# **Exhibit 10.19**

#  

CANDELACORPORATION

 

2008 STOCK PLAN

 

October 27,2008

 

1.          Purpose.  The purpose of this Candela Corporation 2008Stock Plan (the “Plan”) is to encourage employees of Candela Corporation(the “Company”) and employees of any present or future subsidiary of theCompany (collectively, “Related Corporations”) and other individuals whorender services to the Company or any Related Corporation, by providingopportunities to participate in the ownership of the Company’s common stock,$.01 par value per share (the “Common Stock”), and its future growththrough (a) the grant of options which qualify as “incentive stock options”(“ISOs”) under Section 422(b) of the Internal Revenue Code of1986, as amended (the “Code”); (b) the grant of options that do notqualify as ISOs (“Non-Qualified Options”); (c) the grant of stockappreciation rights (“SARs”); (d) the grant of restricted stock (“RestrictedStock”); and (e) the grant of restricted stock unit awards (“RSUs”).  Both ISOs and Non-Qualified Options arereferred to hereafter individually as an “Option” and collectively as “Options.”  Options, SARs, Restricted Stock and RSUs arereferred to hereafter collectively as “Stock Rights.”  As used herein, the term “subsidiary”means a “subsidiary corporation,” as that term is defined in Section 424of the Code.

 

2.          Administration of thePlan.

 

A.      Board or CommitteeAdministration.  The Plan shall beadministered by the Board of Directors of the Company (the “Board”) or,if so designated by the Board, by the Compensation Committee of the Board, orsuch other committee or committees as may be appointed by the Board from timeto time (the “Committee”). Hereinafter, all references in this Plan to the “Committee” shallmean the Board if no Committee has been appointed.  To the extent allowed by applicable statelaw, the Board by resolution may authorize an officer or officers to grantStock Rights within parameters prescribed by the Board to other officers andemployees of the Company.  Subject toratification of the grant or authorization of each Stock Right by the Board (ifso required by applicable state law), and subject to the terms of the Plan, theCommittee shall have the authority to (i) determine to whom (from amongthe class of employees eligible under paragraph 3 to receive ISOs) ISOs shallbe granted, and to whom (from among the class of individuals eligible underparagraph 3 to receive Non-Qualified Options, SARs, Restricted Stock, and RSUs)Non-Qualified Options, SARs, Restricted Stock, and RSUs may be granted; (ii) determinethe time or times at which Stock Rights shall be granted; (iii) determinethe purchase price of shares subject to each Option; (iv) determine thegrant price of SARs as specified in subparagraph 6(d); (v) determinewhether each Option granted shall be an ISO or a Non-Qualified Option; (vi) determine(subject to paragraph 6) the time or times when each Option or SAR shall becomeexercisable and the duration of the exercise period; (vii) determine theterms and conditions of any Stock Right granted under the Plan, (viii) prescribethe forms of any instruments applicable to the grant of any Stock Right, whichneed not be identical, (ix) interpret the Plan and prescribe and rescind rules andregulations relating to it, and (x) make all other decisions anddeterminations that may be required under the Plan or as the Committee deemsnecessary or advisable to administer the Plan. If the Committee determines to issue a Non-Qualified Option, it shalltake whatever actions it deems necessary, under Section 422 of the Codeand the regulations promulgated thereunder, to ensure that such Option is nottreated as an ISO.  The interpretationand construction by the Committee of any provisions of the Plan or of any StockRight granted under it shall be final unless otherwise determined by theBoard.  The Committee may from time totime adopt such rules and regulations for carrying out the Plan as it maydeem advisable.  No member of the Boardor the Committee shall be liable for any action or determination made in goodfaith with respect to the Plan or any Stock Right granted under it.

 

B.        Committee Actions.  The Committee may select one of its membersas its chairman, and shall hold meetings at such time and places as it maydetermine.  A majority of the Committeeshall constitute a quorum and acts of a majority of the members of theCommittee at a meeting at which a quorum is present, or acts reduced to orapproved in writing by all the members of the Committee (if consistent withapplicable state law), shall be the valid acts of the Committee.  From time to time the Board may increase thesize of the Committee and appoint additional members thereof, remove members(with or without 

 

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cause) and appoint newmembers in substitution therefor, fill vacancies however caused, or remove allmembers of the Committee and thereafter directly administer the Plan.

 

C.        Grant of Stock Rightsto Members of the Board.  StockRights (other than ISOs) may be granted to members of the Board.  All grants of Stock Rights to members of theBoard shall in all respects be made in accordance with the provisions of thisPlan applicable to other eligible persons. Members of the Board who either (i) are eligible to receive grantsof Stock Rights pursuant to the Plan or (ii) have been granted StockRights may vote on any matters affecting the administration of the Plan or thegrant of any Stock Rights pursuant to the Plan.

 

D.       Performance-BasedCompensation.

 

(i)                The Committee maytake such action as may be necessary to ensure that Stock Rights granted underthe Plan qualify as qualified “performance-based compensation” within themeaning of Section 162(m) of the Code and applicable regulationspromulgated thereunder (“Performance-Based Compensation”).  Such action may include, in the Committee’sdiscretion, some or all of the following:

 

(a)   requiring that the Plan beadministered by a Committee consisting solely of two or more “outside directors”(as defined in applicable regulations promulgated under Section 162(m) ofthe Code); and

 

(b)  specifying one or more of thePerformance Measures (as defined below) set forth in this subparagraph 2(D) anddetermining the degree of granting, vesting and/or payout with respect to theStock Rights.

 

(ii)             The performancegoals, if any, to be used for Stock Rights shall be chosen from among thefollowing performance measures (the “Performance Measures”):  earnings, earnings before interest and taxes,earnings before interest, taxes, depreciation and amortization, earnings pershare, economic value created, market share, net income (before or aftertaxes), operating income, adjusted net income after capital charge, return onassets, return on capital (based on earnings or cash flow), return on equity,return on investment, revenue, cash flow, operating margin, share price, totalstockholder return, total market value, and strategic business criteria,consisting of one or more objectives based on meeting specified marketpenetration goals, productivity measures, geographic business expansion goals,cost targets, customer satisfaction or employee satisfaction goals, goalsrelating to merger synergies, management of employment practices and employeebenefits, or supervision of litigation or information technology, and goalsrelating to acquisitions or divestitures of subsidiaries, affiliates or jointventures.  Performance Measures may beestablished at the Company, subsidiary or business unit levels.  The targeted level or levels of performancewith respect to any Performance Measures may be established at such levels andon such terms as the Committee may determine, in its discretion, including,without limitation, in absolute terms, as a goal relative to performance inprior periods, or as a goal compared to the performance of one or morecomparable companies or an index covering multiple companies.  Unless otherwise determined by the Committee,measurement of performance goals with respect to the Performance Measures aboveshall exclude the impact of charges for restructurings, discontinuedoperations, extraordinary items, and other unusual or non-recurring items, aswell as the cumulative effects of tax or accounting changes, each as determinedin accordance with generally accepted accounting principles or identified inthe Company’s financial statements, notes to the financial statements,management’s discussion and analysis or other public filings.

 

3.          Eligible Employeesand Others.  ISOs may be granted onlyto employees of the Company or any Related Corporation.  Non-Qualified Options, SARs, Restricted Stock,and RSUs may be granted to any employee, officer or director (whether or notalso an employee) or consultant of the Company or any Related Corporation.  The Committee may take into consideration arecipient’s individual circumstances in determining whether to grant a StockRight.  The granting of any Stock Rightto any individual or entity shall neither entitle that individual or entity to,nor disqualify such individual or entity from, participation in any other grantof Stock Rights.

 

4.            Stock.

 

A.     The shares of Common Stocksubject to Stock Rights shall be authorized but unissued shares of Common Stockor shares of Common Stock reacquired by the Company in any manner.  The aggregate number of shares that may beissued pursuant to the Plan is one millionthree

 

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hundredthousand (1,300,000), subject to adjustment as provided in paragraph8.  The number of shares of Common Stockavailable for issuance of ISOs under the Plan is one million three hundred thousand (1,300,000), subject toadjustment as provided in paragraph 8. If any Option granted under the Plan shall expire or terminate for anyreason without having been exercised in full or shall cease for any reason tobe exercisable in whole or in part or shall be repurchased by the Company, theunpurchased shares of Common Stock subject to such Option shall again beavailable for grants of Stock Rights under the Plan.  Where payment upon exercise of a SAR is madein shares of Common Stock, only the net number of shares of Common Stock issuedin connection with such exercise shall be deemed “issued” for purposes of thisparagraph 4.  If any Stock Right, otherthan an Option, granted under the Plan shall expire or terminate for any reasonwithout delivery of Common Stock such shares of Common Stock subject to theStock Right shall again be available for grants of Stock Rights under the Plan.

 

B.       No employee of the Companyor any Related Corporation may be granted Options and/or SARs with respect tomore than seven hundred thousand (700,000) shares of Common Stock, in theaggregate, under the Plan during any fiscal year of the Company, subject toadjustment as provided in paragraph 8. No employee of the Company or any Related Corporation may be grantedRestricted Stock or RSUs having a fair market value in excess of two milliondollars ($2,000,000)****under thePlan during any fiscal year of the Company.

 

5.          Granting of StockRights.  Stock Rights may be grantedunder the Plan at any time on or after October 27, 2008 and prior to October 26,2018.

 

6.          Terms and Conditionsof Options and SARs.

 

A.      Grant of Options or SARs.  Subject to subparagraph 2(A), Options andSARs shall be evidenced by instruments (which need not be identical) in suchforms as the Committee may from time to time approve.  Such instruments shall conform to the termsand conditions set forth in this paragraph 6 and may contain such otherprovisions as the Committee deems advisable which are not inconsistent with thePlan, including restrictions applicable to shares of Common Stock issuable uponexercise of Options or SARs and the treatment of Options or SARs upon atermination of employment as specified in subparagraph 6(H).  The Committee may specify that anyNon-Qualified Option or SARs shall be subject to the restrictions set forthherein with respect to ISOs, or to such other termination and cancellationprovisions as the Committee may determine. SARs may be granted in tandem with an Option (“Tandem SARs”), ormay be granted on a freestanding basis, not related to any Option (“FreestandingSARs”), or any combination of these forms of SARs.  The Committee may from time to time conferauthority and responsibility on one or more of its own members and/or one ormore officers of the Company to execute and deliver such instruments.  The proper officers of the Company areauthorized and directed to take any and all action necessary or advisable fromtime to time to carry out the terms of such instruments.

 

B.       Price for Options andSARs.

 

(i)                Price forNon-Qualified Options.  The exerciseprice per share specified in the instrument relating to each Non-QualifiedOption granted under the Plan shall not be less than the fair market value, asdetermined in accordance with subparagraph 6(D), per share of the Common Stockof the Company on the date of grant.

 

(ii)             Price for ISOs.  The exercise price per share specified in theinstrument relating to each ISO granted under the Plan shall not be less thanthe fair market value, as determined in accordance with subparagraph 6(D), pershare of the Common Stock on the date of grant. In the case of an ISO to be granted to an employee owning stockpossessing more than ten percent (10%) of the total combined voting power ofall classes of stock of the Company or any Related Corporation, the exerciseprice per share specified in the instrument relating to such ISO shall not beless than one hundred ten percent (110%) of the fair market value, asdetermined in accordance with subparagraph 6(D), per share of the Common Stockon the date of grant.  For purposes of determiningstock ownership under this paragraph, the rules of Section 424(d) ofthe Code shall apply.

 

(iii)          Price of SARs.  The grant price per share specified in theinstrument relating to each Freestanding SAR granted under the Plan shall notbe less than the fair market value, as determined in accordance withsubparagraph 6(D), per share of the Common Stock on the date of grant.  The grant price per share specified in theinstrument relating to each Tandem SAR granted under the Plan shall equal theexercise price of the related Option.

 

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C.        $100,000 AnnualLimitation on ISO Vesting.  Eacheligible employee may be granted Options treated as ISOs only to the extentthat, in the aggregate under this Plan and all incentive stock option plans ofthe Company, ISOs do not become exercisable for the first time by such employeeduring any calendar year with respect to stock having a fair market value(determined at the time the ISOs were granted) in excess of $100,000.  The Company intends to designate any Optionsgranted in excess of such limitation as Non-Qualified Options, and the Companyshall issue separate instruments to the optionee with respect to Options thatare Non-Qualified Options and Options that are ISOs.

 

D.       Determination of FairMarket Value.  Under the terms of thePlan, “fair market value” shall be determined as of the date of grant or, ifthe prices or quotes discussed in this paragraph are unavailable for such date,the last business day for which such prices or quotes are available prior to thedate of grant and shall mean (i) the closing selling price per share ofthe Common Stock, if the Common Stock is traded on any established stockexchange or traded on a national market system; or (ii) the closing bidprice last quoted by an established quotation service for over-the-countersecurities, if the Common Stock is not traded on any established stock exchangeor traded on a national market system. If the Common Stock is not publicly traded at the time an Option or SARis granted under the Plan, “fair market value” shall mean the fair market valueof a share of Common Stock as determined by the Committee in accordance with avaluation methodology approved in good faith by the Committee and in compliancewith Section 409A of the Code and the regulations issued thereunder.

 

E.        Option and SAR Duration.  Subject to earlier expiration as provided insubparagraph 6(H) or in the instrument relating to such Option or SAR,each Option and SAR shall expire on the date specified by the Committee, butnot more than (i) ten years from the date of grant in the case of Optionsand SARs generally and (ii) five years from the date of grant in the caseof ISOs granted to an employee owning stock possessing more than ten percent(10%) of the total combined voting power of all classes of stock of the Companyor any Related Corporation, as determined under subparagraph 6(B).  Subject to earlier expiration as provided insubparagraph 6(H), the term of each ISO shall be the term set forth in theoriginal instrument granting such ISO, except with respect to any part of suchISO that is converted into a Non-Qualified Option pursuant to subparagraph6(K).

 

F.        Exercise of Options andSARs.  Subject to the provisions ofthis paragraph 6, each Option or SAR granted under the Plan shall beexercisable as follows:

 

(i)       Vesting.  The Option or SAR shall be fully exercisableon the date of grant or shall become exercisable thereafter in suchinstallments as the Committee may specify.

 

(ii)             Full Vesting ofInstallments.  Once an installmentbecomes exercisable, it shall remain exercisable until expiration ortermination of the Option or SAR, unless otherwise specified by the Committee.

 

(iv)         Partial Exercise.  Each Option or, subject to subparagraph6(G)(ii), each SAR or installment thereof, may be exercised at any time or fromtime to time, in whole or in part, for up to the total number of shares withrespect to which it is then exercisable

 

(v)            Acceleration ofVesting.  The Committee shall havethe right to accelerate the date that any installment of any Option or SARbecomes exercisable; provided that the Committee shall not, without the consentof an optionee, accelerate the permitted exercise date of any installment ofany Option granted pursuant to subparagraph 6(K) if such accelerationwould violate the annual vesting limitation contained in Section 422(d) ofthe Code, as described in subparagraph 6(C).

 

G.       Means of ExercisingOptions and SARs.

 

(i)                Options.  An Option (or any part or installmentthereof) shall be exercised by giving written notice to the Company at itsprincipal office address, or to such transfer agent as the Company shalldesignate.  Such notice shall identifythe Option being exercised and specify the number of shares as to which suchOption is being exercised, accompanied by full payment of the purchase pricetherefor either (a) in United States dollars in cash or by check, (b) atthe discretion of the Committee, through delivery of shares of Common Stockhaving a fair market value equal as of the date of the exercise to the cashexercise price of the Option, (c) at the discretion of the Committee andconsistent

 

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with applicable law,through the delivery of an assignment to the Company of a sufficient amount ofthe proceeds from the sale of the Common Stock acquired upon exercise of theOption and an authorization to the broker or selling agent to pay that amountto the Company, which sale shall be at the optionee’s direction at the time ofexercise, or (d) at the discretion of the Committee, by any combination of(a), (b) and (c) above.  If theCommittee exercises its discretion to permit payment of the exercise price ofan ISO by means of the methods set forth in clauses (b), (c), or (d) ofthe preceding sentence, such discretion shall be exercised in writing at thetime of the grant of the ISO in question. The holder of an Option shall not have the rights of a shareholder withrespect to the shares covered by such Option until the date of issuance of astock certificate to such holder for such shares.  Except as expressly provided in paragraph 8with respect to changes in capitalization and stock dividends, no adjustmentshall be made for dividends or similar rights for which the record date isbefore the date such stock certificate is issued.

 

(ii)             SARs.  Tandem SARs may be exercised for all or partof the shares of Common Stock subject to the related Option upon the surrenderof the right to exercise the equivalent portion of the related Option.  A Tandem SAR may be exercised only withrespect to the shares of Common Stock for which its related Option is thenexercisable.  Notwithstanding any otherprovision of the Plan to the contrary, with respect to a Tandem SAR granted inconnection with an ISO: (a) the Tandem SAR will expire no later than theexpiration of the underlying ISO; (b) the value of the payout with respectto the Tandem SAR may be for no more than one hundred percent (100%) of thedifference between the exercise price of the underlying ISO and the fair marketvalue of the shares of Common Stock subject to the underlying ISO at the timethe Tandem SAR is exercised; and (c) the Tandem SAR may be exercised onlywhen the fair market value of the shares of Common Stock subject to the ISOexceeds the exercise price of the ISO. Freestanding SARs may be exercised upon whatever terms and conditionsthe Committee, in its sole discretion, imposes upon them and sets forth in theapplicable instrument relating to the grant of such Freestanding SARs.  Upon exercise of a SAR, a grantee shall beentitled to receive payment from the Company in an amount determined bymultiplying: (1) the difference between the fair market value of a shareof Common Stock on the date of exercise over the grant price; by (2) thenumber of shares of Common Stock with respect to which the SAR isexercised.  At the discretion of theCommittee, the payment upon SAR exercise may be in cash, in shares of CommonStock of equivalent value, or in some combination thereof.

 

H.      Termination of Employment.

 

(i)                ISOs.

 

(a)   Termination Other than forDeath or Disability.  Unlessotherwise specified in the instrument relating to an ISO, if an ISO optioneeceases to be employed by the Company and all Related Corporations other than byreason of death or disability as defined below, no further installments of hisor her ISOs shall become exercisable, and his or her ISOs shall terminate onthe earlier of (1) three months after the date of termination of his orher employment, or (2) their specified expiration dates, except to theextent that such ISOs (or unexercised installments thereof) have been convertedinto Non-Qualified Options pursuant to subparagraph 6(K). For purposes of thissubparagraph 6(H), employment shall be considered as continuing uninterruptedduring any bona fide leave of absence (such as those attributable to illness,military obligations or governmental service) provided that the period of suchleave does not exceed 90 days or, if longer, any period during which suchoptionee’s right to re-employment is guaranteed by statute or by contract.  A bona fide leave of absence with the writtenapproval of the Committee shall not be considered an interruption of employmentunder this subparagraph 6(H), provided that such written approval contractuallyobligates the Company or any Related Corporation to continue the employment ofthe optionee after the approved period of absence.  ISOs granted under the Plan shall not beaffected by any change of employment within or among the Company and RelatedCorporations, so long as the optionee continues to be an employee of theCompany or any Related Corporation. Nothing in the Plan shall be deemed to give any grantee of any Optionthe right to be retained in employment or other service by the Company or anyRelated Corporation for any period of time.

 

(b)  Death.  If an ISO optionee ceases to be employed bythe Company by reason of his or her death, any ISO owned by such optionee maybe exercised, to the extent otherwise exercisable on the date of death, by theestate, personal representative or beneficiary who has acquired the ISO by willor by the laws of descent and distribution, until the earlier of (1) thespecified expiration date of the ISO or (2) 180 days from the date of theoptionee’s death.

 

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(c)   Disability.  If an ISO optionee ceases to be employed bythe Company by reason of his or her disability, such optionee shall have theright to exercise any ISO held by him or her on the date of termination ofemployment, for the number of shares for which he or she could have exercisedit on that date, until the earlier of (1) the specified expiration date ofthe ISO or (2) 180 days from the date of the termination of the optionee’semployment.  For the purposes of thePlan, the term “disability” shall mean “permanent and total disability” asdefined in Section 22(e)(3) of the Code or any successor statute.

 

(ii)             Non-QualifiedOptions and SARs.  Each instrumentrelating to the grant of a Non-Qualified Option or SAR shall set forth thetreatment of such Non-Qualified Option or SAR following termination of theoptionee’s or grantee’s employment or, if the grant is made to a director orconsultant, service with the Company or any Related Corporation.  Such provisions shall be determined in thesole discretion of the Committee, need not be uniform among all grants and mayreflect distinctions based on the reasons for termination or employment orservice.  Nothing in the Plan shall bedeemed to give any optionee or grantee the right to be retained in employmentor other service by the Company or any Related Corporation for any period oftime.

 

I.           Transferability ofOptions and SARs.  Except asotherwise provided in this subparagraph 6(I), an Option or SAR may not be sold,pledged, assigned, hypothecated, transferred or disposed of in any manner otherthan by will or by the laws of descent and distribution and may be exercised,during the lifetime of the optionee or grantee, only by the optionee orgrantee.  Notwithstanding the foregoing,with the consent of the Board or the Committee thereof, in either case in itssole discretion, an optionee or grantee may transfer all or a portion of his orher vested Non-Qualified Options or SARs to a trust for the exclusive benefitof the optionee or grantee and/or one or more Immediate Family Members orspouses of Immediate Family Members.  Forthe purposes of this subparagraph 6(I), “Immediate Family Members” shallmean the optionee’s or grantee’s spouse, former spouse, children orgrandchildren, whether natural or adopted. As a condition to any transfer pursuant to this subparagraph 6(I) eachsuch transferee shall agree in writing (in a form satisfactory to theCommittee) to be bound by the terms and conditions of the Option or SARinstrument evidencing such transferred Option or SAR, as well as any additionalrestrictions or conditions as the Committee may require.  Following the transfer of an Option or SAR inaccordance with this subparagraph 6(I), the term “optionee” and “grantee”shall refer to the original transferee, except that, with respect to anyrequirements of continued service or employment or provision of the Company’stax withholding obligations, such terms shall refer to the optionee orgrantee.  The Committee shall have noobligation to notify any transferee of any termination of the transferredOption or SAR, including an early termination resulting from the termination ofemployment or service of the original optionee or grantee.  No transferee shall make a subsequenttransfer of a transferred Option or SAR except to the original optionee orgrantee or as otherwise provided in this subparagraph 6(I).

 

J.          Notice to Company ofa Disqualifying Disposition.  Byaccepting an ISO granted under the Plan, each optionee agrees to notify theCompany in writing immediately after such optionee makes a Disqualifying Disposition(as described in Sections 421, 422 and 424 of the Code and regulationsthereunder) of any stock acquired pursuant to the exercise of ISOs grantedunder the Plan.  A DisqualifyingDisposition is generally any disposition occurring on or before the later of (a) thedate two years following the date the ISO was granted, or (b) the date oneyear following the date the ISO was exercised.

 

K.      Modifications of ISOs;Conversion of ISOs into Non-Qualified Options.  Subject to subparagraph 8(D), without the priorwritten consent of the holder of an ISO, the Committee shall not alter theterms of such ISO (including the means of exercising such ISO) if suchalteration would constitute a modification (within the meaning of Section 424(h)(3) ofthe Code).  The Committee, at the writtenrequest or with the written consent of any optionee, may in its discretion takesuch actions as may be necessary to convert such optionee’s ISOs (or anyinstallments or portions of installments thereof) that have not been exercisedon the date of conversion into Non-Qualified Options at any time prior to theexpiration of such ISOs, regardless of whether the optionee is an employee ofthe Company or a Related Corporation at the time of such conversion.  At the time of such conversion, the Committee(with the consent of the optionee) may impose such conditions on the exerciseof the resulting Non-Qualified Options as the Committee in its discretion maydetermine, provided that such conditions shall not be inconsistent with thisPlan.  Nothing in the Plan shall bedeemed to give any optionee the right to have such optionee’s ISOs convertedinto Non-Qualified Options, and no such conversion shall occur until and unlessthe Committee takes

 

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appropriate action.  Upon the taking of such action, the Companyshall issue separate instruments to the optionee with respect to Options thatare Non-Qualified Options and Options that are ISOs.

 

7.          Terms and Conditionsof Restricted Stock and RSUs.

 

A.     Grant of Restricted Stockand RSUs.  Subject to subparagraph2(A), Restricted Stock and RSUs shall be evidenced by instruments (which neednot be identical) in such forms as the Committee may from time to timeapprove.  Such instruments shall conformto the terms and conditions set forth in this paragraph 7 and may contain suchother provisions as the Committee deems advisable which are not inconsistentwith the Plan.

 

B.       Restrictions.  Restricted Stock or RSUs shall be subject tosuch restrictions on transferability and other restrictions as the Committeemay impose.  These restrictions may lapseseparately or in combination at such times, under such circumstances, in suchinstallments, upon the satisfaction of performance goals or otherwise, as theCommittee determines at the time of the grant of the Restricted Stock orRSUs.  Except as otherwise provided inthe applicable instrument relating to the grant of the Restricted Stock orRSUs, a grantee shall have all of the rights of a shareholder with respect tothe Restricted Stock, and such grantee shall have none of the rights of astockholder with respect to RSUs until such time as shares of Common Stock arepaid in settlement of the RSUs.

 

C.       Termination ofEmployment.  Each instrument relatingto the grant of the Restricted Stock or RSUs shall set forth the treatment ofRestricted Stock or RSUs following termination of the grantee’s employment or,if the grant is made to a director or consultant, service with the Company orany Related Corporation.  Such provisionsshall be determined in the sole discretion of the Committee, need not beuniform among all grants and may reflect distinctions based on the reasons fortermination of employment or service. Nothing in the Plan shall be deemed to give any grantee of any RestrictedStock or RSUs the right to be retained in employment or other service by theCompany or any Related Corporation for any period of time.

 

D.      Nontransferability ofRestricted Stock and RSUs.  Except asotherwise determined by the Committee, during the applicable period ofrestriction, a grantee’s Restricted Stock, RSUs and rights relating theretoshall be available during the grantee’s lifetime only to such grantee, and suchRestricted Stock or RSUs and related rights may not be sold, pledged, assigned,hypothecated, transferred or disposed of in any manner other than by will or bythe laws of descent and distribution.

 

8.          Adjustments.  Upon the occurrence of any of the followingevents, an optionee’s or grantee’s rights with respect to Stock Rights grantedto such optionee or grantee hereunder shall be adjusted as hereinafterprovided, unless otherwise specifically provided in the written instrumentapplicable to such Stock Right between the optionee or grantee and the Company:

 

A.      Stock Dividends and StockSplits.  If the shares of Common Stockshall be subdivided or combined into a greater or smaller number of shares orif the Company shall issue any shares of Common Stock as a stock dividend onits outstanding Common Stock, the number of shares of Common Stock deliverableupon the exercise of Options or SARs and the number of Shares subject to anyRestricted Stock or RSUs shall be appropriately increased or decreasedproportionately, and appropriate adjustments shall be made in the purchaseprice per share of Options or SARs to reflect such subdivision, combination orstock dividend.

 

B.        Consolidations orMergers.  If the Company is to beconsolidated with or acquired by another entity in a merger or otherreorganization in which the holders of the outstanding voting stock of the Companyimmediately preceding the consummation of such event, shall, immediatelyfollowing such event, hold, as a group, less than a majority of the votingsecurities of the surviving or successor entity, or in the event of a sale ofall or substantially all of the Company’s assets or otherwise (each, an “Acquisition”),the Committee or the board of directors of any entity assuming the obligationsof the Company hereunder (the “Successor Board”), shall, as tooutstanding Stock Rights, either (i) make appropriate provision for thecontinuation of such Stock Rights by substituting on an equitable basis for theshares then subject to such Stock Rights either (a) the considerationpayable with respect to the outstanding shares of Common Stock in connectionwith the Acquisition, (b) shares of stock of the surviving or successorcorporation, or (c) such other securities as the Successor Board deemsappropriate; or (ii) upon written notice to the optionees and grantees,provide that all Options and SARs must be exercised, to the extent thenexercisable or to be exercisable as a result of the Acquisition, within

 

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a specified number ofdays of the date of such notice, at the end of which period the Options andSARs shall terminate; (iii) terminate all Options and SARs in exchange fora cash payment equal to the excess of the fair market value of the sharessubject to such Options or SARs (to the extent then exercisable or to beexercisable as a result of the Acquisition) over the exercise price thereof, or(iv) terminate all Stock Rights, other than Options and SARs, on suchterms and conditions as the Committee deems appropriate, including providingfor the cancellation of such Stock Rights for a cash payment to the grantee.

 

C.        Recapitalization orReorganization.  In the event of arecapitalization or reorganization of the Company (other than a transactiondescribed in subparagraph 8(B) above) pursuant to which securities of theCompany or of another corporation are issued with respect to the outstandingshares of Common Stock, an optionee or grantee upon exercising an Option or SARshall be entitled to receive for the purchase price paid upon such exercise thesecurities he or she would have received if he or she had exercised such Optionor SAR prior to such recapitalization or reorganization.

 

D.       Modification of ISOs.  Notwithstanding the foregoing, anyadjustments made pursuant to subparagraphs 8(A), (B) or (C) withrespect to ISOs shall be made only after the Committee, after consulting withcounsel for the Company, determines whether such adjustments would constitute a“modification” of such ISOs (as that term is defined in Section 424 of theCode) or would cause any adverse tax consequences for the holders of suchISOs.  If the Committee determines thatsuch adjustments made with respect to ISOs would constitute a modification ofsuch ISOs or would cause adverse tax consequences to the holders, it mayrefrain from making such adjustments.

 

E.         Dissolution orLiquidation.  In the event of theproposed dissolution or liquidation of the Company, each Stock Right willterminate immediately prior to the consummation of such proposed action or atsuch other time and subject to such other conditions as shall be determined bythe Committee.

 

F.         Issuances ofSecurities.  Except as expresslyprovided herein, no issuance by the Company of shares of stock of any class, orsecurities convertible into shares of stock of any class, shall affect, and noadjustment by reason thereof shall be made with respect to, the number ofshares of Common Stock subject to a Stock Right or price of shares of CommonStock subject to Options and SARs.  Noadjustments shall be made for dividends paid in cash or in property other thansecurities of the Company.

 

G.        Fractional Shares.  No fractional shares shall be issued underthe Plan and the optionee and grantee shall receive from the Company cash inlieu of such fractional shares.

 

H.       Actions of the Committeeor Board.  Upon the happening of anyof the events described in subparagraphs 8(A), (B) or (C) above, (i) theclass and aggregate number of shares set forth in paragraph 4(A) hereofthat are subject to Stock Rights which previously have been or subsequently maybe granted under the Plan shall also be appropriately adjusted to reflect theevents described in such subparagraphs, (ii) the class and aggregatenumber of shares set forth in paragraph 4(A) hereof that are subject toISOs which previously have been or subsequently may be granted under the Planshall also be appropriately adjusted to reflect the events described in suchsubparagraphs and (iii) the class and aggregate number of shares set forthin paragraph 4(B) hereof that are subject to Options and SARs whichpreviously have been or subsequently may be granted under the Plan shall alsobe appropriately adjusted to reflect the events described in suchsubparagraphs.  The Committee or theSuccessor Board shall determine the specific adjustments to be made under thisparagraph 8 and, subject to paragraph 2, its determination shall beconclusive.  Notwithstanding theforegoing, as may be determined by the Committee, any such adjustment shall not(i) cause a Stock Right which is exempt from Section 409A of the Codeto become subject to Section 409A of the Code or (ii) cause an StockRight subject to Section 409A of the Code not to comply with therequirements of Section 409A of the Code.

 

9.          Term and Amendment ofPlan.  This Plan was adopted by theBoard on October 27, 2008,subject to approval of the Plan by the stockholders of the Company.  The Plan shall expire 10 years from the dateof Board approval (except as to Options outstanding on that date).  The Board may terminate or amend the Plan inany respect at any time, except that, no amendment which requires stockholderapproval in order for the Plan to continue to comply with any rule promulgatedby the Securities and Exchange Commission or any securities exchange on whichshares of Common Stock are listed or any applicable laws shall be effectiveunless such amendment is approved by the requisite vote of the stockholders ofthe Company entitled to vote thereon within the time period required under suchapplicable listing standard or rule, including, without limitation, anamendment relating to the following: (a) the total number of shares

 

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that may be issued underthe Plan may not be increased (except by adjustment pursuant to paragraph 8); (b) theprovisions of paragraph 3 regarding eligibility for grants of ISOs may not bemodified; (c) the provisions of paragraph 6(B) regarding the exerciseprice at which shares may be offered pursuant to ISOs may not be modified(except by adjustment pursuant to paragraph 8); and (d) the expirationdate of the Plan may not be extended. Except as otherwise provided herein, in no event may action of the Boardor stockholders alter or impair the rights of a grantee or optionee, withoutsuch grantee’s or optionee’s consent, under any Stock Right previously grantedto such grantee or optionee.

 

10.    Application of Funds.  The proceeds received by the Company from thesale of shares pursuant to Options granted under the Plan shall be used forgeneral corporate purposes.

 

11.    Withholding of AdditionalIncome Taxes.  Upon the exercise of aNon-Qualified Option, the exercise of a SAR, the making of a DisqualifyingDisposition (as defined in subparagraph 6(J)), the vesting or transfer ofRestricted Stock or RSUs or securities acquired on the exercise of an Option orSAR hereunder, or the making of a distribution or other payment with respect tosuch stock or securities, the Company may withhold taxes in respect of amountsthat constitute compensation includible in gross income.  The Committee in its discretion may condition(A) the exercise of an Option, (B) the transfer of a Non-QualifiedOption, (C) the exercise of a SAR, or (D) the vesting ortransferability of Restricted Stock or RSUs or securities acquired byexercising an Option or SAR, on the optionee’s or grantee’s making satisfactoryarrangements for such withholding.  Sucharrangements may include payment by the optionee or grantee in cash or by checkof the amount of the withholding taxes or, at the discretion of the Committee,by the optionee’s or grantee’s delivery of previously held shares of CommonStock or the withholding from the shares of Common Stock otherwise deliverableupon exercise of a Option or SAR shares having an aggregate fair market valueequal to the amount of such withholding taxes.

 

12. GovernmentalRegulation.  The Company’s obligationto sell and deliver shares of the Common Stock under this Plan is subject tothe approval of any governmental authority required in connection with theauthorization, issuance or sale of such shares. Government regulations may impose reporting or other obligations on theCompany with respect to the Plan.  Forexample, the Company may be required to send tax information statements toemployees and former employees that exercise ISOs under the Plan, and theCompany may be required to file tax information returns reporting the incomereceived by optionees in connection with the Plan.

 

13.    Governing Law.  The validity and construction of the Plan andthe instruments evidencing Stock Rights shall be governed by the laws ofDelaware, or the laws of any jurisdiction in which the Company or itssuccessors in interest may be organized.

 

14.    Code Section 409A.  To the extent applicable, it is intended thatthis Plan and any Stock Rights granted hereunder comply with, and should beinterpreted consistent with, the requirements of Section 409A of the Codeand any related regulations or other guidance promulgated thereunder by theU.S. Department of the Treasury or the Internal Revenue Service.

 

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