Exhibit
10.9


RESTRICTED
STOCK AGREEMENT


This Agreement
(the “Agreement”) is made as of the 29th day of June, 2007 (“Date of Award”), between
Medarex, Inc., a New Jersey corporation (the “Company”), and Howard H. Pien
(the “Grantee”).  In consideration of the
agreements set forth below, the Company and the Grantee agree as follows:


1.     Grant.  The following restricted stock awards
(collectively, the “Award”) of shares of the Company’s common stock, $.01 par
value per share (“Common Stock”), are hereby granted by the Company to the
Grantee subject to (i) the terms and conditions hereof, (ii) the provisions of
the Medarex, Inc. 2005 Equity Incentive Plan (the “Plan”), a copy of which is
attached hereto as Exhibit A and the terms of which are incorporated by reference
herein, (iii) the terms and conditions of the Grantee’s employment agreement
with the Company dated May 16, 2007 (the “Employment Agreement”), and (iv) the
receipt by the Company of a stock power endorsed in blank by the Grantee, in
the form attached hereto as Exhibit B:


(a)                                  50,000
shares (the “Inducement Shares”);


(b)                                 175,000
shares (the “Initial Award Shares”); and


(c)                                  75,000
shares (the “Performance Shares”).


The Inducement
Shares, the Initial Award Shares and the Performance Shares shall be referred
to collectively herein as the “Award Shares.” 
The term “Change in Control” as used herein shall have the meaning set
forth in the Employment Agreement and not in the Plan.  All capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Plan.  In the event of any conflict between the
provisions of this Agreement, the Employment Agreement and those of the Plan,
the provisions of the Plan shall control.


2.     Transfer Restrictions.  None of the Award Shares shall be sold,
assigned, pledged or otherwise transferred, voluntarily or involuntarily, by
the Grantee, except in accordance with the terms of this Agreement and the
Plan.


3.     Release of Restrictions.


(a)             The restrictions set forth in Section 2 above shall
lapse as follows, provided that the Grantee remains employed by the Company
from June 14, 2007 (the “Start Date”) through the applicable date:


(i)                                     With respect to the Inducement Shares, on June 14,
2008 with respect to 25,000 Inducement Shares and on June 14, 2009 with respect
to the remaining 25,000 Inducement Shares;


(ii)                                  With respect to the Initial Award Shares, on June 14,
2009 with respect to 87,500 Initial Award Shares and on June 14, 2010 with
respect to the remaining 87,500 Initial Award Shares; and



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(iii)                               With respect to the Performance Shares, on the
five-year anniversary of the Start Date; provided, however,
that if the price of the Common Stock equals or exceeds $26 per share for the
20 consecutive trading days immediately preceding the three-year anniversary of
the Start Date, then the restrictions with respect to 25,000 Performance Shares
shall lapse on such three-year anniversary of the Start Date and; provided further, however, that if the price of the Common
Stock equals or exceeds $26 per share for the 20 consecutive trading days
immediately preceding the four-year anniversary of the Start Date, then with
respect to any Performance Shares for which restrictions have not yet
lapsed, the restrictions shall lapse on such four-year
anniversary of the Start Date.


(b)           In the event the
Grantee’s employment is terminated by the Company “Without Cause” or by the
Grantee for “Good Reason” (each of such terms as defined in the Employment
Agreement), any restrictions on the Initial Award Shares that would have lapsed
during the eighteen (18) months following the date the Grantee’s employment is
terminated shall immediately lapse.


(c)            In the event of a Change in Control,
any restrictions on the Award Shares shall immediately lapse upon the effective
date of the Change in Control.


(d)           In the event the Grantee’s employment
with the Company is terminated prior to the date the restrictions lapse, as
provided in Section 3(a), due to the Grantee’s retirement, permanent
disability, or death, 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 remaining
restrictions with respect to the Grantee’s Award Shares.


4.     Forfeiture.  Except as set forth in Section 3 above, in
the event the Grantee’s employment with the Company is terminated for any
reason prior to the date the restrictions lapse as provided in Section 3 above,
the Award Shares for which restrictions have not lapsed shall be forfeited to
the Company.


5.     Tender Offer/Merger; Adjustment of
Shares.  Notwithstanding anything
contained herein to the contrary:


(a)            Award Shares (i) may be tendered in
response to a tender offer for or a request or invitation to tenders of greater
than 50% of the outstanding Common Stock of the Company or (ii) may be
surrendered in a merger, consolidation or share exchange involving the Company;
provided, however, that in each case, in
the event such tender offer, request for tender, merger, consolidation or share
exchange does not result in a Change in Control, the securities or other
consideration received in exchange therefore shall thereafter be subject to the
restrictions and conditions set forth herein.



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(b)           In the event of any change in the
outstanding Common Stock resulting from a subdivision or consolidation of
shares, whether through reorganization, recapitalization, share split, reverse
share split, share distribution or combination of shares or the payment of a
share dividend, the Award Shares shall be treated in the same manner in any
such transaction as other Common Stock. 
Any Common Stock or other securities received by the Grantee with
respect to the Award Shares in any such transaction shall be subject to the
restrictions and conditions set forth herein.


6.     Rights as Stockholder.  The Grantee shall be entitled to all of the
rights of a stockholder with respect to the Award Shares held in escrow
including the right to vote such shares and to receive dividends and other
distributions payable with respect to such shares since the Date of Award, even
if some or all of such Award Shares have not yet vested and been released from
the restrictions set forth in Section 2 above.


7.     Escrow of Share Certificates.  Certificates for the Award Shares shall be
issued in the Grantee’s name and shall be held in escrow by the Company until
all restrictions lapse or such shares are forfeited as provided herein;
provided, however, that the terms of such escrow shall make allowance for the
transactions contemplated by Section 5 above. 
A certificate or certificates representing the Award Shares as to which
restrictions have lapsed shall be delivered to the Grantee upon such lapse,
provided that any withholding obligations of the Company are satisfied pursuant
to Section 9 below.


8.     Government Regulations.  Notwithstanding anything contained herein to
the contrary, the Company’s obligation to issue or deliver certificates
evidencing the Award Shares shall be subject to all applicable laws, rules and
regulations and to such approvals by any governmental agencies or national
securities exchanges as may be required.


9.     Withholding Taxes.  The Company shall have the right to require
the Grantee to remit to the Company, or to withhold from other amounts payable
to the Grantee, as compensation or otherwise, an amount sufficient to satisfy
all federal, state and local withholding tax requirements which may arise in
connection with this Award.


10.   Tax Consequences.    The acquisition and
vesting of the Award Shares may have adverse tax consequences to the Grantee
that may be avoided or mitigated by filing an election under Section 83(b) of
the Code.  Such election must be filed
within thirty (30) days after the date this Award is granted.  The Grantee hereby acknowledges that it is
his responsibility, and not the Company’s, to file a timely election under
Section 83(b) of the Code, even if the Grantee requests the Company to make
such filing on his behalf.


11.   Award not a Service Contract.  This Award is not an employment or service
contract, and nothing in this Award shall be deemed to create in any way
whatsoever any obligation on the Grantee’s part to continue in the employ of or
service to the Company, or on the part of the Company to continue the Grantee’s
employment or service.


12.   Governing Law.  This Agreement shall be construed under the
laws of the State of New Jersey, without regard to its conflicts of laws
principles.



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IN WITNESS WHEREOF, the Company has caused this Award to be granted on
the date first above written.


	
  

  	
  Medarex, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christian S.
  Schade

  	
   

  
	
   

  	
  Christian S. Schade,

  
	
   

  	
  Senior Vice President
  and

  
	
   

  	
  Chief Financial Officer

  
	
  Accepted:

  	
   

  
	
   

  	
   

  
	
  /s/ Howard H. Pien

  	
   

  	
   

  
	
  Howard H. Pien –
  Grantee

  	
   

  
					



 



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EXHIBIT A


MEDAREX, INC.

2005 EQUITY INCENTIVE PLAN


Section 1.               Purpose of the Plan. The purpose of the Plan is to aid Medarex,
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:



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(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 in 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 in 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) 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



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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 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 in 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 in 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 in 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 and Organization 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
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
Medarex, Inc., a New Jersey 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.



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(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.


(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 the date that the Plan is approved by the holders of a majority of shares
of the outstanding Stock of the Company. 
That date is May 19, 2005.


(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:



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(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 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 or the trading day immediately preceding such date.
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.



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(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, 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 Parent Company, 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.



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(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.


(ss)         “Predecessor Plans” means each of the
Company’s Amended and Restated 1991 Stock Option Plan, 1992 Stock Option Plan,
1994 Stock Option Plan, 1995 Stock Option Plan, 1996 Stock Option Plan, Houston
Biotechnology Incorporated Replacement Stock Option Plan, Houston Biotechnology
Incorporated 1994A Stock Option Plan, 1997 Stock Option Plan, 1999 Stock Option
Plan, 2000 Stock Option Plan, 2000 Non-Director/Officer Employee Stock Option
Plan, 2001 Non-Director/Officer Employee Stock Option Plan, 2001 Stock Option
Plan, and 2002 New Employee Stock Option 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



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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).


(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



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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 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.



 9















(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 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 6,500,000 shares and shall consist
of (i) authorized but unissued shares, or (ii) reacquired shares (treasury) of
Stock, or (iii) any combination thereof. Notwithstanding the foregoing, no more
than 3,000,000 of such shares of Stock may be issued pursuant to all 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 



 10
 









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 Plans 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


(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 Plans that may
become authorized for issuance under the Plan pursuant to this subsection (b) shall
not exceed 10,000,000 shares.


The Plan shall serve as the successor to the
Predecessor Plans, and no further option grants shall be made under the
Predecessor Plans. All options outstanding under the Predecessor Plans 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 Plans
under which such incorporated option was issued. Subject to the rights of the
Participant under the incorporated option documents and Predecessor Plans, 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



 11
 









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)           Notwithstanding any provision of the
Plan to the contrary, 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 Restricted Stock Awards, Restricted
Stock Unit Awards, Deferred Stock Awards and Other Stock-based Awards.


(e)           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 1,000,000 shares.  The maximum number of shares with respect to
which Full Value Awards, in the aggregate, may be granted to any Participant in
any fiscal year of the Company shall be 200,000 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 500,000 shares or may be granted Full Value
Awards, in the aggregate, for up to an additional 50,000 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, if the Company
reprices 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), and if such repricing or reduction (in the case of
a SAR) is approved by the shareholders of the Company, then such repricing or
reduction 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



 12
 









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 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. For purposes of the foregoing sentence, “Employees,”
“Consultants” and “Directors” shall include prospective Employees, prospective
Consultants and prospective Directors to whom



 13
 









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 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



 14
 









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 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”).



 15
 









(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
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 Standards of Integrity 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



 16
 









Change in 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.


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



 17
 









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 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



 18
 









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 Medarex, Inc. 2005 Equity
Incentive Plan and an Agreement entered into between the registered owner and
Medarex, Inc. Copies of such Plan and Agreement are on file in the offices of
Medarex, Inc., 707 State Road, Princeton, New Jersey 08540.”


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, 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.



 19















(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).


(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.
Restricted Stock Units may or may not be made subject to Vesting
Conditions based upon the satisfaction of such Service requirements,
conditions, restrictions or performance criteria, including, without
limitation, Performance Goals as described in Section 10(d), as shall be
established by the Committee and set forth in the Award Agreement evidencing
such Award. Notwithstanding the foregoing, or 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



 20
 









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 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



 21
 









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 $2,000,000.


(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 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:



 22
 









(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 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



 23
 









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.


(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



 24
 









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 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



 25
 









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 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



 26
 









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; provided, however,
that if such Deferred Stock Award is subject to Section 409A of the Code, such
waiver may only occur in the event of the Participant’s Disability or death, or
upon the occurrence of an unforeseeable emergency (as such term is defined
under Section 409A of the Code and Treasury Regulations thereunder) and (ii)
the Award Agreement evidencing such Deferred Stock Award must provide for such
waiver at the time of grant of such Deferred Stock Award.  Anything in the Plan to the contrary
notwithstanding, upon the occurrence of a Change in 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; provided, however,
that if such Award is subject to Section 409A of the Code, (i) such delivery
shall only occur if the Change in Control is deemed to be a change in the
ownership of the



 27
 









Company, a
change in effective control of the Company, or a change in the ownership of a
substantial portion of the assets of the Company (as such terms are defined
under Section 409A of the Code and Treasury Regulations thereunder) and (ii)
the Award Agreement evidencing such Deferred Stock Award must provide for such
delivery at the time of grant of such Deferred Stock Award.


(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



 28
 









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; provided, however,
that if such Other Stock-based Awards are subject to Section 409A of the Code,
such waiver may only occur in the event of the Participant’s Disability or
death, or upon the occurrence of an unforeseeable emergency (as such term is
defined under Section 409A of the Code and Treasury Regulations thereunder) and
(ii) the Award Agreement evidencing such Other Stock-based Awards must provide
for such waiver at the time of grant of such Other Stock-based Awards. Anything
in the Plan to the contrary notwithstanding, upon the occurrence of a Change in
Control, 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
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); provided, however, that if such Other Stock-based Award is
subject to Section 409A of the Code, (i) such delivery shall only occur if the
Change in Control is deemed to be a change in the ownership of the Company, a
change in effective control of the Company, or a change in the ownership of a
substantial portion of the assets of the Company (as such terms are defined
under Section 409A of the Code and Treasury Regulations thereunder) and (ii)
the Award Agreement evidencing such Other Stock-based Award must provide for
such delivery at the time of grant 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.



 29
 









(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.


(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:



 30















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


(d)               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.


(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



 31
 









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 a 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;


(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



 32
 









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 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



 33
 









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
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



 34
 









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; provided, however, that if such Restricted
Stock Unit Award is subject to Section 409A of the Code, (i) such settlement
shall only occur if the Change in Control is deemed to be a change in the
ownership of the Company, a change in effective control of the Company, or a
change in the ownership of a substantial portion of the assets of the Company
(as such terms are defined under Section 409A of the Code and Treasury
Regulations thereunder) and (ii) the Award Agreement evidencing such Restricted
Stock Unit Award must provide for such settlement at the time of grant of such
Restricted Stock Unit Award.


(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; provided, however,
that if such Performance Award is subject to Section 409A of the Code, (i) such
payment shall only occur if the Change in Control is deemed to be a change in
the ownership of the Company, a change in effective control of the Company, or
a change in the ownership of a substantial portion of the assets of the Company
(as such terms are defined under Section 409A of the Code and Treasury
Regulations thereunder) and (ii) the Award Agreement evidencing such
Performance Award must provide for such payment at the time of grant of such
Performance Award.


(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 Award or a Deferred Compensation Award or, in the event of a Change
in Control, 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 the Change in Control; provided,
however, that if such Award is subject to Section 409A of the Code,
(i) such settlement shall only occur if the Change in Control is deemed to be a
change in the ownership of the Company, a change in effective control of the
Company, or a change in the ownership of a substantial portion of the assets of
the Company (as such terms are defined under Section 409A of the Code and
Treasury Regulations thereunder) and (ii) the Award Agreement evidencing such
Award must provide for such settlement at the time of grant of such Award.


(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



 35
 









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



 36
 









Committee 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



 37
 









designations by the same Participant, shall be in a form prescribed by
the Company, and will be 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 New Jersey,
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 19, 2015, but Awards theretofore granted may extend beyond that date.



 38














EXHIBIT B


STOCK POWER


FOR VALUE RECEIVED                                                                                                      


Please
insert Social Security or other


   Identification number of
assignee


Hereby sell, assign and
transfer unto:                                                                                                                                    



                                                                                                                                                                                                


(                                )
Shares of the                           
Capital Stock of                                                                                        


                                                                  
standing in my (our) name(s) on the books of said Corporation represented by
Certificate(s) No.(s)                                                                                                                                                                        
                                                                                                                                                                                                        
herewith and do hereby irrevocably constitute and appoint                                                                                                           
                                                                                                                                                                                                        


Attorney to
transfer the said stock on the books of said Corporation with full power of
substitution in the premises.


	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  
	
   

  
	
  Signature Guaranteed*

  
	
   

  
	
   

  	
   

  



 






* An eligible guarantor is a member of one
of the Acceptable Signature Guarantee Medallion Programs (STAMP, SEMP, NYSEMSP)
with a bond limit of $500,000 or more, or has applied to us and has been
accepted by Continental Stock Transfer & Trust Company as of current date.