Exhibit 10.1


 


CELLDEX THERAPEUTICS, INC.


2005 EQUITY INCENTIVE PLAN


 


Section 1.                                           Purpose of the Plan. The purpose of the Plan is to aid
Celldex Therapeutics, Inc. and any Participating Company in securing and
retaining Directors, Officers, Consultants, and other Employees and to motivate
such persons to exert their best efforts on behalf of the Participating Company
Group.


 


Section 2.                                           Definitions and Construction. Whenever used herein, the
following terms shall have their respective meanings set forth below:


 


(a)                                  “Affiliate” means (i) an entity, other than a Parent
Company, that directly, or indirectly through one or more intermediary
entities, controls the Company or (ii) an entity, other than a Subsidiary
Company, that is controlled by the Company directly, or indirectly through one
or more intermediary entities. For this purpose, the term “control” (including
the term “controlled by”) means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of the
relevant entity, whether through the ownership of voting securities, by
contract or otherwise; or shall have such other meaning assigned such term for
the purposes of registration on Form S-8 under the Securities Act.


 


(b)                                 “Award” means any Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit,
Deferred Stock Award, Other Stock-based Award or Deferred Compensation Award
granted under the Plan.


 


(c)                                  “Award Agreement” means a written agreement between the
Company and a Participant setting forth the terms, conditions and restrictions
of the Award granted to the Participant. An Award Agreement may be an “Option
Agreement,” a “Stock Appreciation Right Agreement,” a “Restricted Stock
Agreement,” a “Restricted Stock Unit Agreement,” a “Performance Share
Agreement,” a “Performance Unit Agreement,” a “Deferred Stock Award Agreement,”
a “Deferred Compensation Award Agreement” and such other cash agreement or “Stock-based
Award Agreement” containing such terms and conditions as shall be determined by
the Committee from time to time.


 


(d)                                 “Board” means the Board of Directors of the Company.


 


(e)                                  “Cashless Exercise” shall have the meaning set forth in Section 6(d).


 


(f)                                    “Cause” shall have the meaning set forth in Section 6(h).


 


(g)                                 “Change in Control” means, unless otherwise defined by the
Participant’s Award Agreement or contract of employment or service, the
occurrence of any of the following:


 


(i)                                     An
acquisition (other than directly from the Company) of any voting securities of
the Company (the “Voting Securities”) by any “Person” (as the term “person” is
used for purposes of Section 13(d) or 14(d) of the Exchange Act)
immediately after which such Person has “Beneficial Ownership” (within the


 

















 


meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of the combined voting power
of the Company’s then outstanding Voting Securities; provided, however, that in
determining whether a Change of Control has occurred, voting securities which
are acquired in a “Non-Control Acquisition” (as hereinafter defined) shall not
constitute an acquisition which would cause a Change of Control.


 


A “Non-Control
Acquisition” shall mean an acquisition of Voting Securities by (1) an
employee benefit plan (or a trust forming a part thereof) maintained by (x) the
Company or (y) any company or other Person of which a majority of its
voting power or its equity securities or equity interest is owned directly or
indirectly by the Company (a “Subsidiary”), (2) any Parent Company, the
Company or any Subsidiary, or (3) any Person in connection with a
Non-Control Transaction (as defined below);


 


(ii)                                  The
individuals who, as of the Effective Date, are members of the Board (the “Incumbent
Board”), cease for any reason to constitute at least 66 2/3% of the Board;
provided, however, that if the election, or nomination for election by the
Company’s shareholders, of any new director was approved by a vote of at least
66 2/3% of the Incumbent Board, such new director shall be considered as a
member of the Incumbent Board; provided, further, however, that no individual
shall be considered a member of the Incumbent Board if such individual
initially assumed office as a result of either an actual or threatened “Election
Contest” (as described in Rule 14a-11 promulgated under the Exchange Act)
or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a “Proxy Contest”) including by reason
of any agreement intended to avoid or settle any Election Contest or Proxy
Contest; or


 


(iii)                               Approval
of the Company’s shareholders of: (1) a merger, consolidation or
reorganization involving the Company, unless (i) the shareholders of the
Company, immediately before such merger, consolidation or reorganization, own,
directly or indirectly immediately following such merger, consolidation or
reorganization, at least 66 2/3% of the combined voting power of the
outstanding Voting Securities of the company resulting from such merger,
consolidation or reorganization (the “Surviving Company”) in substantially the
same proportion as their ownership of the Voting Securities immediately before
such merger, consolidation or reorganization, (ii) the individuals who
were members of the Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation or reorganization constitute
at least 66 2/3% of the members of the board of directors of the Surviving
Company, and (iii) no Person, other than the Company, any Subsidiary, any
employee benefit plan (or any trust forming a part thereof) maintained by the
Company, the Surviving Company or any subsidiary thereof, or any Person who,
immediately prior to such merger, consolidation or reorganization had
Beneficial Ownership of 20% or more of the then outstanding Voting Securities
of the Company, has Beneficial Ownership of 20% or more of the combined voting
power of the


 


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Surviving
Company’s then outstanding voting securities (a transaction described in clause
(i) through (iii) shall herein be referred to as a “Non-Control
Transaction”); (2) a complete liquidation or dissolution of the Company;
or (3) an agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person (other than a
transfer to a Subsidiary).


 


Notwithstanding the foregoing,
a Change of Control shall not be deemed to occur solely because any Person (the
“Subject Person”) acquired Beneficial Ownership of more than the permitted
amount of the outstanding Voting Securities as a result of the acquisition of
Voting Securities by the Company which, by reducing the number of Voting
Securities outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Person, provided that if a Change of Control
would occur (but for the operation of this sentence) as a result of the
acquisition of Voting Securities by the Company, and after such share
acquisition, the Subject Person becomes the Beneficial Owner of any additional
Voting Securities which increases the percentage of the then outstanding Voting
Securities Beneficially Owned by the Subject Person, then a Change of Control
shall occur.


 


(h)                                 “Code” means the Internal Revenue Code of 1986, as amended,
and any applicable regulations promulgated thereunder.


 


(i)                                     “Committee” means the Company’s Compensation Committee and
such other committee or subcommittee of the Board, if any, duly appointed to
administer the Plan and having such powers in each instance as shall be
specified by the Board. The Committee shall have at least two members, each of
whom shall be a “non-employee director” as defined in Rule 16b-3 under the
Exchange Act and an “outside director” as defined in Section 162(m) of
the Code and the regulations thereunder, and, if applicable, meet the
independence requirements of the United States Securities and Exchange
Commission and any applicable stock exchange, quotation system or other
self-regulatory organization on which the Stock is traded. If, at any time,
there is no committee of the Board then authorized or properly constituted to
administer the Plan, the Board shall exercise all of the powers of the
Committee granted herein.


 


(j)                                     “Company” means Celldex Therapeutics, Inc., a Delaware
corporation, or any successor company thereto.


 


(k)                                  “Consultant” means a person engaged to provide consulting or
advisory services (other than as an Employee or a member of the Board) to a
Participating Company, provided that the identity of such person, the nature of
such services or the entity to which such services are provided would not
preclude the Company from offering or selling securities to such person
pursuant to the Plan in reliance on registration on a Form S-8
Registration Statement under the Securities Act.


 


(l)                                     “Covered Employee” shall have the meaning given to such term
in Section 162(m) of the Code.


 


(m)                               “Deferral Period” shall have the meaning set forth in Section 11(a).


 


(n)                                 “Deferred Compensation Award” means an award granted to a
Participant pursuant to Section 13 of the Plan.


 


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(o)                                 “Deferred Stock Award” means an award of Stock granted to a
Participant pursuant to Section 11 of the Plan.


 


(p)                                 “Director” means a member of the Board.


 


(q)                                 “Disability” means a condition causing a Participant to be
disabled within the meaning of Section 409A(a)(2)(C) of the Code.


 


(r)                                    “Dividend Equivalent” means a credit, made at the discretion
of the Committee or as otherwise provided by the Plan, to the account of a
Participant in an amount equal to the cash dividends paid on one share of Stock
for each share of Stock represented by an Award held by such Participant.


 


(s)                                  “Effective Date” means May     ,
2005, the date that the Plan is approved by the holders of a majority of shares
of the outstanding Stock of the Company.


 


(t)                                    “Elective Deferred Period” shall have the meaning set forth
in Section 11(b)(v).


 


(u)                                 “Employee” means any person treated as an employee
(including an Officer or a member of the Board who is also treated as an
employee) in the records of a Participating Company and, with respect to any
Incentive Stock Option granted to such person, who is an employee for purposes
of Section 422 of the Code; provided, however, that neither service as a
member of the Board nor payment of a director’s fee shall be sufficient to
constitute employment for purposes of the Plan. For purposes of the Plan, the
Committee shall determine in good faith and in the exercise of its discretion
whether an individual has become or has ceased to be an Employee and the
effective date of such individual’s employment or termination of employment, as
the case may be. For purposes of an individual’s rights, if any, under the Plan
as of the time of the Committee’s determination, all such determinations by the
Committee shall be final, binding and conclusive, notwithstanding that the
Committee or any court of law or governmental agency subsequently makes a
contrary determination.


 


(v)                                 “Exchange Act” means the Securities Exchange Act of 1934, as
amended.


 


(w)                               “Fair Market Value” means, as of any date, the value of a
share of Stock or other property as determined by the Committee, in its
discretion, or by the Company, in its discretion, if such determination is
expressly allocated to the Company herein, subject to the following:


 


(i)                                     Except
as otherwise determined by the Committee, if, on such date, the Stock is listed
on a national or regional securities exchange or market system, the Fair Market
Value of a share of Stock shall be the closing price of a share of Stock (or
the mean of the closing bid and asked prices of a share of Stock if the Stock
is so quoted instead) as quoted on the Nasdaq National Market, the Nasdaq
SmallCap Market or such other national or regional securities exchange or
market system constituting the primary market for the Stock, as reported in The
Wall Street Journal or such other source as the Company deems reliable. 
If the


 


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relevant date
does not fall on a day on which the Stock has traded on such securities
exchange or market system, the date on which the Fair Market Value shall be
established shall be the last day on which the Stock was so traded prior to the
relevant date, or such other appropriate day as shall be determined by the
Committee, in its discretion.


 


(ii)                                  Notwithstanding
the foregoing, the Committee may, in its discretion, determine the Fair Market
Value on the basis of the opening, closing, high, low or average sale price of
a share of Stock or the actual sale price of a share of Stock received by a
Participant, on such date, the preceding trading day or the next succeeding
trading day. The Committee may vary its method of determination of the Fair
Market Value as provided in this Section for different purposes under the
Plan.


 


(iii)                               If,
on such date, the Stock is not listed on a national or regional securities
exchange or market system, the Fair Market Value of a share of Stock shall be
as determined by the Committee in good faith without regard to any restriction
other than a restriction which, by its terms, will never lapse.


 


(x)                                   “Full Value Award” means any of the following types of
Awards to the extent such Awards are settled in shares of Stock: 
Restricted Stock; Restricted Stock Units; Performance Shares; Performance
Units; Deferred Stock Awards; and Other Stock-based Awards.


 


(y)                                 “Incentive Stock Option” means an Option intended to be (as
set forth in the Award Agreement) and which qualifies as an incentive stock
option within the meaning of Section 422(b) of the Code.


 


(z)                                   “Insider” means an Officer, a Director or any other person
whose transactions in Stock are subject to Section 16 of the Exchange Act.


 


(aa)                            “Nonqualified Stock Option” means an Option not intended to
be (as set forth in the Award Agreement) or not qualifying as an incentive
stock option within the meaning of Section 422(b) of the Code.


 


(bb)                          “Officer” means any person designated by the Board as an
officer of the Company.


 


(cc)                            “Option” means the right to purchase Stock at a stated price
for a specified period of time granted to a Participant pursuant to Section 6
of the Plan. An Option may be either an Incentive Stock Option or a
Nonqualified Stock Option.


 


(dd)                          “Option Expiration Date” shall have the meaning set forth in
Section 6(f).


 


(ee)                            “Other Stock-based Awards” means awards that are valued in
whole or in part by reference to or are otherwise based on the Stock, including
without limitation, convertible debentures, but excluding Options, Restricted
Stock Awards, Restricted Stock Units,


 


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Performance Awards, Stock
Appreciation Rights, Deferred Stock Awards and Deferred Compensation Awards.


 


(ff)                                “Parent Company” means any present or future “parent company”
of the Company, as defined in Section 424(e) of the Code.


 


(gg)                          “Participant” means any eligible person under the Plan who
has been granted one or more Awards.


 


(hh)                          “Participating Company” means the Company or any Subsidiary
Company or Affiliate.


 


(ii)                                  “Participating Company Group” means, at any point in time,
all entities collectively which are then Participating Companies.


 


(jj)                                  “Performance Award” means an Award of Performance Shares or
Performance Units.


 


(kk)                            “Performance Award Formula” means, for any Performance
Award, a formula or table established by the Committee pursuant to Section 10
of the Plan which provides the basis for computing the value of a Performance
Award at one or more threshold levels of attainment of the applicable
Performance Goal(s) measured as of the end of the applicable Performance
Period.


 


(ll)                                  “Performance Goal” means a performance goal established by
the Committee pursuant to Section 10 of the Plan.


 


(mm)                      “Performance Measure” shall have the meaning set forth in Section 10(d).


 


(nn)                          “Performance Period” means a period established by the
Committee pursuant to Section 10(c) of the Plan at the end of which
one or more Performance Goals are to be measured.


 


(oo)                          “Performance Share” means a bookkeeping entry representing a
right granted to a Participant pursuant to Section 10 of the Plan to
receive a payment equal to the Fair Market Value of a share of Stock, based
upon a Performance Award Formula.


 


(pp)                          “Performance Targets” shall have the meaning set forth in Section 10(d).


 


(qq)                          “Performance Unit” means a bookkeeping entry representing a
right granted to a Participant pursuant to Section 10 of the Plan to
receive a payment of up to $100, as determined by the Committee, based upon a
Performance Award Formula.


 


(rr)                                “Plan” means the Company’s 2005 Equity Incentive Plan.


 


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(ss)                            “Predecessor Plan” means each of the Company’s 2003
Long-Term Incentive Stock Plan.


 


(tt)                                “Restricted Stock Award” means an Award of Restricted Stock.


 


(uu)                          “Restricted Stock” means Stock granted to a Participant
pursuant to Section 8 of the Plan.


 


(vv)                          “Restricted Stock Unit” or “Stock Unit”
means a bookkeeping entry representing a right granted to a
Participant pursuant to Section 9 of the Plan, to receive a share of Stock
on a date determined in accordance with the provisions of Section 9 and
the Participant’s Award Agreement.


 


(ww)                      “Restriction Period” means the period established in
accordance with Section 8 of the Plan during which shares subject to a
Restricted Stock Award are subject to Vesting Conditions.


 


(xx)                              “Rule 16b-3” means Rule 16b-3 under the Exchange
Act, as amended from time to time, or any successor rule or regulation.


 


(yy)                          “SAR” or “Stock Appreciation Right”
means a bookkeeping entry representing, for each share of Stock
subject to such SAR, a right granted to a Participant pursuant to Section 7
of the Plan to receive payment of an amount equal to the excess, if any, of the
Fair Market Value of a share of Stock on the date of exercise of the SAR over
the exercise price.


 


(zz)                              “Section 162(m)” means Section 162(m) of the
Code.


 


(aaa)                      “Securities Act” means the Securities Act of 1933, as
amended.


 


(bbb)                   “Service” means a Participant’s employment or service with
the Participating Company Group, whether in the capacity of an Employee,
Officer, Director or Consultant. Unless otherwise provided by the Committee, a
Participant’s Service shall not be deemed to have terminated merely because of
a change in the capacity in which the Participant renders such Service or a
change in the Participating Company for which the Participant renders such
Service, provided that there is no interruption or termination of the
Participant’s Service. Furthermore, a Participant’s Service shall not be deemed
to have terminated if the Participant takes any military leave, sick leave, or
other bona fide leave of absence that is approved by the Company and otherwise
complies with the provisions of Section 14 of the Plan. A Participant’s
Service shall be deemed to have terminated either upon an actual termination of
employment or service with the Participating Company Group or upon the entity
for which the Participant performs Service ceasing to be a Participating
Company. Subject to the foregoing, the Company, in its discretion, shall
determine whether the Participant’s Service has terminated and the effective
date of such termination.


 


(ccc)                      “Spread” shall have the meaning set forth in Section 21(a)(3).


 


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(ddd)                   “Stock” means the common stock of the Company, as adjusted
from time to time in accordance with Section 4(c) of the Plan.


 


(eee)                      “Stock Unit” means a bookkeeping entry representing a right
granted to a Participant pursuant to Section 13 of the Plan to receive a
share of Stock on a date determined in accordance with the provisions of Section 13
and the Participant’s Award Agreement, if any.


 


(fff)                            “Subsidiary Company” means any present or future “subsidiary
company” of the Company, as defined in Section 424(f) of the Code.


 


(ggg)                   “Ten Percent Owner” or “10% Owner” means a Participant who,
at the time an Option is granted to the Participant, owns stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of a Participating Company (other than an Affiliate) within the meaning
of Section 422(b)(6) of the Code.


 


(hhh)                   “Vesting Conditions” mean those conditions established in
accordance with Section 8 or Section 9 of the Plan prior to the
satisfaction of which shares subject to a Restricted Stock Award or Restricted
Stock Unit Award, respectively, remain subject to forfeiture or a repurchase
option in favor of the Company upon the Participant’s termination of Service.


 


Captions and titles contained
herein are for convenience only and shall not affect the meaning or interpretation
of any provision of the Plan. Except when otherwise indicated by the context,
the singular shall include the plural and the plural shall include the
singular. Use of the term “or” is not intended to be exclusive, unless the
context clearly requires otherwise.


 


Section 3.                                           Administration.


 


(a)                                  The
Plan shall be administered by the Committee. All questions of interpretation of
the Plan or of any Award shall be determined by the Committee, and such
determinations shall be final and binding upon all persons having an interest
in the Plan or such Award. A majority of the whole Committee present at a
meeting at which a quorum is present, or an act approved in writing by all
members of the Committee, shall be an act of the Committee. The Committee shall
have full power and authority, subject to such resolutions not inconsistent
with the provisions of the Plan as may from time to time be issued or adopted
by the Board, to grant Awards to Participants, pursuant to the provisions of
the Plan. The Committee shall also interpret the provisions of the Plan and any
Award issued under the Plan (and any agreements relating thereto) and supervise
the administration of the Plan.


 


(b)                                 The
Committee shall: (i) select the Participants to whom Awards may from time
to time be granted hereunder; (ii) determine whether Incentive Stock
Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted
Stock, Deferred Stock Awards, Restricted Stock Units, Performance Shares,
Performance Units, Other Stock-based Awards, or Deferred Compensation Awards,
or a combination of the foregoing, are to be granted hereunder; (iii) determine
the number of shares of Stock to be covered by each Award granted hereunder; (iv) determine
the terms, conditions and restrictions applicable to each Award (which need not
be identical) and any shares acquired pursuant thereto, including, without
limitation, (A) the exercise or purchase price of Stock purchased pursuant
to any Award, (B) the method of


 


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payment for Stock purchased
pursuant to any Award, (C) the method for satisfaction of any tax
withholding obligation arising in connection with any Award, including by the
withholding or delivery of shares of Stock, (D) the timing, terms and
conditions of the exercisability or vesting of any Award or any shares acquired
pursuant thereto, (E) the Performance Award Formula and Performance Goals
applicable to any Award and the extent to which such Performance Goals have
been attained, (F) the time of the expiration of any Award, (G) the
effect of the Participant’s termination of Service on any of the foregoing, and
(H) all other terms, conditions and restrictions applicable to any Award
or Stock acquired pursuant thereto not inconsistent with the terms of the Plan;
(v) determine whether, to what extent and under what circumstances Awards
may be settled in cash; (vi) determine whether, to what extent, and under
what circumstances Stock and other amounts payable with respect to an Award
under this Plan shall be deferred either automatically or at the election of
the Participant; and (vii) determine whether, to what extent, and under
what circumstances Option grants and/or other Awards under the Plan are to be
made, and operate, on a tandem basis.


 


(c)                                  The
Chief Executive Officer and the Chief Financial Officer or any other Officer
designated by the Committee shall have the authority to act on behalf of the
Company with respect to any matter, right, obligation, determination or
election which is the responsibility of or which is allocated to the Company
herein. The Board or the Committee may, in its discretion, delegate to a
committee comprised of one or more Officers the authority to grant one or more
Awards, without further approval of the Board or the Committee, to any
Employee, other than a person who, at the time of such grant, is an Insider;
provided, however, that (i) such Awards shall not be granted for shares of
Stock in excess of the maximum aggregate number of shares of Stock authorized
for issuance pursuant to Section 4, (ii) the exercise price per share
of each such Award which is an Option or Stock Appreciation Right shall be not
less than the Fair Market Value per share of the Stock on the effective date of
grant (or, if the Stock has not traded on such date, on the last day preceding
the effective date of grant on which the Stock was traded), and (iii) each
such Award shall be subject to the terms and conditions of the appropriate
standard form of Award Agreement approved by the Board or the Committee and
shall conform to the provisions of the Plan and such other guidelines as shall
be established from time to time by the Board or the Committee.


 


(d)                                 With
respect to participation by Insiders in the Plan, at any time that any class of
equity security of the Company is registered pursuant to Section 12 of the
Exchange Act, the Plan shall be administered in compliance with the
requirements, if any, of Rule 16b-3.


 


(e)                                  No
member of the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Award thereunder.


 


Notwithstanding the foregoing,
without the affirmative vote of holders of a majority of the shares of Stock
cast in person or by proxy at a meeting of the shareholders of the Company at
which a quorum representing a majority of all outstanding shares of Stock is
present or represented by proxy, the Board shall not approve a program
providing for either (i) the cancellation of outstanding Options or SARs
and the grant in substitution therefore of new Options or SARs having a lower
exercise price or (ii) the amendment of outstanding Options or SARs to
reduce the exercise price thereof. This paragraph shall not be construed to
apply to “issuing or assuming


 


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a stock option in a transaction
to which section 424(a) applies,” within the meaning of Section 424
of the Code.


 


Section 4.                                           Stock Subject to the Plan; Individual Limitations on Awards.


 


(a)                                  Subject
to adjustment as provided in subsections (b) and (c) below, the
maximum aggregate number of shares of Stock that may be issued under the Plan
shall be 1,500,000 shares and shall consist of (i) authorized but unissued
shares, (ii) or reacquired shares (treasury) of Stock, or (iii) any
combination thereof. Notwithstanding the foregoing, no more than ten percent
(10%) of the maximum aggregate number of shares of Stock that may be issued
under the Plan, shall be issued pursuant to the exercise  or settlement
of  Full Value Awards.


 


If an outstanding Award for any
reason expires or is terminated or canceled without having been exercised or
settled in full, or if shares of Stock acquired pursuant to an Award subject to
forfeiture or repurchase are forfeited or repurchased by the Company at the
Participant’s purchase price, the shares of Stock allocable to the terminated
portion of such Award or such forfeited or repurchased shares of Stock shall
again be available for issuance under the Plan. Shares of Stock shall not be
deemed to have been issued pursuant to the Plan (i) with respect to any
portion of an Award that is settled in cash or (ii) to the extent such
shares are withheld or reacquired by the Company in satisfaction of tax
withholding obligations pursuant to Section 19. Upon payment in shares of
Stock pursuant to the exercise of a SAR, the number of shares available for
issuance under the Plan shall be reduced only by the number of shares actually
issued in such payment. If the exercise price of an Option is paid by tender to
the Company, or attestation to the ownership, of shares of Stock owned by the
Participant, the number of shares available for issuance under the Plan shall
be reduced by the net number of shares for which the Option is exercised. The
maximum number of shares available for issuance under the Plan shall not be
reduced to reflect any dividends or dividend equivalents that are reinvested
into additional shares of Stock or credited as additional Performance Shares.
The maximum number of shares of Stock shall not be reduced by the issuance of
shares of Stock hereunder due to the assumption, conversion or substitution of
Awards made by an entity acquired by the Company. For the purposes of computing
the total number of shares of Stock granted under the Plan, where one or more
types of Awards, both of which are payable in shares of Stock, are granted in
tandem with each other, such that the exercise of one type of Award with
respect to a number of shares cancels an equal number of shares of the other,
the number of shares granted under both Awards shall be deemed to be equivalent
to the number of shares under one of the Awards.


 


(b)                                 The
maximum aggregate number of shares of Stock that may be issued under the Plan
as set forth in subsection (a) above shall be cumulatively increased
from time to time by:


 


(i)                                     the
number of shares of Stock authorized and remaining available for the future
grant of options under the Predecessor Plan as of the Effective Date;


 


(ii)                                  the
number of shares of Stock subject to that portion of any option outstanding
under a Predecessor Plan as of the Effective Date which, on or after the
Effective Date, expires or is terminated or canceled for any reason without
having been exercised; and


 


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(iii)          the number of shares Stock that are
withheld or reacquired by the Company on or after the Effective Date in
satisfaction of tax withholding obligations pursuant to a Predecessor Plan.


 


Notwithstanding
the foregoing, the aggregate number of shares of Stock authorized for issuance
under the Predecessor Plan that may become authorized for issuance under the
Plan pursuant to this subsection (b) shall not exceed 2,000,000
shares. As a result, the maximum aggregate number of shares of Stock that may
be issued under the Plan, inclusive of the shares previously issuable under the
Predecessor Plan, is 3,500,000 shares.


 


The
Plan shall serve as the successor to the Predecessor Plan, and no further
option grants shall be made under the Predecessor Plan. All options outstanding
under the Predecessor Plan as of the Effective Date shall, immediately upon the
Effective Date, be incorporated into the Plan and treated as outstanding
Options under the Plan. However, each outstanding option so incorporated shall
continue to be governed solely by the terms of the documents evidencing such
option. No provision of the Plan shall be deemed to adversely affect or
otherwise diminish the rights or obligations of the holders of such
incorporated options with respect to their acquisition of shares of Stock which
may exist under the terms of the Predecessor Plan under which such incorporated
option was issued. Subject to the rights of the Participant under the
incorporated option documents and Predecessor Plan, the discretion delegated to
the Committee hereunder may be exercisable with respect to incorporated options
to the same extent as it is exercisable with respect to options originally
granted under this Plan.


 


(c)           Subject
to any required action by the shareholders of the Company, in the event of any
change in the Stock effected without receipt of consideration by the Company,
whether through merger, consolidation, reorganization, reincorporation,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, split-up, split-off, spin-off, combination of shares, exchange of
shares, or similar change in the capital structure of the Company, or in the
event of payment of a dividend or distribution to the shareholders of the
Company in a form other than Stock (excepting normal cash dividends) that has a
material effect on the Fair Market Value of shares of Stock, appropriate
adjustments shall be made in the number and kind of shares subject to the Plan
and to any outstanding Awards and in the exercise or purchase price per share
under any outstanding Award in order to prevent dilution or enlargement of
Participants’ rights under the Plan. For purposes of the foregoing, conversion
of any convertible securities of the Company shall not be treated as “effected
without receipt of consideration by the Company.” Any fractional share
resulting from an adjustment pursuant to this subsection (c) shall be
rounded down to the nearest whole number, and in no event may the exercise or
purchase price under any Award be decreased to an amount less than the par
value, if any, of the stock subject to such Award. The Committee in its sole
discretion, may also make such adjustments in the terms of any Award to
reflect, or related to, such changes in the capital structure of the Company or
distributions as it deems appropriate, including modification of Performance
Goals, Performance Award Formulas and Performance Periods. The adjustments
determined by the Committee pursuant to this Section 4(c) shall be
final, binding and conclusive.


 


(d)           The
maximum number of shares of Stock with respect to which Options and/or SARs may
be granted to any Participant in any fiscal year of the Company shall be
500,000 shares.  The maximum number of shares with respect to which Full
Value Awards, in


 


11





















 


the
aggregate, may be granted to any Participant in any fiscal year of the Company
shall be 100,000 shares.  In connection with a Participant’s (i) commencement
of Service or (ii) promotion, a Participant may be granted Options and/or
SARs for up to an additional 50,000 shares or may be granted Full Value Awards,
in the aggregate, for up to an additional 25,000 shares none of which shall
count against the limit set forth in the preceding sentence.  The foregoing
limitations shall be adjusted proportionately in connection with any change in
the Company’s capitalization pursuant to subsection (c) above. 
To the extent required by Section 162(m) of the Code or the
regulations thereunder, in applying the foregoing limitations with respect to a
Participant, if any Awards are canceled, the canceled Awards shall continue to
count against the maximum number of shares of Stock with respect to which
Awards may be granted to the Participant.  For this purpose, the repricing
of an Option (or in the case of a SAR, if the base amount on which the stock
appreciation is calculated is reduced to reflect a reduction in the Fair Market
Value of the Stock), if such repricing or reduction (in the case of a SAR) is
approved by the shareholders of the Company, shall be treated as the
cancellation of the existing Option or SAR and the grant of a new Option or
SAR.


 


Section 5.              Eligibility.


 


(a)           Awards
may, at the Committee’s sole discretion, be granted in the form of Options
pursuant to Section 6, SARs pursuant to Section 7, Restricted Stock
Awards pursuant to Section 8, Restricted Stock Unit Awards pursuant to Section 9,
Performance Awards pursuant to Section 10, Deferred Stock Awards pursuant
to Section 11, Other Stock-based Awards pursuant to Section 12,
Deferred Compensation Awards pursuant to Section 13, or any combination
thereof. All Awards shall be subject to the terms, conditions, restrictions and
limitations of the Plan. The Committee may, in its sole judgment, subject an
Award at any time to such other terms, conditions, restrictions and/or
limitations, (including, but not limited to, the time and conditions of
exercise and restrictions on transferability and vesting), provided they are
not inconsistent with the terms of the Plan. Awards under a particular Section of
the Plan need not be uniform and Awards under two or more Sections may be
combined into a single Award Agreement. Any combination of Awards may be
granted at one time and on more than one occasion to the same Participant.


 


(b)           In order
to facilitate the making of any Award to Participants who are employed or
retained by the Company outside the United States as Employees, Directors or
Consultants (or who are foreign nationals temporarily within the United
States), the Committee may provide for such modifications and additional terms
and conditions (“special terms”) in Awards as the Committee may consider
necessary or appropriate to accommodate differences in local law, policy or
custom or to facilitate administration of the Plan. The special terms may
provide that the grant of an Award is subject to (1) applicable
governmental or regulatory approval or other compliance with local legal
requirements and/or (2) the execution by the Participant of a written
instrument in the form specified by the Committee, and that in the event such
conditions are not satisfied, the grant shall be void.  The Committee may
adopt or approve sub-plans, appendices or supplements to, or amendments,
restatements, or alternative versions of, the Plan as it may consider necessary
or appropriate for purposes of implementing any special terms, without thereby
affecting the terms of the Plan as in effect for any other purpose; provided,
however, no such sub-plans, appendices or supplements to, or amendments,
restatements, or alternative versions of, the Plan shall: (i) increase the
number of available shares


 


12





















 


under Section 4;
(ii) cause the Plan to cease to satisfy any conditions of Rule 16b-3
under the Exchange Act or, with respect to Covered Employees, Section 162(m) of
the Code; or (iii) revoke, remove or reduce any vested right of a
Participant without the prior written consent of such Participant.


 


(c)           Unless otherwise specifically
determined by the Committee, all Awards and payments pursuant to such Awards
shall be determined in U.S. currency. The Committee shall determine, in its
discretion, whether and to the extent any payments made pursuant to an Award
shall be made in local currency, as opposed to U.S. dollars. In the event
payments are made in local currency, the Committee may determine, in its
discretion and without liability to any Participant, the method and rate of
converting the payment into local currency.


 


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


 


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


 


(f)            Awards may be granted only to
Employees, Consultants and Directors. Notwithstanding the foregoing, no Awards
may be granted under the Plan to a director or executive officer of a Parent
Company. For purposes of the foregoing sentence, “Employees,” “Consultants” and
“Directors” shall include prospective Employees, prospective Consultants and
prospective Directors to whom Awards are granted in connection with written
offers of an employment or other service relationship with the Participating
Company Group; provided, however, that no Stock subject to any such Award shall
vest, become exercisable or be issued prior to the date on which such person
commences Service.


 


(g)           Awards are granted solely at the
discretion of the Committee. Eligible persons may be granted more than one
Award. However, eligibility in accordance with this Section shall not
entitle any person to be granted an Award, or, having been granted an Award, to
be granted an additional Award.


 


Section 6.              Options. Any Option granted under the Plan
shall be in such form as the Committee may from time to time approve. Any such
Option shall be subject to the following terms and conditions and shall contain
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall deem desirable.


 


(a)           Option Price. The purchase price per share of
the Stock purchasable under an Option shall be determined by the Committee, but
will be not less than 100% of the Fair Market Value of the Stock on the date of
the grant of the Option, as determined in accordance with procedures
established by the Committee. Notwithstanding the foregoing, the purchase price
per share of the Stock purchasable under any Incentive Stock Option granted to
any 10% Owner shall not be less then 110% of the Fair Market Value of the Stock
on the date of


 


13





















 


the
grant of the Option, as determined in accordance with procedures established by
the Committee.


 


(b)           Option Period. The term of each Option shall be
fixed by the Committee, but no Incentive Stock Option shall be exercisable
after the expiration of 10 years from the date the Option is granted. Notwithstanding
the foregoing, no Incentive Stock Option granted to a 10% Owner shall be
exercisable after the expiration of five years from the date the Option is
granted.


 


(c)           Exercisability.


 


(i)           Options shall be exercisable at such
time or times as determined by the Committee at or subsequent to the date of
grant. Unless otherwise determined by the Committee at or subsequent to the
date of grant, no Option shall be exercisable until the first anniversary date
of the granting of the Option, except as provided in subsections (f), (g), (h) or
(i) of this Section 6 and subsection (a) of Section 21.


 


(ii)          Solely for Federal income tax
purposes, to the extent that the aggregate Fair Market Value of Stock with
respect to which Incentive Stock Options are exercisable for the first time by
a Participant during any calendar year exceeds $100,000.00 (as of the date of
grant), such Options shall be treated as Nonqualified Stock Options. For
purposes of this rule, Options shall be taken into account in the order in
which they were granted.


 


(d)           Method of Exercise. Options may be
exercised, in whole or in part, by giving written notice of exercise to the
Company specifying the number of shares to be purchased. Except as otherwise
provided below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash, by check
or in cash equivalent, (ii) by tender to the Company, or attestation to
the ownership, of shares of Stock owned by the Participant having a Fair Market
Value not less than the exercise price, (iii) by delivery of a properly
executed notice of exercise together with irrevocable instructions to a broker
providing for the assignment to the Company of the proceeds of a sale or loan
with respect to some or all of the shares being acquired upon the exercise of
the Option (including, without limitation, through an exercise complying with
the provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System) (a “Cashless Exercise”), (iv) by
such other consideration as may be approved by the Committee from time to time
to the extent permitted by applicable law, or (v) by any combination
thereof. The Committee may at any time or from time to time grant Options which
do not permit all of the foregoing forms of consideration to be used in payment
of the exercise price or which otherwise restrict one or more forms of
consideration.


 


Notwithstanding
the foregoing, an Option may not be exercised by tender to the Company, or
attestation to the ownership, of shares of Stock to the extent such tender or
attestation would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company’s stock.
Unless otherwise provided by the Committee, an Option may not be exercised by
tender to the Company, or attestation to the ownership, of


 


14

















 


shares of Stock unless
such shares either have been owned by the Participant for more than six (6) months
(and not used for another Option exercise by attestation during such period) or
were not acquired, directly or indirectly, from the Company.


 


The
Company reserves, at any and all times, the right, in the Company’s sole and
absolute discretion, to establish, decline to approve or terminate any program
or procedures for the exercise of Options by means of a Cashless Exercise,
including with respect to one or more Participants specified by the Company,
notwithstanding that such program or procedures may be available to other
Participants.


 


(e)           Restrictions on Transferability. During the lifetime
of the Participant, an Option shall be exercisable only by the Participant or
the Participant’s guardian or legal representative. Prior to the issuance of shares
of Stock upon the exercise of an Option, the Option shall not be subject in any
manner to anticipation, alienation, sale, exchange, transfer, assignment,
pledge, encumbrance, or garnishment by creditors of the Participant or the
Participant’s beneficiary, except transfer by will or by the laws of descent
and distribution. Notwithstanding the foregoing, to the extent permitted by the
Committee, in its discretion, and set forth in the Award Agreement evidencing
such Option, a Nonqualified Stock Option shall be assignable or transferable to
a “family member” of the Participant as such term is defined in and subject to
the applicable limitations, if any, described in the General Instructions to Form S-8
Registration Statement under the Securities Act.


 


(f)            Termination by Death. Except to the extent otherwise
provided by the Committee at or after the time of grant, if a Participant’s
Service terminates by reason of death, the Option may thereafter be immediately
exercised in full by the legal representative of the estate or by the legatee
of the Participant under the will of the Participant until the expiration of
the stated period of the Option (the “Option Expiration Date”).


 


(g)           Termination by Reason of Disability. Except to the extent
otherwise provided by the Committee at or after the time of grant, if a
Participant’s Service terminates by reason of Disability, any Option held by
such Participant may thereafter be exercised in full at any time prior to three
(3) years from the date of such termination, but in no event later than
the Option Expiration Date. Notwithstanding the foregoing, if the Option is an
Incentive Stock Option and is not exercised within 12 months of the date the
Participant’s Service is terminated by reason of the Participant being permanently
and totally disabled within the meaning of Section 22(e)(3) of the
Code, the Option shall thereafter be treated as a Nonqualified Stock Option and
not an Incentive Stock Option. If the Participant dies during the 12-month
period commencing on the date his/her Service terminates by reason of such
permanent and total disability, however, then the Option will continue to be an
Incentive Stock Option until the Option Expiration Date.


 


(h)           Termination for Cause. If a Participant’s Service is
terminated by reason of “Cause,” the Option to the extent unexercised and
exercisable by the Participant on the date on which the Participant’s Service
terminated, shall immediately terminate and shall be forfeited in its entirety.
For the purposes of the Plan, “Cause” shall mean, unless otherwise provided in
an Award Agreement: (i) any gross failure by the Participant (other than
by reason of Disability) to faithfully and professionally carry out his or her
duties or to comply with any other material


 


15





















 


provision
of his or her employment agreement, if any, which continues for thirty (30)
days after written notice by the Participating Company for which the
Participant is performing services (the “Employer”); provided, that the
Employer does not have to provide notice in the event that the failure is not
susceptible to remedy or relates to the same type of acts or omissions as to
which notice has been given on a prior occasion; (ii) the Participant’s
dishonesty or other willful misconduct; (iii) the Participant’s conviction
of any felony or of any other crime involving moral turpitude, whether or not
relating to his or her employment; (iv) the Participant’s insobriety or
use of drugs, chemicals or controlled substances either in the course of
performing his or her duties and responsibilities for a Participating Company
or otherwise affecting the ability of Participant to perform those duties and
responsibilities; (v) the Participant’s failure to comply with a lawful
written direction of the Employer; (vi) any wanton or willful dereliction
of duties by the Participant; or (vii) breach of the Employer’s code of
conduct or insider trading policies. Notwithstanding the foregoing, in the
event that a Participant is a party to an employment agreement with the Company
or any other Participating Company that defines a termination on account of “Cause”
(or a term having similar meaning), such definition shall apply as the
definition of a termination of account of “Cause” for purposes hereof, but only
to the extent that such definition provides the Participant with greater
rights. A termination on account of Cause shall be communicated by written
notice to the Participant, and shall be deemed to occur on the date such notice
is sent to the Participant.


 


(i)            Other Termination. Unless otherwise determined by the
Committee at or after grant, if the Participant’s Service terminates for any
reason except Disability, death or Cause, the Option, to the extent unexercised
and exercisable by the Participant on the date on which the Participant’s
Service terminated, may be exercised by the Participant at any time prior to
the expiration of three (3) months after the date on which the Participant’s
Service terminated, but in any event no later than the Option Expiration Date.
Notwithstanding the foregoing, if such termination is by action of the Company
within 18 months following a Change of Control (other than discharge for
Cause), any unexercised portion of the Option may be exercised by the Participant
until the earlier of (x) six (6) months and one day after such
termination or (y) the Option Expiration Date. Notwithstanding the
foregoing, if the Option is not exercised within three (3) months of the
date Participant’s Service is terminated, the Option shall be treated as a
Nonqualified Option and not an Incentive Stock Option.


 


(j)            Extension if Exercise Prevented by Law. Notwithstanding the
foregoing, if the exercise of an Option within the applicable time periods set
forth above is prevented by the provisions of Section 22 below, the Option
shall remain exercisable until three (3) months (or such longer period of
time as determined by the Committee, in its discretion) after the date the
Participant is notified in writing by the Company that the Option is
exercisable, but in any event no later than the Option Expiration Date.


 


(k)           Extension if Participant Subject to Section 16(b).
Notwithstanding
the foregoing, if a sale within the applicable time periods set forth above of
shares acquired upon the exercise of the Option would subject the Participant
to suit under Section 16(b) of the Exchange Act, the Option shall
remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which a sale of such shares by the Participant would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th)
day after the Participant’s termination of Service, or (iii) the Option
Expiration Date.


 


16





















 


Section 7.              Stock Appreciation Rights.


 


(a)           Types of SARs Authorized. SARs shall be granted
independently of and not in tandem with any Option.


 


(b)           Exercise Price. The exercise price for each SAR
shall be established in the discretion of the Committee; provided, however,
that the exercise price per share subject to a SAR shall be not less than the
Fair Market Value of a share of Stock on the effective date of grant of the
SAR.


 


(c)           Exercisability and Term of SARs. SARs shall be
exercisable at such time or times, or upon such event or events, and subject to
such terms, conditions, performance criteria and restrictions as shall be
determined by the Committee and set forth in the Award Agreement evidencing
such SAR; provided, however, that no SAR shall be exercisable after the expiration
of ten (10) years after the effective date of grant of such SAR.


 


(d)           Exercise of SARs. Upon the exercise (or deemed
exercise pursuant to subsection (e) below) of a SAR, the Participant
(or the Participant’s legal representative or other person who acquired the
right to exercise the SAR by reason of the Participant’s death) shall be
entitled to receive payment of an amount for each share with respect to which
the SAR is exercised equal to the excess, if any, of the Fair Market Value of a
share of Stock on the date of exercise of the SAR over the exercise price.
Subject to Section 409A of the Code, payment of such amount shall be made
in cash, shares of Stock, or any combination thereof as determined by the
Committee. Unless otherwise provided in the Award Agreement evidencing such
SAR, payment shall be made in a lump sum as soon as practicable following the
date of exercise of the SAR. Subject to Section 409A of the Code, the
Award Agreement evidencing any SAR may provide for deferred payment in a lump sum
or in installments. When payment is to be made in shares of Stock, the number
of shares to be issued shall be determined on the basis of the Fair Market
Value of a share of Stock on the date of exercise of the SAR. For purposes of Section 7,
a SAR shall be deemed exercised on the date on which the Company receives
notice of exercise from the Participant or as otherwise provided in Section 7(e).


 


(e)           Deemed Exercise of SARs. If, on the date on which a SAR
would otherwise terminate or expire, the SAR by its terms remains exercisable
immediately prior to such termination or expiration and, if so exercised, would
result in a payment to the holder of such SAR, then any portion of such SAR
which has not previously been exercised shall automatically be deemed to be
exercised as of such date with respect to such portion.


 


(f)            Effect of Termination of Service. Subject to earlier
termination of the SAR as otherwise provided herein and unless otherwise
provided by the Committee in the grant of a SAR and set forth in the Award
Agreement, a SAR shall be exercisable after a Participant’s termination of
Service only during the applicable time period determined in accordance with Section 6(f) through
(k) (treating the SAR as if it were an Option) and thereafter shall terminate.


 


(g)           Nontransferability of SARs. During the lifetime of
the Participant, a SAR shall be exercisable only by the Participant or the
Participant’s guardian or legal representative. Prior to the exercise of a SAR,
the SAR shall not be subject in any manner to


 


17





















 


anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or
garnishment by creditors of the Participant or the Participant’s beneficiary,
except transfer by will or by the laws of descent and distribution.


 


Section 8.              Restricted Stock Awards.


 


(a)           Stock and Administration. Shares of Restricted
Stock may be issued either alone or in addition to Options, Deferred Stock
Awards or other Awards granted under the Plan. The Committee shall determine
the Directors, Consultants, and Employees of the Participating Company Group to
whom, and the time or times at which, grants of Restricted Stock will be made,
the number of shares to be awarded, the time or times within which such Restricted
Stock Awards may be subject to forfeiture, and all other conditions of the
Awards. The provisions of Restricted Stock Awards need not be the same with
respect to each recipient.


 


(b)           Awards and Certificates. The prospective recipient of an
Award of shares of Restricted Stock shall not, with respect to such Award, be
deemed to have become a Participant, or to have any rights with respect to such
Award, until and unless such recipient shall have executed an agreement or
other instrument evidencing the Award and delivered a fully executed copy
thereof to the Company and otherwise complied with the then applicable terms
and conditions.


 


(i)           Each Participant shall be issued a
stock certificate in respect of shares of Restricted Stock awarded under the Plan.
Such certificate shall be registered in the name of the Participant, and shall
bear an appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award, substantially in the following form:


 


“The transferability of this certificate and the
shares of stock represented hereby are subject to the terms and conditions
(including forfeiture) of the Celldex Therapeutics, Inc. 2005 Equity
Incentive Plan and an Agreement entered into between the registered owner and
Celldex Therapeutics, Inc. Copies of such Plan and Agreement are on file
in the offices of Celldex Therapeutics, Inc”


 


The Committee shall require that the stock
certificates evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed, and shall require, as a condition of
any Restricted Stock Award, that the Participant shall have delivered a stock
power, endorsed in blank, relating to the Stock covered by such Award.


 


(c)           Restrictions and Conditions. The shares of
Restricted Stock awarded pursuant to the Plan shall be subject to the following
restrictions and conditions:


 


(i)           subject to the provisions of this
Plan, during a period set by the Committee commencing with the date of such
Award (the “restriction period”), the Participant shall not be permitted to
sell, transfer, pledge, or assign shares of Restricted Stock awarded under the
Plan. Within these limits the Committee may provide for the lapse of such
restrictions in installments where deemed appropriate. Notwithstanding the
foregoing, or any other provision of the Plan,


 


18





















 


any Awards of Restricted Stock
which vest on the basis of the Participant’s continuous Service with the
Company or any Participating Company shall not provide for vesting which is any
more rapid than annual pro rata vesting over a three-year period and any Awards
of Restricted Stock which provide for vesting upon the attainment of
Performance Goals shall provide for a Performance Period of at least 12 months.


 


(ii)          Except as provided in
subsection (c)(i) of this Section 8, the Participant shall have,
with respect to the shares of Restricted Stock, all of the rights of a
Shareholder of the Company, including the right to vote the Restricted Stock
and the right to receive any cash dividends. The Committee, in its sole
discretion, may permit or require the payment of cash dividends to be deferred
and, if the Committee so determines, reinvested in additional Restricted Stock
or otherwise reinvested. Certificates for shares of unrestricted Stock shall be
delivered to the Participant promptly after, and only after, the period of
forfeiture shall expire without forfeiture in respect of such shares of
Restricted Stock.


 


(iii)         Subject to the provisions of subsection (d) of
this Section 8, upon termination of Service of any reason during the
restriction period, all shares still subject to restriction shall be forfeited
by the Participant and reacquired by the Company.


 


(d)           Effect of Termination of Service. Unless otherwise
provided by the Committee in the grant of a Restricted Stock Award and set
forth in the Award Agreement or determined by the Committee in its sole
discretion after the date of grant, if a Participant’s Service terminates for
any reason, whether voluntary or involuntary (including the Participant’s death
or Disability), then the Participant shall forfeit to the Company any
Restricted Stock pursuant to the Award which remain subject to Vesting
Conditions as of the date of the Participant’s termination of Service.


 


(e)           Section 83(b) Election. If a Participant makes
an election pursuant to Section 83(b) of the Code with respect to a
Restricted Stock Award, the Participant shall file, within 30 days following
the date of grant of a Restricted Stock Award, a copy of such election with the
Company and with the Internal Revenue Service, in accordance with the
regulations under Section 83 of the Code. The Committee may provide in an
Award Agreement that the Restricted Stock Award is conditioned upon the Participant’s
making or refraining from making an election with respect to the Award under Section 83(b) of
the Code.


 


Section 9.              Terms and Conditions of Restricted Stock
Unit Awards.


 


(a)           Grant of Restricted Stock Unit Awards. Restricted Stock Unit
Awards may be granted upon such conditions as the Committee shall determine,
including, without limitation, upon the attainment of one or more Performance
Goals described in Section 10(d). If either the grant of a Restricted
Stock Unit Award or the Vesting Conditions with respect to such Award is to be
contingent upon the attainment of one or more Performance Goals, the Committee
shall follow procedures substantially equivalent to those set forth in Sections
10(c) through 10(e)(i).


 


19




















 


(b)                                 Purchase Price. No monetary payment (other than
applicable tax withholding, if any) shall be required as a condition of
receiving a Restricted Stock Unit Award, the consideration for which shall be
services actually rendered to a Participating Company or for its benefit.


 


(c)                                  Vesting. Notwithstanding any other provision
of the Plan, any Awards of Restricted Stock Units which vest on the basis of
the Participant’s continuous Service with the Company or any Participating
Company shall not provide for vesting which is any more rapid than annual pro
rata vesting over a three-year period and any Awards of Restricted Stock Units
which provide for vesting upon the attainment of Performance Goals shall
provide for a Performance Period of at least 12 months.


 


(d)                                 Voting Rights, Dividend Equivalent Rights and
Distributions. Participants shall have no voting rights with respect to
shares of Stock represented by Restricted Stock Units until the date of the
issuance of such shares (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company). However,
the Committee, in its discretion, may provide in the Award Agreement evidencing
any Restricted Stock Unit Award that the Participant shall be entitled to receive
Dividend Equivalents with respect to the payment of cash dividends on Stock
having a record date prior to date on which Restricted Stock Units held by such
Participant are settled. Such Dividend Equivalents, if any, shall be paid by
crediting the Participant with additional whole Restricted Stock Units as of
the date of payment of such cash dividends on Stock. The number of additional
Restricted Stock Units (rounded to the nearest whole number) to be so credited
shall be determined by dividing (x) the amount of cash dividends paid on
such date with respect to the number of shares of Stock represented by the
Restricted Stock Units previously credited to the Participant by (y) the
Fair Market Value per share of Stock on such date. Such additional Restricted Stock
Units shall be subject to the same terms and conditions and shall be settled in
the same manner and at the same time (or as soon thereafter as practicable) as
the Restricted Stock Units originally subject to the Restricted Stock Unit
Award. In the event of a dividend or distribution paid in shares of Stock or
any other adjustment made upon a change in the capital structure of the Company
as described in Section 4(c), appropriate adjustments shall be made in the
Participant’s Restricted Stock Unit Award so that it represents the right to
receive upon settlement any and all new, substituted or additional securities
or other property (other than normal cash dividends) to which the Participant
would be entitled by reason of the shares of Stock issuable upon settlement of
the Award, and all such new, substituted or additional securities or other
property shall be immediately subject to the same Vesting Conditions as are
applicable to the Award.


 


(e)                                  Effect of Termination of Service. Unless otherwise
provided by the Committee in the grant of a Restricted Stock Unit Award and set
forth in the Award Agreement or determined by the Committee in its sole
discretion after the date of grant, if a Participant’s Service terminates for
any reason, whether voluntary or involuntary (including the Participant’s death
or disability), then the Participant shall forfeit to the Company any
Restricted Stock Units pursuant to the Award which remain subject to Vesting
Conditions as of the date of the Participant’s termination of Service.


 


(f)                                    Settlement of Restricted Stock Unit Awards. The Company shall
issue to a Participant on the date on which Restricted Stock Units subject to
the Participant’s


 


20





















 


Restricted
Stock Unit Award vest or on such other date determined by the Committee, in its
discretion, and set forth in the Award Agreement one (1) share of Stock
(and/or any other new, substituted or additional securities or other property
pursuant to an adjustment described in Section 9(d)) for each Restricted
Stock Unit then becoming vested or otherwise to be settled on such date,
subject to the withholding of applicable taxes. Notwithstanding the foregoing,
if permitted by the Committee and set forth in the Award Agreement, and subject
to Section 409A of the Code, the Participant may elect in accordance with
terms specified in the Award Agreement to defer receipt of all or any portion
of the shares of Stock or other property otherwise issuable to the Participant
pursuant to this Section.


 


(g)                                 Nontransferability of Restricted Stock Unit Awards. Prior to the issuance
of shares of Stock in settlement of a Restricted Stock Unit Award, the Award
shall not be subject in any manner to anticipation, alienation, sale, exchange,
transfer, assignment, pledge, encumbrance, or garnishment by creditors of the
Participant or the Participant’s beneficiary, except transfer by will or by the
laws of descent and distribution. All rights with respect to a Restricted Stock
Unit Award granted to a Participant hereunder shall be exercisable during his
or her lifetime only by such Participant or the Participant’s guardian or legal
representative.


 


Section 10.                                     Terms and Conditions of Performance
Awards.


 


(a)                                  Types of Performance Awards Authorized. Performance Awards may
be in the form of either Performance Shares or Performance Units. Each Award
Agreement evidencing a Performance Award shall specify the number of
Performance Shares or Performance Units subject thereto, the Performance Award
Formula, the Performance Goal(s) and Performance Period applicable to the
Award, and the other terms, conditions and restrictions of the Award.


 


(b)                                 Initial Value of Performance Shares and Performance
Units. Unless otherwise provided by the Committee in granting a Performance
Award, each Performance Share shall have an initial value equal to the Fair
Market Value of one (1) share of Stock, subject to adjustment as provided
in Section 4(c), on the effective date of grant of the Performance Share,
and each Performance Unit shall have an initial value of one hundred dollars
($100). The final value payable to the Participant in settlement of a
Performance Award determined on the basis of the applicable Performance Award
Formula will depend on the extent to which Performance Goals established by the
Committee are attained within the applicable Performance Period established by
the Committee.  No Participant shall be granted within any one fiscal year
of the Company, Performance Units which in the aggregate have a maximum initial
value in excess of $1,000,000.


 


(c)                                  Establishment of Performance Period, Performance Goals
and Performance Award Formula. In granting each Performance Award,
the Committee shall establish in writing the applicable Performance Period,
Performance Award Formula and one or more Performance Goals which, when
measured at the end of the Performance Period, shall determine on the basis of
the Performance Award Formula the final value of the Performance Award to be
paid to the Participant. Unless otherwise permitted in compliance with the
requirements under Section 162(m) with respect to “performance-based
compensation,” the Committee shall establish the Performance Goal(s) and
Performance Award Formula applicable


 


21





















 


to
each Performance Award no later than the earlier of (a) the date ninety
(90) days after the commencement of the applicable Performance Period or (b) the
date on which 25% of the Performance Period has elapsed, and, in any event, at
a time when the outcome of the Performance Goals remains substantially
uncertain. Once established, the Performance Goals and Performance Award
Formula shall not be changed during the Performance Period. The Company shall
notify each Participant granted a Performance Award of the terms of such Award,
including the Performance Period, Performance Goal(s) and Performance
Award Formula.


 


(d)                                 Measurement of Performance Goals. Performance Goals
shall be established by the Committee on the basis of targets to be attained (“Performance
Targets”) with respect to one or more measures of business or financial
performance (each, a “Performance Measure”), subject to the following:


 


(i)                                     Performance Measures. Performance Measures
shall have the same meanings as used in the Company’s financial statements, or,
if such terms are not used in the Company’s financial statements, they shall
have the meanings used generally in the Company’s industry. Performance
Measures shall be calculated with respect to the Company and each Subsidiary
Company consolidated therewith for financial reporting purposes or such
division or other business unit as may be selected by the Committee. For
purposes of the Plan, any financial Performance Measures applicable to a
Performance Award shall be calculated in accordance with the Company’s past
accounting practices.  Adjustments, if any, shall be made solely for the
purpose of providing a consistent basis from period to period for the
calculation of Performance Measures in order to prevent the dilution or
enlargement of the Participant’s rights with respect to a Performance Award.
Performance Measures may be one or more of the following, as determined by the
Committee: (1) cost of sales, (2) earnings per share, (3) cash
flow (including but not limited to net operating cash flow, free cash flow and
cash flow return on capital), (4) marketing and sales expenses, (5) net
income or net earnings (before or after taxes), (6) operating margin, (7) product
approvals, (8) product sales, (9) projects in clinical or preclinical
development, (10) regulatory filings, (11) research and development
efforts, (12) working capital, (13) revenue, (14) achievement of specified
milestones in the discovery, development, commercialization, or manufacturing
of one or more of the Company’s products and/or services, (15) expense targets,
(16) personal management objectives, (17) share price (including, but not
limited to, growth measures and total shareholder return), (18) operating
efficiency, (19) gross margin, (20) return measures (including, but not limited
to, return on assets, capital, equity, or sales), (21) productivity ratios,
(22) operating income, (23) net operating profit, (24) earnings before or after
interest, taxes, depreciation, and/or amortization, (25) economic value added,
(26) market share, (27) customer satisfaction, (28) joint ventures, corporate
partnerships and strategic alliances, (29) spin-offs, split ups and the like,
(30) reorganizations, (31) strategic investments or recapitalizations,
restructurings, financings (issuance of debt or equity) or refinancings, (32)
acquisitions or divestitures, (33) organizational realignments, (34)
infrastructure changes, and (35) assets. The Performance Measures and
Performance Goals may


 


22





















 


differ from Participant to
Participant and from Award to Award. Any criteria used may be measured, as
applicable, (A) in absolute terms, (B) in relative terms (including,
but not limited to, passage of time and/or against another company or
companies), (C) on a per-share basis, (D) against the performance of
the Company as a whole or a segment of the Company and/or (E) on a pre-tax
or after-tax basis.  Partial achievement of the specified criteria may
result in a payment or vesting corresponding to the degree of achievement as
specified in the applicable Award Agreement.


 


(ii)                                  Performance Targets. Performance Targets
may include a minimum, maximum, target level and intermediate levels of
performance, with the final value of a Performance Award determined under the
applicable Performance Award Formula by the level attained during the
applicable Performance Period. A Performance Target may be stated as an
absolute value or as a value determined relative to a standard selected by the
Committee.


 


(e)                                  Settlement of Performance Awards.


 


(i)                                     Determination of Final Value. As soon as practicable
following the completion of the Performance Period applicable to a Performance
Award, the Committee shall certify in writing the extent to which the
applicable Performance Goals have been attained and the resulting final value
of the Award earned by the Participant and to be paid upon its settlement in
accordance with the applicable Performance Award Formula.


 


(ii)                                  Discretionary Adjustment of Award
Formula. In its discretion, the Committee may, either at the time it grants a
Performance Award or at any time thereafter, provide for the positive or
negative adjustment of the Performance Award Formula applicable to a
Performance Award granted to any Participant who is not a Covered Employee to
reflect such Participant’s individual performance in his or her position with
the Company or such other factors as the Committee may determine. If permitted
under a Covered Employee’s Award Agreement, the Committee shall have the
discretion, on the basis of such criteria as may be established by the
Committee, to reduce some or all of the value of the Performance Award that
would otherwise be paid to the Covered Employee upon its settlement
notwithstanding the attainment of any Performance Goal and the resulting value
of the Performance Award determined in accordance with the Performance Award
Formula. No such reduction may result in an increase in the amount payable upon
settlement of another Participant’s Performance Award.


 


(iii)                               Effect of Leaves of Absence. Unless otherwise
required by law, payment of the final value, if any, of a Performance Award
held by a Participant who has taken in excess of thirty (30) days in leaves of
absence during a Performance Period shall be prorated on the basis of the
number of days of the Participant’s Service during the Performance Period
during which the Participant was not on a leave of absence.


 


23





















 


(iv)                              Notice to Participants. As soon as practicable
following the Committee’s determination and certification in accordance with
Sections 10(e)(i) and (ii), the Company shall notify each Participant of
the determination of the Committee.


 


(v)                                 Payment in Settlement of Performance
Awards. As soon as practicable following the Committee’s determination and
certification in accordance with Sections 10(e)(i) and (ii), and in no
event later than the date required by Section 409A of the Code to avoid a
payment of deferred compensation, payment shall be made to each eligible
Participant (or such Participant’s legal representative or other person who
acquired the right to receive such payment by reason of the Participant’s
death) of the final value of the Participant’s Performance Award. Payment of
such amount shall be made in cash, shares of Stock, or a combination thereof as
determined by the Committee. Unless otherwise provided in the Award Agreement
evidencing a Performance Award, payment shall be made in a lump sum. Subject to
Section 409A of the Code, an Award Agreement may provide for deferred
payment in a lump sum or in installments. If any payment is to be made on a
deferred basis, the Committee may, but shall not be obligated to, provide for
the payment during the deferral period of Dividend Equivalents or interest.


 


(vi)                              Provisions Applicable to Payment in
Shares. If payment is to be made in shares of Stock, the number of such shares
shall be determined by dividing the final value of the Performance Award by the
value of a share of Stock determined by the method specified in the Award
Agreement. Such methods may include, without limitation, the closing market
price on a specified date (such as the settlement date) or an average of market
prices over a series of trading days. Shares of Stock issued in payment of any
Performance Award may be fully vested and freely transferable shares or may be
shares of Stock subject to Vesting Conditions as provided in Section 9(c).
Any shares subject to Vesting Conditions shall be evidenced by an appropriate
Award Agreement and shall be subject to the provisions of Sections 9(c), (d), (e) and
(g) above.


 


(f)                                    Voting Rights; Dividend Equivalent Rights
and Distributions. Participants shall have no voting rights with respect to
shares of Stock represented by Performance Share Awards until the date of the
issuance of such shares, if any (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company).
However, the Committee, in its discretion, may provide in the Award Agreement
evidencing any Performance Share Award that the Participant shall be entitled
to receive Dividend Equivalents with respect to the payment of cash dividends
on Stock having a record date prior to the date on which the Performance Shares
are settled or forfeited. Such Dividend Equivalents, if any, shall be credited
to the Participant in the form of additional whole Performance Shares as of the
date of payment of such cash dividends on Stock. The number of additional
Performance Shares (rounded to the nearest whole number) to be so credited
shall be determined by dividing (x) the amount of cash dividends paid on
such date with respect to the number of shares of Stock represented by the
Performance Shares previously credited to the Participant by (y) the Fair
Market Value per share of Stock on such date. Dividend Equivalents


 


24





















 


may be
paid currently or may be accumulated and paid to the extent that Performance
Shares become non-forfeitable, as determined by the Committee. Settlement of
Dividend Equivalents may be made in cash, shares of Stock, or a combination
thereof as determined by the Committee, and may be paid on the same basis as
settlement of the related Performance Share as provided in Section 10(e).
Dividend Equivalents shall not be paid with respect to Performance Units. In
the event of a dividend or distribution paid in shares of Stock or any other
adjustment made upon a change in the capital structure of the Company as
described in Section 4(c), appropriate adjustments shall be made in the
Participant’s Performance Share Award so that it represents the right to
receive upon settlement any and all new, substituted or additional securities
or other property (other than normal cash dividends) to which the Participant
would entitled by reason of the shares of Stock issuable upon settlement of the
Performance Share Award, and all such new, substituted or additional securities
or other property shall be immediately subject to the same Performance Goals as
are applicable to the Award.


 


(g)                                 Effect of Termination of Service. Unless otherwise
provided by the Committee in the grant of a Performance Award and set forth in
the Award Agreement or determined by the Committee in its sole discretion after
the date of grant, the effect of a Participant’s termination of Service on the
Performance Award shall be as follows:


 


(i)                                     Termination for Cause and Voluntary
Termination of Service by Participant. If a Participant’s Service
terminates for reason of Cause or voluntary termination before the completion
of the Performance Period applicable to the Performance Award, such Award shall
be forfeited in its entirety.


 


(ii)                                  Other Termination of Service. If the Participant’s
Service terminates for any reason except for Cause or voluntary termination before
the completion of the Performance Period applicable to the Performance Award,
the final value of the Participant’s Performance Award shall be determined by
the extent to which the applicable Performance Goals have been attained with
respect to the entire Performance Period and shall be prorated based on the
number of months of the Participant’s Service during the Performance Period.
Payment shall be made following the end of the Performance Period in any manner
permitted by Section 10(e).


 


(h)                                 Nontransferability of Performance Awards.
Prior
to settlement in accordance with the provisions of the Plan, no Performance
Award shall be subject in any manner to anticipation, alienation, sale,
exchange, transfer, assignment, pledge, encumbrance, or garnishment by
creditors of the Participant or the Participant’s beneficiary, except transfer
by will or by the laws of descent and distribution. All rights with respect to
a Performance Award granted to a Participant hereunder shall be exercisable
during his or her lifetime only by such Participant or the Participant’s
guardian or legal representative.


 


Section 11.                                     Deferred Stock Awards.


 


(a)                                  Stock and Administration. Subject to the
requirements of Section 409A of the Code, Deferred Stock Awards of the
right to receive Stock that is not to be distributed to the Participant until
after a specified deferral period may be made either alone or in addition to


 


25





















 


Options,
Restricted Stock, or other Awards granted under the Plan. The Committee shall
determine the Participants to whom, and the time or times at which, Deferred
Stock Awards shall be awarded, the number of shares of Stock to be awarded to
any Participant, the duration of the period (the “Deferral Period”) during which, and the conditions
under which, receipt of the Stock will be deferred, and the terms and
conditions of the Deferred Stock Award in addition to those contained in
subsection (b) of this Section 11. In its sole discretion, the
Committee may provide for a minimum payment at the end of the applicable
Deferral Period based on a stated percentage of the Fair Market Value on the
date of grant of the number of shares of Stock covered by a Deferred Stock
Award. The Committee may also provide for the grant of deferred Stock upon the
completion of a specified Performance Period. The provisions of Deferred Stock
Awards need not be the same with respect to each recipient.


 


(b)                                 Terms and Conditions. Deferred Stock Awards made
pursuant to this Section 11 shall be subject to the following terms and
conditions:


 


(i)                                     Subject to the
provisions of the Plan, the shares of stock to be issued pursuant to a Deferred
Stock Award may not be sold, assigned, transferred, pledged or otherwise
encumbered during the Deferral Period or Elective Deferral Period (defined
below), where applicable, and may be subject to a risk of forfeiture during all
or such portion of the Deferral Period as shall be specified by the Committee.
At the expiration of the Deferral Period and Elective Deferral Period, share
certificates shall be delivered to the Participant, or the Participant’s legal
representative, representing the number of shares covered by the Deferred Stock
Award.


 


(ii)                                  Amounts equal to any
dividends declared during the Deferral Period with respect to the number of
shares of Stock covered by a Deferred Stock Award will be paid to the
Participant currently, or deferred and deemed to be reinvested in additional
deferred Stock or otherwise reinvested, as determined at the time of the Deferred
Stock Award by the Committee, in its sole discretion.


 


(iii)                               Subject to the
provisions of subsection (b)(iv) of this Section 11, upon
termination of the Service for any reason during the Deferral Period for a
given Deferred Stock Award, the Stock subject to such Deferred Stock Award
shall be forfeited by the Participant.


 


(iv)                              In the event of the
Participant’s Disability or death during the Deferral Period (or Elective
Deferral Period, where applicable), or in cases of special circumstances, the
Committee may, in its sole discretion, when it finds that a waiver would be in
the best interests of the Company, waive in whole or in part any or all of the
remaining deferral limitations imposed hereunder with respect to any or all of
the Participant’s Deferred Stock Award. Anything in the Plan to the contrary
notwithstanding, upon the occurrence of a Change of Control, the Deferral
Period and the Elective Deferral Period with respect to each Deferred Stock
Award shall expire immediately and all share certificates relating to such
Deferred Stock Award shall be delivered to each Participant or the Participant’s
legal representative.


 


26





















 


(v)                                 Subject to Section 409A
of the Code, prior to completion of the Deferral Period, a Participant may
elect to defer further the receipt of the Deferred Stock Award for a specified
period or until a specified event (the “Elective Deferred Period”), subject in
each case to the approval of the Committee and under such terms as are determined
by the Committee, all in its sole discretion.


 


(vi)                              Each Deferred Stock
Award shall be confirmed by an Award Agreement or other instrument executed by
the Committee and by the Participant.


 


Section 12.                                     Other Stock-Based Awards.


 


(a)                                  Stock and Administration. Subject to the requirements of Section 409A
of the Code, Other Stock-based Awards may be granted either alone or in
addition to other Awards granted under the Plan. Subject to the provisions of
the Plan, the Committee shall have sole and complete authority to determine the
Participants to whom and the time or times at which such Other Stock-based
Awards shall be made, the number of shares of the Stock to be awarded pursuant
to such Other Stock-based Awards and all other conditions of the Other Stock-based
Awards. The Committee may also provide for the grant of the Stock upon the
completion of a specified Performance Period. The provisions of Other
Stock-based Awards need not be the same with respect to each recipient.


 


(b)                                 Terms and Conditions. Other Stock-based
Awards made pursuant to this Section 12 shall be subject to the following
terms and conditions:


 


(i)                                     Subject to the
provisions of this Plan, shares or interests in shares subject to Other
Stock-based Awards made under this Section 12 may not be sold, assigned,
transferred, pledged or otherwise encumbered prior to the date on which the
shares are issued, or, if later, the date on which any applicable restriction,
performance or deferral period lapses.


 


(ii)                                  Subject to the
provisions of this Plan and the Other Stock-based Award agreement, the
recipients of Other Stock-based Awards under this Section 12 shall be
entitled to receive, currently or on a deferred basis, interest or dividends or
interest or Dividend Equivalents with respect to the number of shares or
interests therein covered by the Other Stock-based Awards, as determined at the
time of grant of the Other Stock-based Awards by the Committee, in its sole
discretion, and the Committee may provide that such amounts (if any) shall be
deemed to have been reinvested in additional Stock or otherwise reinvested.


 


(iii)                               Any Other Stock-based
Awards granted under this Section 12 and any Stock covered by any such
Other Stock-based Award may be forfeited to the extent so provided in the Other
Stock-based Award agreement, as determined by the Committee, in its sole
discretion.


 


(iv)                              In the event of the
Participant’s Disability or death, or in cases of special circumstances, the
Committee may, in its sole discretion, waive in whole or in part any or all of
the remaining limitations imposed hereunder (if any) with respect to any or all
Other Stock-based Awards. Anything in the Plan to the


 


27





















 


contrary notwithstanding, any
limitations imposed with respect to any Other Stock-based Award under this Section 12,
including any provision providing for the forfeiture of any Other Stock-based
Award under any circumstance, shall terminate immediately upon a Change of
Control and the number of shares of or interests in the Stock subject to such
Other Stock-based Award shall be delivered to the Participant (or, in the case
of an Other Stock-based Award with respect to which such number is not
determinable, such number of shares of or interests in the Stock as is determined
by the Committee and set forth in the terms of such Other Stock-based Award).


 


(v)                                 Each Other Stock-based
Award under this Section 12 shall be confirmed by an agreement or other
instrument executed by the Company and by the Participant.


 


(vi)                              The Stock or interests
therein (including securities convertible into the Stock) paid or awarded on a
bonus basis under this Section 12 shall be issued for no cash
consideration; the Stock or interests therein (including securities convertible
into the Stock) purchased pursuant to a purchase right Awarded under this Section 12
shall be priced at least at 50% of the Fair Market Value of the Stock on the
date of grant.


 


(vii)                           The Committee, in its
sole discretion, may impose such restrictions on the transferability of Other
Stock-based Awards as it deems appropriate. Any such restrictions shall be set
forth in the written agreement between the Company and the Participant with
respect to such Award.


 


(viii)                        Each Other Stock-based
Award to an Insider under this Section 12 shall be subject to all of the
limitations and qualifications that may be required by Section 16 of the
Exchange Act and all of the rules and regulations promulgated thereunder.


 


Section 13.                                     Deferred Compensation Awards.


 


(a)                                  Establishment of Deferred Compensation
Award Programs. This Section 13 shall not be effective unless and
until the Committee determines to establish a program pursuant to this Section.
The Committee, in its discretion and upon such terms and conditions as it may
determine, and subject to the requirements of Section 409A of the Code,
may establish one or more programs pursuant to the Plan under which:


 


(1)                                  A Participant
designated by the Committee who is an Insider or otherwise among a select group
of management and highly compensated Employees may irrevocably elect, prior to
a date specified by the Committee, to reduce such Participant’s compensation
otherwise payable in cash (subject to any minimum or maximum reductions imposed
by the Committee) and to be granted automatically at such time or times as
specified by the Committee one or more Awards of Stock Units with respect to
such numbers of shares of Stock as determined in accordance with the rules of
the program established by the Committee and having such other terms and
conditions as established by the Committee.


 


28





















 


(2)                                  Participants
designated by the Committee who are Insiders or otherwise among a select group
of management and highly compensated Employees may irrevocably elect, prior to
a date specified by the Committee, to be granted automatically an Award of
Stock Units with respect to such number of shares of Stock and upon such other
terms and conditions as established by the Committee in lieu of:


 


(i)                                     shares of Stock
otherwise issuable to such Participant upon the exercise of an Option;


 


(ii)                                  cash or shares of
Stock otherwise issuable to such Participant upon the exercise of an SAR; or


 


(iii)                               cash or shares of
Stock otherwise issuable to such Participant upon the settlement of a Performance
Award.


 


(b)                                 Terms and Conditions of Deferred
Compensation Awards. Deferred Compensation Awards granted pursuant to this Section 13
may be evidenced by Award Agreements in such form as the Committee shall from
time to time establish. Deferred Compensation Awards may incorporate all or any
of the terms of the Plan by reference and shall comply with and be subject to
the following terms and conditions:


 


(1)                                  Vesting Conditions. Deferred Compensation
Awards shall be subject to such vesting conditions as shall be determined by
the Committee.


 


(2)                                  Terms and Conditions of Stock Units.


 


(i)                                     Voting Rights; Dividend Equivalent Rights
and Distributions. Participants shall have no voting rights with respect to
shares of Stock represented by Stock Units until the date of the issuance of
such shares (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company). However, a Participant
shall be entitled to receive Dividend Equivalents with respect to the payment
of cash dividends on Stock having a record date prior to date on which Stock
Units held by such Participant are settled. Such Dividend Equivalents shall be
paid by crediting the Participant with additional whole and/or fractional Stock
Units as of the date of payment of such cash dividends on Stock. The method of
determining the number of additional Stock Units to be so credited shall be
specified by the Committee and set forth in the Award Agreement. Such
additional Stock Units shall be subject to the same terms and conditions and
shall be settled in the same manner and at the same time (or as soon thereafter
as practicable) as the Stock Units originally granted under the Award
Agreement. In the event of a dividend or distribution paid in shares of Stock
or any other adjustment made upon a change in the capital structure of the
Company as described in Section 4(c), appropriate adjustments shall be
made in the Participant’s Stock Units so that the Participant receives upon
settlement any and all new, substituted or additional securities or other
property (other than normal cash dividends) to which the Participant would
entitled by reason of the shares of Stock issuable upon settlement of the
Award.


 


29





















 


(ii)                                  Settlement of Stock Units. A Participant
electing to receive an Award of Stock Units pursuant to this Section 13,
shall specify at the time of such election a settlement date with respect to
such Award. The Company shall issue to the Participant as soon as practicable
following the earlier of the settlement date elected by the Participant or the
date of termination of the Participant’s Service, a number of whole shares of
Stock equal to the number of whole Stock Units granted under the Award
Agreement. Such shares of Stock shall be fully vested, and the Participant
shall not be required to pay any additional consideration (other than
applicable tax withholding) to acquire such shares. Any fractional Stock Units
shall be settled by the Company by payment in cash of an amount equal to the
Fair Market Value as of the payment date of such fractional share.


 


(iii)                               Nontransferability of Stock Units. Prior to their
settlement in accordance with the provision of the Plan, no Stock Unit shall be
subject in any manner to anticipation, alienation, sale, exchange, transfer,
assignment, pledge, encumbrance, or garnishment by creditors of the Participant
or the Participant’s beneficiary, except transfer by will or by the laws of
descent and distribution. All rights with respect to a Stock Unit granted to a
Participant hereunder shall be exercisable during his or her lifetime only by
such Participant or the Participant’s guardian or legal representative.


 


Section 14.                                      Transfer, Leave of Absence, etc. For purposes of the
Plan: (a) a transfer of an Employee from the Company to a Participating
Company, or vice versa, or from one Participating Company to another; (b) a
leave of absence, duly authorized in writing by the Company, for military
service or sickness, or for any other purposes approved by the Company if the
period of such leave does not exceed 90 days; or (c) a leave of absence in
excess of 90 days, duly authorized in writing by the Company, shall not be
deemed a termination of Service. However, if any such leave of absence taken by
a Participant exceeds ninety (90) days, then on the one hundred eighty-first
(181st) day following the commencement of such leave any Incentive Stock Option
held by the Participant shall cease to be treated as an Incentive Stock Option
and instead shall be treated thereafter as a Nonqualified Stock Option, unless
the Participant’s right to return to Service is guaranteed by statute or
contract.


 


Section 15.                                      Amendments and Termination. The Board may amend, alter, or
discontinue the Plan, but no amendment, alteration, or discontinuation shall be
made (i) which would impair the rights of an Participant under any Award
theretofore granted, without the Participant’s consent, or (ii) which,
without the approval of the shareholders, would:


 


(a)                                  except as is provided
in Section 4 of the Plan, increase the total number of shares available
for the purpose of the Plan;


 


(b)                                 subsequent to the date
of grant, decrease the option price of any Option to less than 100% (110% in
the case of a 10% Owner of an Incentive Stock Option) of the Fair Market Value
on the date of the granting of the Option;


 


(c)                                  extend the maximum
option period under Section 6(b) of the Plan;


 


30




















 


(d)                                 otherwise materially
increase the benefits accruing to Participants under, or materially modify the
requirements as to eligibility for participation in, the Plan; or


 


(e)                                  violate any applicable
law, rule or regulation enacted or promulgated by any governmental
authority, securities exchange, market system  or self regulatory
organization.


 


The
Committee may amend the terms of any Award theretofore granted, prospectively
or retroactively, but no such amendment shall impair the rights of any holder
without such holder’s consent. Notwithstanding the foregoing, the Board or the
Committee may, in its discretion, amend the Plan or terms of any outstanding
Award held by a person then subject to Section 16 of the Exchange Act
without the consent of any holder in order to preserve exemptions under said Section 16
which are or become available from time to time under rules of the
Securities and Exchange Commission.


 


Section 16.                                      Unfunded Status of the Plan. The Plan is intended
to constitute an “unfunded” plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant by the Company, nothing
contained herein shall give any such Participant any rights that are greater
than those of a general creditor of the Company. In its sole discretion, the
Committee may authorize the creation of trusts or other arrangements to meet
the obligations created under the Plan to deliver the Stock; provided, however,
that the existence of such trusts or other arrangements is consistent with the unfunded
status of the Plan.


 


Section 17.                                      Employment at Will. Nothing contained in the Plan, or
in any Award granted pursuant to the Plan, or in any agreement made pursuant to
the Plan, shall confer upon any Participant any right with respect to
continuance of employment by a Participating Company or its subsidiaries, nor
interfere in any way with the right of a Participating Company or its
subsidiaries to terminate the Participant’s employment at will or change the
Participant’s compensation at any time.


 


Section 18.                                      Additional Compensation Arrangements. Nothing contained in
this Plan shall prevent the Board of Directors from adopting other or
additional compensation arrangements, subject to shareholder approval if such
approval is required; and such arrangements may be either generally applicable
or applicable only in specific cases.


 


Section 19.                                      Taxes.


 


(a)                                  Participants shall make
arrangements satisfactory to the Committee regarding payment of any federal,
state, or local taxes of any kind required by law to be withheld with respect
to any income which the Participant is required, or elects, to include in his
gross income and the Company and its subsidiaries shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of any
kind otherwise due to the Participant. Anything contained herein to the
contrary notwithstanding, the Committee may, in its sole discretion, authorize
acceptance of Stock received in connection with the grant or exercise of an
Award or otherwise previously acquired in satisfaction of withholding
requirements.


 


(b)                                 Notwithstanding any
provisions to the contrary in this Section 19, an Insider may only satisfy
tax withholding requirements with the settlement of a stock appreciation right
or with shares of the Stock if he or she has held such stock or stock
appreciation right for at


 


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least six (6) months or the cash settlement of the tax
obligation occurs no earlier than six (6) months after the date of an
irrevocable election made by an Insider.


 


Section 20.                                      Standard Forms of Award Agreement.


 


(a)                                  Award Agreements. Each Award shall comply
with and be subject to the terms and conditions set forth in the appropriate
form of Award Agreement approved by the Committee and as amended from time to
time. Any Award Agreement may consist of an appropriate form of notice of grant
and a form of agreement incorporated therein by reference, or such other form
or forms, including electronic media, as the Committee may approve from time to
time.


 


(b)                                 Authority to Vary Terms. The Committee shall have
the authority from time to time to vary the terms of any standard form of Award
Agreement either in connection with the grant or amendment of an individual
Award or in connection with the authorization of a new standard form or forms;
provided, however, that the terms and conditions of any such new, revised or
amended standard form or forms of Award Agreement are not inconsistent with the
terms of the Plan.


 


Section 21.                                      Change in Control.


 


(a)                                  Effect of Change in Control on Options and
SARs.


 


(1)                                  Accelerated Vesting. The Committee, in its
discretion, may provide in any Award Agreement evidencing an Option or SAR
Award or, in the event of a Change in Control, may take such actions as it
deems appropriate to provide, for the acceleration of the exercisability and
vesting in connection with such Change in Control of any or all outstanding
Options and SARs and shares acquired upon the exercise of such Options and SARs
upon such conditions and to such extent as the Committee shall determine.


 


(2)                                  Assumption or Substitution. In the event of a
Change in Control, the Surviving Company, may, without the consent of any
Participant, either assume the Company’s rights and obligations under outstanding
Options and SARs or substitute for outstanding Options and SARs substantially
equivalent options and SARs (as the case may be) for the stock of the Surviving
Company or other Person acquiring the Company’s Voting Securities in such
Change in Control (the “Acquirer”). Any Options or SARs which are not assumed
or substituted in connection with the Change in Control nor exercised as of the
time of consummation of the Change in Control shall terminate and cease to be
outstanding effective as of the time of consummation of the Change in Control.


 


(3)                                  Cash-Out of Options or SARs. The Committee, in its
discretion and without the consent of any Participant, may determine that, upon
the occurrence of a Change in Control, each or any Option or SAR outstanding immediately
prior to the Change in Control shall be canceled in exchange for a payment with
respect to each vested share of Stock subject to such canceled Option or SAR in
(i) cash, (ii) stock of the Company or of a corporation or other
business entity a party to the Change in Control, or (iii) other property
which, in any such case, shall be in an amount having a Fair Market Value equal
to the excess of the Fair Market Value of the consideration to be paid per
share of Stock in the Change in Control over the exercise price


 


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per
share under such Option or SAR (the “Spread”). In the event such determination
is made by the Committee, the Spread (reduced by applicable withholding taxes,
if any) shall be paid to Participants in respect of their canceled Options and
SARs as soon as practicable following the date of the Change in Control.


 


(b)                                 Effect of Change in Control on Restricted
Stock Awards. The
Committee, in its discretion, may provide in any Award Agreement evidencing a
Restricted Stock Award or, in the event of a Change in Control, may take such
actions as it deems appropriate to provide, that the lapsing of the Restriction
Period applicable to the shares subject to the Restricted Stock Award held by a
Participant whose Service has not terminated prior to the Change in Control
shall be accelerated effective immediately prior to the consummation of the
Change in Control to such extent as the Committee shall determine.


 


(c)                                  Effect of Change in Control on Restricted
Stock Unit Awards. The Committee, in its discretion, may provide in any Award Agreement
evidencing a Restricted Stock Unit Award or, in the event of a Change in
Control, may take such actions as it deems appropriate to provide, that the
Restricted Stock Unit Award held by a Participant whose Service has not
terminated prior to the Change in Control shall be settled effective as of the
date of the Change in Control to such extent as the Committee shall determine.


 


(d)                                 Effect of Change in Control on Performance
Awards. The
Committee, in its discretion, may provide in any Award Agreement evidencing a
Performance Award or, in the event of a Change in Control, may take such
actions as it deems appropriate to provide, that the Performance Award held by
a Participant whose Service has not terminated prior to the Change in Control
or whose Service terminated by reason of the Participant’s death or Disability
shall become payable effective as of the date of the Change in Control to such
extent as the Committee shall determine.


 


(e)                                  Effect of Change in Control on Deferred Stock
Awards, Other Stock-Based Awards and Deferred Compensation Awards. The Committee, in its
discretion, may provide in any Award Agreement evidencing a Deferred Stock
Award, Other Stock-based Awards or a Deferred Compensation Award or, in the
event of a change in the ownership of effective control or change in the
ownership of a substantial portion of the Company’s assets (as such terms are
defined for purposes of Section 409A of the Code), may take such actions
as it deems appropriate to provide that the Stock or Stock Units pursuant to
such Award shall be settled effective as of the date of such change in
ownership or effective control or change in ownership of a substantial portion
of the Company’s assets, to such extent as the Committee shall determine.


 


(f)                                    Excise Tax Limit. In the event that the vesting of Awards
together with all other payments and the value of any benefit received or to be
received by a Participant would result in all or a portion of such payment
being subject to the excise tax under Section 4999 of the Code, then the
Participant’s payment shall be either (i) the full payment or (ii) such
lesser amount that would result in no portion of the payment being subject to
excise tax under Section 4999 of the Code (the “Excise Tax”), whichever of
the foregoing amounts, taking into account the applicable federal, state, and
local employment taxes, income taxes, and the Excise Tax, results in the
receipt by the Participant, on an after-tax basis, of the greatest amount of
the


 


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payment notwithstanding
that all or some portion of the payment may be taxable under Section 4999
of the Code. All determinations required to be made under this Section 21(f) shall
be made by the nationally recognized accounting firm which is the Company’s
outside auditor immediately prior to the event triggering the payments that are
subject to the Excise Tax (the “Accounting Firm”). The Company shall cause the
Accounting Firm to provide detailed supporting calculations of its
determinations to the Company and the Participant. All fees and expenses of the
Accounting Firm shall be borne solely by the Company. The Accounting Firm’s
determinations must be made with substantial authority (within the meaning of Section 6662
of the Code). For the purposes of all calculations under Section 280G of
the Code and the application of this Section 21(f), all determinations as
to present value shall be made using 120 percent of the applicable Federal rate
(determined under Section 1274(d) of the Code) compounded
semiannually, as in effect on December 30, 2004.


 


Section 22.                                      Compliance With Securities Law. The grant of Awards
and the issuance of shares of Stock pursuant to any Award shall be subject to
compliance with all applicable requirements of federal, state and foreign law
with respect to such securities and the requirements of any stock exchange or
market system upon which the Stock may then be listed. In addition, no Award
may be exercised or shares issued pursuant to an Award unless (a) a
registration statement under the Securities Act shall at the time of such
exercise or issuance be in effect with respect to the shares issuable pursuant
to the Award or (b) in the opinion of legal counsel to the Company, the
shares issuable pursuant to the Award may be issued in accordance with the
terms of an applicable exemption from the registration requirements of the
Securities Act. The inability of the Company to obtain from any regulatory body
having jurisdiction the authority, if any, deemed by the Company’s legal
counsel to be necessary to the lawful issuance and sale of any shares hereunder
shall relieve the Company of any liability in respect of the failure to issue
or sell such shares as to which such requisite authority shall not have been
obtained. As a condition to issuance of any Stock, the Company may require the
Participant to satisfy any qualifications that may be necessary or appropriate,
to evidence compliance with any applicable law or regulation and to make any
representation, warranty or covenant with respect thereto as may be requested
by the Company.


 


Section 23.                                      Miscellaneous Provisions.


 


(a)                                  Deferrals of Payment. In addition to the grant
of Deferred Stock Awards or Deferred Compensation Awards under Section 11
or 13 of the Plan, the Committee may in its discretion permit a Participant to
defer the receipt of payment of cash or delivery of shares of Stock that would
otherwise be due to the Participant by virtue of the exercise of a right or the
satisfaction of vesting or other conditions with respect to an Award. If any
such deferral is to be permitted by the Committee, the Committee shall
establish rules and procedures relating to such deferral in a manner
intended to comply with the requirements of Section 409A of the Code,
including, without limitation, the time when an election to defer may be made,
the time period of the deferral and the events that would result in payment of
the deferred amount, the interest or other earnings attributable to the
deferral and the method of funding, if any, attributable to the deferred
amount.


 


(b)                                 Repurchase Rights. Shares issued under the
Plan may be subject to one or more repurchase options, or other conditions and
restrictions as determined by the Committee


 


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in its discretion at the time the Award is granted. The
Company shall have the right to assign at any time any repurchase right it may
have, whether or not such right is then exercisable, to one or more persons as
may be selected by the Company. Upon request by the Company, each Participant
shall execute any agreement evidencing such repurchase options or transfer
restrictions prior to the receipt of shares of Stock hereunder and shall
promptly present to the Company any and all certificates representing shares of
Stock acquired hereunder for the placement on such certificates of appropriate
legends evidencing any such repurchase options or transfer restrictions.


 


(c)                                  Provision of Information. Each Participant shall be
given access to information concerning the Company equivalent to that
information generally made available to the Company’s common shareholders.


 


(d)                                 Rights as Employee, Consultant or Director. No person, even though
eligible pursuant to Section 5, shall have a right to be selected as a
Participant, or, having been so selected, to be selected again as a
Participant. Nothing in the Plan or any Award granted under the Plan shall
confer on any Participant a right to remain an Employee, Officer, Consultant or
Director or interfere with or limit in any way any right of a Participating
Company to terminate the Participant’s Service at any time. To the extent that
an Employee of a Participating Company other than the Company receives an Award
under the Plan, that Award shall in no event be understood or interpreted to
mean that the Company is the Employee’s employer or that the Employee has an
employment relationship with the Company.


 


(e)                                  Rights as a Shareholder. A Participant shall have
no rights as a shareholder with respect to any shares covered by an Award until
the date of the issuance of such shares (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the Company).
No adjustment shall be made for dividends, distributions or other rights for
which the record date is prior to the date such shares are issued, except as
provided in Section 4(c) or another provision of the Plan.


 


(f)                                    Fractional Shares. The Company shall not be
required to issue fractional shares upon the exercise or settlement of any
Award; provided, however, that if the Company does not issue fractional shares
upon the exercise or settlement of any Award, it shall make a cash payment
equal to the Fair Market Value of such fractional shares unless such fractional
shares are rounded up.


 


(g)                                 Severability. If any one or more of the provisions (or any part
thereof) of this Plan shall be held invalid, illegal or unenforceable in any
respect, such provision shall be modified so as to make it valid, legal and
enforceable, and the validity, legality and enforceability of the remaining
provisions (or any part thereof) of the Plan shall not in any way be affected
or impaired thereby.


 


(h)                                 Beneficiary Designation. Subject to local laws and
procedures, each Participant may file with the Company a written designation of
a beneficiary who is to receive any benefit under the Plan to which the
Participant is entitled in the event of such Participant’s death before he or
she receives any or all of such benefit. Each designation will revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Company, and will be


 


35





















 


effective only when filed by the Participant in writing
with the Company during the Participant’s lifetime. If a married Participant
designates a beneficiary other than the Participant’s spouse, the effectiveness
of such designation may be subject to the consent of the Participant’s spouse.
If a Participant dies without an effective designation of a beneficiary who is
living at the time of the Participant’s death, the Company will pay any
remaining unpaid benefits to the Participant’s legal representative.


 


(i)                                     Choice of Law. Except to the extent governed by applicable federal
law, the validity, interpretation, construction and performance of the Plan and
each Award Agreement shall be governed by the laws of the State of Delaware,
without regard to its conflict of law rules.


 


Section 24.                                      Effective Date of the Plan. The Plan shall be effective on the
date it is approved by the vote of the holders of a majority of all outstanding
shares of Stock.


 


Section 25.                                      Term of the Plan. No Award shall be granted pursuant
to the Plan after May     , 2015, but Awards
theretofore granted may extend beyond that date.


 


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