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Exhibit 10.1    
    


GENTIUM S.P.A.  


 2004 EQUITY INCENTIVE PLAN  







 
TABLE OF CONTENTS  



	 
	 	 
	 	PAGE

	SECTION 1.    PURPOSE	 	1
	

SECTION 2.    DEFINITIONS	
 	

1
	 	(a)	 	"Affiliate"	 	1
	 	(b)	 	"Award"	 	1
	 	(c)	 	"Award Agreement"	 	1
	 	(d)	 	"Board"	 	1
	 	(e)	 	"Change In Control"	 	1
	 	(f)	 	"Code"	 	2
	 	(g)	 	"Committee"	 	2
	 	(h)	 	"Common Stock"	 	2
	 	(i)	 	"Company"	 	2
	 	(j)	 	"Consultant"	 	2
	 	(k)	 	"Corporate Transaction"	 	2
	 	(l)	 	"Covered Employee"	 	2
	 	(m)	 	"Director"	 	2
	 	(n)	 	"Disability"	 	2
	 	(o)	 	"Employee"	 	3
	 	(p)	 	"Exchange Act"	 	3
	 	(q)	 	"Exercise Price"	 	3
	 	(r)	 	"Fair Market Value"	 	3
	 	(s)	 	"Grant"	 	3
	 	(t)	 	"Incentive Stock Option" or "ISO"	 	3
	 	(u)	 	"Key Employee"	 	3
	 	(v)	 	"Non-Employee Director"	 	3
	 	(w)	 	"Nonstatutory Stock Option" or "NSO"	 	3
	 	(x)	 	"Option"	 	3
	 	(y)	 	"Optionee"	 	3
	 	(z)	 	"Parent"	 	3
	 	(aa)	 	"Participant"	 	4
	 	(bb)	 	"Plan"	 	4
	 	(cc)	 	"Restricted Stock"	 	4
	 	(dd)	 	"Restricted Stock Agreement"	 	4
	 	(ee)	 	"SAR Agreement"	 	4
	 	(ff)	 	"Securities Act"	 	4
	 	(gg)	 	"Service"	 	4
	 	(hh)	 	"Share"	 	4
	 	(ii)	 	"Stock Appreciation Right" or "SAR"	 	4
	 	(jj)	 	"Stock Bonus"	 	4
	 	(kk)	 	"Stock Bonus Agreement"	 	4
	 	(ll)	 	"Stock Option Agreement"	 	4
	 	(mm)	 	"Stock Purchase Right"	 	4
	 	(nn)	 	"Stock Unit"	 	4
	 	(oo)	 	"Stock Unit Agreement"	 	4
	 	(pp)	 	"Subsidiary"	 	4
	 	(qq)	 	"10-Percent Shareholder"	 	4
	 	 	 	 	 





i







 

	SECTION 3.    ADMINISTRATION	 	4
	 	(a)	 	Administration by Board.	 	4
	 	(b)	 	Powers of Board.	 	5
	 	(c)	 	Delegation to Committee.	 	5
	 	(d)	 	Effect of Board's Decision.	 	6
	 	(e)	 	Indemnification.	 	6
	

SECTION 4.    ELIGIBILITY	
 	

6
	 	(a)	 	General Rules	 	6
	 	(b)	 	Incentive Stock Options	 	6
	 	(c)	 	Non-Employee Director Options	 	6
	

SECTION 5.    SHARES SUBJECT TO PLAN	
 	

7
	 	(a)	 	Basic Limitation	 	7
	 	(b)	 	Additional Shares	 	7
	 	(c)	 	Limits on Options and SARs	 	7
	 	(d)	 	Limits on Stock Purchase Rights, Stock Units and Stock Bonuses	 	7
	

SECTION 6.    TERMS AND CONDITIONS OF OPTIONS	
 	

7
	 	(a)	 	Stock Option Agreement	 	7
	 	(b)	 	Number of Shares	 	7
	 	(c)	 	Exercise Price	 	8
	 	(d)	 	Exercisability and Term	 	8
	 	(e)	 	Modifications or Assumption of Options	 	8
	 	(f)	 	Transferability of Options	 	8
	 	(g)	 	Restrictions on Transfer	 	8
	 	(h)	 	Incentive Stock Option $100,000 Limitation.	 	8
	

SECTION 7.    PAYMENT FOR OPTION SHARES	
 	

8
	 	(a)	 	General Rule	 	8
	 	(b)	 	Surrender of Stock	 	9
	 	(c)	 	Cashless Exercise	 	9
	 	(d)	 	Other Forms of Payment	 	9
	

SECTION 8.    TERMS AND CONDITIONS FOR AWARDS OF STOCK PURCHASE RIGHTS AND STOCK UNITS.	
 	

9
	 	(a)	 	Time, Amount and Form of Awards	 	9
	 	(b)	 	Restricted Stock and Stock Unit Agreements	 	9
	 	(c)	 	Payment for Restricted Stock or Stock Unit Awards	 	9
	 	(d)	 	Form and Time of Settlement of Stock Units	 	9
	 	(e)	 	Vesting Conditions	 	9
	 	(f)	 	Assignment or Transfer of Restricted Stock or Stock Units	 	9
	 	(g)	 	Death of Stock Units Recipient	 	10
	 	(h)	 	Trusts	 	10
	 	(i)	 	Voting and Dividend Rights	 	10
	 	(j)	 	Stock Units Voting and Dividend Rights	 	10
	 	(k)	 	Creditors' Rights	 	10
	

SECTION 9.    TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS	
 	

10
	 	(a)	 	SAR Agreement	 	10
	 	(b)	 	Number of Shares	 	11
	 	(c)	 	Exercise Price	 	11
	 	(d)	 	Exercisability and Term	 	11
	 	 	 	 	 



ii







 

	 	(e)	 	Exercise of SARs	 	11
	 	(f)	 	Modification or Assumption of SARs	 	11
	

SECTION 10.    TERMS AND CONDITIONS OF STOCK BONUSES	
 	

11
	 	(a)	 	Stock Bonus Agreement.	 	11
	 	(b)	 	Number of Shares.	 	11
	 	(c)	 	Consideration	 	11
	 	(d)	 	Vesting.	 	11
	 	(e)	 	Transferability.	 	12
	 	(f)	 	Death of Stock Bonus Recipient	 	12
	 	(g)	 	Trusts	 	12
	 	(h)	 	Stock Bonus Voting and Dividend Rights	 	12
	

SECTION 11.    PROTECTION AGAINST DILUTION	
 	

12
	 	(a)	 	Adjustments	 	12
	 	(b)	 	Participant Rights	 	13
	

SECTION 12.    EFFECT OF A CORPORATE TRANSACTION	
 	

13
	 	(a)	 	Merger or Reorganization	 	13
	 	(b)	 	Acceleration	 	13
	

SECTION 13.    LIMITATIONS ON RIGHTS	
 	

13
	 	(a)	 	Retention Rights	 	13
	 	(b)	 	Shareholders' Rights	 	13
	 	(c)	 	Regulatory Requirements	 	13
	

SECTION 14.    WITHHOLDING TAXES	
 	

13
	 	(a)	 	General	 	13
	 	(b)	 	Share Withholding	 	13
	

SECTION 15.    DURATION AND AMENDMENTS	
 	

14
	 	(a)	 	Term of the Plan	 	14
	 	(b)	 	Right to Amend, Suspend or Terminate the Plan	 	14
	 	(c)	 	Right to Amend Award.	 	14
	

SECTION 16.    EXECUTION	
 	

14
	

APPENDIX A GENTIUM S.P.A. 2004 ITALY STOCK AWARD SUB-PLAN	
 	

1
	

SECTION 1.    BACKGROUND AND PURPOSE	
 	

1
	

SECTION 2.    DEFINITION AND CONSTRUCTION	
 	

1
	

SECTION 3.    INCORPORATION OF PLAN	
 	

2
	

SECTION 4.    ITALIAN STOCK OPTION TERMS	
 	

2
	 	(a)	 	Italian Stock Option Agreement	 	2
	 	(b)	 	Number of Shares	 	2
	 	(c)	 	Exercise Price	 	2
	 	 	 	 	 





iii







 

	 	(d)	 	Exercisability and Term	 	2
	 	(e)	 	Withholding Obligations.	 	2
	 	(f)	 	Transferability	 	2
	

SECTION 5.    ITALIAN STOCK GRANT TERMS	
 	

2
	 	(a)	 	Italian Stock Grant Agreement.	 	3
	 	(b)	 	Number of Shares.	 	3
	 	(c)	 	Consideration.	 	3
	 	(d)	 	Vesting	 	3
	 	(e)	 	Withholding Obligations	 	3
	 	(f)	 	Transferability	 	3
	

SECTION 6.    EFFECT OF A CORPORATE TRANSACTION	
 	

3
	 	(a)	 	Merger or Reorganization	 	3
	 	(b)	 	Acceleration	 	3
	

SECTION 7.    LIMITATIONS ON RIGHTS	
 	

3
	 	(a)	 	Retention Rights	 	3
	 	(b)	 	Shareholders' Rights	 	3
	 	(c)	 	Regulatory Requirements	 	3
	

SECTION 8.    DURATION AND AMENDMENTS	
 	

4
	 	(a)	 	Term of the Italy Sub-Plan	 	4
	 	(b)	 	Right to Amend, Suspend or Terminate the Italy Sub-Plan	 	4
	 	(c)	 	Right to Amend Italian Award	 	4
	

SECTION 9.    EXECUTION	
 	

4




iv









GENTIUM S.P.A.  


 2004 EQUITY INCENTIVE PLAN  


 
  SECTION 1.    PURPOSE.    
    


        The Board adopted the Gentium S.p.A. 2004 Equity Incentive Plan on September 30, 2004 (the "Adoption Date"), subject to approval by the Company's
shareholders. The Plan shall become effective as of the date on which Shares are first made available to the general public pursuant to an initial public offering of the Shares (the "IPO Date"). 


        In
addition, the Board adopted the Italy Stock Award Sub-Plan (the "Italy Sub-Plan") on the Adoption Date, subject to approval by the Company's shareholders. The
Italy Sub-Plan shall become effective as of the IPO Date. The Italy Sub-Plan, attached to the Plan as Appendix A, contains the additional provisions that are to be read
in conjunction with the Plan and are applicable to Italian Key Employees who are liable for income tax in the Republic of Italy. 


        The
purpose of the Plan is to promote the long-term success of the Company and the creation of shareholder value by offering Key Employees an opportunity to acquire a
proprietary interest in the success of the Company, or to increase such interest, and to encourage such selected persons to continue to provide services to the Company and to attract new individuals
with outstanding qualifications. 


        The
Plan seeks to achieve this purpose by providing for Awards in the form of Stock Purchase Rights granting Restricted Stock, Stock Units, Stock Appreciation Rights, Stock Bonuses and
Options (which may constitute Incentive Stock Options or Nonstatutory Stock Options). 


        The
Plan shall be governed by, and construed in accordance with, the laws of the State of Delaware (except its choice-of-law provisions). Capitalized terms shall
have the
meaning provided in Section 2 of the Plan or the Italy Sub-Plan unless otherwise provided in this Plan or the applicable Award Agreement, or other applicable agreement. 


 
 

SECTION 2.    DEFINITIONS.    
    


 
 
        (a)    "Affiliate"   means any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not less
than 50% of such entity. For purposes of determining an
individual's "Service," this definition shall include any entity other than a Subsidiary, if the Company, a Parent and/or one or more Subsidiaries own not less than 50% of such entity. 


 
 
        (b)    "Award"   means any Grant of an Option, SAR, Stock Unit, Stock Bonus or Stock Purchase Right under the Plan.



 
 
        (c)    "Award Agreement"   means a written agreement between the Company and a Participant evidencing the terms and
conditions of a Grant of an individual Award. Each Award Agreement shall
be subject to the terms and conditions of the Plan. 


 
 
        (d)    "Board"   means the Board of Directors of the Company, as constituted from time to time. 


 
 
        (e)    "Change In Control"   except as may otherwise be provided in an Award Agreement or other applicable agreement, means
the occurrence of any of the following: 



          (i)  The
consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if more than 50% of the combined voting
power of the continuing or surviving entity's securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not shareholders of the Company
immediately prior to such merger, consolidation or other reorganization; 


         (ii)  The
sale, transfer or other disposition of all or substantially all of the Company's assets; 



        (iii)  A
change in the composition of the Board, as a result of which fewer that one-half of the incumbent directors are directors who either (i) had been
directors of the Company on the date 








 




24 months
prior to the date of the event that may constitute a Change in Control (the "original directors") or (ii) were elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the aggregate of the original directors who were still in office at the time of the election or nomination and the directors whose election or nomination
was previously so approved; 


        (iv)  Any
transaction as a result of which any person becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing at least 20% of the total voting power represented by the Company's then outstanding voting securities. For purposes of this
Paragraph (iii), the term "person" shall have the same meaning as when used in sections 13(d) and 14(d) of the Exchange Act but shall exclude: 



        (A)  A
trustee or other fiduciary holding securities under an employee benefit plan of the Company or a subsidiary of the Company; 



        (B)  A
corporation owned directly or indirectly by the shareholders of the Company in substantially the same proportions as their ownership of the common stock of the
Company; and 


        (C)  The
Company; or 




         (v)  A
complete liquidation or dissolution of the Company. 




 
 
        (f)    "Code"   means the United States Internal Revenue Code of 1986, as amended. 



 
 
        (g)    "Committee"   means a committee consisting of one or more members of the Board that is appointed by the Board (as
described in Section 3) to administer the Plan. 


 
 
        (h)    "Common Stock"   means the Company's common stock. 



 
 
        (i)    "Company"   means Gentium S.p.A., a stock corporation organized under the laws of the Republic of Italy. 


 
 
        (j)    "Consultant"   means an individual who performs bona fide services to the Company, a Parent, a Subsidiary or an
Affiliate other than as an Employee or Director or
Non-Employee Director. 


 
 
        (k)    "Corporate Transaction"   means the occurrence, in a single transaction or in a series of related transactions, of any
one or more of the following events: 



          (i)  a
sale or other disposition of all or substantially all, as determined by the Board in its discretion, of the consolidated assets of the Company and its Subsidiaries; 


         (ii)  a
merger, consolidation or similar transaction following which the Company is not the surviving corporation; or 



        (iii)  a
merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of
securities, cash or otherwise. 




 
 
        (l)    "Covered Employee"   means the chief executive officer and the four (4) other highest compensated officers of the
Company for whom total compensation is required to be reported
to shareholders under the Exchange Act, as determined for purposes of section 162(m) of the Code. 


 
 
        (m)    "Director"   means a member of the Board who is also an Employee. 


 
 
        (n)    "Disability"   means that the Key Employee is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which
can be expected 


2







 

to
result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. 


 
 
        (o)    "Employee"   means any individual who is a common-law employee of the Company, a Parent, a Subsidiary or an Affiliate.
Mere service as a Director or payment of a
director's fee by the Company or an Affiliate shall not be sufficient to constitute "employment" by the Company or an Affiliate. 



 
 
        (p)    "Exchange Act"   means the United States Securities Exchange Act of 1934, as amended. 


 
 
        (q)    "Exercise Price"   means, in the case of an Option, the amount for which a Share may be purchased upon exercise of
such Option, as specified in the applicable Stock Option
Agreement. "Exercise Price," in the case of a SAR, means an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value of a Share in determining the amount
payable upon exercise of such SAR. 


 
 
        (r)    "Fair Market Value"   means the market price of Shares, determined by the Committee as follows: 



          (i)  If
the Shares were traded on a stock exchange on the date in question, then the Fair Market Value shall be equal to the closing price reported by the applicable
composite transactions report for such date; 


         (ii)  If
the Shares were traded over-the-counter on the date in question and were classified as a national market issue or small cap issue, then the
Fair Market Value shall be equal to the closing price quoted by the NASDAQ system for such date; 


        (iii)  If
the Shares were traded over-the-counter on the date in question but were not classified as a national market issue, then the Fair Market
Value shall be equal to the mean between the last reported representative bid and asked prices quoted by the applicable trading market for such date; and 



        (iv)  If
none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate. 




        Whenever
possible, the determination of Fair Market Value by the Committee shall be based on the prices reported in the Wall Street
Journal. Such determination shall be conclusive and binding on all persons. 


 
 
        (s)    "Grant"   means any grant of an Award under the Plan. 


 
 
        (t)    "Incentive Stock Option" or "ISO"   means an incentive stock option
described in Code section 422(b). 


 
 
        (u)    "Key Employee"   means an Employee, Director, Non-Employee Director or Consultant who has been selected by the
Committee to receive an Award under the Plan. 


 
 
        (v)    "Non-Employee Director"   means a member of the Board who is not an Employee. 


 
 
        (w)    "Nonstatutory Stock Option" or "NSO"   means a stock option that is not
an ISO. 


 
 
        (x)    "Option"   means an ISO or NSO granted under the Plan entitling the Optionee to purchase Shares. 


 
 
        (y)    "Optionee"   means an individual, estate or other entity that holds an Option. 


 
 
        (z)    "Parent"   means a "parent corporation," whether now or hereafter existing, as defined in section 424(e) of the
Code. 


3







 

 
 
        (aa)    "Participant"   means an individual or estate or other entity that holds an Award. 


 
 
        (bb)    "Plan"   means this Gentium S.p.A. 2004 Equity Incentive Plan as it may be amended from time to time. 



 
 
        (cc)    "Restricted Stock"   means a Share awarded under the Plan pursuant to a Stock Purchase Right. 


 
 
        (dd)    "Restricted Stock Agreement"   means the agreement described in Section 8 evidencing Restricted Stock that may
be purchased following the Grant of a Stock Purchase Right. 


 
 
        (ee)    "SAR Agreement"   means the agreement described in Section 9 evidencing a Grant of a Stock Appreciation Right.



 
 
        (ff)    "Securities Act"   means the United States Securities Act of 1933, as amended. 


 
 
        (gg)    "Service"   means service as an Employee, Director, Non-Employee Director or Consultant. A change in the capacity in
which the Participant renders service to the
Company or an Affiliate as an Employee, Consultant, Director or Non-Employee Director or a change in the entity for which the Participant renders such service, provided that there is no
interruption or termination of the Participant's service with the Company or an Affiliate, shall not terminate a Participant's Service. For example, a change in status from an Employee of the Company
to a Consultant of an Affiliate or a Director shall not constitute an interruption of Service. 



 
 
        (hh)    "Share"   means one share of Common Stock. 


 
 
        (ii)    "Stock Appreciation Right" or "SAR"   means a stock appreciation right
awarded under the Plan. 


 
 
        (jj)    "Stock Bonus"   means a stock bonus awarded under the Plan. 


 
 
        (kk)    "Stock Bonus Agreement"   means the agreement described in Section 10 evidencing each Grant of a Stock Bonus.



 
 
        (ll)    "Stock Option Agreement"   means the agreement described in Section 6 evidencing each Grant of an Option.



 
 
        (mm)    "Stock Purchase Right"   means the right to acquire Restricted Stock pursuant to Section 8. 


 
 
        (nn)    "Stock Unit"   means a bookkeeping entry representing the equivalent of a Share, as awarded under the Plan.



 
 
        (oo)    "Stock Unit Agreement"   means the agreement described in Section 8 evidencing a Grant of Stock Units.



 
 
        (pp)    "Subsidiary"   means a "subsidiary corporation," whether now or hereafter existing, as defined in section 424(f)
of the Code. 



 
 
        (qq)    "10-Percent Shareholder"   means an individual who owns more than ten percent (10%) of the total combined voting
power of all classes of outstanding stock of the Company, its Parent or any
of its Subsidiaries. In determining stock ownership, the attribution rules of section 424(d) of the Code shall be applied. 


 
 

SECTION 3.    ADMINISTRATION.    
    


 
 
        (a)    Administration by Board.     The Board shall administer the Plan and the Italy Sub-Plan unless and until the
Board delegates administration to a Committee, as provided in
Section 3(c). 


4







 

 
 
        (b)    Powers of Board.     The Board shall have the power, subject to, and within the limitations of, the express
provisions of the Plan and Italy Sub-Plan: 



          (i)  to
determine from time to time which of the persons eligible under the Plan or the Italy Sub-Plan shall be granted Awards or Italian Awards, as applicable;
when and how each Award or Italian Award shall be granted; what type or combination of types of Award or Italian Awards shall be granted; the provisions of each Award or Italian Awards granted (which
need not be identical), including the time or times when a person shall be permitted to receive Common Stock pursuant to a Award or Italian Award; and the number of Shares with respect to which an
Award or Italian Award shall be granted to each such person. 


         (ii)  to
construe and interpret the Plan, Italy Sub-Plan, Awards and Italian Awards granted under them, and to establish, amend and revoke rules and regulations
for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or the Italy Sub-Plan or in any Award Agreement or Italian
Award Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan and Italy Sub-Plan fully effective. 


        (iii)  to
amend the Plan or an Award as provided in Section 15. 


        (iv)  to
terminate or suspend the Plan as provided in Section 15. 


         (v)  generally,
to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company which are not in
conflict with the provisions of the Plan or Italy Sub-Plan. 




 
 
        (c)    Delegation to Committee.     



          (i)  The
Board may delegate administration of the Plan to a Committee or Committees of the Board, and the term "Committee" shall apply to persons to whom such authority has
been delegated. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the
power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any
time and revest in the Board the administration of the Plan. 


         (ii)  With
respect to Awards granted to any Covered Employee, the Committee shall consist of those individuals who satisfy the requirements of "outside director" within the
meaning of section 162(m) of the Code (and the United State Treasury regulations promulgated thereunder) so that such Awards qualify for the performance-based compensation exemption of
section 162(m) of the Code. 




        With
respect to Awards granted to officers or directors of the Company (it's Parent, any Subsidiary or Affiliate) who are subject to section 16 of the Exchange Act, the Committee
shall consist of those individuals who shall satisfy the requirements of Rule 16b-3 (or its successor) under the Exchange Act ("Rule 16b-3"). Notwithstanding the
previous sentence, failure of the Committee to satisfy the requirements of Rule 16b-3 shall not invalidate any Awards granted by such Committee. 



        The
Board may also appoint one or more separate committees of the Board, each composed of directors of the Company who need not qualify under section 162(m) of the Code and/or
Rule 16b-3, that may administer the Plan with respect to Key Employees who are not considered Covered Employees nor officers or directors of the Company (it's Parent, any Subsidiary
or Affiliate) under section 16 of the Exchange Act, that may grant Awards under the Plan to such Key Employees, and that may determine all terms of such Awards. 


5







 



        Notwithstanding
the foregoing, the Board shall constitute the Committee and shall administer the Plan with respect to all Awards granted to Non-Employee Directors. 


 
 
        (d)    Effect of Board's Decision.     All determinations, interpretations and constructions made by the Board in
good faith shall not be subject to review by any person and shall be final, binding and
conclusive on all persons. 


 
 
        (e)    Indemnification.     Each member of the Committee, or of the Board, shall be indemnified and held harmless
by the Company against and from (i) any loss, cost, liability, or
expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or
she may be involved by reason of any action taken or failure to act under the Plan or Italy Sub-Plan or any Award Agreement or Italian Award Agreement, and (ii) from any and all
amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her,
provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing
right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Certificate of Incorporation or Bylaws, by contract, as
a matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold them harmless. 


 
 

SECTION 4.    ELIGIBILITY.    
    


 
 
        (a)    General Rules.     Only Employees, Directors, Non-Employee Directors and Consultants who are liable for
income tax in the United States shall be eligible for designation
as Key Employees by the Committee. 


 
 
        (b)    Incentive Stock Options.     Only Key Employees who are common-law employees of the Company, its Parent or a
Subsidiary shall be eligible for the grant of ISOs. In addition, a Key
Employee who is a 10-Percent Shareholder shall not be eligible for the grant of an ISO unless the requirements set forth in section 422(c)(5) of the Code are satisfied. 


 
 
        (c)    Non-Employee Director Options.     Non-Employee Directors shall also be eligible to receive Options as
described in this Section 4(c) from and after the date the Board has
determined to implement this provision. 



          (i)  Each
eligible Non-Employee Director elected or appointed after the IPO Date shall automatically be granted an NSO to purchase 10,000 Shares (subject to
adjustment under Section 11(a)) as a result of his or her initial election or appointment as a Non-Employee Director. All NSOs granted pursuant to this
Section 4(c)(i) shall vest and become exercisable, provided the individual is serving as a Non-Employee Director of the Company as of the vesting date, as follows:
one-third of the total Shares subject to the NSO (rounded to nearest whole number) one year from the date of grant, then in 24 equal monthly installments commencing on the date one month
and one year after the date of grant. 


         (ii)  Upon
the conclusion of each regular annual meeting of the Company's shareholders following his or her initial appointment, each eligible Non-Employee
Director who will continue serving as a member of the Board thereafter shall receive an NSO to purchase 5,000 Shares (subject to adjustment under Section 11(a)). All NSOs granted pursuant to
this Section 4(c)(ii) shall vest and become exercisable provided the individual is serving as a Non-Employee Director of the Company as of the vesting date as follows:
one-twelfth of the total Shares subject to the NSO (rounded to nearest whole number) on each monthly anniversary of the date of grant. 



6







 




        (iii)  All
NSOs granted to Non-Employee Directors under this Section 4(c) shall become exercisable in full in the event of Change in Control with respect
to the Company. 


        (iv)  The
Exercise Price under all NSOs granted to a Non-Employee Director under this Section 4(c) shall be equal to one hundred percent (100%) of the Fair
Market Value of a Share on the date of grant, which shall be payable in one of the forms described in Section 7. 


         (v)  All
NSOs granted to a Non-Employee Director under this Section 4(c) shall terminate on the earlier of: 



        (A)  The
10th anniversary of the date of grant; or 


        (B)  The
date ninety (90) days after the termination of such Non-Employee Director's Service for any reason. 





 
 

SECTION 5.    SHARES SUBJECT TO PLAN.    
    


 
 
        (a)    Basic Limitation.     Subject to the provisions of Section 11(a), the stock issuable under the Plan and
the Italy Sub-Plan shall be authorized but unissued Shares or
treasury Shares. The aggregate number of Shares reserved for Awards under the Plan and for Italian Awards under the Italy Sub-Plan shall not exceed 1,500,000 Shares; provided, however,
that subject to the provisions of Section 11(a) of the Plan, the aggregate maximum number of Shares that may be issued in connection with ISOs shall be 1,500,000 Shares. 



 
 
        (b)    Additional Shares.     If Awards or Italian Awards are forfeited or terminate for any other reason before
being exercised, then the Shares underlying such Awards and Italian Awards
shall again become available for Awards under the Plan and Italian Awards under the Italy Sub-Plan. If SARs are exercised, then only the number of Shares (if any) actually issued in
settlement of such SARs shall reduce the number available under Section 5(a) and the balance shall again become available for Awards under the Plan and Italian Awards under the Italy
Sub-Plan. 


 
 
        (c)    Limits on Options and SARs.     No Key Employee shall receive Options to purchase Shares and/or SARs during
any fiscal year covering in excess of 500,000 Shares. Notwithstanding the foregoing
limitation, a Key Employee may receive Options to purchase Shares and/or SARs of up to 600,000 Shares in the first year of a Key Employee's employment with Company. 


 
 
        (d)    Limits on Stock Purchase Rights, Stock Units and Stock Bonuses.     No Key Employee shall receive an
Award(s) of Stock Purchase Rights, Stock Units and/or Stock Bonuses during any fiscal year covering in excess of 250,000 Shares.
Notwithstanding the foregoing limitation, a Key Employee may receive an Award(s) of Stock Purchase Rights, Stock Units and/or Stock Bonuses of up to 500,000 Shares in the first year of a Key
Employee's employment with Company. 


 
 

SECTION 6.    TERMS AND CONDITIONS OF OPTIONS.    
    


 
 
        (a)    Stock Option Agreement.     Each Grant of an Option under the Plan shall be evidenced by a Stock Option
Agreement between the Optionee and the Company. Such Option shall be subject to all
applicable terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the Plan and that the Committee deems appropriate for inclusion in a
Stock Option Agreement. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical. A Stock Option Agreement may provide that new Options will be granted
automatically to the Optionee when he or she exercises the prior Options. The Stock Option Agreement shall also specify whether the Option is an ISO or an NSO. 



 
 
        (b)    Number of Shares.     Each Stock Option Agreement shall specify the number of Shares that are subject to the
Option and shall provide for the adjustment of such number in accordance
with Section 11(a). 


7







 

 
 
        (c)    Exercise Price.     An Option's Exercise Price shall be established by the Committee and set forth in a
Stock Option Agreement. The Exercise Price of an ISO shall not be less than
100% of the Fair Market Value (110% for 10-Percent Shareholders) of a Share on the date of Grant. In the case of an NSO, a Stock Option Agreement may specify an Exercise Price that varies
in accordance with a predetermined formula while the NSO is outstanding. 


 
 
        (d)    Exercisability and Term.     Each Stock Option Agreement shall specify the date when all or any installment
of the Option is to become exercisable. The Stock Option Agreement shall also
specify the term of the Option; provided that the term of an ISO shall in no event exceed ten (10) years from the date of Grant. An ISO that is granted to a 10-Percent Shareholder
shall have a maximum term of five (5) years. No Option can be exercised after the expiration date provided in the applicable Stock Option Agreement. A Stock Option Agreement may provide for
accelerated exercisability in the event of the Optionee's death, Disability or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of
the Optionee's Service. A Stock Option Agreement may permit an Optionee to exercise an Option before it is vested, subject to the Company's right of repurchase over any Shares acquired under the
unvested portion of the Option (an "early exercise"), which right of repurchase shall lapse at the same rate the Option would have vested had there been no early exercise. In no event shall the
Company be required to issue fractional Shares upon the exercise of an Option. 


 
 
        (e)    Modifications or Assumption of Options.     Within the limitations of the Plan, the Committee may modify,
extend or assume outstanding stock options or may accept the cancellation of outstanding stock
options (whether granted by the Company or by another issuer) in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise Price. The
foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, alter or impair his or her rights or obligations under such Option. 


 
 
        (f)    Transferability of Options.     Except as otherwise provided in the applicable Stock Option Agreement and
then only to the extent permitted by applicable law, no Option shall be transferable by
the Optionee other than by will or by the laws of descent and distribution. Except as otherwise provided in the applicable Stock Option Agreement, an Option may be exercised during the lifetime of the
Optionee only or by the guardian or legal representative of the Optionee. No Option or interest therein may be assigned, pledged or hypothecated by the Optionee during his or her lifetime, whether by
operation of law or otherwise, or be made subject to execution, attachment or similar process. 


 
 
        (g)    Restrictions on Transfer.     Any Shares issued upon exercise of an Option shall be subject to such rights
of repurchase, rights of first refusal and other transfer restrictions as the
Committee may determine. Such restrictions shall apply in addition to any restrictions that may apply to holders of Shares generally and shall also comply to the extent necessary with applicable law. 


 
 
        (h)    Incentive Stock Option $100,000 Limitation.     To the extent that the aggregate Fair Market Value
(determined at the time of grant) of Common Stock with respect to which ISOs are exercisable for the first time
by any Optionee during any calendar year (under all plans of the Company and its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or portions thereof which exceed such limit
(according to the order in which they were granted) shall be treated as NSOs. 


 
 

SECTION 7.    PAYMENT FOR OPTION SHARES.    
    


 
 
        (a)    General Rule.     The entire Exercise Price of Shares issued upon exercise of Options shall be payable in
cash at the time when such Shares are purchased, except as follows: 



          (i)  In
the case of an ISO granted under the Plan, payment shall be made only pursuant to the express provisions of the applicable Stock Option Agreement. The Stock Option
Agreement may specify that payment may be made in any form(s) described in this Section 7. 



8







 

         (ii)  In
the case of an NSO granted under the Plan, the Committee may in its discretion, at any time accept payment in any form(s) described in this Section 7. 




 
 
        (b)    Surrender of Stock.     To the extent permitted under applicable laws, regulations and rules, and to the
extent that this Section 7(b) is applicable, payment for all or any part
of the Exercise Price may be made with Shares which have already been owned by the Optionee for such duration as shall be specified by the Committee. Such Shares shall be valued at their Fair Market
Value on the date when the new Shares are purchased under the Plan. 


 
 
        (c)    Cashless Exercise.     To the extent that this Section 7(c) is applicable, payment for all or any part
of the Exercise Price may be made through a "cashless exercise" program
established by the Company. 


 
 
        (d)    Other Forms of Payment.     To the extent that this Section 7(d) is applicable, payment may be made in
any other form that is consistent with applicable laws, regulations and rules. 



 
 

SECTION 8.    TERMS AND CONDITIONS FOR AWARDS OF STOCK PURCHASE RIGHTS AND STOCK UNITS.    
    


 
 
        (a)    Time, Amount and Form of Awards.     Awards under this Section 8 may be granted in the form of Stock
Purchase Rights, in the form of Stock Units, or in any combination of both. Such Awards may
also be awarded in combination with NSOs or SARs, and such an Award may provide that the Restricted Stock or Stock Units will be forfeited in the event that the related NSOs or SARs are exercised. 


 
 
        (b)    Restricted Stock and Stock Unit Agreements.     Each Grant of a Stock Purchase Right or Stock Units under
the Plan shall be evidenced by a Restricted Stock Agreement or Stock Unit Agreement between the
Participant and the Company. Such Awards shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the
Plan and that the Committee deems appropriate for inclusion in the applicable Award Agreement. The provisions of the various Award Agreements entered into under the Plan need not be identical. 


 
 
        (c)    Payment for Restricted Stock or Stock Unit Awards.     Restricted Stock or Stock Units may be issued with or
without cash consideration under the Plan. 


 
 
        (d)    Form and Time of Settlement of Stock Units.     Settlement of vested Stock Units may be made in the form of
(i) cash, (ii) Shares or (iii) any combination of both. The actual number of
Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on predetermined performance factors. Methods of converting Stock Units into cash may
include (without limitation) a method based on the average Fair Market Value of Shares over a series of trading days. Vested Stock Units may be settled in a lump sum or in installments. The
distribution may occur or commence when all vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred to any later date. The amount of a deferred
distribution may be increased by an interest factor or by dividend equivalents. Until an Grant of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to
Section 11(a). 


 
 
        (e)    Vesting Conditions.     Each Grant of Restricted Stock or Stock Units shall become vested, in full or in
installments, upon satisfaction of the conditions specified in the applicable
Award Agreement. An Award Agreement may provide for accelerated vesting in the event of the Participant's death, Disability, retirement or other events. 


 
 
        (f)    Assignment or Transfer of Restricted Stock or Stock Units.     Except as provided in Section 14, or in
a Restricted Stock Agreement or Stock Unit Agreement, or as required by applicable law, a Restricted Stock or Stock
Unit Award granted under the Plan shall not be anticipated, assigned, 


9







 

attached,
garnished, optioned, transferred or made subject to any creditor's process, whether voluntarily, involuntarily or by operation of law. Any act in violation of this Section 8(f) shall
be void. However, this Section 8(f) shall not preclude a Participant from designating a beneficiary who will receive any outstanding Restricted Stock or Stock Unit Awards in the event of the
Participant's death, nor shall it preclude a transfer of Restricted Stock or Stock Unit Awards by will or by the laws of descent and distribution. 



 
 
        (g)    Death of Stock Units Recipient.     Any Stock Units Award that becomes payable after the Award recipient's
death shall be distributed to the recipient's beneficiary or beneficiaries. Each recipient
of a Stock Units Award under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Company. A beneficiary designation may be changed by filing the
prescribed form with the Company at any time before the recipient's death. If no beneficiary was designated or if no designated beneficiary survives the recipient, then any Stock Units Award that
becomes payable after the recipient's death shall be distributed to the recipient's estate. 


 
 
        (h)    Trusts.     Neither this Section 8 nor any other provision of the Plan shall preclude a Participant
from transferring or assigning Restricted Stock to (a) the
trustee of a trust that is revocable by such Participant alone, both at the time of the transfer or assignment and at all times thereafter prior to such Participant's death, or (b) the trustee
of any other trust to the extent approved in advance by the Committee in writing. A transfer or assignment of Restricted Stock from such trustee to any person other than such Participant shall be
permitted only to the extent approved in advance by the Committee in writing, and Restricted Stock held by such trustee shall be subject to all of the conditions and restrictions set forth in the Plan
and in the applicable Restricted Stock Agreement, as if such trustee were a party to such Restricted Stock Agreement. 


 
 
        (i)    Voting and Dividend Rights.     The holders of Restricted Stock awarded under the Plan shall have the same
voting, dividend and other rights as the Company's other shareholders. A Restricted
Stock Agreement, however, may require that the holders of Restricted Stock invest any cash dividends received in additional Restricted Stock. Such additional Restricted Stock shall be subject to the
same conditions and restrictions as the Award with respect to which the dividends were paid. Such additional Restricted Stock shall not reduce the number of Shares available under Section 5. 


 
 
        (j)    Stock Units Voting and Dividend Rights.     The holders of Stock Units shall have no voting rights. Prior to
settlement or forfeiture, any Stock Unit awarded under the Plan may, at the Committee's
discretion, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Share while the Stock Unit is
outstanding. Dividend equivalents may be converted into additional Stock Units. Settlement of dividend equivalents may be made in the form of cash, in the form of Shares, or in a combination of both.
Prior to distribution, any dividend equivalents which are not paid shall be subject to the same conditions and restrictions as the Stock Units to which they attach. 


 
 
        (k)    Creditors' Rights.     A holder of Stock Units shall have no rights other than those of a general creditor
of the Company. Stock Units represent an unfunded and unsecured obligation of
the Company, subject to the terms and conditions of the applicable Stock Unit Agreement. 


 
 

SECTION 9.    TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.    
    


 
 
        (a)    SAR Agreement.     Each Grant of a SAR under the Plan shall be evidenced by a SAR Agreement between the
Award recipient and the Company. Such SAR shall be subject to all applicable
terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SAR Agreements entered into under the Plan need not be identical. SARs
may be granted in consideration of a reduction in the recipient other compensation. 


10







 

 
 
        (b)    Number of Shares.     Each SAR Agreement shall specify the number of Shares to which the SAR pertains and
shall provide for the adjustment of such number in accordance with
Section 11(a). 


 
 
        (c)    Exercise Price.     Each SAR Agreement shall specify the Exercise Price. A SAR Agreement may specify an
Exercise Price that varies in accordance with a predetermined formula while
the SAR is outstanding. 


 
 
        (d)    Exercisability and Term.     Each SAR Agreement shall specify the date when all or any installment of the
SAR is to become exercisable. The SAR Agreement shall also specify the term of the
SAR. A SAR Agreement may provide for accelerated exercisability in the event of the recipient's death, Disability, retirement or other events and may provide for expiration prior to the end of its
term in the event of the termination of the recipient's Service. SARs may also be awarded in combination with Options, Restricted Stock or Stock Units, and such an Award may provide that the SARs will
not be exercisable unless the related Options, Restricted Stock or Stock Units are forfeited. A SAR may be included in an ISO only at the time of Grant but may be included in an NSO at the time of
Grant or at any subsequent time, but not later than six months before the expiration of such NSO. A SAR granted under the Plan may provide that it will be exercisable only in the event of a Change in
Control. 


 
 
        (e)    Exercise of SARs.     If, on the date when a SAR expires, the Exercise Price under such SAR is less than the
Fair Market Value on such date but any portion of such SAR has not been
exercised or surrendered, then such SAR shall automatically be deemed to be exercised as of such date with respect to such portion. Upon exercise of a SAR, the recipient (or any person having the
right to exercise the SAR after his or her death) shall receive from the Company (i) Shares, (ii) cash or (iii) a combination of Shares and cash, as the Committee shall determine.
The amount of cash and/or the Fair Market Value of Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of
the Shares subject to the SARs exceeds the Exercise Price. 


 
 
        (f)    Modification or Assumption of SARs.     Within the limitations of the Plan, the Committee may modify, extend
or assume outstanding stock appreciation rights or may accept the cancellation of outstanding
stock appreciation rights (whether granted by the Company or by another issuer) in return for the grant of new SARs for the same or a different number of Shares and at the same or a different Exercise
Price. The foregoing notwithstanding, no modification of a SAR shall, without the consent of the Optionee, alter or impair his or her rights or obligations under such SAR. 


 
 

SECTION 10.    TERMS AND CONDITIONS OF STOCK BONUSES    
    


 
 
        (a)    Stock Bonus Agreement.     Each Grant of a Stock Bonus under the Plan shall be evidenced by a Stock Bonus
Agreement between the Award recipient and the Company. Such Stock Bonus Agreement
shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Stock Bonus Agreements entered into
under the Plan need not be identical. Stock Bonuses may be granted in consideration of a reduction in the recipient's other compensation. 


 
 
        (b)    Number of Shares.     Each Stock Bonus Agreement shall specify the number of Shares to which the Stock Bonus
pertains and shall provide for the adjustment of such number in accordance
with Section 11(a). 


 
 
        (c)    Consideration.     A Stock Bonus may be issued with or without cash consideration under the Plan. A Stock
Bonus may be awarded in consideration for past services actually rendered
to the Company or an Affiliate for its benefit. 


 
 
        (d)    Vesting.     The Stock Bonus Agreement shall specify whether the Shares awarded under the Stock Bonus
Agreement are subject to a share repurchase right option in favor of the
Company in 


11







 

accordance
with a vesting schedule to be determined by the Committee. In the event the Service of a recipient of a Stock Bonus terminates, the Company may reacquire any or all of the Shares held by
the recipient which have not vested as of the date of termination under the terms of the Stock Bonus Agreement. 


 
 
        (e)    Transferability.     Except as provided in Section 14 or Stock Bonus Agreement, or as required by
applicable law, a Stock Bonus granted under the Plan shall not be anticipated,
assigned, attached, garnished, optioned, transferred or made subject to any creditor's process, whether voluntarily, involuntarily or by operation of law. Any act in violation of this
Section 10(e) shall be void. However, this Section 10(e) shall not preclude a recipient of a Stock Bonus from designating a beneficiary who will receive any outstanding Stock Bonus in
the event of the recipient's death, nor shall it preclude a transfer of a Stock Bonus by will or by the laws of descent and distribution. 


 
 
        (f)    Death of Stock Bonus Recipient.     Any Stock Bonus that becomes payable after the recipient's death shall
be distributed to the recipient's beneficiary or beneficiaries. Each recipient of a Stock
Bonus under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form
with the Company at any time before the recipient's death. If no beneficiary was designated or if no designated beneficiary survives the recipient, then any Stock Bonus that becomes payable after the
recipient's death shall be distributed to the recipient's estate. 


 
 
        (g)    Trusts.     Neither this Section 10 nor any other provision of the Plan shall preclude a recipient of a
Stock Bonus from transferring or assigning the Stock Bonus to
(a) the trustee of a trust that is revocable by such recipient alone, both at the time of the transfer or assignment and at all times thereafter prior to such recipient death, or (b) the
trustee of any other trust to the extent approved in advance by the Committee in writing. A transfer or assignment of a Stock Bonus from such trustee to any person other than the recipient shall be
permitted only to the extent approved in advance by the Committee in writing, and the Stock Bonus held by such trustee shall be subject to all of the conditions and restrictions set forth in the Plan
and in the applicable Stock Bonus Agreement, as if such trustee were a party to such Stock Bonus Agreement. 


 
 
        (h)    Stock Bonus Voting and Dividend Rights.     The holders of a Stock Bonus shall have the same voting,
dividend and other rights as the Company's other shareholders. 


 
 

SECTION 11.    PROTECTION AGAINST DILUTION.    
    


 
 
        (a)    Adjustments.     In the event of a subdivision of the outstanding Shares, a declaration of a dividend
payable in Shares, a declaration of a dividend payable in a form other than
Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Shares (by reclassification or otherwise) into a lesser number of Shares, a
recapitalization, reorganization, merger, liquidation, spin-off or a similar occurrence (all without the receipt of consideration), the Committee shall make such adjustments as it, in its
reasonable discretion, deems appropriate in order to prevent the dilution or enlargement of rights hereunder in one or more of: 



          (i)  the
number of Shares subject to automatic Grants under Section 4(c); the number of Shares available for future Awards or Italian Awards under
Section 5(a); the per person Share limits under Sections 5(c) and (d); 


         (ii)  the
number of Shares covered by each outstanding Award or Italian Award; or 


        (iii)  the
Exercise Price under each outstanding SAR, Option or Italian Stock Option. 




        Notwithstanding
anything in this Plan or the Italy Sub-Plan to the contrary, no adjustment shall be made with respect to any stock split occurring prior to the IPO Date. 


12







 

 
 
        (b)    Participant Rights.     Except as provided in this Section 11, a recipient of an Award or Italian Award
shall have no rights by reason of any issue by the Company of stock of any
class or securities convertible into stock of any class, any subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or decrease in the
number of shares of stock of any class. 


 
 

SECTION 12.    EFFECT OF A CORPORATE TRANSACTION.    
    


 
 
        (a)    Merger or Reorganization.     In the event that the Company is a party to a Corporate Transaction,
outstanding Awards shall be subject to the terms and conditions of the agreement
memorializing such Corporate Transaction. Such agreement may provide, without limitation, for the assumption or substitution of outstanding Awards by the surviving corporation or its parent, for their
continuation by the Company (if the Company is a surviving corporation), for accelerated vesting or for their cancellation with or without consideration. 


 
 
        (b)    Acceleration.     The Committee may determine, at the time of granting an Award, or thereafter, that such
Award shall become fully exercisable as to all Shares subject to such
Award in the event that a Change in Control occurs with respect to the Company. 


 
 

SECTION 13.    LIMITATIONS ON RIGHTS.    
    


 
 
        (a)    Retention Rights.     Neither the Plan nor any Award granted under the Plan shall be deemed to give any
individual a right to remain an Employee, Consultant or Director of the Company,
a Parent, a Subsidiary or an Affiliate. The Company and its Parents and Subsidiaries and Affiliates reserve the right to terminate the Service of any person at any time, and for any reason, subject to
applicable laws, the Company's Certificate of Incorporation and Bylaws and a written employment agreement (if any). 


 
 
        (b)    Shareholders' Rights.     A Participant shall have no dividend rights, voting rights or other rights as a
stockholder with respect to any Shares covered by his or her Award prior to the
issuance of a stock certificate for such Shares. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date when such certificate is issued, except
as expressly provided in Section 11. 


 
 
        (c)    Regulatory Requirements.     Any other provision of the Plan notwithstanding, the obligation of the Company
to issue Shares under the Plan shall be subject to all applicable laws, rules and
regulations and such approval by any regulatory body as may be required. The Company reserves the right to restrict, in whole or in part, the delivery of Shares pursuant to any Award prior to the
satisfaction of all legal requirements relating to the issuance of such Shares, to their registration, qualification or listing or to an exemption from registration, qualification or listing. 



 
 

SECTION 14.    WITHHOLDING TAXES.    
    


 
 
        (a)    General.     A Participant shall make arrangements satisfactory to the Company for the satisfaction of any
withholding tax obligations that arise in connection with his or her
Award. The Company shall not be required to issue any Shares or make any cash payment under the Plan until such obligations are satisfied. 



 
 
        (b)    Share Withholding.     If a public market for the Company's Shares exists, the Committee may permit a
Participant to satisfy all or part of his or her withholding or income tax
obligations by having the Company withhold all or a portion of any Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Shares that he or she previously
acquired. Such Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash. In no event may the Company allow Shares to be withheld in an amount that
exceeds the minimum statutory 


13







 

withholding
rates for federal, foreign and state tax purposes, including payroll taxes. Any payment of taxes by assigning Shares to the Company may be subject to restrictions, including, but not
limited to, any restrictions required by rules of the Securities and Exchange Commission. 


 
 

SECTION 15.    DURATION AND AMENDMENTS.    
    


 
 
        (a)    Term of the Plan.     The Plan shall become effective on the IPO Date, subject to the approval of the
Company's shareholders. No Options shall be exercisable until such shareholder
approval is obtained. In the event that the shareholders fail to approve the Plan within twelve (12) months after its adoption by the Board, any Awards made shall be null and void and no
additional Awards shall be made. The Plan shall terminate on the day before the tenth (10th) anniversary of the Adoption Date or on any earlier date pursuant to Section 15(b) of the Plan. 


 
 
        (b)    Right to Amend, Suspend or Terminate the Plan.     The Board may amend, suspend or terminate the Plan at any
time and for any reason. The suspension or termination of the Plan, or any amendment thereof, shall not
affect any Award previously granted under the Plan. No Awards shall be granted under the Plan after the Plan's suspension or termination. An amendment of the Plan shall be subject to the approval of
the Company's shareholders only to the extent required by applicable laws, regulations or rules. 


 
 
        (c)    Right to Amend Award.     The Board at any time, and from time to time, may amend the terms of any one or
more Awards; provided, however, that the rights under any Award shall not be
impaired by any such amendment unless (i) the Company requests the consent of the Participant and (ii) the Participant consents in writing. 


 
 

SECTION 16.    EXECUTION.    
    


        To record the adoption of the Plan by the Board, the Company has caused its duly authorized officer to execute this Plan on behalf of the Company. 



	

 	
 	

GENTIUM S.P.A.
	

 	
 	

By	
 	

 
	 	 	 	 	

	

 	
 	

Title	
 	

 
	 	 	 	 	





14









 
 

APPENDIX A    
    
    GENTIUM S.P.A.
  2004 ITALY STOCK AWARD SUB-PLAN    
    


 
  SECTION 1. BACKGROUND AND PURPOSE    
    


        The purpose of this Italy Stock Award Sub-Plan (the "Italy Sub-Plan") is to advance the interest of the Company by enabling it and its
operating companies to attract and retain the best available personnel for positions of substantial responsibility in Italy and to provide Italian Key Employees of the Company and its controlling and
subsidiary companies, with an opportunity for investment in the Company; thereby giving them an additional incentive to increase their efforts on behalf of the long term success of the Company and its
operating companies. 


        It
is intended that Italian Awards granted under the Italy Sub-Plan shall qualify for the favorable tax and social security treatment applicable to stock grants or stock
options granted under applicable Italian law and in accordance with the relevant provisions set forth by Italian tax law and the Italian tax administration. The terms of the Italian
Sub-Plan shall be interpreted in accordance with the relevant provisions set forth by Italian tax and social security laws, as well as the Italian tax and social security administrations.
For Italian Awards granted under the Italy Sub-Plan, any conflict in terms between the Plan and the Italy Sub-Plan shall be governed by the terms in the Italy
Sub-Plan. 


 
 

SECTION 2. DEFINITION AND CONSTRUCTION    
    


        All capitalized terms used in this Italy Sub-Plan shall have the meaning ascribed to them in either the Italy Sub-Plan or the Plan. Terms
not defined in the Italy Sub-Plan or the Plan, shall be given their normal and ordinary meaning. 



        (a)   "Italian
Employee" means any individual employed by the Company or a controlling or subsidiary company who resides in the Republic of Italy and who is liable for income
tax in the Republic of Italy. 


        (b)   "Exercise
Price" means (1) when the Company's Common Stock is traded on a regulated market as defined under applicable Italian law, the average of the closing
price quoted by the NASDAQ system over the preceding 30 days and (2) when the Company's Common Stock is not on a regulated market as defined under applicable Italian law, the
proportionate value of the net worth of the Company determined by the Board in good faith and on such basis as it deems appropriate, taking applicable regulations into account. 



        (c)   "Italy
Sub-Plan" means the provisions contained herein as Appendix A the Plan to be known as the Gentium S.p.A. 2004 Italy Stock Award
Sub-Plan, as the same may be amended from time to time. 


        (d)   "Italian
Award" means an Italian Stock Option or an Italian Stock Grant. 


        (e)   "Italian
Award Agreement" means a written agreement between the Company and an Italian Key Employee evidencing the terms and conditions of a grant of an individual
Italian Award. Each Italian Award Agreement shall be subject to the terms and conditions of the Italy Sub-Plan. 



        (f)    "Italian
Key Employee" means an Italian Employee who is liable for income tax in Italy or any person eligible to receive an Italian Award under Articles 2349 and
2441 of the Italian Civil Code who is liable for income tax in Italy and who has been selected by the Committee to receive an Italian Award under the Italy Sub-Plan. 


        (g)   "Italian
Stock Grant" means a stock grant to acquire Shares pursuant to Article 2349 of the Italian Civil Code. 


        (h)   "Italian
Stock Grant Agreement" means the agreement described in Section 5 of the Italy Sub-Plan. 








 




        (i)    "Italian
Stock Option" means a stock option to acquire Shares pursuant to Article 2441 of the Italian Civil Code. 


        (j)    "Italian
Stock Option Agreement" means the agreement described in Section 4 of the Italy Sub-Plan. 




 
 

SECTION 3. INCORPORATION OF PLAN    
    


        This Italy Sub-Plan shall be ancillary to the Plan. The provisions of this Italy Sub-Plan shall be applicable only to Italian Key
Employees who have or shall have a liability for Italian income tax with respect to an Italian Award For the avoidance of doubt, this Italy Sub-Plan does not apply to any Key Employee or
Participant who does not have Italy income tax liability with respect to their Award. 



 
 

SECTION 4. ITALIAN STOCK OPTION TERMS    
    


 
 
        (a)    Italian Stock Option Agreement.     Each grant of an Italian Stock Option under the Italy Sub-Plan shall be
evidenced by an Italian Stock Option Agreement between the Italian Key
Employee and the Company. Such Italian Stock Option shall be subject to all applicable terms and conditions of the Italy Sub-Plan and may be subject to any other terms and conditions that
are not inconsistent with the Italy Sub-Plan and that the Board deems appropriate for inclusion in an Italian Stock Option Agreement. The provisions of the various Italian Stock Option
Agreements entered into under the Italy Sub-Plan need not be identical. 


 
 
        (b)    Number of Shares.     Each Italian Stock Option Agreement shall specify the number of Shares that are
subject to the Italian Stock Option and shall provide for the adjustment of such
number in accordance with Section 11(a) of the Plan. Notwithstanding the foregoing, no Italian Key Employee shall receive Italian Stock Options to purchase Shares in excess of 10% of the voting
rights in the annual meeting of shareholders or 10% of the capital or equity of the Company. 


 
 
        (c)    Exercise Price.     An Italian Stock Option's Exercise Price shall be established by the Board and set forth
in the Italian Stock Option Agreement. 


 
 
        (d)    Exercisability and Term.     Each Italian Stock Option Agreement shall specify the date when all or any
installment of the Italian Stock Option is to become exercisable. The Italian Stock
Option Agreement shall also specify the term of the Italian Stock Option, provided that the Italian Stock Option shall terminate prior to the end of its term if the Italian Key Employee's Service with
the Company terminates. No Italian Stock Option can be exercised after the expiration date provided in the applicable Italian Stock Option Agreement. 


 
 
        (e)    Withholding Obligations.     The recipient of an Italian Stock Option shall make arrangements satisfactory
to the Company for the satisfaction of any withholding tax obligations that arise in
connection with his or her Italian Stock Option. The Company shall not be required to issue any Shares until such obligations are satisfied. 


 
 
        (f)    Transferability.     Except as otherwise provided in the applicable Italian Stock Option Agreement and then
only to the extent permitted by applicable law, no Italian Stock Option
shall be transferable by the Italian Key Employee other than by will or by the laws of descent and distribution. No Italian Stock Option or interest therein may be assigned, pledged or hypothecated by
the Italian Key Employee during his or her lifetime, whether by operation of law or otherwise, or be made subject to execution, attachment or similar process. 


 
 

SECTION 5. ITALIAN STOCK GRANT TERMS    
    


 
 
        (a)    Italian Stock Grant Agreement.     Each grant of an Italian Stock Grant under the Italy Sub-Plan shall be
evidenced by an Italian Stock Grant Agreement between the Italian Key Employee 


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and
the Company. Such Italians Stock Grant Agreement shall be subject to all applicable terms of the Italy Sub-Plan and may be subject to any other terms that are not inconsistent with the
Italy Sub-Plan. The provisions of the various Italian Stock Grant Agreements entered into under the Italy Sub-Plan need not be identical. 


 
 
        (b)    Number of Shares.     Each Italian Stock Grant Agreement shall specify the number of Shares to which the
Italian Stock Grant pertains and shall provide for the adjustment of such
number in accordance with Section 11(a) of the Plan. 


 
 
        (c)    Consideration.     An Italian Stock Grant shall be awarded in consideration for past services actually
rendered to the Company or any of its controlling or subsidiary companies. 


 
 
        (d)    Vesting     The Shares awarded under an Italian Stock Grant shall be subject to forfeiture in accordance
with a vesting schedule to be determined by the Board. 


 
 
        (e)    Withholding Obligations     The recipient of an Italian Stock Grant shall make arrangements satisfactory to
the Company for the satisfaction of any withholding tax obligations that arise in
connection with his or her Italian Stock Grant. The Company shall not be required to issue any Shares until such obligations are satisfied. 


 
 
        (f)    Transferability     Except as otherwise provided in the applicable Italian Stock Grant Agreement and then
only to the extent permitted by applicable law, no Italian Stock Grant shall
be transferable by the Italian Key Employee. No Italian Stock Grant or interest therein may be assigned, pledged or hypothecated by the Italian Key Employee during his lifetime, whether by operation
of law or otherwise, or be made subject to execution, attachment or similar process. 


 
 

SECTION 6. EFFECT OF A CORPORATE TRANSACTION.    
    


 
 
        (a)    Merger or Reorganization.     In the event that the Company is a party to a Corporate Transaction,
outstanding Italian Awards shall be subject to the terms and conditions of the agreement
memorializing such Corporate Transaction. Such agreement may provide, without limitation, for the assumption or substitution of outstanding Italian Awards by the surviving corporation or its parent,
for their continuation by the Company (if the Company is a surviving corporation), for accelerated vesting or for their cancellation with or without consideration. 


 
 
        (b)    Acceleration.     The Board may determine, at the time of granting an Italian Award, or thereafter, that
such Italian Award shall become fully exercisable as to all Shares subject
to such Italian Award in the event that a Change in Control occurs with respect to the Company. 


 
 

SECTION 7. LIMITATIONS ON RIGHTS.    
    


 
 
        (a)    Retention Rights.     Neither the Italy Sub-Plan nor any Italian Award granted under the Italy Sub-Plan
shall be deemed to give any individual a right to remain
an employee, consultant or director of the Company and its controlling and subsidiary companies. The Company and its controlling and subsidiary companies reserve the right to terminate the Service of
any person at any time, and for any reason, subject to applicable laws, the Company's Certificate of Incorporation and Bylaws and a written employment agreement (if any). 


 
 
        (b)    Shareholders' Rights.     A recipient of an Italian Award shall have no dividend rights, voting rights or
other rights as a shareholder with respect to any Shares covered by his or her
Italian Award prior to the issuance of a stock certificate for such Shares. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date when such
certificate is issued, except as expressly provided in Section 11 of the Plan. 


 
 
        (c)    Regulatory Requirements.     Any other provision of the Italy Sub-Plan notwithstanding, the obligation of
the Company to issue Shares under the Italy Sub-Plan shall be
subject to all applicable 


3







 

laws,
rules and regulations and such approval by any regulatory body as may be required. The Company reserves the right to restrict, in whole or in part, the delivery of Shares pursuant to any Italian
Award prior to the satisfaction of all legal requirements relating to the issuance of such Shares, to their registration, qualification or listing or to an exemption from registration, qualification
or listing. 


 
 

SECTION 8. DURATION AND AMENDMENTS.    
    


 
 
        (a)    Term of the Italy Sub-Plan.     The Italy Sub-Plan shall become effective on the IPO Date, subject to the
approval of the Company's shareholders. No Italian Stock Option shall be
exercisable until such shareholder approval is obtained. In the event that the shareholders fail to approve the Italy Sub-Plan, any Italian Awards made shall be null and void and no
additional Italian Awards shall be made. The Italy Sub-Plan shall terminate on the day before the tenth (10th) anniversary of the Adoption Date or on any earlier date pursuant to
Section 8(b) of the Italy Sub-Plan. 


 
 
        (b)    Right to Amend, Suspend or Terminate the Italy Sub-Plan.     The Board may amend, suspend or terminate the
Italy Sub-Plan at any time and for any reason. The suspension or termination of the Italy
Sub-Plan, or any amendment thereof, shall not affect any Italian Award previously granted under the Italy Sub-Plan. No Italian Awards shall be granted under the Italy
Sub-Plan after the Italy Sub-Plan's suspension or termination. An amendment of the Italy Sub-Plan shall be subject to the approval of the Company's shareholders
only to the extent required by applicable laws, regulations or rules. 


 
 
        (c)    Right to Amend Italian Award     The Board at any time, and from time to time, may amend the terms of any
one or more Italian Awards; provided, however, that the rights under any Italian Award
shall not be impaired by any such amendment unless (i) the Company requests the consent of the recipient of such Italian Award and (ii) the recipient of such Italian Award consents in
writing. 


 
 

SECTION 9. EXECUTION.    
    


        To record the adoption of the Italy Sub-Plan by the Board, the Company has caused its duly authorized officer to execute this Italy
Sub-Plan on behalf of the Company. 



	 	 	GENTIUM S.P.A.
	

 	
 	

By	
 	

    

	

 	
 	

Title	
 	

    





4











QuickLinks



Exhibit 10.1




SECTION 1. PURPOSE.

SECTION 2. DEFINITIONS.


(a)  "Affiliate"

(b)  "Award"

(c)  "Award Agreement"

(d)  "Board"

(e)  "Change In Control"

(f)  "Code"

(g)  "Committee"

(h)  "Common Stock"

(i)  "Company"

(j)  "Consultant"

(k)  "Corporate Transaction"

(l)  "Covered Employee"

(m)  "Director"

(n)  "Disability"

(o)  "Employee"

(p)  "Exchange Act"

(q)  "Exercise Price"

(r)  "Fair Market Value"

(s)  "Grant"

(t)  "Incentive Stock Option" or "ISO"

(u)  "Key Employee"

(v)  "Non-Employee Director"

(w)  "Nonstatutory Stock Option" or "NSO"

(x)  "Option"

(y)  "Optionee"

(z)  "Parent"

(aa)  "Participant"

(bb)  "Plan"

(cc)  "Restricted Stock"

(dd)  "Restricted Stock Agreement"

(ee)  "SAR Agreement"

(ff)  "Securities Act"

(gg)  "Service"

(hh)  "Share"

(ii)  "Stock Appreciation Right" or "SAR"

(jj)  "Stock Bonus"

(kk)  "Stock Bonus Agreement"

(ll)  "Stock Option Agreement"

(mm)  "Stock Purchase Right"

(nn)  "Stock Unit"

(oo)  "Stock Unit Agreement"

(pp)  "Subsidiary"

(qq)  "10-Percent Shareholder"


SECTION 3. ADMINISTRATION.


(a)  Administration by Board.

(b)  Powers of Board.

(c)  Delegation to Committee.

(d)  Effect of Board's Decision.

(e)  Indemnification.


SECTION 4. ELIGIBILITY.


(a)  General Rules.

(b)  Incentive Stock Options.

(c)  Non-Employee Director Options.


SECTION 5. SHARES SUBJECT TO PLAN.


(a)  Basic Limitation.

(b)  Additional Shares.

(c)  Limits on Options and SARs.

(d)  Limits on Stock Purchase Rights, Stock Units and Stock Bonuses.


SECTION 6. TERMS AND CONDITIONS OF OPTIONS.


(a)  Stock Option Agreement.

(b)  Number of Shares.

(c)  Exercise Price.

(d)  Exercisability and Term.

(e)  Modifications or Assumption of Options.

(f)  Transferability of Options.

(g)  Restrictions on Transfer.

(h)  Incentive Stock Option $100,000 Limitation.


SECTION 7. PAYMENT FOR OPTION SHARES.


(a)  General Rule.

(b)  Surrender of Stock.

(c)  Cashless Exercise.

(d)  Other Forms of Payment.


SECTION 8. TERMS AND CONDITIONS FOR AWARDS OF STOCK PURCHASE RIGHTS AND STOCK UNITS.


(a)  Time, Amount and Form of Awards.

(b)  Restricted Stock and Stock Unit Agreements.

(c)  Payment for Restricted Stock or Stock Unit Awards.

(d)  Form and Time of Settlement of Stock Units.

(e)  Vesting Conditions.

(f)  Assignment or Transfer of Restricted Stock or Stock Units.

(g)  Death of Stock Units Recipient.

(h)  Trusts.

(i)  Voting and Dividend Rights.

(j)  Stock Units Voting and Dividend Rights.

(k)  Creditors' Rights.


SECTION 9. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.


(a)  SAR Agreement.

(b)  Number of Shares.

(c)  Exercise Price.

(d)  Exercisability and Term.

(e)  Exercise of SARs.

(f)  Modification or Assumption of SARs.


SECTION 10. TERMS AND CONDITIONS OF STOCK BONUSES


(a)  Stock Bonus Agreement.

(b)  Number of Shares.

(c)  Consideration.

(d)  Vesting.

(e)  Transferability.

(f)  Death of Stock Bonus Recipient.

(g)  Trusts.

(h)  Stock Bonus Voting and Dividend Rights.


SECTION 11. PROTECTION AGAINST DILUTION.


(a)  Adjustments.

(b)  Participant Rights.


SECTION 12. EFFECT OF A CORPORATE TRANSACTION.


(a)  Merger or Reorganization.

(b)  Acceleration.


SECTION 13. LIMITATIONS ON RIGHTS.


(a)  Retention Rights.

(b)  Shareholders' Rights.

(c)  Regulatory Requirements.


SECTION 14. WITHHOLDING TAXES.


(a)  General.

(b)  Share Withholding.


SECTION 15. DURATION AND AMENDMENTS.


(a)  Term of the Plan.

(b)  Right to Amend, Suspend or Terminate the Plan.

(c)  Right to Amend Award.


SECTION 16. EXECUTION.



APPENDIX A GENTIUM S.P.A. 2004 ITALY STOCK AWARD SUB-PLAN


SECTION 1. BACKGROUND AND PURPOSE

SECTION 2. DEFINITION AND CONSTRUCTION

SECTION 3. INCORPORATION OF PLAN

SECTION 4. ITALIAN STOCK OPTION TERMS


(a)  Italian Stock Option Agreement.

(b)  Number of Shares.

(c)  Exercise Price.

(d)  Exercisability and Term.

(e)  Withholding Obligations.

(f)  Transferability.


SECTION 5. ITALIAN STOCK GRANT TERMS


(a)  Italian Stock Grant Agreement.

(b)  Number of Shares.

(c)  Consideration.

(d)  Vesting

(e)  Withholding Obligations

(f)  Transferability


SECTION 6. EFFECT OF A CORPORATE TRANSACTION.


(a)  Merger or Reorganization.

(b)  Acceleration.


SECTION 7. LIMITATIONS ON RIGHTS.


(a)  Retention Rights.

(b)  Shareholders' Rights.

(c)  Regulatory Requirements.


SECTION 8. DURATION AND AMENDMENTS.


(a)  Term of the Italy Sub-Plan.

(b)  Right to Amend, Suspend or Terminate the Italy Sub-Plan.

(c)  Right to Amend Italian Award


SECTION 9. EXECUTION.