EX-10.1






Exhibit 10.1




NEOPROBE CORPORATION




SECOND AMENDED AND RESTATED 2002 STOCK INCENTIVE PLAN




1. Background, Purpose and Duration




     1.1 Effective Date. The Plan is effective as of March 7, 2002, subject to ratification by an
affirmative vote of the holders of a majority of the Shares which are present in person or by proxy
and entitled to vote at the 2002 Annual Meeting of Stockholders. Section 4.1 of the Plan was
amended effective March 15, 2005, subject to ratification by an affirmative vote of the holders of
a majority of the Shares present in person or by proxy and entitled to vote at the 2005 Annual
Meeting of Stockholders. The Company further amended Section 4.1 of the Plan effective February 29,
2008, which amendment is subject to ratification by an affirmative vote of the holders of a
majority of the Shares which are present in person or by proxy and entitled to vote at the 2008
Annual Meeting of Stockholders.



     1.2 Purpose of the Plan. The Plan is intended to further the growth and profitability of the
Company by providing increased incentive to and encourage Share ownership on the part of (a)
employees of the Company and its Affiliates, (b) consultants who provide significant services to
the Company and its Affiliates, and (c) directors of the Company who are not employees of the
Company. All management and key Employees, Consultants and Directors of the Company are eligible
to receive Awards under the Plan.



2. Definitions




     The following words and phrases shall have the following meanings unless a different meaning
is plainly required by the context:



     2.1 “1934 Act” means the Securities Exchange Act of 1934, as amended. Reference to a specific
section of the 1934 Act or regulation thereunder shall include such section or regulation, any
valid regulation promulgated under such section, and any comparable provision of any future
legislation or regulation amending, supplementing or superseding such section or regulation.



     2.2 “Affiliate” means any corporation or any other entity (including, but not limited to,
partnerships, limited liability corporations and joint ventures) controlling, controlled by, or
under common control with the Company.



     2.3 “Affiliated SAR” means a SAR that is granted in connection with a related Option, and
which automatically will be deemed to be exercised at the same time that the related Option is
exercised. The deemed exercise of an Affiliated SAR shall not necessitate a reduction in the
number of Shares subject to the related Option, except to the extent of the exercise of the related
Option.



     2.4 “Award” means, individually or collectively, a grant under the Plan of Nonqualified Stock
Options, Incentive Stock Options, SARs, Restricted Stock, Performance Units, or Performance Shares.



     2.5 “Award Agreement” means the written agreement setting forth the terms and provisions
applicable to each Award granted under the Plan.



     2.6 “Board” means the Board of Directors of the Company.



     2.7 “Change of Control” will be deemed to have occurred if and when (a) an individual,
partnership, corporation, trust or other entity (“Person”) acquires or combines with the Company,
or 50 percent or more of the Company’s assets or earning power, in one or more transactions, and
after such acquisition or combination, less than a majority of the outstanding voting shares of the
Person surviving such transaction (or the ultimate parent of the surviving Person) are owned by the
owners of the voting shares of the Company outstanding immediately prior to such acquisition or
combination; or (b) during any period of two consecutive years during the term of this Plan,
individuals who at the beginning of such period are members of the Board (“Original Board Members”)
cease for any reason to constitute at least a majority of the Board, unless the election of each
Board member who was not an Original Board Member has been approved in advance by Board members
representing at least two-thirds of the Board members then in office who were Original Board
Members or elected by them.



 









 





     2.8 “Code” means the Internal Revenue Code of 1986, as amended. Reference to a specific
section of the Code or regulation thereunder shall include such section or regulation, any valid
regulation promulgated under such section, and any comparable provision of any future legislation
or regulation amending, supplementing or superseding such section or regulation.



     2.9 “Committee” means the committee appointed by the Board (pursuant to Section 3.1) to
administer the Plan.



     2.10 “Company” means Neoprobe Corporation, a Delaware corporation, its Subsidiaries and any
successors.



     2.11 “Consultant” means any person who provides services to the Company or any Subsidiary
(other than in connection with the offer or sale of securities of the Company or any Subsidiary in
a capital raising transaction), who is neither an Employee nor a Director and who is a consultant
or an adviser to the Company or any Subsidiary within the meaning of General Instruction A.1. to
Form S-8 promulgated by the SEC under the Securities Act of 1933.



     2.12 “Covered Officers” means those Participants who the Committee designates, for each
Performance Period, in order to maintain qualified performance-based compensation within the
meaning of Code Section 162(m).



     2.13 “Director” means any individual who is a member of the Board.



     2.14 “Disability” means a permanent and total disability within the meaning of Code section
22(e)(3), provided that in the case of Awards other than Incentive Stock Options, the Committee in
its discretion may determine whether a permanent and total disability exists in accordance with
uniform and non-discriminatory standards adopted by the Committee from time to time.



     2.15 “Employee” means any management or key employee of the Company or of an Affiliate,
whether such employee is so employed at the time the Plan is adopted or becomes so employed
subsequent to the adoption of the Plan.



     2.16 “Exercise Price” means the price at which a Share may be purchased by a Participant
pursuant to the exercise of an Option.



     2.17 “Extraordinary Events” shall mean (a) asset write-downs, (b) litigation or claim
judgments or settlements, (c) the effect of changes in tax law, accounting principles or other such
laws or provisions affecting reported results, (d) accruals for reorganization and restructuring
programs, (e) capital gains and losses, (f) special charges in connection with mergers and
acquisitions, and (g) any extraordinary non-recurring items as described in Accounting Principles
Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and
results of operation appearing or incorporated by reference in the Company’s Annual Report on Form
10-K filed with the Securities and Exchange Commission for the applicable year.



     2.18 “Fair Market Value” means (a) if the Shares are listed or admitted to trading on a
national securities exchange or the Nasdaq National Market, the per Share closing price regular way
on the principal national securities exchange or the Nasdaq National Market on which the Shares are
listed or admitted to trading on the day prior to the Grant Date or, if no closing price can be
determined for the such day, the most recent date for which such price can reasonably be
ascertained, or (b) if the Shares are not listed or admitted to trading on a national securities
exchange or the Nasdaq National Market, but are quoted on the over-the-counter Bulletin Board, the
average of the high and low sales price per share reported on the over-the-counter Bulletin Board
on the day prior to the Grant Date or, if no high and low price can be determined for such day, the
most recent date for which such price can reasonably be ascertained, or (c) if the Shares are not
listed or admitted to trading on a national securities exchange or the Nasdaq National Market, nor
are quoted on the over-the-counter Bulletin Board, the mean between the representative bid and
asked per Share prices in the over-the-counter market at the closing of the day prior to the Grant
Date, or the most recent such bid and asked prices then available, as reported by NASDAQ or if the
Shares are not then quoted by NASDAQ as furnished by any market maker selected from time to time by
the Committee for that purpose. In all other cases, the fair market value will be determined in
accordance with procedures established in good faith by the Committee and with respect to Incentive
Stock Options, shall conform to regulations issued by the Internal Revenue Service.



     2.19 “Fiscal Year” means the fiscal year of the Company.



     2.20 “Freestanding SAR” means a SAR that is granted independently of any Option.



     2.21 “Grant Date” means, with respect to an Award, the date that the Award was granted.



     2.22 “Incentive Stock Option” means an Option to purchase Shares which is designated as an
Incentive Stock Option and is intended to meet the requirements of section 422 of the Code.



     2.23 “Nonqualified Stock Option” means an option to purchase Shares which is not intended to
be an Incentive Stock Option.



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     2.24 “Option” means an Incentive Stock Option or a Nonqualified Stock Option.



     2.25 “Participant” means an Employee, Consultant, or Non-employee Director who has an outstanding Award.



     2.26 “Performance Goal” shall mean any one or more of the following performance criteria:



     (a) Income (loss) per common share from continuing operations as disclosed in the Company’s
annual report to shareholders for a particular Fiscal Year;



     (b) Income (loss) per common share disclosed in the Company’s annual report to stockholders
for a particular Fiscal Year;



     (c) Income (loss) per common share or income (loss) per common share from continuing
operations excluding (i) extraordinary charge(s); and/or (ii) any accruals for restructuring
programs, merger integration costs, or merger transaction costs; and/or (iii) other unusual or
infrequent items (whether gains or losses) as defined by generally accepted accounting principles
(GAAP) which are disclosed as a separate component of income or loss on the face of the income
statement or as may be disclosed in the notes to the financial statements (hereinafter “EPS”);



     (d) Ratio of (i) operating profit, or other objective and specific income (loss) category
results to (ii) average common shares outstanding (adjustments to (i) in this paragraph may be made
at the time of the goal/target establishment by the Committee in its discretion);



     (e) Any of items (a), (b), (c) or (d) on a diluted basis as described in Statement of
Financial Accounting Standards No. 128 including official interpretations or amendments thereof
which may be issued from time to time as long as such interpretations or amendments are utilized on
the face of the income statement or in the notes to the financial statements disclosed in the
Company’s annual report to shareholders;



     (f) Share price;



     (g) Total stockholder return expressed on a dollar or percentage basis as is customarily
disclosed in the proxy statement accompanying the notice of annual meetings of stockholders;



     (h) Income (loss) (i) from continuing operations before extraordinary charge(s), or (ii)
before extraordinary charge(s), or (iii) net, as the case may be, adjusted to remove the effect of
any accruals for restructuring programs or other unusual or infrequent items as defined by
generally accepted accounting principles (GAAP) disclosed as a separate component of income on the
face of the income statement or in the notes to the financial statements;



     (i) Net income;



     (j) Income (loss) before income taxes;



     (k) Any of items (a) through (j) above with respect to any Subsidiary, Affiliate, division,
business unit or business group of the Company whether or not such information is included in the
Company’s annual report to stockholders, proxy statement or notice of annual meeting of
stockholders;



     (l) Any of items (a) though (j) above with respect to a Performance Period whether or not such
information is included in the Company’s annual report to stockholders, proxy statement or notice
of annual meetings of stockholders;



     (m) Total Stockholder Return Ranking Position meaning the relative placement of the Company’s
Total Stockholder Return compared to those publicly held companies in the Company’s peer group as
established by the Committee prior to the beginning of a vesting period or such later date as
permitted under the Code. The peer group shall be comprised of not less than six (6) companies,
including the Company; or



     (n) Any other objective criteria established by the Committee and approved by the shareholders
of the Company prior to payment of any Award based on the criteria.



With respect to items (a), (b), (c) and (d) above, other terminology may be used for “income (loss)
per common share” (such as “Basic EPS”, “earnings per common share”, “diluted EPS”, or “earnings
per common share-assuming dilution”) as contemplated by Statement of Financial Accounting Standards
No. 128.



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     2.27 “Performance Period” means the Fiscal Year except in the following cases: (a) the
Employee’s service period within a Fiscal Year in the case of a new hire or promoted Employee; or
(b) a period of service determined at the discretion of the Committee prior to the expiration of
more than 25% of the period. Notwithstanding any provision contained herein, Performance Periods
of Awards granted to Section 16 Persons shall exceed six (6) months in length (or such shorter
period as may be permissible while maintaining compliance with Rule 16b-3).



     2.28 “Performance Share” means a Performance Share granted to a Participant pursuant to
Section 8.



     2.29 “Performance Unit” means a Performance Unit granted to a Participant pursuant to Section
8.



     2.30 “Period of Restriction” means the period during which shares of Restricted Stock are
subject to forfeiture and/or restrictions on transferability; provided, however, that the Period of
Restriction on Shares granted to a Section 16 Person may not lapse until at least six (6) months
after the Grant Date.



     2.31 “Plan” means the Neoprobe Corporation 2002 Stock Incentive Plan, as set forth in this
instrument and as hereafter amended from time to time.



     2.32 “Restricted Stock” means an Award granted to a Participant pursuant to Section 7.



     2.33 “Retirement” means, in the case of an Employee, a Termination of Service by reason of the
Employee’s retirement at or after his or her having satisfied the requirements for retirement under
the applicable Company or Affiliate qualified retirement plan. With respect to a Consultant, no
Termination of Service shall be deemed to be on account of “Retirement.” With respect to a
Non-employee Director, “Retirement” means termination of service on the Board with the consent of
the remaining Directors.



     2.34 “Rule 16b-3” means Rule 16b-3 promulgated under the 1934 Act, as amended, and any future
regulation amending, supplementing or superseding such regulation.



     2.35 “Section 16 Person” means a person who, with respect to the Shares, is subject to section
16 of the 1934 Act.



     2.36 “Shares” means the shares of the Company’s common stock, $0.001 par value.



     2.37 “Stock Appreciation Right” or “SAR” means an Award, granted alone or in connection with a
related Option, that pursuant to Section 6 is designated as a SAR.



     2.38 “Subsidiary” means any entity in an unbroken chain of entities beginning with the Company
if each of the entities other than the last entity in the chain then owns fifty percent (50%) or
more of the total combined voting power in one of the other entities in the chain.



     2.39 “Tandem SAR” means a SAR that is granted in connection with a related Option, the
exercise of which shall require forfeiture of the right to purchase an equal number of Shares under
the related Option (and when a Share is purchased under the Option, the SAR shall be canceled to
the same extent).



     2.40 “Termination of Service” means (a) in the case of an Employee, a cessation of the
employee-employer relationship between an Employee and the Company or an Affiliate for any reason,
including, but not by way of limitation, a termination by resignation, discharge, death,
Disability, Retirement, or the disaffiliation of an Affiliate, but excluding any such termination
where there is a simultaneous reemployment by the Company or an Affiliate; (b) in the case of a
Consultant, a cessation of the service relationship between a Consultant and the Company or an
Affiliate for any reason, including, but not by way of limitation, a termination by resignation,
discharge, death, Disability, or the disaffiliation of an Affiliate, but excluding any such
termination where there is a simultaneous re-engagement of the consultant by the Company or an
Affiliate; and (c) in the case of a Non-employee Director, a cessation of the Non-employee
Director’s service on the Board for any reason.



3. Administration




     3.1 The Committee. The Plan shall be administered by the Committee. The Committee shall
consist of not less than two (2) Directors. The members of the Committee shall be appointed from
time to time by, and shall serve at the pleasure of, the Board. The Committee shall be comprised
solely of Directors who both are (a) “non-employee directors” under Rule 16b-3, and (b) “outside
directors” under section 162(m) of the Code.



     3.2 Authority of the Committee. It shall be the duty of the Committee to administer the Plan
in accordance with the Plan’s provisions. The Committee shall have all powers and discretion
necessary or appropriate to administer the Plan and to control its operation, including, but not
limited to, the power to (a) determine which Employees and Consultants shall be granted Awards, (b)



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prescribe the terms and conditions of the Awards (other than the Options granted to Non-employee
Directors pursuant to Section 9), (c) interpret the Plan and the Awards, (d) adopt such procedures
and subplans as are necessary or appropriate to permit participation in the Plan by Employees,
Consultants and Directors who are foreign nationals or employed outside of the United States, (e)
adopt rules for the administration, interpretation and application of the Plan as are consistent
therewith, and (f) interpret, amend or revoke any such rules.



     3.3 Delegation by the Committee. The Committee, in its sole discretion and on such terms and
conditions as it may provide, may delegate all or any part of its authority and powers under the
Plan to one or more directors or officers of the Company; provided, however, that the Committee may
not delegate its authority and powers (a) with respect to Section 16 Persons, or (b) in any way
which would jeopardize the Plan’s qualification under Section 162(m) of the Code or Rule 16b-3.



     3.4 Non-employee Directors. Notwithstanding any contrary provision of this Section 3, the
Board shall administer Section 9 of the Plan, and the Committee shall exercise no discretion with
respect to Section 9. In the Board’s administration of Section 9 and the Options and any Shares
granted to Non-employee Directors, the Board shall have all of the authority and discretion
otherwise granted to the Committee with respect to the administration of the Plan.



     3.5 Decisions Binding. All determinations and decisions made by the Committee, the Board, and
any delegate of the Committee pursuant to the provisions of the Plan shall be final, conclusive,
and binding on all Persons, and shall be given the maximum deference permitted by law.



4. Shares Subject to the Plan




     4.1 Number of Shares. Subject to adjustment as provided in Section 4.3, the total number of
Shares available for grant under the Plan shall not exceed Seven Million (7,000,000) Shares. The
maximum number of Shares that are available for grant to any individual Participant in any calendar
year shall not exceed 500,000 Shares. Shares granted under the Plan may be either authorized but
unissued Shares or treasury Shares.



     4.2 Lapsed Awards. If an Award terminates, expires, or lapses for any reason, any Shares
subject to such Award again shall be available to be the subject of an Award.



     4.3 Adjustments in Awards and Authorized Shares. In the event of any merger, reorganization,
consolidation, recapitalization, separation, liquidation, stock dividend, split-up, Share
combination, or other change in the corporate structure of the Company affecting the Shares, the
Committee shall adjust the number and class of Shares which may be delivered under the Plan, the
number, class, and price of Shares subject to outstanding Awards, and the numerical limit of
Section 10.5 in such manner as the Committee (in its sole discretion) shall determine to be
appropriate to prevent the dilution or diminution of such Awards. Notwithstanding the preceding,
the number of Shares subject to any Award always shall be a whole number.



5. Stock Options




     5.1 Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted
to Employees and Consultants at any time and from time to time as determined by the Committee in
its sole discretion. The Committee, in its sole discretion, shall determine the number of Shares
subject to each Option. The Committee may grant Incentive Stock Options, Nonqualified Stock
Options, or a combination thereof.



     5.2 Award Agreement. Each Option shall be evidenced by an Award Agreement that shall specify
the Exercise Price, the expiration date of the Option, the number of Shares to which the Option
pertains, any conditions to exercise of the Option, and such other terms and conditions as the
Committee, in its discretion, shall determine. The Award Agreement shall specify whether the
Option is intended to be an Incentive Stock Option or a Nonqualified Stock Option.



     5.3 Exercise Price. Subject to the provisions of this Section 5.3, the Exercise Price for
each Option shall be determined by the Committee in its sole discretion.



     5.3.1 Nonqualified Stock Options. In the case of a Nonqualified Stock Option, the Exercise
Price shall be not less than twenty five percent (25%) of the Fair Market Value of a Share on the
Grant Date.



     5.3.2 Incentive Stock Options. In the case of an Incentive Stock Option, the Exercise Price
shall be not less than one hundred percent (100%) of the Fair Market Value of a Share on the Grant
Date; provided, however, that if on the Grant Date, the Employee (together with persons whose stock
ownership is attributed to the Employee pursuant to section 424(d) of the Code) owns stock
possessing more than 10% of the total combined voting power of all classes of stock of the Company
or any of its Subsidiaries, the Exercise Price shall be not less than one hundred and ten percent
(110%) of the Fair Market Value of a Share on the Grant Date.



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     5.3.3 Substitute Options. Notwithstanding the provisions of Sections 5.3.1 and 5.3.2, in the
event that the Company or an Affiliate consummates a transaction described in section 424(a) of the
Code (e.g., the acquisition of property or stock from an unrelated corporation), persons who become
Employees or Consultants on account of such transaction may be granted Options in substitution for
options granted by their former employer. If such substitute Options are granted, the Committee,
in its sole discretion and consistent with section 424(a) of the Code, shall determine the exercise
price of such substitute Options.



     5.4 Expiration of Options.



     5.4.1 Expiration Dates. Each Option shall terminate no later than the first to occur of the
following events:



     (a) The date for termination of the Option set forth in the written Award Agreement; or



     (b) The expiration of ten (10) years from the Grant Date (except as provided in Section 5.8.4
regarding Incentive Stock Options); or



     (c) Immediately upon the date and time of the Participant’s Termination of Service for a
reason other than the Participant’s death, Disability or Retirement, unless the Committee in its
sole discretion elects to extend the exercisability of an Option to not more than three (3) months
from Termination of Service; or



     (d) The expiration of one (1) year from the date of the Participant’s Termination of Service
by reason of death, Disability or Retirement (except as provided in Section 5.8.2 regarding
Incentive Stock Options).



     5.4.2 Committee Discretion. Subject to the limits of Sections 5.4.1, the Committee, in its
sole discretion, (a) shall provide in each Award Agreement when each Option expires and becomes
unexercisable, and (b) may, after an Option is granted, extend the maximum term of the Option
(subject to Section 5.8.4 regarding Incentive Stock Options).



     5.5 Exercisability of Options. Options granted under the Plan shall be exercisable at such
times and be subject to such restrictions and conditions as the Committee shall determine in its
sole discretion. After an Option is granted, the Committee, in its sole discretion, may accelerate
the exercisability of the Option. However, in no event may any Option granted to a Section 16
Person be exercisable until at least six (6) months following the Grant Date.



     5.6 Payment. Options shall be exercised by the Participant’s delivery of a written notice of
exercise to the Secretary of the Company (or the Company’s designee), setting forth the number of
Shares with respect to which the Option is to be exercised, accompanied by full payment for the
Shares.



     Upon the exercise of any Option, the Exercise Price shall be payable to the Company in full in
cash or its equivalent. The Committee, in its sole discretion, also may permit exercise (a) by
tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise
equal to the total Exercise Price, or (b) by any other means which the Committee, in its sole
discretion, determines to both provide legal consideration for the Shares, and to be consistent
with the purposes of the Plan.



     As soon as practicable after receipt of a written notification of exercise and full payment
for the Shares purchased, the Company shall deliver to the Participant (or the Participant’s
designated broker), Share certificates (which may be in book entry form) representing such Shares.



     5.7 Restrictions on Share Transferability. The Committee may impose such restrictions on any
Shares acquired pursuant to the exercise of an Option as it may deem advisable, including, but not
limited to, restrictions related to applicable Federal securities laws, the requirements of any
national securities exchange or system upon which Shares are then listed or traded, or any blue sky
or state securities laws.



     5.8 Certain Additional Provisions for Incentive Stock Options. Notwithstanding anything to
the contrary contained in this Section 5, the following provisions shall apply to any Incentive
Stock Option granted pursuant to the Plan.



     5.8.1 Exercisability. The aggregate Fair Market Value (determined on the Grant Date(s)) of
the Shares with respect to which Incentive Stock Options are exercisable for the first time by any
Employee during any calendar year (under all plans of the Company and its Subsidiaries) shall not
exceed $100,000.



     5.8.2 Termination of Service. No Incentive Stock Option may be exercised more than three (3)
months after the Participant’s Termination of Service for any reason other than Disability or
death, unless (a) the Participant dies during such three-month period, and (b) the Award Agreement
or the Committee permits later exercise.



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     5.8.3 Company and Subsidiaries Only. Incentive Stock Options may be granted only to persons
who are Employees of the Company or a Subsidiary on the Grant Date.



     5.8.4 Expiration. No Incentive Stock Option may be exercised after the expiration of ten (10)
years from the Grant Date; provided, however, that if the Option is granted to an Employee who,
together with persons whose stock ownership is attributed to the Employee pursuant to section
424(d) of the Code, owns stock possessing more than 10% of the total combined voting power of all
classes of the stock of the Company or any of its Subsidiaries, the Option may not be exercised
after the expiration of five (5) years from the Grant Date.



     5.9 Grant of Reload Options. The Committee may provide in an Award Agreement that a
Participant who exercises all or part of an Option by payment of the Exercise Price with already
owned Shares, shall be granted an additional option (a “Reload Option”) for a number of shares
equal to the number of Shares tendered to exercise the previously granted Option plus, if the
Committee so determines, any Shares withheld or delivered in satisfaction of any tax withholding
requirements. As determined by the Committee, each Reload Option shall: (a) have a Grant Date
which is the date as of which the previously granted Option is exercised, and (b) be exercisable on
the same terms and conditions as the previously granted Option, except that the Exercise Price
shall be determined as of the Grant Date.



     5.10 Acceleration on Change of Control. Unless provided otherwise in the Award Agreement, if
a Change of Control occurs, all outstanding Options granted under the Plan will become immediately
exercisable to the extent of 100% of the Shares subject thereto notwithstanding any contrary
exercise or vesting periods specified in this Plan.



6. Stock Appreciation Rights.




     6.1 Grant of SARs. Subject to the terms and conditions of the Plan, a SAR may be granted to
Employees and Consultants at any time and from time to time as shall be determined by the
Committee, in its sole discretion. The Committee may grant Affiliated SARs, Freestanding SARs,
Tandem SARs, or any combination thereof. The Committee shall have complete discretion to determine
the number of SARs granted to any Participant.



     6.1.1 Exercise Price and Other Terms. The Committee, subject to the provisions of the Plan,
shall have complete discretion to determine the terms and conditions of SARs granted under the
Plan. However, the exercise price of a Freestanding SAR shall be not less than twenty five percent
(25%) of the Fair Market Value of a Share on the Grant Date. The exercise price of Tandem or
Affiliated SARs shall equal the Exercise Price of the related Option. In no event shall a SAR
granted to a Section 16 Person become exercisable until at least six (6) months after the Grant
Date (or such shorter period as may be permissible while maintaining compliance with Rule 16b-3).



     6.2 Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of the Shares
subject to the related Option upon the surrender of the right to exercise the equivalent portion of
the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its
related Option is then exercisable. With respect to a Tandem SAR granted in connection with an
Incentive Stock Option: (a) the Tandem SAR shall expire no later than the expiration of the
underlying Incentive Stock Option; (b) the value of the payout with respect to the Tandem SAR shall
be for no more than one hundred percent (100%) of the difference between the Exercise Price of the
underlying Incentive Stock Option and the Fair Market Value of the Shares subject to the underlying
Incentive Stock Option at the time the Tandem SAR is exercised; and (c) the Tandem SAR shall be
exercisable only when the Fair Market Value of the Shares subject to the Incentive Stock Option
exceeds the Exercise Price of the Incentive Stock Option.



     6.3 Exercise of Freestanding SARs. Freestanding SARs shall be exercisable on such terms and
conditions as the Committee, in its sole discretion, shall determine. However, no SAR granted to a
Section 16 Person shall be exercisable until at least six (6) months after the Grant Date (or such
shorter period as may be permissible while maintaining compliance with Rule 16b-3).



     6.4 SAR Agreement. Each SAR grant shall be evidenced by an Award Agreement that shall specify
the exercise price, the term of the SAR, the conditions of exercise, and such other terms and
conditions as the Committee, in its sole discretion, shall determine.



     6.5 Expiration of SARs. A SAR granted under the Plan shall expire upon the date determined by
the Committee, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the
foregoing, the rules of Section 5.4 also shall apply to SARs.



     6.6 Payment of SAR Amount. Upon exercise of a SAR, a Participant shall be entitled to receive
payment from the Company in an amount determined by multiplying:



     (a) The difference between the Fair Market Value of a Share on the date of exercise over the
exercise price; times



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     (b) The number of Shares with respect to which the SAR is exercised. At the discretion of the
Committee, payment for a SAR may be in cash, Shares or a combination thereof.



7. Restricted Stock




     7.1 Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the
Committee, at any time and from time to time, may grant Shares of Restricted Stock to Employees and
Consultants in such amounts as the Committee, in its sole discretion, shall determine. The
Committee, in its sole discretion, shall determine the number of Shares to be granted to each
Participant.



     7.2 Restricted Stock Agreement. Each Award of Restricted Stock shall be evidenced by an Award
Agreement that shall specify the Period of Restriction, the number of Shares granted, any price to
be paid for the Shares, and such other terms and conditions as the Committee, in its sole
discretion, shall determine. Unless the Committee determines otherwise, Shares of Restricted Stock
shall be held by the Company as escrow agent until the restrictions on such Shares have lapsed.



     7.3 Transferability. Shares of Restricted Stock may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the end of the applicable Period of
Restriction. In no event may the restrictions on Restricted Stock granted to a Section 16 Person
lapse prior to six (6) months following the Grant Date.



     7.4 Other Restrictions. The Committee, in its sole discretion, may impose such other
restrictions on Shares of Restricted Stock as it may deem advisable or appropriate, in accordance
with this Section 7.4. For example, the Committee may set restrictions based upon the achievement
of specific performance objectives (Company-wide, divisional, or individual), applicable Federal or
state securities laws, or any other basis determined by the Committee in its discretion. The
Committee, in its discretion, may legend the certificates representing Restricted Stock to give
appropriate notice of the restrictions applicable to such Shares.



     7.5 Removal of Restrictions. Shares of Restricted Stock covered by each Restricted Stock
grant made under the Plan shall be released from escrow as soon as practicable after the last day
of the Period of Restriction. The Committee, in its discretion, may accelerate the time at which
any restrictions shall lapse, and remove any restrictions; provided, however, that the Period of
Restriction on Shares granted to a Section 16 Person may not lapse until at least six (6) months
after the Grant Date. After the restrictions have lapsed, the Participant shall be entitled to
have any legend or legends under Section 7.4 removed from his or her Share certificate, and the
Shares shall be freely transferable by the Participant.



     7.6 Voting Rights. During the Period of Restriction, Participants holding Shares of
Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares,
unless otherwise provided in the Award Agreement.



     7.7 Dividends and Other Distributions. During the Period of Restriction, Participants holding
Shares of Restricted Stock shall be entitled to receive all dividends and other distributions paid
with respect to such Shares unless otherwise provided in the Award Agreement. If any such
dividends or distributions are paid in Shares, the Shares shall be subject to the same restrictions
on transferability and forfeitability as the Shares of Restricted Stock with respect to which they
were paid. With respect to Restricted Stock granted to a Section 16 Person, any dividend or
distribution that constitutes a “derivative security” or an “equity security” under Section 16 of
the 1934 Act shall be subject to a Period of Restriction equal to the longer of: (a) the remaining
Period of Restriction on the Shares of Restricted Stock with respect to which the dividend or
distribution is paid; or (b) six (6) months.



     7.8 Return of Restricted Stock to Company. On the date set forth in the Award Agreement, the
Restricted Stock for which restrictions have not lapsed shall revert to the Company and again shall
become available for grant under the Plan.



8. Performance Units and Performance Shares




     8.1 Grant of Performance Units/Shares. Performance Units and Performance Shares may be
granted to Employees and Consultants at any time and from time to time, as shall be determined by
the Committee, in its sole discretion. The Committee shall have complete discretion in determining
the number of Performance Units and Performance Shares granted to any Participant.



     8.2 Initial Value. Each Performance Unit shall have an initial value that is established by
the Committee on or before the Grant Date. Each Performance Share shall have an initial value
equal to the Fair Market Value of a Share on the Grant Date.



     8.3 Performance Objectives and Other Terms. The Committee shall set performance objectives in
its discretion which, depending on the extent to which they are met, will determine the number or
value of Performance Units or Shares that will be paid out to the Participants. The Committee may
set performance objectives based upon the achievement of Company-wide, divisional, or individual
goals, or any other basis determined by the Committee in its discretion. The time period during
which the performance objectives must be met shall be called the “Performance Period”. Performance
Periods of Awards granted to Section 16 Persons shall exceed six (6) months in length (or such
shorter period as may be permissible while maintaining compliance with Rule 16b-3). Each Award of
Performance Units/Shares shall be evidenced by an Award Agreement that shall specify the
Performance Period, and such other terms and conditions as the Committee, in its sole discretion,
shall determine.



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     8.4 Earning of Performance Units and Performance Shares. After the applicable Performance
Period has ended, the Participant shall be entitled to receive a payout of the number of
Performance Units or Shares earned during the Performance Period, depending upon the extent to
which the applicable performance objectives have been achieved. After the grant of a Performance
Unit or Share, the Committee, in its sole discretion, may reduce or waive any performance
objectives for Award; provided that Performance Periods of Awards granted to Section 16 Persons
shall not be less than six (6) months (or such shorter period as may be permissible while
maintaining compliance with Rule 16b-3).



     8.5 Form and Timing of Payment. Payment of earned Performance Units or Performance Shares
shall be made as soon as practicable after the expiration of the applicable Performance Period.
The Committee, in its sole discretion, may pay earned Performance Units or Performance Shares in
cash, Shares or a combination thereof



     8.6 Cancellation. On the date set forth in the Award Agreement, all unearned or unvested
Performance Units or Performance Shares shall be forfeited to the Company, and again shall be
available for grant under the Plan.



9. Non-employee Directors




     9.1 Granting of Options. Subject to the terms & provisions of the Plan, the Board may grant
Nonqualified Stock Options to purchase shares to Non-employee Directors of the Company.



     9.2 Terms of Options. The Board, in its sole discretion, shall determine the number of shares
subject to each Option.



     9.2.1 Option Agreement. Each Option granted pursuant to this Section 9 shall be evidenced by
a written stock option agreement which shall be executed by the Participant and the Company.



     9.2.2 Exercise Price. The Exercise Price for the Shares subject to each Option granted
pursuant to this Section 9 shall be not less than twenty five percent (25%) of the Fair Market
Value of a Share on the Grant Date.



     9.2.3 Exercisability. Each Option granted pursuant to this Section 9 shall become exercisable
in full one year after the date the Option is granted. If a Non-employee Director incurs a
Termination of Service for a reason other than Retirement, death or Disability, his or her Options
which are not exercisable on the date of such Termination shall never become exercisable. If the
Termination of Service is on account of Retirement, death or Disability, the Option shall become
exercisable in full on the date of the Termination of Service.



     9.2.4 Expiration of Options. Each Option shall terminate upon the first to occur of the
following events:



     (a) The expiration of ten (10) years from the Grant Date; or



     (b) The expiration of three (3) months from the date of the Participant’s Termination of
Service for a reason other than death, Disability or Retirement; or



     (c) The expiration of one (1) year from the date of the Participant’s Termination of Service
by reason of Disability or Retirement.



     9.2.5 Death of Director. Notwithstanding Section 9.2.4, if a Director dies prior to the
expiration of his or her options in accordance with Section 9.2.4, his or her options shall
terminate one (1) year after the date of his or her death.



     9.2.6 Special Rule for Retirement. Notwithstanding the provisions of Section 9.2.4, if the
exercisability of an Option is accelerated under Section 9.2.3 on account of the Participant’s
Retirement, such Option shall terminate upon the first to occur of: (a) the expiration of ten (10)
years from the date the Option was granted; or (b) the expiration of one year from the date of the
Participant’s death.



     9.2.7 Not Incentive Stock Options. Options granted pursuant to this Section 9 shall not be
designated as Incentive Stock Options.



     9.2.8 Other Terms. All provisions of the Plan not inconsistent with this Section 9,
including, but not limited to, Section 5.10, shall apply to Options granted to Non-employee
Directors.



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     9.3 Elections by Non-employee Directors. Pursuant to such procedures as the Board (in its
discretion) may adopt from time to time, each Non-employee Director may elect to forego receipt of
all or a portion of committee fees and meeting fees otherwise due to the Non-employee Director in
exchange for Shares. The number of Shares received by any Non-employee Director shall equal the
amount of foregone compensation divided by the Fair Market Value of a Share on the date that the
compensation otherwise would have been paid to the Non-employee Director, rounded up to the nearest
whole number of Shares. The procedures adopted by the Board for elections under this Section 9.3
shall be designed to ensure that any such election by a Non-employee Director will not disqualify
him or her as a “non-employee director” under Rule 16b-3.



10. Section 162(m) Deduction Qualification. Except as otherwise provided in Section 10.5,
the provisions of this Section 10 shall apply only to Awards of Covered Officers.



     10.1 Awards for Covered Officers. Any other provision of the Plan notwithstanding, all Awards
to Covered Officers shall be made in a manner that allows for the full deductibility of the Award
by the Company or its Subsidiaries under Section 162(m) of the Code. All Awards for Covered
Officers shall comply with the provisions of this Section 10.



     10.2 Designation of Covered Officers. For each Performance Period, the Committee will
designate which Participants are Covered Officers prior to the completion of 25% of the Performance
Period (or such earlier or later date as is permitted or required by Section 162(m) of the Code).



     10.3 Establishment of Performance Goals and Awards for Covered Officers. Prior to the
completion of 25% of a Performance Period (or such earlier or later date as is permitted or
required by Section 162(m) of the Code), the Committee shall in its sole discretion, for each such
Performance Period: (a) determine and establish in writing one or more Performance Goals
applicable to the Performance Period for each Covered Officer; and (b) either (i) assign each
Covered Officer a target Award expressed as a fixed number of Shares or a whole dollar amount or
(ii) establish a payout table or formula for purposes of determining the Award payable to each
Covered Officer. Each payout table or formula: (a) shall be in writing; (b) shall be based on a
comparison of actual performance to the Performance Goals; (c) may include a “floor” which is the
level of achievement of the Performance Goal in which payout begins; and (d) shall provide for an
actual Award equal to or less than the Covered Officer’s target Award, depending on the extent to
which actual performance approached or reached the Performance Goal. Such pre-established
Performance Goals and Awards must state, in terms of an objective formula or standard, the method
for computing the amount of the Award payable to each Covered Officer if the Performance Goal is
met. A formula or standard is objective if a third party having knowledge of the relevant
performance results could calculate the amount to be paid to the Covered Officer. The Committee
may establish any number of Performance Periods, Performance Goals and Awards for any Covered
Officer running concurrently, in whole or in part, provided, that in so doing the Committee does
not jeopardize the Company’s deduction for such Awards under Section 162(m) of the Code. The
Committee may select different Performance Goals and Awards for different Covered Officers.



     10.4 Certification of Achievement of Performance Goals and Amount of Awards. After the end of
each Performance Period, or such earlier date if the Performance Goals are achieved, the Committee
shall certify in writing, prior to the unconditional payment of any Award, that the Performance
Goals for the Performance Period and all other material terms of the Plan were satisfied and to
what extent they were satisfied. The Committee shall determine the actual Award for each Covered
Officer based on the payout table/formula established in Section 10.3, as the case may be.
Extraordinary Events shall either be excluded or included in determining the extent to which the
corresponding Performance Goal has been achieved, whichever will produce the higher Award,
provided, however, notwithstanding the attainment of specified Performance Goals, the Committee has
the discretion to reduce or eliminate an Award that would otherwise be paid to any Participant,
including any Covered Officer, based on the Committee’s evaluation of Extraordinary Events or other
factors. Without limiting the manner of computing Awards set forth in the preceding sentence, with
respect to Covered Officers, the Committee may not under any circumstances increase the amount of
an Award.



     10.5 Maximum Award. Any other provision of the Plan notwithstanding, the maximum aggregate
Awards payable to any Participant under the Plan for any Performance Period shall not exceed Five
Hundred Thousand (500,000) Shares, which maximum number of Shares shall be adjusted pursuant to
Section 4.3.



11. Miscellaneous




     11.1 Forfeiture. Notwithstanding anything in the Plan or in any Award Agreement to the
contrary, in the event of a breach of conduct by a Participant or former Participant (including,
without limitation, any conduct prejudicial to or in conflict with the Company or an Affiliate), or
any activity of a Participant or former Participant in competition with any of the businesses of
the Company or an Affiliate, the Committee may (a) cancel any outstanding Award granted to the
Participant, in whole or in part, whether or not vested, and/or (b) if such conduct or activity
occurs within one year following the exercise or payment of an Award, require the former
Participant to repay to the Company any gain realized or payment received upon the exercise or
payment of such Award (with such gain or repayment valued as of the date of exercise or payment).
Such cancellation or repayment obligation shall be effective as of the date specified by the
Committee. Any repayment obligation may be satisfied in Shares or cash or a combination thereof
(based upon the Fair Market Value of the Shares on the day prior to the date of payment), and the
Committee may provide for an offset to any



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future payments owed by the Company or Affiliate to such individual if necessary to satisfy
the repayment obligation. The determination of whether any Participant or former Participant has
engaged in a breach of conduct or any activity in competition with any of the businesses of the
Company or an Affiliate shall be determined by the Committee in good faith and in its sole
discretion.



     11.2 No Effect on Employment or Service. Nothing in the Plan shall interfere with or limit in
any way the right of the Company to terminate any Participant’s employment or service at any time,
with or without cause. For purposes of the Plan, transfer of employment of a Participant between
the Company and any one of its Affiliates (or between Affiliates) shall not be deemed a Termination
of Service. Unless there is a written agreement between the Employee and the Company or an
Affiliate to the contrary, employment of an Employee with the Company and its Affiliates is on an
at-will basis only.



     11.3 Participation. No Employee or Consultant shall have the right to be selected to receive
an Award under this Plan, or, having been so selected, to be selected to receive a future Award.



     11.4 Indemnification. Each person who is or shall have been a member of the Committee, or of
the Board, shall be indemnified and held harmless by the Company against and from (a) 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 any Award Agreement, and (b) 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
individuals may be entitled under the Company’s Articles of Incorporation or Code of Regulations,
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.



     11.5 Successors. All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of
all or substantially all of the business or assets of the Company.



     11.6 Beneficiary Designations. If permitted by the Committee, a Participant under the Plan
may name a beneficiary or beneficiaries to whom any vested but unpaid Award shall be paid in the
event of the Participant’s death. Each such designation shall revoke all prior designations by the
Participant and shall be effective only if given in a form and manner acceptable to the Committee.
In the absence of any such designation, any vested benefits remaining unpaid at the Participant’s
death shall be paid to the Participant’s estate and, subject to the terms of the Plan and of the
applicable Award Agreement, any unexercised vested Award may be exercised by the administrator or
executor of the Participant’s estate.



     11.7 Nontransferability of Awards; Unfunded Plan. No Award granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will,
by the laws of descent and distribution, or to the limited extent provided in Section 11.5. All
rights with respect to an Award granted to a Participant shall be available during his or her
lifetime only to the Participant. Notwithstanding the foregoing, to the extent provided in the
applicable Award Agreement, a Participant may transfer a Nonqualified Stock Option either (a) to
members of his or her immediate family (as defined in Rule 16a-1 promulgated under the 1934 Act),
to one or more trusts for the benefit of such family members, or to partnerships or other entities
in which such family members are the only partners or owners, provided that the Participant does
not receive any consideration for the transfer, or (b) if such transfer is approved by the
Committee. If such transfer is permitted under the Award Agreement, any Nonqualified Stock Option
held by such transferees are subject to the same terms and conditions that applied to such
Nonqualified Stock Options immediately prior to transfer based on the transferor Participant’s
continuing relationship with the Company. It is intended that the Plan be an “unfunded” plan for
incentive compensation. The Plan does not give a Participant any interest, lien or claim against
any specific asset of the Company. No Participant or beneficiary shall have any rights under this
Plan other than as a general unsecured creditor of the Company.



     11.8 No Rights as Stockholder. Except to the limited extent provided in Sections 7.6 and 7.7,
no Participant (nor any beneficiary) shall have any of the rights or privileges of a shareholder of
the Company with respect to any Shares issuable pursuant to an Award (or exercise thereof), unless
and until certificates representing such Shares shall have been issued, recorded on the records of
the Company or its transfer agents or registrars, and delivered to the Participant (or
beneficiary).



     11.9 Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an
Award (or exercise thereof), the Company shall have the power and the right to deduct or withhold,
or require a Participant to remit to the Company, an amount sufficient to satisfy Federal, state,
and local taxes (including the Participant’s FICA obligation) required to be withheld with respect
to such Award (or exercise thereof).



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     11.10 Withholding Arrangements. The Committee, in its sole discretion and pursuant to such
procedures as it may specify from time to time, may permit or require a Participant to satisfy all
or part of the tax withholding obligations in connection with an Award by (a) having the Company
withhold otherwise deliverable Shares, or (b) delivering to the Company already-owned Shares having
a Fair Market Value equal to the amount required to be withheld. The amount of the withholding
requirement shall be deemed to include any amount which the Committee determines, not to exceed the
amount determined by using the minimum federal, state or local marginal income tax rates applicable
to the Participant with respect to the Award on the date that the amount of tax to be withheld is
to be determined. The Fair Market Value of the Shares to be withheld or delivered shall be
determined as of the date that the taxes are required to be withheld.



     11.11 Deferrals. The Committee, in its sole discretion, may permit a Participant to defer
receipt of the payment of cash or the delivery of Shares that would otherwise be delivered to a
Participant under the Plan. Any such deferral elections shall be subject to such rules and
procedures as shall be determined by the Committee in its sole discretion.



12. Amendment, Termination and Duration




     12.1 Amendment, Suspension, or Termination. The Board, in its sole discretion, may amend or
terminate the Plan, or any part thereof, at any time and for any reason. However, if and to the
extent required to maintain the Plan’s qualification under applicable law or stock exchange
regulation, any such amendment shall be subject to shareholder approval. The amendment,
suspension, or termination of the Plan shall not, without the consent of the Participant, alter or
impair any rights or obligations under any Award previously granted to such Participant. No Award
may be granted during any period of suspension or after termination of the Plan.



     12.2 Duration of the Plan. The Plan shall commence on the date specified herein, and subject
to Section 12.1 (regarding the Board’s right to amend or terminate the Plan), shall remain in
effect thereafter. However, without further stockholder approval, no Incentive Stock Option may be
granted under the Plan after March 7, 2012.



13. Legal Construction




     13.1 Gender and Number; Accounting Terms. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall include the
singular and the singular shall include the plural. Accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting principles.



     13.2 Severability. In the event any provision of the Plan shall be held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and
the Plan shall be construed and enforced as if the illegal or invalid provision had not been
included.



     13.3 Requirements of Law. The granting of Awards and the issuance of Shares under the Plan
shall be subject to all applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.



     13.4 Compliance with Rule 16b-3. Transactions under this Plan with respect to Section 16
Persons are intended to comply with all applicable conditions of Rule 16b-3. To the extent any
provision of the Plan, Award Agreement or action by the Committee fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed advisable by the Committee.
Notwithstanding any contrary provision of the Plan, if the Committee specifically determines that
compliance with Rule 16b-3 no longer is required, all references in the Plan to Rule 16b-3 shall be
null and void.



     13.5 Governing Law. The Plan and all Award Agreements shall be construed in accordance with
and governed by the laws of the State of Delaware.



     13.6 Captions. Captions are provided herein for convenience only, and shall not serve as a
basis for interpretation or construction of the Plan.




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