receive pursuant to an Award by completing such form required by the
Committee and returning it to the Committee on or before the December 31
preceding the calendar year during which such Award is granted to the
Participant.

 

15.3.               New Participant Elections to Defer.  Each individual who
becomes a Participant during a calendar year may, at the discretion of the
Committee, elect to defer to a specified date the receipt of unrestricted Common
Stock or cash payment, as applicable, that the Participant would otherwise be
entitled to receive pursuant to an Award granted to the Participant after such
date such individual became a Participant by completing such form required by
the Committee and returning it to the Committee on or before the date that is 30
days after the date on which the individual became a Participant.

 

15.4.               Elections Irrevocable.  An election to defer an Award shall
become irrevocable on the first day of the calendar year to which such election
applies or, solely in the case of a new Participant, 30 days after the date on
which the individual became a Participant.

 

15.5.               Individual Elections.  A Participant must complete a
deferral election form in accordance with Section 15.1 or Section 15.2, as
applicable, for each calendar year in which such Participant desires to defer
Awards and a Participant’s elections with respect to Awards deferred in a
particular calendar year shall expire as of the last day of such calendar year.

 

15.6.               Establishment of Calendar Year Subaccounts.  The Company may
establish on its books for each Participant and for each calendar year a
Calendar Year Subaccount to which a Participant’s Awards deferred in a
particular calendar year are credited. A separate Calendar Year Subaccount shall
be created within each Participant’s Account for each calendar year in which the
Participant makes an Award deferral under the Plan.

 

15.7.               Effect on Vesting.  Notwithstanding anything herein to the
contrary, this Section 15 shall not effect the vesting or vested percentage of a
Participant’s Award. Any unvested Award will not be distributed pursuant to this
Section 15 or otherwise.

 

15.8.               Effect of Death, Disability and Change in Control.  Subject
to the provisions of this Section 15.8, the Participant’s Awards credited to a
particular Calendar Year Subaccount shall be distributed to him or her at the
time specified in his or her deferral election form related to the particular
calendar year. Notwithstanding any election made by a Participant to the
contrary, any deferred Awards that have not been distributed to the Participant
as of the date (i) of his or her death, (ii) on which he or she is determined to
be Disabled, or (iii) of a Change in Control shall be paid to the Participant’s
Beneficiary in a lump sum upon such Participant’s death, date of Disability
determination or Change in Control, as applicable.

 

ARTICLE 16
CHANGE IN CONTROL

 

16.1.               Background.  Except as provided in an employment, change in
control, severance or similar agreement between the Participant and the Company,
notwithstanding any provision contained in the Plan, including, but not limited
to, Section 4.5, the provisions of this Article 16 shall control over any
contrary provision.

 

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16.2.               Options and SARs.  With respect to all Options and SARs that
are unexercised and outstanding, upon a Change In Control, such Options and/or
SARs shall become immediately and fully vested and exercisable; unless such
Options and/or SARs are assumed by the successor corporation, and shall be
substituted with options or SARs involving the common stock of the successor
corporation with equivalent value and with the terms and conditions of the
substituted options or SARs being no less favorable than the Options or SARs
granted hereunder. Substituted awards shall vest in full if employment is
terminated for any reason other than Cause or voluntary termination within
eighteen (18) months of the Change In Control.

 

16.3.               Stock Awards.  With respect to all Stock Awards that are
outstanding, upon a Change In Control, such Stock Awards shall become
immediately and fully vested; unless such Stock Awards are assumed by the
successor corporation, and are substituted with stock awards involving the
common stock of the successor corporation with equivalent value and with the
terms and conditions of the substituted restricted stock awards being no less
favorable than the Stock Awards granted hereunder. Substituted awards shall vest
in full if employment is terminated for any reason other than Cause or voluntary
termination within eighteen (18) months of the Change In Control.

 

16.4.               Treatment of Performance Units and Performance Shares.  If a
Change In Control occurs during the term of one or more performance periods for
which the Committee has granted performance units and/or performance shares
(including those issued as Performance Awards under Article 7), the term of each
such performance period (hereinafter a “current performance period”) shall
immediately terminate upon the occurrence of such event. Upon a Change In
Control, for each “current performance period” and each completed performance
period for which the Committee has not on or before such date made a
determination as to whether and to what degree the performance objectives for
such period have been attained (hereinafter a “completed performance period”),
it shall be assumed that the performance objectives have been attained at a
level of one hundred percent (100%) or the equivalent thereof. A Participant in
one or more “current performance periods” shall be considered to have earned
and, therefore, be entitled to receive, a prorated portion of the Awards
previously granted to him for each such “current performance period.” Such
prorated portion shall be determined by multiplying the number of performance
shares or performance units, as the case may be, granted to the Participant by a
fraction, the numerator of which is the total number of days that have elapsed
since the beginning of the “current performance period,” and the denominator of
which is the total number of days in such “current performance period.”  A
Participant in one or more “completed performance periods” shall be considered
to have earned and, therefore, be entitled to receive all the performance shares
or performance units, as the case may be, previously granted to him during each
‘such “completed performance period.”

 

16.5.               Deferred Awards.  Unless otherwise provided by the
Committee, at any time, upon a Change In Control, any Awards deferred by a
Participant under Article 16 hereof, but for which he or she has not received
payment as of such date, shall be paid as soon as practicable, but in no event
later than 90 days after the Change In Ownership or the event giving rise to
rights under Article 17.

 

ARTICLE 17
MISCELLANEOUS

 

17.1.               Nonassignability.

 

(a)          In General.  Except as otherwise determined by the Committee or as
otherwise provided in Section 17.1(b), no Awards or any other payment under the
Plan shall be subject in any manner to alienation, anticipation, sale, transfer
(except by will or the laws of descent and distribution), assignment, pledge, or
encumbrance, nor shall any Award be payable to or exercisable by anyone other
than the Participant to whom it was granted.

 

(b)          Non-Qualified Stock Options.  The Committee shall have the
discretionary authority to grant Non-Qualified Stock Options or amend
outstanding Non-Qualified Stock Options to provide that they be transferable,
subject to such terms and conditions as the Committee shall establish. In
addition to any such terms and conditions, the following terms and conditions
shall apply to all transfers of Non-Qualified Stock Options:

 

(1)           Permissible Transferees. Transfers shall only be permitted to:
(i) the Participant’s “Immediate Family Members,” as that term is defined in
Section 17.1(b)(8); (ii) a trust or trusts for the exclusive benefit of such
Immediate Family Members; or (iii) a family partnership or family limited
partnership in which

 

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each partner is, at the time of transfer and all times subsequent thereto,
either an Immediate Family Member or a trust for the exclusive benefit of one or
more Immediate Family Members.

 

(2)              No Consideration. All transfers shall be made for no
consideration.

 

(3)              Subsequent Transfers. Once a Participant transfers a
Non-Qualified Stock Option, any subsequent transfer of such transferred Option
shall, notwithstanding Section 17.1(b)(1) to the contrary, be permitted
provided, however, such subsequent transfer complies with all of the terms and
conditions of this Section 17.1, with the exception of Section 17.1(b)(1).

 

(4)              Transfer Agent. In order for a transfer to be effective, the
Committee’s designated transfer agent must be used to effectuate the transfer.
The costs of such transfer agent shall be borne solely by the transferor.

 

(5)              Withholding. In order for a transfer to be effective, a
Participant must agree in writing prior to the transfer on a form provided by
the Company to pay any and all payroll and withholding taxes due upon exercise
of the transferred option. In addition, prior to the exercise of a transferred
option by a transferee, arrangements must be made by the Participant with the
Company for the payment of all payroll and withholding taxes.

 

(6)              Terms and Conditions of Transferred Option. Upon transfer, a
Non-Qualified Stock Option continues to be governed by and subject to the terms
and conditions of the Plan and the option’s applicable administrative guide and
Award Notice. A transferee of a Non-Qualified Stock Option is entitled to the
same rights as the Participant to whom such Non-Qualified Stock Options was
awarded, as if no transfer had taken place. Accordingly, the rights of the
transferee are subject to the terms and conditions of the original grant to the
Participant, including provisions relating to expiration date, exercisability,
exercise price and forfeiture.

 

(7)              Notice to Transferees. The Company shall be under no obligation
to provide a transferee with any notice regarding the transferred Options held
by the transferee upon forfeiture or any other circumstance.

 

(8)              Immediate Family Member. For purposes of this Section 17.1, the
term “Immediate Family Member” shall mean the Participant and his or her spouse,
children or grandchildren, whether natural, step- or adopted children or
grandchildren.

 

17.2.               Withholding Taxes.  The Company shall be entitled to deduct
from any payment under the Plan, regardless of the form of such payment, the
amount of all applicable income and employment taxes required by law to be
withheld with respect to such payment or may require the Participant to pay to
it such tax prior to and as a condition of the making of such payment. In
accordance with any applicable administrative guidelines it establishes, the
Committee may allow a Participant to pay the amount of taxes required by law to
be withheld from an Award by withholding from any payment of Common Stock due as
a result of such Award, or by permitting the Participant to deliver to the
Company, shares of Common Stock having a Fair Market Value, as determined by the
Committee.

 

17.3.               Section 409A.  To the extent determined necessary or
advisable by the Committee in its sole discretion, Awards hereunder, and Award
deferrals hereunder, shall be interpreted to the extent possible to comply with
the provisions of section 409A of the Code (or avoid application of such Code
section), to the extent applicable. Participants shall be deemed to consent to
any changes to Awards, or any Award deferral, that the Board determines are
necessary or advisable to comply with the provisions of section 409A of the
Code. Adjustments made pursuant to Section 16 shall, to the extent determined
necessary or advisable in the sole discretion of the Committee, be made in
compliance with the requirements of section 409A of the Code or, if applicable,
to avoid application of section 409A of the Code.

 

17.4.               Amendments to Awards.  The Committee may at any time
unilaterally amend any unexercised, unearned, or unpaid Award, including, but
not by way of limitation, Awards earned but not yet paid, to the extent it deems
appropriate; provided, however, (i) no Award may be repriced, replaced with cash
or another award, regranted through cancellation, or modified without
shareholder approval if the effect would be to reduce the exercise price for the
shares underlying the Award, and (ii) that any such amendment which, in the
opinion of the Committee, is adverse to the Participant shall require the
Participant’s consent.

 

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17.5.               Regulatory Approvals and Listings.  Notwithstanding anything
contained in this Plan to the contrary, the Company shall have no obligation to
issue or deliver certificates of Common Stock evidencing Stock Awards or any
other Award resulting in the payment of Common Stock prior to (i) the obtaining
of any approval from any governmental agency which the Company shall, in its
sole discretion, determine to be necessary or advisable, (ii) the admission of
such shares to listing on the stock exchange on which the Common Stock may be
listed, and (iii) the completion of any registration or other qualification of
said shares under any state or federal law or ruling of any governmental body
which the Company shall, in its sole discretion, determine to be necessary or
advisable.

 

17.6.               No Right to Continued Employment, Service or
Grants.  Participation in the Plan shall not give any Employee, Consultant or
Director any right to remain in the employ or service of the Company. Further,
the adoption of this Plan shall not be deemed to give any Employee, Consultant
or Director or any other individual any right to be selected as a Participant or
to be granted an Award. In addition, no Employee, Consultant or Director having
been selected for an Award, shall have at any time the right to receive any
additional Awards.

 

17.7.               Amendment/Termination.  The Board may suspend or terminate
the Plan at any time for any reason with or without prior notice. In addition,
the Board may, from time to time for any reason and with or without prior
notice, amend the Plan in any manner, but may not, without stockholder approval,
adopt any amendment which would increase the number of shares available under
the Plan, which would alter the provisions of Section 4.3 or 17.4 as they relate
to Option repricing, or which would require the vote of the stockholders of the
Company pursuant to Section 162(m) of the Code or any applicable rule of the
exchange or quotation system on which the Common Stock is traded, but only
insofar as such amendment affects Covered Employees, or if such approval is
necessary or deemed advisable with respect to tax, securities, or other
applicable laws, policies, or regulations. Notwithstanding the foregoing, the
Committee may not revoke, remove or reduce any vested right of a Participant
without the prior written consent of such Participant.

 

17.8.               Governing Law.  The Plan shall be governed by and construed
in accordance with the laws of the State of Delaware, except as superseded by
applicable federal law, without giving effect to its conflicts of law
provisions.

 

17.9.               No Right, Title, or Interest in Company Assets.  No
Participant shall have any rights as a stockholder of the Company as a result of
participation in the Plan until the date of issuance of a stock certificate in
his or her name, and, in the case of Restricted Stock, such rights are granted
to the Participant under the Plan. To the extent any person acquires a right, to
receive payments from the Company under the Plan, such rights shall be no
greater than the rights of an unsecured creditor of the Company and the
Participant shall not have any rights in or against any specific assets of the
Company. All of the Awards granted under the Plan shall be unfunded.

 

17.10.             Section 16 of the Exchange Act.  In order to avoid any
Exchange Act violations, the Committee may, from time to time, impose additional
restrictions upon an Award, including but not limited to, restrictions regarding
tax withholdings and restrictions regarding the Participant’s ability to
exercise Awards under the Company’s broker-assisted stock option exercise
program.

 

17.11.             No Guarantee of Tax Consequences.  No person connected with
the Plan in any capacity, including, but not limited to, the Company and its
directors, officers, agents and employees, makes any representation, commitment,
or guarantee that any tax treatment, including, but not limited to, federal,
state and local income, estate and gift tax treatment, will be applicable with
respect to the tax treatment of any Award, any amounts deferred under the Plan,
or paid to or for the benefit of a Participant under the Plan, or that such tax
treatment will apply to or be available to a Participant on account of
participation in the Plan.

 

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