Exhibit
10.1


LIPID
SCIENCES, INC.

Performance Equity Plan

(As Amended on December 14, 2006)


Section 1. Purpose; Definitions.


1.1. Purpose. The purpose of the Lipid Sciences, Inc. 2001
Performance Equity Plan is to enable the Company to offer to its employees,
officers, directors and consultants whose past, present and/ or potential
contributions to the Company and its Subsidiaries have been, are or will be
important to the success of the Company, an opportunity to acquire a
proprietary interest in the Company. The various types of long-term incentive
awards that may be provided under the Plan will enable the Company to respond
to changes in compensation practices, tax laws, accounting regulations and the
size and diversity of its businesses.


1.2. Definitions. For purposes of the Plan, the following terms
shall be defined as set forth below:


(a)           “Agreement” means the
agreement between the Company and the Holder, or such other document as may be
determined by the Committee, setting forth the terms and conditions of an award
under the Plan.


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


(c)           “Code” means the
Internal Revenue Code of 1986, as amended from time to time.


(d)           “Committee” means the
Stock Option Committee of the Board or any other committee of the Board that
the Board may designate to administer the Plan or any portion thereof. If no
Committee is so designated, then all references in this Plan to “Committee”
shall mean the Board.


(e)           “Common Stock” means
the Common Stock of the Company, no par value.


(f)            “Company” means Lipid
Sciences, Inc., a corporation organized under the laws of the State of
Delaware.


(g)           “Deferred Stock” means
Common Stock to be received under an award made pursuant to Section 8, below,
at the end of a specified deferral period.


(h)           “Disability” means
physical or mental impairment as determined under procedures established by the
Committee for purposes of the Plan.


(i)            “Effective Date” means
the date set forth in Section 12.1, below.













(j)            “Fair Market Value”,
unless otherwise required by any applicable provision of the Code or any
regulations issued thereunder, means, as of any given date: (i) if the Common
Stock is listed on a national securities exchange or quoted on the Nasdaq
National Market or Nasdaq SmallCap Market, the last sale price of the Common
Stock in the principal trading market for the Common Stock on such date, as
reported by the exchange or Nasdaq, as the case may be; (ii) if the Common
Stock is not listed on a national securities exchange or quoted on the Nasdaq
National Market or Nasdaq SmallCap Market, but is traded in the
over-the-counter market, the closing bid price for the Common Stock on such
date, as reported by the OTC Bulletin Board or the National Quotation Bureau,
Incorporated or similar publisher of such quotations; and (iii) if the fair
market value of the Common Stock cannot be determined pursuant to clause (i) or
(ii) above, such price as the Committee shall determine, in good faith.


(k)           “Holder” means a person
who has received an award under the Plan.


(l)            “Incentive Stock
Option” means any Stock Option intended to be and designated as an “incentive
stock option” within the meaning of Section 422 of the Code.


(m)          “Nonqualified Stock
Option” means any Stock Option that is not an Incentive Stock Option.


(n)           “Other Stock-Based
Award” means an award under Section 9, below, that is valued in whole or in
part by reference to, or is otherwise based upon, Common Stock.


(o)           “Parent” means any
present or future “parent corporation” of the Company, as such term is defined
in Section 424(e) of the Code (without regard to the phrase “at the time of the
granting of the option” in such Section).


(p)           “Plan” means the Lipid
Sciences, Inc. 2001 Performance Equity Plan, as hereinafter amended from time
to time.


(q)           “Repurchase Value”
shall mean the Fair Market Value in the event the award to be settled under
Section 2.2(h) or repurchased under Section 10.2 is comprised of shares of
Common Stock and the difference between Fair Market Value and the Exercise
Price (if lower than Fair Market Value) in the event the award is a Stock
Option or Stock Appreciation Right; in each case, multiplied by the number of
shares subject to the award.


(r)            “Restricted Stock”
means Common Stock received under an award made pursuant to Section 7, below,
that is subject to restrictions under said Section 7.


(s)           “SAR Value” means the
excess of the Fair Market Value (on the exercise date) over the exercise price
that the participant would have otherwise had to pay to exercise the related
Stock Option, multiplied by the number of shares for which the Stock
Appreciation Right is exercised.



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(t)            “Stock Appreciation
Right” means the right to receive from the Company, on surrender of all or part
of the related Stock Option, without a cash payment to the Company, a number of
shares of Common Stock equal to the SAR Value divided by the Fair Market Value
(on the exercise date).


(u)           “Stock Option” or
“Option” means any option to purchase shares of Common Stock which is granted
pursuant to the Plan.


(v)           “Stock Reload Option”
means any option granted under Section 5.3 of the Plan.


(w)          “Subsidiary” means any
present or future “subsidiary corporation” of the Company, as such term is
defined in Section 424(f) of the Code (without regard to the phrase “at the time
of the granting of the option” in such Section).


(x)            “Termination” means
that the Holder has ceased to be an employee or director of, or consultant to,
the Company or its Subsidiaries and no longer serves in any such capacity on
behalf of the Company or its Subsidiaries. 
An event that causes a Subsidiary to cease being a Subsidiary shall be
treated as a “Termination” of that Subsidiary’s employees, directors and
consultants.


(y)           “Vest” means to become
exercisable or to otherwise obtain ownership rights in an award.


Section 2. Administration.


2.1. Committee Membership. The Plan shall be administered by the
Board or a Committee, as provided herein. Committee members shall serve for
such term as the Board may in each case determine, and shall be subject to removal
at any time by the Board. The Committee members shall be “non-employee
directors” as defined in Rule 16b-3 promulgated under the Securities Exchange
Act of 1934, as amended (“Exchange Act”), and “outside directors” within the
meaning of Section 162(m) of the Code.


2.2. Powers of Committee. The Committee shall have full authority
to award, pursuant to the terms of the Plan: (i) Stock Options, (ii) Stock
Appreciation Rights, (iii) Restricted Stock, (iv) Deferred Stock, (v) Stock
Reload Options and/or (vi) Other Stock-Based Awards (collectively, “Awards”).
For purposes of illustration and not of limitation, the Committee shall have
the authority (subject to the express provisions of this Plan):


(a) to select,
from the persons designated as eligible recipients of awards in Section 4.1,
the officers, employees, directors and consultants of the Company or any
Subsidiary to whom Stock Options, Stock Appreciation Rights, Restricted Stock,
Deferred Stock, Reload Stock Options and/or Other Stock-Based Awards may from
time to time be awarded hereunder;



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(b) to determine
the terms and conditions, not inconsistent with the terms of the Plan, of any
award granted hereunder (including, but not limited to, number of shares, share
exercise price or types of consideration paid upon exercise of such options,
such as other securities of the Company or other property, any restrictions or
limitations, and any vesting, exchange, surrender, cancellation, acceleration,
termination, exercise or forfeiture provisions, as the Committee shall
determine);


(c) to determine
any specified performance goals or such other factors or criteria which need to
be attained for the vesting of an award granted hereunder;


(d) to determine
the terms and conditions under which awards granted hereunder are to operate on
a tandem basis and/or in conjunction with or apart from other equity awarded
under this Plan and cash and non-cash awards made by the Company or any
Subsidiary outside of this Plan;


(e) to permit a
Holder to elect to defer a payment under the Plan under such rules and
procedures as the Committee may establish, including the payment or crediting
of interest on deferred amounts denominated in cash and of dividend equivalents
on deferred amounts denominated in Common Stock;


(f) to determine
the extent and circumstances under which Common Stock and other amounts payable
with respect to an award hereunder shall be deferred that may be either
automatic or at the election of the Holder; and


(g) to substitute
(i) new Stock Options for previously granted Stock Options, which previously
granted Stock Options have higher option exercise prices and/or contain other
less favorable terms, and (ii) new awards of any other type for previously
granted awards of the same type, which previously granted awards are upon less
favorable terms; and


(h) to make
payments and distributions with respect to awards (i.e.,
to “settle” awards) through cash payments in an amount equal to the Repurchase
Value.


Notwithstanding
anything contained herein to the contrary, the Committee shall not grant to any
one Holder in any one calendar year awards for more than 500,000 shares in the
aggregate.


2.3. Interpretation of Plan.


(a) Committee Authority. Subject to Section 11, below, the
Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable to interpret the terms and provisions of the
Plan and any award issued under the Plan (and to determine the form and substance
of all Agreements relating thereto), and to otherwise supervise the
administration of the Plan. Subject to Section 11, below, all decisions made by
the



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Committee pursuant to the
provisions of the Plan shall be made in the Committee’s sole discretion and
shall be final and binding upon all persons, including the Company, its
Subsidiaries and Holders.


(b) Incentive Stock Options. Anything in the Plan to the
contrary notwithstanding, no term or provision of the Plan relating to
Incentive Stock Options (including but not limited to Stock Reload Options or
Stock Appreciation rights granted in conjunction with an Incentive Stock
Option) or any Agreement providing for Incentive Stock Options shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be so exercised, so as to disqualify the Plan under Section 422
of the Code or, without the consent of the Holder(s) affected, to disqualify
any Incentive Stock Option under such Section 422.


Section 3. Stock Subject to Plan.


3.1.  Number of
Shares. The total number of shares of Common Stock reserved and
available for issuance under the Plan shall be 5,000,000 shares; provided that
this number of shares shall automatically increase on the January 1, in each of
the calendar years 2002, 2003, 2004, 2005 and 2006 by an amount equal to 3% of
the shares of Common Stock outstanding on December 31 of the immediately
preceding calendar year as reflected on the stock ledger of the Company, if the
Plan is then in effect, but in no event shall any annual increase exceed
500,000 shares of Common Stock. Shares of Common Stock under the Plan
(“Shares”) may consist, in whole or in part, of authorized and unissued shares
or treasury shares. If a Stock Option expires or is cancelled without being
exercised, the Shares of Common Stock that were subject to such Stock Option
shall revert to the Plan and again be available for future issuance under this
Plan.  Similarly, if a Stock Appreciation
Right or Deferred Stock award is cancelled before it is exercised (in the case
of a Stock Appreciation Right) or before the end of the Deferral Period (in the
case of a Deferred Stock award, and the shares of Common Stock subject to such
Stock Appreciation Right or Deferred Stock award are never in fact issued to
the Holder thereof, such Shares shall revert to the Plan and again be available
for future issuance under this Plan.


3.2. Changes in Capital Structure.  In the event of any stock dividend,
recapitalization, reclassification of Stock, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination, or
other similar corporate transaction or event (not including a Fundamental
Transaction or Change of Control as defined in Sections 10.1 and 10.2,
respectively), appropriate adjustments shall be made to: (a) the number and
type of Options or other awards that may be granted under this Plan;
(b) the number and type of Options or other awards that may be granted to
any individual under this Plan; (c) the exercise price and number and
class of securities issuable under each outstanding Option or other award, and
(d) the repurchase price of any securities or awards granted hereunder
subject to a right of repurchase in favor of the Corporation; provided,
however, in each case, that with respect to awards of incentive



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stock options no such
adjustment will be authorized to the extent that such authority would cause
such options to be treated as incentive stock options; and provided further,
however, unless the Committee specifies otherwise, any securities issuable as a
result of any such adjustment shall be rounded to the next lower whole
security.


Section 4. Eligibility;
Limitations.


4.1 Eligibility. Awards may be made or granted to employees,
officers, directors and consultants who are deemed to have rendered or to be
able to render significant services to the Company or its Subsidiaries and who
are deemed to have contributed or to have the potential to contribute to the
success of the Company. Notwithstanding any other provision of this Plan,
Incentive Stock Option may be granted to, and only to, persons who are
employees of the Company or a Subsidiary at the time of grant. An award other
than an Incentive Stock Option may be made or granted to a person in connection
with his hiring or retention, or at any time on or after the date he reaches an
agreement (oral or written) with the Company with respect to such hiring or
retention, even though it may be prior to the date the person first performs
services for the Company or its Subsidiaries; provided,
however, that no portion of any such award shall vest prior to the
date the person first performs such services. If an Incentive Stock Option is
awarded to a person in connection with his or her becoming an employee of the
Company or a Subsidiary, such Incentive Stock Option shall, for all purposes,
be deemed granted no earlier than the day on which such person’s employment
begins.


4.2 Section 162(m) Limitation. So long as the Company is a
“publicly held corporation” within the meaning of Section 162(m) of the Code:
(a) no employee of the Company or prospective employee of the Company may
be granted one or more awards hereunder within any fiscal year representing
more than 250,000 Shares or the right to acquire more than 250,000 Shares,
subject to adjustment under Section 3.2, and (b) Options may be granted to
an Executive only by the Committee (and, notwithstanding Section 2.1, not by
the Board). If an Option is cancelled without being exercised, that cancelled
Option shall continue to be counted against the limit on Options that may be
granted to any individual under this Section 4.2. For purposes of the Plan, an “Executive” shall mean any
individual who is subject to Section 16 of the Exchange Act or who is a
“covered employee” under Section 162(m) of the Code, in either case because of
such individual’s affiliation with the Company or an affiliate of the Company.


Section 5. Stock Options.


5.1. Grant and Exercise. Stock Options granted under the Plan may
be of two types: (i) Incentive Stock Options and (ii) Nonqualified Stock
Options. Any Stock Option granted under the Plan shall contain such terms, not
inconsistent with this Plan, or with respect to Incentive Stock Options, not
inconsistent with the Plan and the Code, as the Committee may from time to time
approve. The Committee shall have the authority to grant Incentive Stock
Options or Non-Qualified Stock Options, or both types of Stock



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Options which may be
granted alone or in addition to other awards granted under the Plan. To the
extent that any Stock Option intended to qualify as an Incentive Stock Option
does not so qualify, it shall constitute a separate Nonqualified Stock Option.


5.2. Terms and Conditions. Stock Options granted under the Plan
shall be subject to the following terms and conditions:


(a) Option Term. The term of each Stock Option shall be fixed by
the Committee; provided, however, that an Incentive Stock Option may be granted
only within the ten-year period commencing from the Effective Date and may only
be exercised within ten years of the date of grant (or five years in the case
of an Incentive Stock Option granted to an optionee who, at the time of grant,
owns Common Stock possessing more than 10% of the total combined voting power
of all classes of voting stock of the Company, or the Parent or a Subsidiary of
the Company (“10% Stockholder”).


(b) Exercise Price. The exercise price per share of Common Stock
purchasable under an Incentive Stock Option shall be determined by the
Committee at the time of grant and may not be less than 100% of the Fair Market
Value on the date of grant (or, if greater, the par value of a share of Common
Stock); provided, however, that the exercise price of an Incentive Stock Option
granted to a 10% Stockholder shall not be less than 110% of the Fair Market
Value on the date of grant


(c) Exercisability. Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be determined
by the Committee and as set forth in Section 10, below. If the Committee
provides, in its discretion, that any Stock Option is exercisable only in
installments, i.e., that it vests over time, the Committee may waive such
installment exercise provisions at any time at or after the time of grant in
whole or in part, based upon such factors as the Committee shall determine.


(d) Method of Exercise. Subject to whatever installment,
exercise and waiting period provisions are applicable in a particular case,
Stock Options may be exercised in whole or in part at any time during the term
of the Option by giving written notice of exercise to the Company specifying
the number of shares of Common Stock to be purchased. Such notice shall be
accompanied by payment in full of the purchase price, which shall be in cash
or, if provided in the Agreement, either in shares of Common Stock (including
Restricted Stock and other contingent awards under this Plan) or partly in cash
and partly in such Common Stock, or such other means which the Committee
determines are consistent with the Plan’s purpose and applicable law. Cash
payments shall be made by wire transfer, certified or bank check or personal
check, in each case payable to the order of the Company; provided, however,
that the Company shall not be required to deliver certificates for shares of
Common Stock with respect to which an Option is exercised until the Company has
confirmed the receipt of good and available funds in payment of the purchase
price thereof (except that, in the case of an exercise arrangement approved by
the Committee and described in the last sentence of this



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paragraph, payment may be
made as soon as practicable after the exercise). Payments in the form of Common
Stock shall be valued at the Fair Market Value on the date prior to the date of
exercise. Such payments shall be made by delivery of stock certificates in
negotiable form that are effective to transfer good and valid title thereto to
the Company, free of any liens or encumbrances. Subject to the terms of the
Agreement, the Committee may, in its sole discretion, at the request of the
Holder, deliver upon the exercise of a Nonqualified Stock Option a combination
of shares of Deferred Stock and Common Stock; provided,
however, that, notwithstanding the provisions of Section 8 of the
Plan, such Deferred Stock shall be fully vested and not subject to forfeiture.
A Holder shall have none of the rights of a Stockholder with respect to the
shares subject to the Option until such shares shall be transferred to the
Holder upon the exercise of the Option. The Committee may permit a Holder to
elect to pay the Exercise Price upon the exercise of a Stock Option by
irrevocably authorizing a third party to sell shares of Common Stock (or a
sufficient portion of the shares) acquired upon exercise of the Stock Option
and remit to the Company a sufficient portion of the sale proceeds to pay the
entire Exercise Price and any tax withholding resulting from such exercise.


(e) Transferability. Except as may be set forth in the next
sentence of this Section or in the Agreement, no Stock Option shall be
transferable by the Holder other than by will or by the laws of descent and
distribution or as permitted by the Code and Rule 16b-3 under the Exchange Act,
and all Stock Options shall be exercisable, during the Holder’s lifetime, only
by the Holder (or, to the extent of legal incapacity or incompetency, the
Holder’s guardian or legal representative). Notwithstanding the foregoing, a
Holder may (A) transfer any Stock Option pursuant to a Qualified Domestic
Relations Order, and (B) with the approval of the Committee, transfer a
Nonqualified Stock Option by gift, for no consideration, to or for the benefit
of the Holder’s “Immediate Family” (as defined below), or to an entity in which
the Holder and/or members of Holder’s Immediate Family own more than fifty
percent of the voting interest, in exchange for an interest in that entity,
subject to such limits as the Committee may establish and the execution of such
documents as the Committee may require, and the transferee shall remain subject
to all the terms and conditions applicable to the Stock Option prior to such
transfer.  The term “Immediate Family”
shall mean any child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law, including
adoptive relationships, any person sharing the Holder’s household (other than a
tenant or employee), a trust in which these persons have more than fifty
percent beneficial interest, and a foundation in which these persons (or the
Holder) control the management of the assets.


(f) Termination by Reason of Death. If a Holder’s Termination is
by reason of death, any Stock Option held by such Holder, unless otherwise
determined by the Committee and set forth in the Agreement, shall thereupon
automatically terminate, except that the portion of such Stock Option that has vested
on the date of death may



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thereafter be exercised
by the legal representative of the estate or by the legatee of the Holder under
the will of the Holder, for a period of one year (or such other greater or
lesser period as the Committee may specify in the Agreement) from the date of
such death or until the expiration of the stated term of such Stock Option,
whichever period is shorter.


(g) Termination by Reason of Disability. If a Holder’s
Termination is by reason of Disability, any Stock Option held by such Holder,
unless otherwise determined by the Committee and set forth in the Agreement,
shall thereupon automatically terminate, except that the portion of such Stock
Option that has vested on the date of Termination may thereafter be exercised
by the Holder for a period of one year (or such other greater or lesser period
as the Committee may specify in the Agreement) from the date of Termination or
until the expiration of the stated term of such Stock Option, whichever period
is shorter.


(h) Other Termination. Subject to the provisions of Section
13.3, below, and unless otherwise determined by the Committee and set forth in
the Agreement, if a Holder’s Termination is for any reason other than death or
Disability, then the portion of such Stock Option that has vested on the date
of Termination may be exercised for the lesser of three months after
Termination or the balance of such Stock Option’s term (or such other greater
or lesser period as the Committee may specify in the Agreement).


(i) Additional Incentive Stock Option Limitation. In the case of
an Incentive Stock Option, the aggregate Fair Market Value (on the date of
grant of the Option) with respect to which Incentive Stock Options become
exercisable for the first time by a Holder during any calendar year (under all
such plans of the Company and its Parent and Subsidiaries) shall not exceed
$100,000.


(j) Buyout and Settlement Provisions. The Committee may at any
time, in its sole discretion, offer to repurchase a Stock Option previously
granted, based upon such terms and conditions as the Committee shall establish
and communicate to the Holder at the time that such offer is made.


5.3. Stock Reload Option. The exercise price per share of Common
Stock purchasable under an incentive stock option shall be determined by the
Committee at the time of grant and may not be less than 100% of the Fair Market
Value on the date of grant (or, if greater, the par value of a share of Common
Stock); provided, however, that the exercise price of an incentive stock option
granted to a 10% Stockholder shall not be less than 110% of the Fair Market
Value on the date of grant.


Section 6. Stock Appreciation
Rights.


6.1. Grant and Exercise. The Committee may grant Stock
Appreciation Rights to participants who have been or are being granted Stock
Options under the Plan as a means



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of allowing such
participants to exercise their Stock Options without the need to pay the
exercise price in cash. In the case of a Nonqualified Stock Option, a Stock
Appreciation Right may be granted either at or after the time of the grant of
such Nonqualified Stock Option. In the case of an Incentive Stock Option, a
Stock Appreciation Right may be granted only at the time of the grant of such
Incentive Stock Option.


6.2. Terms and Conditions. Stock Appreciation Rights shall be
subject to the following terms and conditions:


(a) Exercisability. Stock Appreciation Rights shall be
exercisable as shall be determined by the Committee and set forth in the
Agreement, subject to the limitations, if any, imposed by the Code with respect
to related Incentive Stock Options.


(b) Termination. A Stock Appreciation Right shall terminate and
shall no longer be exercisable upon the termination or exercise of the related
Stock Option.


(c) Method of Exercise. Stock Appreciation Rights shall be
exercisable upon such terms and conditions as shall be determined by the
Committee and set forth in the Agreement and by surrendering the applicable
portion of the related Stock Option. Upon such exercise and surrender, the
Holder shall be entitled to receive a number of shares of Common Stock equal to
the SAR Value divided by the Fair Market Value on the date the Stock
Appreciation Right is exercised.


(d) Shares Affected Upon Plan. The granting of a Stock
Appreciation Right shall not affect the number of shares of Common Stock
available under for awards under the Plan. The number of shares Available for
awards under the Plan will, however, be reduced by the number of shares of
Common Stock acquirable upon exercise of the Stock Option to which such Stock
Appreciation Right relates.


Section 7. Restricted Stock.


7.1. Grant. Shares of Restricted Stock may be awarded either
alone or in addition to other awards granted under the Plan. The Committee
shall determine the eligible persons to whom, and the time or times at which,
grants of Restricted Stock will be awarded, the number of shares to be awarded,
the price (if any) to be paid by the Holder, the time or times within which
such awards may be subject to forfeiture (“Restriction Period”), the vesting
schedule and rights to acceleration thereof and all other terms and conditions
of the awards.


7.2. Terms and Conditions. Each Restricted Stock award shall be
subject to the following terms and conditions:


(a) Certificates. Restricted Stock, when issued, will be
represented by a stock certificate or certificates registered in the name of
the Holder to whom such Restricted Stock shall have been awarded. During the
Restriction Period, certificates representing



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the Restricted Stock and
any securities constituting Retained Distributions (as defined below) shall
bear a legend to the effect that ownership of the Restricted Stock (and such
Retained Distributions) and the enjoyment of all rights appurtenant thereto are
subject to the restrictions, terms and conditions provided in the Plan and the
Agreement. Such certificates shall be deposited by the Holder with the Company,
together with stock powers or other instruments of assignment, each endorsed in
blank, which will permit transfer to the Company of all or any portion of the
Restricted Stock and any securities constituting Retained Distributions that
shall be forfeited or that shall not become vested in accordance with the Plan
and the Agreement.


(b) Rights of Holder. Restricted Stock shall constitute issued
and outstanding shares of Common Stock for all corporate purposes. The Holder
will have the right to vote such Restricted Stock, to receive and retain all
regular cash dividends and other cash equivalent distributions as the Board may
in its sole discretion designate, pay or distribute on such Restricted Stock
and to exercise all other rights, powers and privileges of a holder of Common
Stock with respect to such Restricted Stock, with the exceptions that (i) the
Holder will not be entitled to delivery of the stock certificate or
certificates representing such Restricted Stock until the Restriction Period
shall have expired and unless all other vesting requirements with respect
thereto shall have been fulfilled; (ii) the Company will retain custody of the
stock certificate or certificates representing the Restricted Stock during the
Restriction Period; (iii) other than regular cash dividends and other cash
equivalent distributions as the Board may in its sole discretion designate, pay
or distribute, the Company will retain custody of all distributions (“Retained
Distributions”) made or declared with respect to the Restricted Stock (and such
Retained Distributions will be subject to the same restrictions, terms and
conditions as are applicable to the Restricted Stock) until such time, if ever,
as the Restricted Stock with respect to which such Retained Distributions shall
have been made, paid or declared shall have become vested and with respect to
which the Restriction Period shall have expired; (iv) a breach of any of the
restrictions, terms or conditions contained in this Plan or the Agreement or
otherwise established by the Committee with respect to any Restricted Stock or
Retained Distributions will cause a forfeiture of such Restricted Stock and any
Retained Distributions with respect thereto.


(c) Vesting; Forfeiture. Upon the expiration of the Restriction
Period with respect to each award of Restricted Stock and the satisfaction of
any other applicable restrictions, terms and conditions (i) all or part of such
Restricted Stock shall become vested in accordance with the terms of the
Agreement, subject to Section 10, below, and (ii) any Retained Distributions
with respect to such Restricted Stock shall become vested to the extent that
the Restricted Stock related thereto shall have become vested, subject to
Section 10, below. Any such Restricted Stock and Retained Distributions that do
not vest shall be forfeited to the Company and the Holder shall not thereafter
have any rights with respect to such Restricted Stock and Retained
Distributions that shall have been so forfeited.



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Section 8. Deferred Stock.


8.1. Grant. Shares of Deferred Stock may be awarded either alone
or in addition to other awards granted under the Plan. The Committee shall
determine the eligible persons to whom and the time or times at which grants of
Deferred Stock will be awarded, the number of shares of Deferred Stock to be
awarded to any person, the duration of the period (“Deferral Period”) during
which, and the conditions under which, receipt of the shares will be deferred,
and all the other terms and conditions of the awards.


8.2. Terms and Conditions. Each Deferred Stock award shall be
subject to the following terms and conditions:


(a) Certificates. At the expiration of the Deferral Period (or
the Additional Deferral Period referred to in Section 8.2 (d) below, where
applicable), share certificates shall be issued and delivered to the Holder, or
his legal representative, representing the number equal to the shares covered
by the Deferred Stock award.


(b) Rights of Holder. A person entitled to receive Deferred
Stock shall not have any rights of a Stockholder by virtue of such award until
the expiration of the applicable Deferral Period and the issuance and delivery
of the certificates representing such Common Stock. The shares of Common Stock
issuable upon expiration of the Deferral Period shall not be deemed outstanding
by the Company until the expiration of such Deferral Period and the issuance
and delivery of such Common Stock to the Holder.


(c) Vesting; Forfeiture. Upon the expiration of the Deferral
Period with respect to each award of Deferred Stock and the satisfaction of any
other applicable restrictions, terms and conditions all or part of such
Deferred Stock shall become vested in accordance with the terms of the
Agreement, subject to Section 10, below. Any such Deferred Stock that does not
vest shall be forfeited to the Company and the Holder shall not thereafter have
any rights with respect to such Deferred Stock.


(d) Additional Deferral Period. A Holder may request to, and the
Committee may at any time, defer the receipt of an award (or an installment of
an award) for an additional specified period or until a specified event
(“Additional Deferral Period”). Subject to any exceptions adopted by the
Committee, such request must generally be made at least one year prior to
expiration of the Deferral Period for such Deferred Stock award (or such
installment).


Section 9. Other Stock-Based
Awards.


Other Stock-Based
Awards may be awarded, subject to limitations under applicable law, that are
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on or related to, shares of Common Stock, as deemed by the
Committee to be consistent with the purposes of the Plan, including, without



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limitation, purchase
rights, shares of Common Stock awarded which are not subject to any
restrictions or conditions, convertible or exchangeable debentures, or other
rights convertible into shares of Common Stock and awards valued by reference
to the value of securities of or the performance of specified Subsidiaries.
Other Stock-Based Awards may be awarded either alone or in addition to or in
tandem with any other awards under this Plan or any other plan of the Company.
Each other Stock-Based Award shall be subject to such terms and conditions as
may be determined by the Committee.


Section 10. Accelerated Vesting
and Exercisability.


10.1 Fundamental Transactions. If the Company merges with another
entity in a transaction in which the Company is not the surviving entity or if,
as a result of any other transaction or event, other securities are substituted
for the Shares or Shares may no longer be issued (each a “Fundamental Transaction”), then,
notwithstanding any other provision of this Plan, the Committee shall do one or
more of the following contingent on the closing or completion of the Fundamental
Transaction: (a) arrange for the substitution of Awards on equity securities
other than Shares (including, if appropriate, equity securities of an entity
other than the Company) in exchange for such Awards, (b) accelerate the vesting
and termination of outstanding Options so that Options can be exercised in full
before or otherwise in connection with the closing or completion of the
transaction or event but then terminate, (c) terminate the Restriction Period
or Deferral Period applicable to any outstanding Awards, and (d) cancel Awards
in exchange for cash payments to Award holders. The Committee need not adopt
the same rules for each Award or each Award holder.


10.2 Changes of Control. The Committee may also, but need not,
specify that other transactions or events constitute a “Change of Control”. The Committee may do that
either before or after the transaction or event occurs. Examples of
transactions or events that the Committee may treat as Changes of Control are:
(a) the Company or an “Affiliate”
(as defined in Regulation D of the Securities Act) is a party to a
merger, consolidation, amalgamation, or other transaction in which the
beneficial shareholders of the Company, immediately before the transaction,
beneficially own securities representing 50% or less of the total combined
voting power or value of the Company immediately after the transaction, (b) any
person or entity, including a “group” as contemplated by Section 13(d)(3) of
the Exchange Act, acquires securities holding 30% or more of the total combined
voting power or value of the Company, or (c) as a result of or in connection
with a contested election of Company Directors, the persons who were Company
Directors immediately before the election cease to constitute a majority of the
Board. In connection with a Change of Control, notwithstanding any other
provision of this Plan, the Committee may take any one or more of the actions
described in Section 10.1. In addition, the Committee may extend the date for
the exercise of Options (but not beyond their original Expiration Date). The
Committee need not adopt the same rules for each Award or each Award holder.



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10.3 Divestiture. If the Company or an Affiliate sells or
otherwise transfers equity securities of an Affiliate to a person or entity
other than the Company or an Affiliate, or leases, exchanges or transfers all
or any portion of its assets to such a person or entity, then the Committee, in
its sole and absolute discretion, may specify that such transaction or event
constitutes a “Divestiture”. In
connection with a Divestiture, notwithstanding any other provision of this
Plan, the Committee may take one or more of the actions described in Section
10.1 or 10.2  with respect to Options or Option
Shares held by, for example, Employees, Directors or Consultants for whom that
transaction or event results in a Termination. The Committee need not adopt the
same rules for each Option or each Optionee.


10.4 Dissolution. If the Company adopts a plan of dissolution,
the Committee may, in its sole and absolute discretion, cause Options to be
fully vested and exercisable (but not after their Expiration Date) before the
dissolution is completed but contingent on its completion and may cause the
Company’s repurchase rights on Option Shares to lapse upon completion of the
dissolution. To the extent not exercised before the earlier of the completion
of the dissolution or their Expiration Date, Options shall terminate just
before the dissolution is completed. The Committee need not adopt the same
rules for each Option or each Optionee.


10.5 Cut-Back to Preserve Benefits. If  the
Administrator determines that the net after-tax amount to be realized by any
Award holder, taking into account any accelerated vesting, termination of  Restriction or Deferral Periods, or cash payments to that
Award holder in connection with any transaction or event addressed in this
Section 10 would be greater if  one or more of  those steps were not taken with respect to that Award
holder’s Award, then and to that extent one or more of  those
steps shall not be taken.


Section 11. Amendment and
Termination.


The Board may at
any time, and from time to time, amend alter, suspend or discontinue any of the
provisions of the Plan, but no amendment, alteration, suspension or
discontinuance shall be made that would impair the rights of a Holder under any
Agreement theretofore entered into hereunder, without the Holder’s consent.


Section 12. Term of Plan.


12.1. Effective Date. The Plan shall be effective as of October 1,
2001, subject to the approval of the Plan by the Company’s stockholders within
one year after the Effective Date. Any awards granted under the Plan prior to
such approval shall be effective when made (unless otherwise specified by the
Committee at the time of grant), but shall be conditioned upon, and subject to,
such approval of the Plan by the Company’s stockholders and no awards shall
vest or otherwise become free of restrictions prior to such approval.



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12.2. Termination Date. Unless terminated by the Board, this Plan
shall continue to remain effective until such time as no further awards may be
granted and all awards granted under the Plan are no longer outstanding.
Notwithstanding the foregoing, grants of Incentive Stock Options may be made
only during the ten year period following the Effective Date.


Section 13. General Provisions.


13.1. Written Agreements. Each award granted under the Plan shall
be confirmed by, and shall be subject to the terms of, the Agreement executed
by the Company and the Holder, or such other document as may be determined by
the Committee. The Committee may terminate any award made under the Plan if the
Agreement relating thereto is not executed and returned to the Company within
10 days after the Agreement has been delivered to the Holder for his or her
execution.


13.2. Unfunded Status of 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 Holder by the Company, nothing contained herein
shall give any such Holder any rights that are greater than those of a general
creditor of the Company.


13.3. Employees.


(a) Termination for Cause.  If  a
Holder’s Termination is due to cause, the Committee may, in its sole
discretion, take action to cause all of  the
Holder’s Options to terminate and cease to be exercisable at the time of  termination.  “Cause” means (i) the willful and continued
failure by the Holder to substantially perform his or her duties and
obligations (other than any such failure resulting from his or her incapacity
due to physical or mental illness) after there has been delivered to the Holder
a written demand for performance from the Company which describes the basis for
the Company’s belief that the Holder has not substantially performed his or her
duties; or (ii) the perpetration by the Holder of a material dishonest act or
fraud against the Company or its respective subsidiaries; or (iii) the willful
engaging by the Holder in misconduct which is materially injurious to the
Company or any of its subsidiaries, monetarily or otherwise, including but not
limited to, disclosure or misuse of any confidential information, intoxication
during the performance of Company duties, or use of unlawful controlled
substances or unlawful use of lawful controlled substances; or (iv) the
Holder’s conviction of a felony not disclosed to the Company prior to
initiation of service for the Company which the Committee reasonably believes
has had or will have a material detrimental effect on the Company’s reputation
or business.  For purposes of this
paragraph, no act, or failure to act, on Holder’s part shall be considered
“willful” unless done, or omitted to be done, by the Holder in bad faith and
without reasonable belief that the action or omission was in the best interests
of the Company and its subsidiaries.



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(b) No Right of Employment. Nothing contained in the Plan or in
any award hereunder shall be deemed to confer upon any Holder who is an
employee of the Company or any Subsidiary any right to continued employment
with the Company or any Subsidiary, nor shall it interfere in any way with the
right of the Company or any Subsidiary to terminate the employment of any
Holder who is an employee at any time.


13.4. Investment Representations; Company Policy. The Committee
may require each person acquiring shares of Common Stock pursuant to a Stock
Option or other award under the Plan to represent to and agree with the Company
in writing that the Holder is acquiring the shares for investment without a
view to distribution thereof. Each person acquiring shares of Common Stock
pursuant to a Stock Option or other award under the Plan shall be required to
abide by all policies of the Company in effect at the time of such acquisition
and thereafter with respect to the ownership and trading of the Company’s
securities.


13.5. Additional Incentive Arrangements. Nothing contained in the
Plan shall prevent the Board from adopting such other or additional incentive
arrangements as it may deem desirable, including, but not limited to, the
granting of Stock Options and the awarding of Common Stock and cash otherwise
than under the Plan; and such arrangements may be either generally applicable
or applicable only in specific cases.


13.6. Withholding Taxes. Not later than the date as of which an
amount must first be included in the gross income of the Holder for Federal
income tax purposes with respect to any Stock Option or other award under the
Plan, the Holder shall pay to the Company, or make arrangements satisfactory to
the Committee regarding the payment of, any Federal, state and local taxes of
any kind required by law to be withheld or paid with respect to such amount. If
permitted by the Committee, tax withholding or payment obligations may be
settled with Common Stock, including Common Stock that is part of the award
that gives rise to the withholding requirement. The obligations of the Company
under the Plan shall be conditioned upon such payment or arrangements and the
Company or the Holder’s employer (if not the Company) 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 Holder from the Company or any Subsidiary.


13.7. Governing Law. The Plan and all awards made and actions
taken thereunder shall be governed by and construed in accordance with the laws
of the State of Delaware (without regard to choice of law provisions).


13.8. Other Benefit Plans. Any award granted under the Plan shall
not be deemed compensation for purposes of computing benefits under any
retirement plan of the Company or any Subsidiary and shall not affect any
benefits under any other benefit plan now or subsequently in effect under which
the availability or amount of benefits is related to the level of compensation
(unless required by specific reference in any such other plan to awards under
this Plan).



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13.9. Non-Transferability. Except as otherwise expressly provided
in the Plan or the Agreement, no right or benefit under the Plan may be
alienated, sold, assigned, hypothecated, pledged, exchanged, transferred,
encumbranced or charged, and any attempt to alienate, sell, assign,
hypothecate, pledge, exchange, transfer, encumber or charge the same shall be
void.


13.10. Applicable Laws. The obligations of the Company with respect
to all Stock Options and awards under the Plan shall be subject to (i) all
applicable laws, rules and regulations and such approvals by any governmental
agencies as may be required, including, without limitation, the Securities Act
of 1933 (the “Securities Act”), as amended, and (ii) the rules and regulations
of any securities exchange on which the Common Stock may be listed.


13.11. Conflicts. If any of the terms or provisions of the Plan or
an Agreement conflict with the requirements of Section 422 of the Code, then
such terms or provisions shall be deemed inoperative to the extent they so
conflict with such requirements. Additionally, if this Plan or any Agreement
does not contain any provision required to be included herein under Section 422
of the Code, such provision shall be deemed to be incorporated herein and
therein with the same force and effect as if such provision had been set out at
length herein and therein. If any of the terms or provisions of any Agreement
conflict with any terms or provisions of the Plan, then such terms or
provisions shall be deemed inoperative to the extent they so conflict with the
requirements of the Plan. Additionally, if any Agreement does not contain any
provision required to be included therein under the Plan, such provision shall
be deemed to be incorporated therein with the same force and effect as if such
provision had been set out at length therein.


[END OF DOCUMENT]


 


 



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