Exhibit 10.1


 


deCODE GENETICS, INC.
  2006 EQUITY INCENTIVE PLAN, AS
AMENDED


 

















 


deCODE GENETICS, INC.

2006 EQUITY INCENTIVE PLAN


 


TABLE OF CONTENTS


 


 


	
  ARTICLE

  	
   

  	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 1.

  	
   

  	
  PURPOSE OF THE PLAN; TYPES OF
  AWARDS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2.

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3.

  	
   

  	
  ADMINISTRATION

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4.

  	
   

  	
  COMMON STOCK SUBJECT TO THE PLAN

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5.

  	
   

  	
  ELIGIBILITY

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6.

  	
   

  	
  STOCK OPTIONS IN GENERAL

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7.

  	
   

  	
  TERM, VESTING AND EXERCISE OF
  OPTIONS

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8.

  	
   

  	
  EXERCISE OF OPTIONS FOLLOWING
  TERMINATION OF EMPLOYMENT OR SERVICE

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9.

  	
   

  	
  RESTRICTED STOCK

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10.

  	
   

  	
  STOCK APPRECIATION RIGHTS

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11.

  	
   

  	
  ADJUSTMENT PROVISIONS

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12.

  	
   

  	
  GENERAL PROVISIONS

  	
   

  	
  13

  



 

















 


ARTICLE
1.  PURPOSE OF THE PLAN; TYPES OF AWARDS


 


1.1     Purpose.  The deCODE genetics, Inc.
2006 Equity Incentive Plan is intended to provide selected (i) Employees
of the Corporation and its Subsidiaries; (ii) consultants and advisers who
perform services for the Corporation or its Subsidiaries; and (iii) non-employee
directors of the Corporation and its Subsidiaries with an opportunity to
acquire Common Stock of the Corporation. 
The Plan is designed to help the Corporation attract, retain, and
motivate certain Employees, Consultants, and Non-Employee Directors to make
substantial contributions to the success of the Corporation’s business and the
businesses of its Subsidiaries.  Awards
will be granted under the Plan based, among other things, on a participant’s
level of responsibility and performance within the Corporation and its
Subsidiaries.


 


1.2     Authorized Plan Awards.  Incentive Stock Options, Nonqualified Stock
Options, Restricted Stock, and SARs (including Tandem SARs) may be awarded
within the limitations of the Plan herein described; provided, however, that
Incentive Stock Options (including Tandem SARs coupled with Incentive Stock
Options) may not be granted to Directors or Consultants.


 


ARTICLE
2.  DEFINITIONS


 


2.1     “Administrator.”  The Board of Directors or a committee of the
Board to which the Board delegates the administration of the Plan as provided
herein, provided, however, that for purposes of taking any action which the
Administrator is authorized to take with respect to Awards to Non-Employee Directors,
the Administrator shall be such committee or the Board of Directors acting
without the participation of any member of the Board of Directors who is an
employee of the Corporation..


 


2.2      “Agreement.”  A written or electronic agreement between the
Corporation and a Participant evidencing the grant of an Award.  A Participant may be issued one or more
Agreements from time to time, reflecting one or more Awards.


 


2.3     “Adoption
Date.”  The date on which the
Board adopts this Plan, subject to the approval of the Plan by the Corporation’s
stockholders.


 


2.4     “Award.”  The grant of a Stock Option, Restricted
Stock, or a SAR.


 


2.5     “Board.”  The Board of Directors of the Corporation.


 


2.6      “Change in Control.” 
Except as otherwise provided in an Agreement, the first to occur of any
of the following events unless, in the case of Clauses (a), (b) and (c),
such event is pursuant to a
plan or arrangement approved by the Board:


 


 (a)  The Corporation is merged with or
into or consolidated with another corporation or other entity under
circumstances where (i) the stockholders of the Corporation immediately
prior to such merger or consolidation do not own after such merger or
consolidation shares representing more than fifty percent (50%) of the voting
power of the Corporation or other surviving entity;


 

















 


 (b)  The Corporation is liquidated or
sells or otherwise disposes of substantially all of its assets in a single
transaction or a series of related transactions;


 


 (c)  Any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) except
for any of the Corporation’s employee benefit plans, or any entity holding the
Corporation’s voting securities for, or pursuant to, the terms of any such plan
(or any trust forming a part thereof) shall become the beneficial owner (within the meaning of Rule 13d-3
under such Act) of forty (40%) percent or more of the Common Stock of the
Corporation; or


 


 (d)  During any period of
two consecutive years, individuals, who at the beginning of such period,
constituted the Board cease for any reason to constitute at least a majority of
the Board unless the election, or the nomination for election by the
Corporation’s stockholders, of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at
the beginning of the period.


 


Notwithstanding
Clause (c), a Change in Control shall not be deemed to have occurred if a
person becomes the beneficial owner, directly or indirectly, of the Corporation’s
securities representing forty (40%) percent or more of the combined voting
power of the Corporation’s then outstanding securities solely as a result of an
acquisition by the Corporation of its voting securities which, by reducing the
number of shares outstanding, increases the proportionate number of shares
beneficially owned by such person to forty (40%) percent or more of the
combined voting power of the Corporation’s then outstanding securities;
provided, however, that if a person becomes a beneficial owner of forty (40%)
percent   or more of the combined voting power of the
Corporation’s then outstanding securities by reason of share purchases by the
Corporation and shall, after such share purchases by the Corporation, become
the beneficial owner, directly or indirectly, of any additional voting
securities of the Corporation (other than as a result of a stock split, stock
dividend or similar transaction), then a Change in Control of the Corporation
shall be deemed to have occurred with respect to such person under
Clause (c).


 


2.7     “Code.”  The Internal Revenue Code of 1986, as
amended.


 


2.8     “Common Stock.”  The common stock of the Corporation (par
value $.001 per share) as described in the Corporation’s certificate of
incorporation, or such other stock as shall be substituted therefor.


 


2.9     “Consultant.”  A natural person who, or an employee of any
entity that, has contracted directly with the Corporation or a Subsidiary to
provide bona fide services to the Corporation or a Subsidiary not in connection
with the offer or sale of securities in a capital-raising transaction, but who
is not an Employee or a Non-Employee Director who is paid only for providing
services as a Director.


 


2.10   “Corporation.”  deCODE genetics, Inc., a Delaware
corporation.


 


2.11   “Disability.”  The meaning given such term in a person’s
employment, consulting or other agreement with the Corporation or, in the
absence thereof, in any disability insurance policy maintained by the
Corporation or a Subsidiary employing or contracting with such person, or in
the absence thereof, as defined in Section 22(e)(3) of the Code.


 

















 


2.12   “Employee.”  Any common law employee of the Corporation or
a Subsidiary, including any individual employed through an agreement between
the Corporation or a Subsidiary and a professional employer organization;
provided, however, that the term “Employee” does not include any individual who
renders services pursuant to a written arrangement that expressly provides that
the individual is not eligible for participation in the Plan, regardless if
such individual is later determined by the Internal Revenue Service or a court
of law to be a common law employee.


 


2.13   “Exchange
Act.”  The Securities Exchange
Act of 1934, as amended.


 


2.14   “Fair Market
Value.”  As of any date:


 


(a)  If the Common Stock is listed on an established stock
exchange or exchanges (including the Nasdaq Stock Market), the Fair Market
Value shall be deemed to be the closing price of the Common Stock on such stock
exchange or exchanges on the day before such date.  If no sale of Common Stock has been made on
any stock exchange on that day, the Fair Market Value shall be deemed to be
such closing price for the next preceding day on which a sale occurred.


 


(b)  If the Common Stock is not listed on an established stock
exchange (including the Nasdaq Stock Market), the Fair Market Value shall be
the mean between the closing dealer “bid” and “asked” prices for the Common
Stock for the day before such date, and if no “bid” and “asked” prices are
quoted for the day before such date, the Fair Market Value shall be determined
by reference to such prices on the next preceding day on which such prices were
quoted.


 


(c)  In the event that the Common Stock is not traded on an
established stock exchange (including the Nadsaq Stock Market) and no closing
dealer “bid” and “asked” prices are available on the day before such date,
then, subject to the conditions and limitations of Code Section 409A, and
the guidance promulgated thereunder, the Fair Market Value will be the price
determined by a reasonable application of a reasonable valuation method
established by the Administrator in good faith.


 


(d)  In connection with determining the Fair Market Value on any
relevant day, the Administrator may use any source deemed reliable; and its
determination shall be final and binding on all affected persons, absent clear
error.


 


2.15  “Incentive Stock Option.”  A Stock Option intended to satisfy the
requirements of Code Section 422(b).


 


2.16  “Non-Employee Director.”  A member of the Board or of the board of
directors of a Subsidiary  who is not an
Employee.


 


2.17  “Nonqualified Stock Option.”  A Stock Option that does not satisfy the
requirements of Code Section 422(b).


 


2.18  “Optionee.”  A Participant who is granted a Stock Option pursuant
to the provisions of the Plan.


 

















 


2.19  “Participant.”  An Employee, Consultant, or Non-Employee
Director to whom an Award has been granted and remains outstanding.


 


2.20  “Performance Criteria.”  Any objective determination of performance as
specified by the Administrator in an Award. 
Performance Criteria may differ from Participant to Participant and from
Award to Award.  Performance Criteria
shall be established by the Administrator prior to the issuance of a
Performance Grant.


 


2.21  “Performance Goal.”  One or more goals established by the
Administrator that relate to one or more Performance Criteria with respect to
an Award intended to constitute a Performance Grant.  A Performance Goal shall relate to such
period of time, as may be specified by the Administrator at the time of the
awarding of a Performance Grant.


 


2.22  “Performance Grant.”  An Award, the award, vesting or receipt
without restriction of which, is conditioned on the satisfaction of one or more
Performance Goals.


 


2.23  “Plan.”  The deCODE genetics, Inc.
2006 Equity Incentive Plan.


 


2.24  “Restricted Stock.”  An award of Common Stock pursuant to the
provisions of the Plan, which award is subject to such restrictions and other
conditions, if any, including achievement of one or more Performance Goals, as
may be specified by the Administrator at the time of such award.


 


2.25  “Reference Value.”  The dollar amount fixed as such at the date
of grant of a SAR, which amount shall not be less than the Fair Market Value of
the Common Stock on such date.


 


2.26  “Retirement.”  The termination of employment or service with
the Corporation or a Subsidiary of a Participant who is an Employee or a
Non-Employee Director following the first day of the month coincident with or
next following (i) attainment of age  65, and (ii) the
completion of five (5) years service, in the case of an Employee, or
three (3) years of service, in the case of a Non-Employee Director.


 


2.27  “Securities Act.”  The Securities Act of 1933, as amended.


 


2.28  “SAR.”  A stock appreciation right, which represents
the potential right to receive the increase (if any) in the Fair Market Value
of a share of Common Stock on the date of the exercise of such right over the
Reference Value of such share of Common Stock on the date the right is granted.


 


2.29  “Stock Option”
or “Option.”  A grant of a right to purchase Common Stock
pursuant to the provisions of the Plan.


 


2.30  “Subsidiary.”  A subsidiary corporation, as defined in Code Section 424(f),
that is a subsidiary of the Corporation.


 


2.31  “Tandem SAR.”  A SAR granted in connection with the
concurrent grant of an Option, which SAR shall expire to the extent the related
Option is exercised and vice versa.


 

















 


2.32   “Termination
or Dismissal For Cause.”  The
meaning ascribed to such term or a similar term in a person’s employment,
consulting or other agreement with the Corporation, or in the absence thereof


 


 (a) gross or habitual failure to perform
the person’s assigned duties that is not corrected within fifteen (15) days of
written notice to such person thereof; or


 


 (b) misconduct, including, but not
limited to: (i) conviction of a crime, or entry of a plea of nolo
contendere with regard to a crime, involving moral turpitude or dishonesty, (ii) illegal
drug use or alcohol abuse on Corporation premises or at a Corporation sponsored
event, (iii) conduct by the person which in the good faith and reasonable
determination of the Board demonstrates gross unfitness to serve, (iv) participation
in a fraud or act of dishonesty against the Corporation, or (v) intentional,
material violation by the person of any contract between the person and the
Corporation.


 


ARTICLE
3.  ADMINISTRATION


 


3.1     The Administrator.  The Plan shall be administered by the Board
or a committee of the Board to which the Board has delegated administration of
the Plan.  Any such committee shall be
composed of two or more members of the Board, all of whom are (a) “non-employee
directors” as such term is defined under the rules and regulations adopted
from time to time by the Securities and Exchange Commission pursuant to Section 16(b) of
the Exchange Act, and (b) “outside directors” within the meaning of
Code Section 162(m).  The Board
may from time to time remove members from, or add members to, such
committee.  Vacancies on such committee,
however caused, shall be filled by the Board. 
The Board may at any time, and from time to time, revest in itself the
administration of the Plan.


 


3.2     Powers of the
Administrator.


 


 (a)     The Administrator shall be vested with full
authority to make such rules and regulations as it deems necessary or
desirable to administer the Plan and to interpret the provisions of the
Plan.  Any determination, decision, or
action of the Administrator in connection with the construction, interpretation,
administration, or application of the Plan shall be final, conclusive, and
binding upon all Participants and any person claiming under or through a
Participant, unless otherwise determined by the Board.


 


 (b)     Subject to the terms, provisions and
conditions of the Plan, the Administrator shall have exclusive jurisdiction to:


 


(i)        determine and select the
individuals to be granted Awards (it being understood that more than one Award
may be granted to the same person);


 


(ii)       determine the number of
shares subject to each Award;


 


(iii)      determine the date or dates
when the Awards will be granted;


 


(iv)      determine the exercise price
of shares subject to an Option in accordance with Article 6;


 

















 


(v)       determine the date or dates
when an Option may be exercised within the term of the Option specified
pursuant to Article 7;


 


(vi)      determine whether an Option
constitutes an Incentive Stock Option or a Nonqualified Stock Option;


 


(vii)     determine the Reference Value
applicable to SARs;


 


(viii)    determine any Performance
Criteria and establish any Performance Goals with respect thereto, to be
applied to an Award; and


 


(ix)      prescribe the form, which
shall be consistent with the Plan document, of the Agreement evidencing any
Awards granted under the Plan.


 


3.3  Liability.  No member of the Board or any committee
serving as the Administrator shall be liable for any action or determination
made in good faith by the Board or the Administrator with respect to this Plan
or any Awards granted under this Plan.


 


3.4  Establishment and Certification of
Performance Goals.  The Administrator
shall establish, prior to grant, Performance Goals with respect to each Award
intended to constitute a Performance Grant. 
Except as may otherwise be provided in Articles 8 and 11 hereof, no
Option or SAR that is intended to constitute a Performance Grant may be
exercised until the Performance Goal or Goals applicable thereto is or are
satisfied, nor shall any share of Restricted Stock that is intended to
constitute a Performance Grant be released to a Participant until the
Performance Goal or Goals applicable thereto is or are satisfied.


 


3.5  Performance Grants Not Mandatory.  Nothing herein shall be construed as
requiring that any Award be made a Performance Grant.


 


ARTICLE
4.  COMMON STOCK SUBJECT TO THE PLAN


 


4.1  Common Stock Authorized.  The initial total aggregate number of shares
of Common Stock for which Awards may be granted under the Plan shall not exceed
10,000,000.  The limitation established
by the preceding sentence shall also be subject to adjustment as provided in Article 11.


 


4.2  Shares Available.  The Common Stock to be issued under the Plan
shall be the Corporation’s Common Stock which shall be made available at the
discretion of the Administrator, either from authorized but unissued Common
Stock or from Common Stock acquired by the Corporation, including shares
purchased in the open market.  In the
event that any outstanding Award under the Plan for any reason expires,
terminates, or is forfeited, the shares of Common Stock allocable to such
expiration, termination, or forfeiture may thereafter again be made subject to
an Award under the Plan.


 


4.3  Use and Replenishment of Authorized Shares.  All Awards shall be charged, on a
share-for-share basis, against the shares authorized under Section 4.1;
provided, however, that shares subject to a Tandem SAR shall be charged against
the authorized shares only once for the overall number of shares subject
thereto and not for both the number of shares subject to the 


 

















 


Tandem SAR portion of the
Award and the number of shares subject to the Option portion of the Award.  The provisions of the preceding sentence
shall apply whether an exercised SAR is settled in cash or stock, or partly in
both.  In the event that any outstanding
Award under the Plan for any reason expires, terminates, or is forfeited, the
shares of Common Stock allocable to such expiration, termination, or forfeiture
may thereafter again be made subject to an Award under the Plan; provided,
however, shares subject to a Tandem SAR shall be replenished only once for the
overall number of shares subject thereto and not for both the number of shares
subject to the SAR portion of the Award and the number of shares subject to the
Option portion of the Award.


 


ARTICLE
5.  ELIGIBILITY


 


5.1  Participation.  The Administrator shall grant awards only to
persons who are Employees, Consultants, or Non-Employee Directors.


 


5.2  Incentive Stock Option Eligibility.  The Administrator may grant Incentive Stock
Option Awards only to Employees. 
Notwithstanding any other provision of the Plan to the contrary, an
individual who owns more than ten percent of the total combined voting power of
all classes of outstanding stock of the Corporation shall not be eligible for
the grant of an Incentive Stock Option, unless the special requirements set
forth in Sections 6.1 and 7.1 are satisfied.  For purposes of this section, in determining
stock ownership, an individual shall be considered as owning the stock owned,
directly or indirectly, by or for his brothers and sisters (whether by the
whole or half blood), spouse, ancestors and lineal descendants.  Stock owned, directly or indirectly, by or
for a corporation, partnership, estate, or trust shall be considered as being
owned proportionately by or for its stockholders, partners, or
beneficiaries.  “Outstanding stock” shall
include all stock actually issued and outstanding immediately before the grant
of the Option.  “Outstanding stock” shall
not include shares authorized for issue under outstanding Options held by the
Optionee or by any other person.


 


ARTICLE
6.  STOCK OPTIONS IN GENERAL


 


6.1  Exercise Price.  The exercise price of an Option to purchase a
share of Common Stock shall be, in the case of an Incentive Stock Option, not
less than 100% of the Fair Market Value of a share of Common Stock on the date
the Option is granted, except that the exercise price shall be not less than
110% of such Fair Market Value in the case of an Incentive Stock Option granted
to any individual described in the second sentence of Section 5.2.  The exercise price of an Option to purchase a
share of Common Stock shall be, in the case of a Nonqualified Stock Option, not
less than 100% of the Fair Market Value of a share of Common Stock on the date
the Option is granted.  In no event shall
the exercise price of an Option be less than the fair market value (as
determined under Code Section 409A and the guidance promulgated
thereunder) on the date of grant.  The
exercise price shall be subject to adjustment pursuant to the limited
circumstances set forth in Article 11.


 


6.2  Limitation on Incentive Stock Options.  The aggregate Fair Market Value (determined
as of the date an Option is granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any individual in
any calendar year (under the Plan and any other plan maintained by the
Corporation or a Subsidiary) shall not exceed $100,000.


 
















 


6.3     Limitation on Option Awards.  Awards of Options under this Plan (and any
other plan of the Corporation or a Subsidiary providing for stock option
awards) to any individual Employee shall not exceed, in the aggregate, Options
to acquire 1,000,000 shares of Common Stock during any period of
12 consecutive months.  Such
limitation shall be subject to adjustment in the manner described in Article 11.  The limitation in this section shall not
include Options that are granted as a part of Tandem SARs.  This limitation shall be construed and
applied consistently with Section 162(m) of the Code.


 


6.4     Transferability of Options.


 


 (a)  Except as provided in
Subsection (b), an Option granted hereunder shall not be transferable
other than by will or the laws of descent and distribution, and such Option
shall be exercisable, during the Optionee’s lifetime, only by such Optionee.


 


 (b)  An Optionee may, with
the prior approval of the Administrator, transfer a Nonqualified Stock Option
for no consideration to or for the benefit of one or more members of the
Optionee’s “immediate family” (including a trust, partnership, or limited
liability company or other entity for the benefit of the Optionee and/or one or
more of such members to the extent that a registration statement on Form S-8
may be used for the exercise of an Option by such entity), subject to such
limits as the Administrator may impose, and the transferee shall remain subject
to all terms and conditions applicable to the Option prior to its transfer.  The term “immediate family” shall mean an
Optionee’s spouse, parents, children, stepchildren, adoptive relationships,
sisters, brothers, grandchildren and any other family member as to whom a
registration statement on Form S-8 may be used for the exercise of an Option.


 


ARTICLE
7.  TERM, VESTING AND EXERCISE OF OPTIONS


 


7.1     Term and Vesting.  Each Option granted under the Plan shall
terminate on the date determined by the Administrator, and specified in the
Agreement; provided, however, that (i) each intended Incentive Stock
Option granted to an individual described in the second sentence of Section 5.2
shall terminate not later than five years after the date of the grant, (ii) each
other intended Incentive Stock Option shall terminate not later than ten years
after the date of grant, and (iii) each Option granted under the Plan
which is intended to be a Nonqualified Stock Option shall terminate not later
than ten years after the date of grant. 
Each Option granted under the Plan shall become exercisable (i.e., vested)
only after the earlier of the date(s) (i) determined by the
Administrator and specified in an Agreement, including a date that may be tied
to the satisfaction of one or more Performance Goals); and (ii) if
provided in an Agreement, the Optionee’s death, disability  or
Retirement.  Except as provided in Article 8,
an Option may be exercised only during the continuance of the Optionee’s
employment or service with the Corporation or a Subsidiary.


 


7.2     Exercise.


 


 (a)  A person electing to
exercise an Option shall give notice to the Corporation of such election and of
the number of shares he or she has elected to purchase and shall at the time of
exercise tender the full exercise price of the shares he or she has elected to
purchase.  The exercise notice shall be
delivered to the Corporation in person, by certified mail, or by such other 


 

















 


method (including
electronic transmission) and in such form as determined by the
Administrator.  The exercise price shall
be paid in full, in cash, upon the exercise of the Option; provided, however,
that in lieu of cash, unless the Administrator otherwise provides prior to
exercise, an Optionee may exercise an Option by tendering to the Corporation
shares of Common Stock owned by him or her and having a Fair Market Value equal
to the cash exercise price applicable to the Option (with the Fair Market Value
of such stock to be determined in the manner provided in Section 6.3) or
by delivering such combination of cash and such shares as the Administrator in
its sole discretion may approve; further provided, however, that no such manner
of exercise shall be permitted if such exercise would violate Section 402
of the Sarbanes-Oxley Act of 2002. 
Notwithstanding the foregoing, Common Stock acquired pursuant to the
exercise of an Incentive Stock Option may not be tendered as payment unless the
holding period requirements of Code Section 422(a)(1) have been
satisfied, and Common Stock not acquired pursuant to the exercise of an
Incentive Stock Option may not be tendered as payment unless it has been held,
beneficially and of record, for at least six months (or such longer time as may
be required by applicable securities law or accounting principles to avoid
adverse consequences to the Corporation, a Subsidiary, or a Participant).  If the Administrator so provides, the
exercise price may be paid in any other form permitted by applicable law.


 


 (b)  A person holding more
than one Option at any relevant time may, in accordance with the provisions of
the Plan, elect to exercise such Options in any order.


 


 (c)  Unless the
Administrator otherwise provides, at the request of the Participant and to the
extent permitted by applicable law, the Participant may pay the exercise price
by irrevocably authorizing a third party to sell shares of Common Stock (or a
sufficient portion of the shares) acquired upon the exercise of an Option and
to remit to the Corporation a sufficient portion of the sales proceeds to pay
the entire exercise price and any tax withholding required as a result of such
exercise.


 


ARTICLE
8.  EXERCISE OF OPTIONS FOLLOWING
TERMINATION

OF EMPLOYMENT OR SERVICE


 


8.1     Retirement; Other Termination by
Corporation or Subsidiary.  In the
event of an Optionee’s termination of employment or Optionee’s termination of
service as a Non-Employee Director (i) due to Retirement or (ii) by
the Corporation or a Subsidiary other than Termination for Cause, such Optionee’s
Option shall lapse at the earlier of the expiration of the term of such Option
or, unless otherwise determined by the Administrator:


 


 (a)  in the case of an
Incentive Stock Option, three months from the date of such termination of
employment; and


 


 (b)  in the case of a
Nonqualified Stock Option,  one year from
the date of such termination of employment or service.


 


8.2  Death or Total Disability.  In the event of an Optionee’s termination of
service due to death or Disability, such Optionee’s Option shall lapse at the
earlier of the expiration of the term of such Option or, unless otherwise
determined by the Administrator:


 

















 


(a)           in the case of
termination of employment or service due to death, eighteen (18) months from
the date of termination of such employment or service; and


 


(b)           in the case of
termination of employment or service due to Disability, one year from the date
of such termination of employment or service.


 


8.3  Termination or Dismissal For Cause; Other
Termination by Optionee.  In the
event of an Optionee’s Termination or Dismissal For Cause, or in the event of
termination of employment or service with the Corporation or a Subsidiary at
the election of an Optionee, such Optionee’s Option shall lapse at the earlier
of the expiration of the term of such Option or, unless otherwise determined by
the Administrator, three months from the date of such termination of employment
or service unless otherwise determined by the Administrator.


 


8.4  Special Termination Provisions for Options.


 


(a)  In the event that an Optionee’s employment or service with
the Corporation or a Subsidiary is terminated and the Administrator deems it equitable
to do so, the Administrator may, in its discretion, waive any continuous
service requirement for vesting  (but not any
Performance Goals) specified in an Agreement pursuant to Section 7.1 and
permit exercise of an Option held by such Optionee prior to the satisfaction of
such continuous service requirement.  Any
such waiver may be made with retroactive effect, provided it is made within
60 days following the Optionee’s termination of employment or service.


 


(b)  Notwithstanding any waiver by the Administrator of the
continuous service requirement with respect to an Option as set forth in Section 8.4(a) above
and the circumstance of an Optionee’s termination of employment or service with
the Corporation or a Subsidiary is described in Sections 8.1 or 8.2, such
Option shall lapse as otherwise provided in the relevant section.


 


(c)  Notwithstanding anything to the contrary contained herein,
following termination of an Optionee’s employment or service with the
Corporation, any Option that remains exercisable shall terminate immediately if
the Optionee disparages the Corporation or violates the terms of any
non-competition or other agreement then in effect between the Optionee and the
Corporation, in each case as reasonably determined by the Administrator.


 


ARTICLE
9.  RESTRICTED STOCK


 


9.1  In General.  Each Restricted Stock Award shall be subject
to such terms and conditions as may be specified in the Agreement issued to a
Participant to evidence the grant of such Award.  Restricted Stock may be issued to a
Participant for no payment by the Participant or for such payment, including
payment below the Fair Market Value of the Restricted Stock on the date of
grant, as the Administrator may determine.


 


9.2  Minimum Vesting Period for Certain
Restricted Stock Awards.  Each
Restricted Stock Award granted to a Participant shall become free of
restriction (i.e., become vested) at such times or upon such events (including,
without limitation, the satisfaction of one or more Performance Goals)
as determined by the Administrator and specified in an Agreement,
provided, however, that, unless earlier vested pursuant to Section 9.3, (a) a
Restricted Stock Award which is a 


 

















 


Performance Grant shall
vest not earlier than one (1) year after the date of grant notwithstanding
earlier satisfaction of the related Performance Goal or Goals and (b) any
other Restricted Stock Award shall vest over a period of not less than three (3) years,
provided, further that the foregoing limitations shall not apply to Restricted
Stock Awards granted by a committee to which the Board has delegated
administration of the Plan pursuant to Section 3.1 hereof in an amount not
to exceed, in the aggregate, ten percent (10%) of the shares available for
grant under this Plan.


 


9.3  Waiver of Vesting Period for Certain
Restricted Stock Awards.  In the
event that a Participant’s employment or service with the Corporation or a
Subsidiary is terminated and the Administrator deems it equitable to do so, the
Administrator may, in its discretion waive any minimum vesting period (but not
the satisfaction of any Performance Goals) with respect to a Restricted Stock
Award held by such Participant, provided, however, that the number of shares
subject to Restricted Stock Awards as to which the minimum vesting period is
waived upon termination of employment or service other than as a result of
death, Disability or Retirement shall not exceed, in the aggregate, ten percent
(10%) of the shares available for grant under this Plan.   Any such waiver may be made with retroactive
effect, provided it is made within 60 days following such termination of
employment or service.


 


9.4  Issuance and Retention of Share
Certificates By Corporation.  One or
more share certificates shall be issued upon the grant of a Restricted Stock Award;
but, until such time as the Restricted Stock shall vest or otherwise become
distributable by reason of satisfaction of one or more Performance Goals, the
Corporation shall retain such share certificates.  In lieu of the foregoing, the Corporation may
instruct its transfer agent to make a book entry record showing ownership of
the Restricted Stock in the name of the Participant subject to the terms and
conditions of the Plan and the applicable Agreement.


 


9.5  Stock Powers.  At the time of the grant of a Restricted
Stock Award, the Participant to whom the grant is made shall deliver such stock
powers, endorsed in blank, as may be requested by the Corporation.


 


9.6  Release of Shares.  Within 30 days following the date on
which a Participant becomes entitled under an Agreement to receive shares of
previously Restricted Stock, the Corporation shall deliver to him or her a
certificate evidencing the ownership of such shares or, at the request of the
Participant, shall arrange for a transfer of the previously Restricted Stock in
book entry form to a brokerage account designated by the Participant.


 


9.7   Forfeiture of Restricted Stock Awards.  In the event of the forfeiture of a
Restricted Stock Award, by reason of a Participant’s termination of employment
or service with the Corporation or a Subsidiary prior to vesting, the failure
to achieve a Performance Goal or otherwise, the Corporation shall take such
steps as may be necessary to cancel the affected shares and return the same to
its treasury.


 


9.8  Assignment, Transfer, Etc. of Restricted
Stock Rights.  The potential rights
of a Participant to shares of Restricted Stock may not be assigned,
transferred, sold, pledged, hypothecated, or otherwise encumbered or disposed
of until such time as unrestricted certificates 


 

















 


for such shares are
received by him or her or a book entry transfer is made to the Participant’s
brokerage account unless otherwise determined by the Administrator.


 


ARTICLE
10.  STOCK APPRECIATION RIGHTS


 


10.1  In
General.  SARs shall be subject to
such terms and conditions as may be specified in the Agreement issued to the Participant to evidence the grant of such an Award;
provided, however, that in no event shall the Reference Value of a SAR be less
than the Fair Market Value on the date of grant.


 


10.2  Term,
Vesting and Exercise Following Termination. 
SARs shall be subject to the Plan’s term and vesting rules, and the rules for
exercise following termination of service, applicable to Nonqualified Stock Options;
provided, however, that in the case of a Tandem SAR, such SAR shall be subject
to the same term and vesting rules, and the rules for exercise following
termination of service, applicable to its related Option.


 


10.3  Exercise
Procedures and Payment.  SARs shall be subject to such exercise
procedures as may be established by the Administrator in the relevant
Agreement.  Each SAR shall entitle a
Participant upon exercise to an amount equal to (i) the excess of (A) the
Fair Market Value on the exercise date of one share of Common Stock over (B) the
Reference Value per share of Common Stock, times (ii) the number of shares
of Common Stock covered by the SAR. 
Payment required upon the exercise of a SAR shall be made within
30 days of exercise and may be made in cash, stock, or partly in both, as
specified by the Administrator in the relevant Agreement or otherwise.


 


10.4  Certain
Additional Provisions and Conditions.  The Agreement evidencing the grant of any
Tandem SAR under the Plan shall contain such additional provisions and conditions
as may be necessary to comply with any applicable securities law and
exchange-related requirements and, in the case of a Tandem SAR that includes an
intended Incentive Stock Option, such provisions and conditions as may be
necessary to qualify the Option as such.


 


10.5  Assignment,
Transfer, Etc. of SARs.  The rights
of a Participant under a SAR shall not be transferable other than by will or
the laws of descent and distribution and such SAR shall be exercisable, during
the Participant’s lifetime, only by him or her, provided, however,
that a Tandem SAR shall be transferable to the same extent as the related Stock
Option.


 


10.6  Limitation on SAR Awards.  Awards of SARs under this Plan (and any other
plan of the Corporation or a Subsidiary providing for SAR awards) to any
individual Employee shall not exceed, in the aggregate, SARs for
1,000,000 shares of Common Stock during any period of 12 consecutive
months.  Such limitation shall be subject
to adjustment in the manner described in Article 11.  This limitation shall be construed and
applied consistently with Section 162(m) of the Code.


 

















 


ARTICLE
11.  ADJUSTMENT PROVISIONS


 


11.1  Share Adjustments.


 


(a)  In the event that the shares of Common Stock of the
Corporation, as presently constituted, shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of the
Corporation or any other entity, or if the number of such shares of Common
Stock shall be changed through the payment of a stock dividend, stock split or
reverse stock split, then (i) the shares of Common Stock authorized
hereunder to be made the subject of Awards, (ii) the shares of Common
Stock then subject to outstanding Awards and the exercise price thereof (where
relevant), (iii) the maximum number of Awards that may be granted within a
12-month period and (iv) the nature and terms of the shares of stock or
securities subject to Awards hereunder shall be increased, decreased or
otherwise changed to such extent and in such manner as may be necessary or
appropriate to reflect any of the foregoing events.


 


(b)  If there shall be any other change in the number or kind of
the outstanding shares of the Common Stock of the Corporation, or of any stock
or other securities into which such Common Stock shall have been changed, or
for which it shall have been exchanged, and if a Administrator shall, in its
sole discretion, determine that such change equitably requires an adjustment in
any Award which was theretofore granted or which may thereafter be granted under
the Plan, then such adjustment shall be made in accordance with such
determination.


 


(c)  The grant of an Award pursuant to the Plan shall not affect
in any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure, to merge, to consolidate, to dissolve, to liquidate or to sell or
transfer all or any part of its business or assets.


 


11.2  Corporate Changes.  A liquidation or dissolution of the
Corporation, a merger or consolidation in which the Corporation is not the
surviving entity or a sale of all or substantially all of the Corporation’s
assets in a single transaction or series of related transactions shall cause
each outstanding Award to terminate, except to the extent that another
corporation or other entity may and does, in the transaction, assume and
continue the Award, substitute its own awards, or otherwise makes provision for
the payment of appropriate value therefor.


 


11.3  Fractional Shares.  Fractional shares resulting from any
adjustment in Awards pursuant to this Article may be settled, as the
Administrator shall determine.


 


11.4  Binding Determination.  To the extent that the foregoing adjustments
relate to stock or securities of the Corporation, such adjustments shall be
made by the Administrator, whose determination in that respect shall be final,
binding, and conclusive.  The Corporation
shall give notice of any adjustment to each holder of an Award that has been so
adjusted.


 


ARTICLE
12.  GENERAL PROVISIONS


 


12.1  Effective Date.  The Plan shall become effective the Adoption
Date, provided that stockholder approval is obtained within 12 months of
the adoption of the Plan by the Board.


 


12.2  Termination of the Plan.  Unless previously terminated by the Board,
the Plan shall terminate on, and the Administrator shall grant no Award after
the day immediately preceding the tenth anniversary of the Adoption Date.


 

















 


12.3  Limitation on Termination, Amendment,
Modification, or Suspension.


 


(a)  The Board may at any time terminate, amend, modify, or
suspend the Plan, provided that, without the approval of the stockholders of
the Corporation, no amendment or modification shall be made solely by the Board
which:


 


(i)     increases the maximum number of shares of
Common Stock as to which Awards may be granted under the Plan (except as
provided in Section 11.1);


 


(ii)    changes the class of eligible Participants;
or


 


(iii)   otherwise requires the approval of
stockholders under applicable federal or state law or the requirements of any
securities exchange on which the securities of the Corporation are then listed
to avoid potential liability or adverse consequences to the Corporation or a
Participant.


 


(b)  No termination, amendment, modification, or suspension of the
Plan shall in any manner affect any Award theretofore granted under the Plan
without the consent of the Participant or any person validly claiming under or
through the Participant.


 


12.4  No Right to Grant of Award or Continued
Service.  Nothing contained in this
Plan or otherwise shall be construed to (a) require the grant of an Award
to an individual who meets the eligibility criteria set forth in Article 5,
or (b) confer upon a Participant any right to continue in the employment
or service with the Corporation or any Subsidiary or limit in any respect the
right of the Corporation or of any Subsidiary to terminate the Participant’s
employment or service with the Corporation or Subsidiary at any time and for
any reason.


 


12.5  No Obligation.  No exercise of discretion under this Plan
with respect to an event or person shall create an obligation to exercise such
discretion in any similar or same circumstance, except as otherwise provided or
required by law.


 


12.6  Intentionally Omitted.


 


12.7  Special Rules of Interpretation for
Participants Who are not Employees. 
In the case of a Participant who is not an Employee on the date on which
an Award is made, (a) all references herein to “termination of employment
or service” (or words to that effect) shall be construed as references to
termination of the working or consulting relationship with the Corporation or
Subsidiary, as the case may be and (b) this Plan shall otherwise be
construed, as appropriate, to take into account that such Participant is or was
not an Employee on the date of grant of an Award.


 


12.8  Change in Control.  The Administrator shall have the power to
specify in the applicable Agreement, or otherwise provide by resolution prior
to a Change in Control or the occurrence of any other event described in Section 11.2,
(i) that all or a portion of the outstanding Awards shall vest, become
immediately exercisable or payable and have all restrictions lifted upon, or
immediately prior to, a Change in Control or such other event and (ii) that
following a Change in Control, all or a portion of any Awards not terminated
pursuant to Section 11.2 shall be exercisable for the full term thereof
notwithstanding any termination of employment or services as a Non-Employee
Director by the Award holder.


 

















 


12.9   Miscellaneous Rules of Construction.  The transfer of an Employee between the
Corporation and any of its Subsidiaries, without more, shall not be deemed a
termination of the employment relationship for purposes of this Plan.  The change in status of a Participant from an
Employee to a Consultant and vice versa shall not constitute a termination of
employment or service for purposes of this Plan (except with respect to the
eligibility requirements to receive an Incentive Stock Options as set forth in Section 5.2).


 


12.10
Withholding Taxes.


 


 (a)  Subject to the
provisions of Subsection (b), the Corporation will require, where
sufficient funds are not otherwise available, that a Participant who is an
Employee pay or reimburse to it any withholding taxes when withholding is
required by law.


 


 (b)  Unless the
Administrator otherwise provides, a Participant who is an Employee may satisfy
the withholding obligation described in Subsection (a), in whole or in
part, by electing to have the Corporation withhold shares of Common Stock
(otherwise issuable to him or her) having a Fair Market Value equal to the
amount required to be withheld.  An
election by a Participant who is an Employee to have shares withheld for this
purpose shall be subject to such conditions as may then be imposed thereon by
any applicable securities law.


 


12.11
Listing and Registration of Shares.


 


 (a)  No Option or SAR
granted pursuant to the Plan shall be exercisable in whole or in part, and no
share certificate shall be delivered, if at any relevant time the Administrator
determines in its discretion that the listing, registration, or qualification
of the shares of Common Stock subject to an Award on any securities exchange or
under any applicable law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection with, such
Award, until such listing, registration, qualification, consent, or approval
shall have been effected or obtained free of any conditions not acceptable to
the Administrator.


 


 (b)  If a registration
statement under the Securities Act with respect to the shares issuable under
the Plan is not in effect at any relevant time, as a condition of the issuance
of the shares, a Participant (or any person claiming through a Participant)
shall give the Administrator a written or electronic statement, satisfactory in
form and substance to the Administrator, that he or she is acquiring the shares
for his or her own account for investment and not with a view to their
distribution.  The Corporation may place
upon any stock certificate for shares issued under the Plan the following
legend or such other legend as the Administrator may prescribe to prevent
disposition of the shares in violation of the Securities Act or other
applicable law:


 


“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (“ACT”) AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED OR OFFERED FOR SALE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THEM UNDER THE ACT OR A
WRITTEN OPINION OF COUNSEL FOR THE CORPORATION THAT REGISTRATION IS NOT
REQUIRED.”


 

















 


12.12  Gender; Number.  Words of one gender, wherever used herein,
shall be construed to include each other gender, as the context requires.  Words used herein in the singular form shall
include the plural form, as the context requires, and vice versa.


 


12.13  Applicable Law.  Except to the extent preempted by
federal law, this Plan document, and the Agreements issued pursuant hereto, shall
be construed, administered, and enforced in accordance with the domestic
internal law of the State of Delaware.


 


12.14  Headings.  The headings of the several Articles and
Sections of this Plan document have been inserted for convenience of reference
only and shall not be used in the construction of the same.