Exhibit 10.2


 


VANTAGE DRILLING COMPANY


 


2007
LONG-TERM INCENTIVE COMPENSATION PLAN


 


ARTICLE
I


PURPOSE


 


Section 1.1  Purpose.  This 2007 Long-Term Incentive Compensation
Plan (the “Plan”), originally established by Vantage Energy Services, Inc.,
a Delaware corporation, and subsequently adopted by Vantage Drilling Company (the
“Company”), is to create incentives which are designed to motivate Participants
to put forth maximum effort toward the success and growth of the Company and to
enable the Company to attract and retain experienced individuals who by their
position, ability and diligence are able to make important contributions to the
Company’s success. Toward these objectives, the Plan provides for the grant of
Options, Restricted Stock Awards, Stock Appreciation Rights (“SARs”),
Performance Units and Performance Bonuses to Eligible Employees and the grant
of Nonqualified Stock Options, Restricted Stock Awards, SARs and Performance
Units to Consultants and Eligible Directors, subject to the conditions set forth
in the Plan.


 


Section 1.2  Establishment.  The Plan is effective as of June 12, 2008 and
for a period of ten years thereafter. The Plan shall continue in effect until
all matters relating to the payment of Awards and administration of the Plan
have been settled. The Plan is subject to approval by the Company’s
stockholders in accordance with applicable law which approval must occur within
the period ending twelve months after the date the Plan is adopted by the
Board. Pending such approval by the stockholders, Awards under the Plan may be
granted, but no such Awards may be exercised prior to receipt of stockholder
approval. In the event stockholder approval is not obtained within a twelve-month
period, all Awards granted shall be void.


 


Section 1.3  Shares Subject
to the Plan. 
Subject to the limitations set forth in the Plan, Awards may be made
under this Plan for a total of 7,500,000 shares of the Company’s ordinary
shares, par value $.001 per share (the “Common Stock”).


 


ARTICLE II


DEFINITIONS


 


Section 2.1  “Account”
means the recordkeeping account established by the Company to which will be
credited an Award of Performance Units to a Participant.


 


Section 2.2  “Affiliated
Entity” means any corporation, partnership, limited
liability company or other form of legal entity in which a majority of the
partnership or other similar interest thereof is owned or controlled, directly
or indirectly, by the Company or one or more of its Subsidiaries or Affiliated
Entities or a combination thereof. For purposes hereof, the Company, a
Subsidiary or an Affiliated Entity shall be deemed to have a majority ownership
interest in a partnership or limited liability company if the Company, such
Subsidiary or Affiliated Entity shall be allocated a majority of partnership or
limited liability company gains or losses or shall be or control a managing
director or a general partner of such partnership or limited liability company.


 


Section 2.3  “Award”
means, individually or collectively, any Option, Restricted Stock Award, SAR,
Performance Unit or Performance Bonus granted under the Plan to an Eligible
Employee by the Board or any Nonqualified Stock Option, Performance Unit SAR or
Restricted Stock Award granted under the Plan to a Consultant or an Eligible
Director by the Board pursuant to such terms, conditions, restrictions, and/or
limitations, if any, as the Board may establish by the Award Agreement or
otherwise.


 


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Section 2.4  “Award
Agreement” means any written instrument that
establishes the terms, conditions, restrictions, and/or limitations applicable
to an Award in addition to those established by this Plan and by the Board’s
exercise of its administrative powers.


 


Section 2.5  “Board”
means the Board of Directors of the Company and, if the Board has appointed a
Committee as provided in Section 3.1, the term “Board” shall include such
Committee.


 


Section 2.6  “Change of
Control Event” means each of the following:


 


(i)             Any
transaction in which shares of voting securities of the Company representing
more than 50% of the total combined voting power of all outstanding voting
securities of the Company are issued by the Company, or sold or transferred by
the stockholders of the Company as a result of which those persons and entities
who beneficially owned voting securities of the Company representing more than
50% of the total combined voting power of all outstanding voting securities of
the Company immediately prior to such transaction cease to beneficially own
voting securities of the Company representing more than 50% of the total
combined voting power of all outstanding voting securities of the Company
immediately after such transaction;


 


(ii)          The
merger or consolidation of the Company with or into another entity as a result
of which those persons and entities who beneficially owned voting securities of
the Company representing more than 50% of the total combined voting power of
all outstanding voting securities of the Company immediately prior to such
merger or consolidation cease to beneficially own voting securities of the
Company representing more than 50% of the total combined voting power of all
outstanding voting securities of the surviving corporation or resulting entity
immediately after such merger of consolidation; or


 


(iii)       The
sale of all or substantially all of the Company’s assets to an entity of which
those persons and entities who beneficially owned voting securities of the
Company representing more than 50% of the total combined voting power of all
outstanding voting securities of the Company immediately prior to such asset
sale do not beneficially own voting securities of the purchasing entity
representing more than 50% of the total combined voting power of all
outstanding voting securities of the purchasing entity immediately after such
asset sale.


 


Section 2.7  “Code”
means the Internal Revenue Code of 1986, as amended. References in the Plan to
any section of the Code shall be deemed to include any amendments or successor
provisions to such section and any regulations under such section.


 


Section 2.8  “Committee”
means the Committee appointed by the Board as provided in Section 3.1.


 


Section 2.9  “Common Stock”
means the ordinary shares, par value $.001 per share, of the Company, and after
substitution, such other stock as shall be substituted therefore as provided in
Article X.


 


Section 2.10  “Consultant”
means any person who is engaged by the Company, a Subsidiary or an Affiliated
Entity to render consulting or advisory services.


 


Section 2.11  “Date of Grant”
means the date on which the grant of an Award is authorized by the Board or
such later date as may be specified by the Board in such authorization.


 


Section 2.12  “Disability”
means the Participant is unable to continue employment by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months. For purposes of this Plan, the determination of Disability
shall be made in the sole and absolute discretion of the Board.


 


Section 2.13  “Eligible
Employee” means any employee of the Company, a
Subsidiary, or an Affiliated Entity as approved by the Board.


 


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Section 2.14  “Eligible
Director” means any member of the Board who is not an
employee of the Company, a Subsidiary or an Affiliated Entity.


 


Section 2.15  “Exchange Act”
means the Securities Exchange Act of 1934, as amended.


 


Section 2.16  “Fair Market
Value” means (A) during such time as the Common
Stock is registered under Section 12 of the Exchange Act, the closing
price of the Common Stock as reported by an established stock exchange or
automated quotation system on the day for which such value is to be determined,
or, if no sale of the Common Stock shall have been made on any such stock
exchange or automated quotation system that day, on the next preceding day on
which there was a sale of such Common Stock, or (B) during any such time
as the Common Stock is not listed upon an established stock exchange or
automated quotation system, the mean between dealer “bid” and “ask” prices of
the Common Stock in the over-the-counter market on the day for which such value
is to be determined, as reported by the National Association of Securities
Dealers, Inc., or (C) during any such time as the Common Stock cannot
be valued pursuant to (A) or (B) above, the fair market value shall
be as determined by the Board considering all relevant information including,
by example and not by limitation, the services of an independent appraiser.


 


Section 2.17  “Incentive
Stock Option” means an Option within the meaning of Section 422
of the Code.


 


Section 2.18  “Nonqualified
Stock Option” means an Option which is not an
Incentive Stock Option.


 


Section 2.19  “Option”
means an Award granted under Article V of the Plan and includes both
Nonqualified Stock Options and Incentive Stock Options to purchase shares of
Common Stock.


 


Section 2.20  “Participant”
means an Eligible Employee, a Consultant or an Eligible Director to whom an
Award has been granted by the Board under the Plan.


 


Section 2.21  “Performance
Bonus” means the cash bonus which may be granted to
Eligible Employees under Article IX of the Plan.


 


Section 2.22  “Performance
Units” means those monetary units that may be granted
to Eligible Employees, Consultants or Eligible Directors pursuant to Article VIII
hereof.


 


Section 2.23  “Plan”
means this Vantage Energy Services, Inc. 2007 Long-Term Incentive
Compensation Plan.


 


Section 2.24  “Restricted
Stock Award” means an Award granted to an Eligible
Employee, Consultant or Eligible Director under Article VI of the Plan.


 


Section 2.25  “Retirement”
means the termination of an Eligible Employee’s employment with the Company, a
Subsidiary or an Affiliated Entity on or after attaining age     .


 


Section 2.26  “SAR”
means a stock appreciation right granted to an Eligible Employee, Consultant or
Eligible Director under Article VII of the Plan.


 


Section 2.27  “Subsidiary”
shall have the same meaning set forth in Section 424 of the Code.


 


ARTICLE
III


ADMINISTRATION


 


Section 3.1  Administration
of the Plan by the Board.  The Board shall administer the Plan. The
Board may, by resolution, appoint the Compensation Committee to administer the
Plan and delegate its powers described under this Section 3.1 and
otherwise under the Plan for purposes of Awards granted to Eligible Employees
and Consultants.


 


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Subject to the provisions of
the Plan, the Board shall have exclusive power to:


 


(a)          Select
Eligible Employees and Consultants to participate in the Plan.


 


(b)         Determine
the time or times when Awards will be made to Eligible Employees or
Consultants.


 


(c)          Determine
the form of an Award, whether an Incentive Stock Option, Nonqualified Stock
Option, Restricted Stock Award, SAR, Performance Unit, or Performance Bonus,
the number of shares of Common Stock or Performance Units subject to the Award,
the amount and all the terms, conditions (including performance requirements),
restrictions and/or limitations, if any, of an Award, including the time and
conditions of exercise or vesting, and the terms of any Award Agreement, which
may include the waiver or amendment of prior terms and conditions or
acceleration or early vesting or payment of an Award under certain
circumstances determined by the Board.


 


(d)         Determine
whether Awards will be granted singly or in combination.


 


(e)          Accelerate
the vesting, exercise or payment of an Award or the performance period of an
Award.


 


(f)            Determine
whether and to what extent a Performance Bonus may be deferred, either
automatically or at the election of the Participant or the Board.


 


(g)         Take
any and all other action it deems necessary or advisable for the proper
operation or administration of the Plan.


 


Section 3.2  Administration
of Grants to Eligible Directors.  The Board shall have the exclusive power to
select Eligible Directors to participate in the Plan and to determine the
number of Nonqualified Stock Options, Performance Units, SARs or shares of
Restricted Stock awarded to Eligible Directors selected for participation. If
the Board appoints a committee to administer the Plan, it may delegate to the
committee administration of all other aspects of the Awards made to Eligible
Directors.


 


Section 3.3  Board to Make Rules and
Interpret Plan. 
The Board in its sole discretion shall have the authority, subject to
the provisions of the Plan, to establish, adopt, or revise such rules and
regulations and to make all such determinations relating to the Plan, as it may
deem necessary or advisable for the administration of the Plan. The Board’s
interpretation of the Plan or any Awards and all decisions and determinations
by the Board with respect to the Plan shall be final, binding, and conclusive
on all parties.


 


Section 3.4  Section 162(m) Provisions.  The Company intends for the Plan and the
Awards made there under to qualify for the exception from Section 162(m) of
the Code for “qualified performance based compensation” if it is determined by
the Board that such qualification is necessary for an Award. Accordingly, the
Board shall make determinations as to performance targets and all other
applicable provisions of the Plan as necessary in order for the Plan and Awards
made there under to satisfy the requirements of Section 162(m) of the
Code.


 


ARTICLE
IV


GRANT
OF AWARDS


 


Section 4.1  Grant of
Awards.  Awards
granted under this Plan shall be subject to the following conditions:


 


(a)          Any
shares of Common Stock related to Awards which terminate by expiration,
forfeiture, cancellation or otherwise without the issuance of shares of Common
Stock or are exchanged in the


 


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Board’s
discretion for Awards not involving Common Stock, shall be available again for
grant under the Plan and shall not be counted against the shares authorized
under Section 1.3.


 


(b)         Common
Stock delivered by the Company in payment of an Award authorized under Articles
V and VI of the Plan may be authorized and unissued Common Stock or Common
Stock held in the treasury of the Company.


 


(c)          The
Board shall, in its sole discretion, determine the manner in which fractional
shares arising under this Plan shall be treated.


 


(d)         Separate
certificates or a book-entry registration representing Common Stock shall be
delivered to a Participant upon the exercise of any Option.


 


(e)          The
Board shall be prohibited from canceling, reissuing or modifying Awards if such
action will have the effect of repricing the Participant’s Award.


 


(f)            Eligible
Directors may only be granted Nonqualified Stock Options, Restricted Stock
Awards, SARs or Performance Units under this Plan.


 


(g)         The
maximum term of any Award shall be ten years.


 


ARTICLE
V


STOCK
OPTIONS


 


Section 5.1  Grant of
Options.  The
Board may, from time to time, subject to the provisions of the Plan and such
other terms and conditions as it may determine, grant Options to Eligible
Employees. These Options may be Incentive Stock Options or Nonqualified Stock
Options, or a combination of both. The Board may, subject to the provisions of
the Plan and such other terms and conditions as it may determine, grant
Nonqualified Stock Options to Eligible Directors and Consultants. Each grant of
an Option shall be evidenced by an Award Agreement executed by the Company and
the Participant, and shall contain such terms and conditions and be in such
form as the Board may from time to time approve, subject to the requirements of
Section 5.2.


 


Section 5.2  Conditions of
Options.  Each
Option so granted shall be subject to the following conditions:


 


(a)          Exercise
Price.  As limited by Section 5.2(e) below,
each Option shall state the exercise price which shall be set by the Board at
the Date of Grant; provided, however, no Option shall be granted at an exercise
price which is less than the Fair Market Value of the Common Stock on the Date
of Grant.


 


(b)         Form of
Payment.  The exercise price of an Option
may be paid (i) in cash or by check, bank draft or money order payable to
the order of the Company; (ii) by delivering shares of Common Stock having
a Fair Market Value on the date of payment equal to the amount of the exercise
price, but only to the extent such exercise of an Option would not result in an
adverse accounting charge to the Company for financial accounting purposes with
respect to the shares used to pay the exercise price unless otherwise
determined by the Board; or (iii) a combination of the foregoing. In
addition to the foregoing, the Board may permit an Option granted under the
Plan to be exercised by a broker-dealer acting on behalf of a Participant
through procedures approved by the Board.


 


(c)          Exercise
of Options.  Options granted under the
Plan shall be exercisable, in whole or in such installments and at such times,
and shall expire at such time, as shall be provided by the Board in the Award
Agreement. Exercise of an Option shall be by written notice to the Secretary of
the Company at least two business days in advance of such exercise stating the
election to exercise in the form and manner determined by the Board. Every share
of Common Stock


 


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acquired
through the exercise of an Option shall be deemed to be fully paid at the time
of exercise and payment of the exercise price.


 


(d)         Other
Terms and Conditions.  Among other conditions
that may be imposed by the Board, if deemed appropriate, are those relating to (i) the
period or periods and the conditions of exercisability of any Option; (ii) the
minimum periods during which Participants must be employed by the Company, its
Subsidiaries, or an Affiliated Entity, or must hold Options before they may be
exercised; (iii) the minimum periods during which shares acquired upon
exercise must be held before sale or transfer shall be permitted; (iv) conditions
under which such Options or shares may be subject to forfeiture; (v) the
frequency of exercise or the minimum or maximum number of shares that may be
acquired at any one time; (vi) the achievement by the Company of specified
performance criteria; and (vii) non-compete and protection of business
matters.


 


(e)          Special
Restrictions Relating to Incentive Stock Options.  Options issued in the form of Incentive Stock
Options shall only be granted to Eligible Employees of the Company or a
Subsidiary, and not to Eligible Employees of an Affiliated Entity unless such
entity shall be considered as a “disregarded entity” under the Code and shall
not be distinguished for federal tax purposes from the Company or the
applicable Subsidiary.


 


(f)            Application
of Funds.  The proceeds received by the
Company from the sale of Common Stock pursuant to Options will be used for
general corporate purposes.


 


(g)         Stockholder
Rights.  No Participant shall have a
right as a stockholder with respect to any share of Common Stock subject to an
Option prior to purchase of such shares of Common Stock by exercise of the
Option.


 


ARTICLE
VI


RESTRICTED
STOCK AWARDS


 


Section 6.1  Grant of
Restricted Stock Awards.  The Board may, from time to time, subject to
the provisions of the Plan and such other terms and conditions as it may
determine, grant a Restricted Stock Award to Eligible Employees, Consultants or
Eligible Directors. Restricted Stock Awards shall be awarded in such number and
at such times during the term of the Plan as the Board shall determine. Each
Restricted Stock Award shall be subject to an Award Agreement setting forth the
terms of such Restricted Stock Award and may be evidenced in such manner as the
Board deems appropriate, including, without limitation, a book-entry
registration or issuance of a stock certificate or certificates.


 


Section 6.2  Conditions of
Restricted Stock Awards.  The grant of a Restricted Stock Award shall
be subject to the following:


 


(a)          Restriction
Period.  Restricted Stock Awards granted
to an Eligible Employee shall require the holder to remain in the employment of
the Company, a Subsidiary, or an Affiliated Entity for a prescribed period.
Restricted Stock Awards granted to Consultants or Eligible Directors shall
require the holder to provide continued services to the Company for a period of
time. These employment and service requirements are collectively referred to as
a “Restriction Period”. The Board or the Committee, as the case may be, shall
determine the Restriction Period or Periods which shall apply to the shares of
Common Stock covered by each Restricted Stock Award or portion thereof. In
addition to any time vesting conditions determined by the Board or the
Committee, as the case may be, Restricted Stock Awards may be subject to the
achievement by the Company of specified performance criteria based upon the
Company’s achievement of all or any of the operational, financial or stock
performance criteria set forth on Exhibit A annexed hereto, as may from
time to time be established by the Board or the Committee, as the case may be.
At the end of the Restriction Period, assuming the fulfillment of any other
specified vesting conditions, the restrictions imposed by the Board or the
Committee, as the case may be shall lapse


 


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with respect
to the shares of Common Stock covered by the Restricted Stock Award or portion
thereof. In addition to acceleration of vesting upon the occurrence of a Change
of Control Event as provided in Section 11.5, the Board or the Committee,
as the case may be, may, in its discretion, accelerate the vesting of a
Restricted Stock Award in the case of the death, Disability or Retirement of
the Participant who is an Eligible Employee or resignation of a Participant who
is a Consultants or an Eligible Director.


 


(b)         Restrictions.  The holder of a Restricted Stock Award may
not sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of the
shares of Common Stock represented by the Restricted Stock Award during the applicable
Restriction Period. The Board shall impose such other restrictions and
conditions on any shares of Common Stock covered by a Restricted Stock Award as
it may deem advisable including, without limitation, restrictions under
applicable Federal or state securities laws, and may legend the certificates
representing Restricted Stock to give appropriate notice of such restrictions.


 


(c)          Rights
as Stockholders.  During any Restriction
Period, the Board may, in its discretion, grant to the holder of a Restricted
Stock Award all or any of the rights of a stockholder with respect to the
shares, including, but not by way of limitation, the right to vote such shares
and to receive dividends. If any dividends or other distributions are paid in
shares of Common Stock, all such shares shall be subject to the same
restrictions on transferability as the shares of Restricted Stock with respect
to which they were paid.


 


ARTICLE
VII


STOCK
APPRECIATION RIGHTS


 


Section 7.1  Grant of SARs.  The Board may from time to time, in its sole
discretion, subject to the provisions of the Plan and subject to other terms
and conditions as the Board may determine, grant a SAR to any Eligible
Employee, Consultant or Eligible Director. SARs may be granted in tandem with
an Option, in which event, the Participant has the right to elect to exercise
either the SAR or the Option. Upon the Participant’s election to exercise one
of these Awards, the other tandem Award is automatically terminated. SARs may
also be granted as an independent Award separate from an Option. Each grant of
a SAR shall be evidenced by an Award Agreement executed by the Company and the
Participant and shall contain such terms and conditions and be in such form as
the Board may from time to time approve, subject to the requirements of the
Plan. The exercise price of the SAR shall not be less than the Fair Market
Value of a share of Common Stock on the Date of Grant of the SAR.


 


Section 7.2  Exercise and
Payment.  SARs
granted under the Plan shall be exercisable in whole or in installments and at
such times as shall be provided by the Board in the Award Agreement. Exercise
of a SAR shall be by written notice to the Secretary of the Company at least
two business days in advance of such exercise. The amount payable with respect
to each SAR shall be equal in value to the excess, if any, of the Fair Market
Value of a share of Common Stock on the exercise date over the exercise price
of the SAR. Payment of amounts attributable to a SAR shall be made in shares of
Common Stock.


 


Section 7.3  Restrictions.  In the event a SAR is granted in tandem with
an Incentive Stock Option, the Board shall subject the SAR to restrictions
necessary to ensure satisfaction of the requirements under Section 422 of
the Code. In the case of a SAR granted in tandem with an Incentive Stock Option
to an Eligible Employee who owns more than 10% of the combined voting power of
the Company or its Subsidiaries on the date of such grant, the amount payable
with respect to each SAR shall be equal in value to the applicable percentage
of the excess, if any, of the Fair Market Value of a share of Common Stock on
the Exercise date over the exercise price of the SAR,


 


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which exercise price shall not be less than
110% of the Fair Market Value of a share of Common Stock on the date the SAR is
granted.


 


ARTICLE
VIII


PERFORMANCE
UNITS


 


Section 8.1  Grant of
Awards.  The
Board may, from time to time, subject to the provisions of the Plan and such
other terms and conditions as it may determine, grant Performance Units to
Eligible Employees, Consultants and Eligible Directors. Each Award of
Performance Units shall be evidenced by an Award Agreement executed by the
Company and the Participant, and shall contain such terms and conditions and be
in such form as the Board may from time to time approve, subject to the
requirements of Section 8.2.


 


Section 8.2  Conditions of
Awards.  Each
Award of Performance Units shall be subject to the following conditions:


 


(a)          Establishment
of Award Terms.  Each Award shall state
the target, maximum and minimum value of each Performance Unit payable upon the
achievement of performance goals.


 


(b)         Achievement
of Performance Goals.  The Board shall
establish performance targets for each Award for a period of no less than a
year based upon some or all of the operational, financial or performance
criteria listed in Exhibit A attached. The Board shall also establish such
other terms and conditions as it deems appropriate to such Award. The Award may
be paid out in cash or Common Stock as determined in the sole discretion of the
Board.


 


ARTICLE
IX


PERFORMANCE
BONUS


 


Section 9.1  Grant of
Performance Bonus. 
The Board may from time to time, subject to the provisions of the Plan
and such other terms and conditions as the Board may determine, grant a
Performance Bonus to certain Eligible Employees selected for participation. The
Board will determine the amount that may be earned as a Performance Bonus in
any period of one year or more upon the achievement of a performance target
established by the Board. The Board shall select the applicable performance
target(s) for each period in which a Performance Bonus is awarded. The
performance target shall be based upon all or some of the operational,
financial or performance criteria more specifically listed in Exhibit A
attached.


 


Section 9.2  Payment of
Performance Bonus. 
In order for any Participant to be entitled to payment of a Performance
Bonus, the applicable performance target(s) established by the Board must
first be obtained or exceeded. Payment of a Performance Bonus shall be made
within 60 days of the Board’s certification that the performance target(s) has
been achieved unless the Participant has previously elected to defer payment
pursuant to a nonqualified deferred compensation plan adopted by the Company.
Payment of a Performance Bonus may be made in either cash or Common Stock as
determined in the sole discretion of the Board.


 


ARTICLE
X


STOCK
ADJUSTMENTS


 


In the event that the shares of
Common Stock, as constituted on the effective date of the Plan, shall be
changed into or exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation (whether by reason of
merger, consolidation, recapitalization, reclassification, stock split, spin-off,
combination of shares or otherwise), or if the number of such shares of Common
Stock shall be increased through the payment of a stock dividend, or a dividend
on the shares of Common Stock, or if rights or warrants to purchase securities
of the


 


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Company shall be issued to holders of all outstanding Common Stock,
then there shall be substituted for or added to each share available under and
subject to the Plan, and each share theretofore appropriated under the Plan,
the number and kind of shares of stock or other securities into which each
outstanding share of Common Stock shall be so changed or for which each such
share shall be exchanged or to which each such share shall be entitled, as the
case may be, on a fair and equivalent basis in accordance with the applicable
provisions of Section 424 of the Code; provided, however, with respect to
Options, in no such event will such adjustment result in a modification of any
Option as defined in Section 424(h) of the Code. In the event there
shall be any other change in the number or kind of the outstanding shares of
Common Stock, or any stock or other securities into which the Common Stock
shall have been changed or for which it shall have been exchanged, then if the
Board shall, in its sole discretion, determine that such change equitably
requires an adjustment in the shares available under and subject to the Plan,
or in any Award, theretofore granted, such adjustments shall be made in
accordance with such determination, except that no adjustment of the number of
shares of Common Stock available under the Plan or to which any Award relates
that would otherwise be required shall be made unless and until such adjustment
either by itself or with other adjustments not previously made would require an
increase or decrease of at least 1% in the number of shares of Common Stock
available under the Plan or to which any Award relates immediately prior to the
making of such adjustment (the “Minimum Adjustment”). Any adjustment
representing a change of less than such minimum amount shall be carried forward
and made as soon as such adjustment together with other adjustments required by
this Article X and not previously made would result in a Minimum
Adjustment. Notwithstanding the foregoing, any adjustment required by this Article X
which otherwise would not result in a Minimum Adjustment shall be made with
respect to shares of Common Stock relating to any Award immediately prior to
exercise, payment or settlement of such Award. No fractional shares of Common
Stock or units of other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole share.


 


ARTICLE
XI


GENERAL


 


Section 11.1  Amendment or
Termination of Plan. 
The Board may alter, suspend or terminate the Plan at any time provided,
however, that it may not, without stockholder approval, adopt any amendment
which would (i) increase the aggregate number of shares of Common Stock
available under the Plan (except by operation of Article X), (ii) materially
modify the requirements as to eligibility for participation in the Plan, or (iii) materially
increase the benefits to Participants provided by the Plan.


 


Section 11.2  Termination of
Employment; Termination of Service.  If an Eligible Employee’s employment with the
Company, a Subsidiary or an Affiliated Entity terminates as a result of death,
Disability or Retirement, the Eligible Employee (or personal representative in
the case of death) shall be entitled to purchase all or any part of the shares
subject to any (i) vested Incentive Stock Option for a period of up to
three months from such date of termination (one year in the case of death or
Disability (as defined above) in lieu of the three-month period), and (ii) vested
Nonqualified Stock Option during the remaining term of the Option. If an
Eligible Employee’s employment terminates for any other reason, the Eligible
Employee shall be entitled to purchase all or any part of the shares subject to
any vested Option for a period of up to three months from such date of
termination. In no event shall any Option be exercisable past the term of the
Option. The Board may, in its sole discretion, accelerate the vesting of
unvested Options in the event of termination of employment of any Participant.


 


In the event a Consultant
ceases to provide services to the Company or an Eligible Director terminates
service as a director of the Company, the unvested portion of any Award shall
be forfeited unless otherwise accelerated pursuant to the terms of the Eligible
Director’s Award Agreement or by


 


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the Board. The Consultant or Eligible
Director shall have a period of three years following the date he ceases to
provide consulting services or ceases to be a director, as applicable, to
exercise any Nonqualified Stock Options which are otherwise exercisable on his
date of termination of service.


 


Section 11.3  Limited Transferability—Options.  The Board may, in its discretion, authorize
all or a portion of the Nonqualified Stock Options granted under this Plan to
be on terms which permit transfer by the Participant to (i) the ex-spouse
of the Participant pursuant to the terms of a domestic relations order, (ii) the
spouse, children or grandchildren of the Participant (“Immediate Family Members”),
(iii) a trust or trusts for the exclusive benefit of such Immediate Family
Members, or (iv) a partnership or limited liability company in which such
Immediate Family Members are the only partners or members. In addition, there
may be no consideration for any such transfer. The Award Agreement pursuant to
which such Nonqualified Stock Options are granted expressly provide for
transferability in a manner consistent with this paragraph. Subsequent
transfers of transferred Nonqualified Stock Options shall be prohibited except
as set forth below in this Section 11.3. Following transfer, any such
Nonqualified Stock Options shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer, provided that for
purposes of Section 11.2 hereof the term “Participant” shall be deemed to
refer to the transferee. The events of termination of employment of Section 11.2
hereof shall continue to be applied with respect to the original Participant,
following which the Nonqualified Stock Options shall be exercisable by the
transferee only to the extent, and for the periods specified in Section 11.2
hereof. No transfer pursuant to this Section 11.3 shall be effective to
bind the Company unless the Company shall have been furnished with written
notice of such transfer together with such other documents regarding the
transfer as the Board shall request. With the exception of a transfer in
compliance with the foregoing provisions of this Section 11.3, all other
types of Awards authorized under this Plan shall be transferable only by will
or the laws of descent and distribution; however, no such transfer shall be
effective to bind the Company unless the Board has been furnished with written
notice of such transfer and an authenticated copy of the will and/or such other
evidence as the Board may deem necessary to establish the validity of the
transfer and the acceptance by the transferee of the terms and conditions of
such Award.


 


Section 11.4  Withholding
Taxes.  Unless
otherwise paid by the Participant, the Company, its Subsidiaries or any of its
Affiliated Entities 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 Board may allow a Participant to pay the amount
of taxes required by law to be withheld from an Award by (i) directing the
Company to withhold from any payment of the Award a number of shares of Common
Stock having a Fair Market Value on the date of payment equal to the amount of
the required withholding taxes or (ii) delivering to the Company
previously owned shares of Common Stock having a Fair Market Value on the date
of payment equal to the amount of the required withholding taxes. However, any
payment made by the Participant pursuant to either of the foregoing clauses (i) or
(ii) shall not be permitted if it would result in an adverse accounting
charge with respect to such shares used to pay such taxes unless otherwise
approved by the Board.


 


Section 11.5  Change of
Control. 
Notwithstanding any other provision in this Plan to the contrary, in the
event of a Change of Control Event, the Board shall have the discretion to
determine whether and to what extent to accelerate the vesting, exercise or
payment of an Award.


 


Section 11.6  Amendments to
Awards.  Subject
to the limitations of Article IV, such as the prohibition on repricing of
Options, the Board may at any time unilaterally amend the terms of any Award
Agreement, whether or not presently exercisable or vested, to the extent it
deems appropriate. However, amendments which are adverse to the Participant
shall require the Participant’s consent.


 


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Section 11.7  Registration;
Regulatory Approval. 
Following approval of the Plan by the stockholders of the Company as
provided in Section 1.2 of the Plan, the Board, in its sole discretion,
may determine to file with the Securities and Exchange Commission and keep
continuously effective, a Registration Statement on Form S-8 with respect
to shares of Common Stock subject to Awards hereunder. Notwithstanding anything
contained in this Plan to the contrary, the Company shall have no obligation to
issue shares of Common Stock under this Plan prior to the obtaining of any
approval from, or satisfaction of any waiting period or other condition imposed
by, any governmental agency which the Board shall, in its sole discretion,
determine to be necessary or advisable.


 


Section 11.8  Right to
Continued Employment. 
Participation in the Plan shall not give any Eligible Employee any right
to remain in the employ of the Company, any Subsidiary, or any Affiliated
Entity. The Company or, in the case of employment with a Subsidiary or an
Affiliated Entity, the Subsidiary or Affiliated Entity reserves the right to
terminate any Eligible Employee at any time. Further, the adoption of this Plan
shall not be deemed to give any Eligible Employee or any other individual any
right to be selected as a Participant or to be granted an Award.


 


Section 11.9  Reliance on
Reports.  Each
member of the Board and each member of the Board shall be fully justified in
relying or acting in good faith upon any report made by the independent public
accountants of the Company and its Subsidiaries and upon any other information
furnished in connection with the Plan by any person or persons other than
himself or herself. In no event shall any person who is or shall have been a
member of the Board be liable for any determination made or other action taken
or any omission to act in reliance upon any such report or information or for
any action taken, including the furnishing of information, or failure to act,
if in good faith.


 


Section 11.10  Construction.  Masculine pronouns and other words of
masculine gender shall refer to both men and women. The titles and headings of
the sections in the Plan are for the convenience of reference only, and in the
event of any conflict, the text of the Plan, rather than such titles or
headings, shall control.


 


Section 11.11  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.


 


Section 11.12  Other Laws.  The Board may refuse to issue or transfer any
shares of Common Stock or other consideration under an Award if, acting in its
sole discretion, it determines that the issuance or transfer of such shares or
such other consideration might violate any applicable law or regulation or
entitle the Company to recover the same under Section 16(b) of the
Exchange Act, and any payment tendered to the Company by a Participant, other
holder or beneficiary in connection with the exercise of such Award shall be
promptly refunded to the relevant Participant, holder or beneficiary.


 


Section 11.13  No Trust or
Fund Created. 
Neither the Plan nor an Award shall create or be construed to create a
trust or separate fund of any kind or a fiduciary relationship between the
Company and a Participant or any other person. To the extent that a Participant
acquires the right to receive payments from the Company pursuant to an Award,
such right shall be no greater than the right of any general unsecured creditor
of the Company.


 


Section 11.14  Conformance
to Section 409A of the Code.  To the extent that the Committee determines
that any Award granted under the Plan is subject to Section 409A of the
Code, the Award Agreement evidencing such Award shall incorporate the terms and
conditions required by Section 409A of the Code. To the extent applicable,
the Plan and Award Agreements shall be interpreted in accordance with Section 409A
of the Code and Department of Treasury regulations and other interpretive
guidance issued thereunder, including without limitation any such regulations
or other guidance that may be issued after the Effective Date. Notwithstanding
any provision of the Plan to the


 


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contrary, in the event that the Committee
determines that any Award may be subject to Section 409A of the Code and
related Department of Treasury guidance, the Committee may adopt such
amendments to the Plan and the applicable Award Agreement or adopt other
policies and procedures (including amendments, policies and procedures with
retroactive effect), or take any other actions, that the Committee determines
are necessary or appropriate to (i) exempt the Award from Section 409A
of the Code or (ii) comply with the requirements of Section 409A of
the Code and related Department of Treasury guidance.


 


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