2002 STOCK OPTION INCENTIVE COMPENSATION PLAN



 





Exhibit 4.2



INVERESK RESEARCH GROUP, INC.



2002 STOCK OPTION AND INCENTIVE COMPENSATION
PLAN



Amended and Restated as of May 4, 2004



     
Inveresk Research Group, Inc., a Delaware
corporation (the “Company”), wishes to attract
officers, employees and consultants to the Company and its
Subsidiaries and to induce officers, employees and consultants
to remain with the Company and its Subsidiaries, to encourage
those persons to increase their efforts to make the
Company’s business more successful, whether directly or
through its Subsidiaries, and to align their interests with the
interests of the Company’s stockholders.



     
The Plan as originally adopted provided that in
connection with the transaction pursuant to which Inveresk
Research Group Limited became a wholly-owned subsidiary of the
Company, the Company would issue Options (to purchase shares of
the Company’s Common Stock) to holders of options to
purchase capital stock of Inveresk Research Group Limited in
consideration for the cancellation of the options issued by
Inveresk Research Group Limited.



     
Amendments to the Plan were adopted in 2004 for
the purpose of providing for awards of equity-based compensation
other than stock options, as hereinafter set forth.




1.     Definitions


     
Whenever used herein, the following terms shall
have the meanings set forth below:



     
“Amendment Date” means May 4, 2004.



     
“Award” means an Option, Performance
Stock Award, Restricted Stock Award, Performance Restricted
Stock Award, Cash Performance Award, Stock Unit Award or Stock
Appreciation Right (SAR) awarded under this Plan.



     
“Award Agreement” means a written
agreement entered into pursuant to this Plan by the Company and
a Participant with respect to an Award.



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



     
“Cause” means, with respect to any
Participant, unless otherwise provided in the Participant Award
Agreement, conduct that is determined by the Board in good faith
to fall within one or more of the following categories:
(i) engaging in willful or gross misconduct or neglect in
the conduct of the Participant’s employment obligations,
(ii) repeatedly failing to adhere to the directions of
superiors or the Board or the written policies and practices of
the Company or its Subsidiaries or its affiliates,
(iii) the commission of a felony or a crime of moral
turpitude, or any crime involving the Company or its
Subsidiaries, or any affiliate thereof, (iv) fraud,
misappropriation or embezzlement, (v) a material breach of
the Participant’s employment agreement (if any) with the
Company or its Subsidiaries or its affiliates, (vi) acts or
omissions constituting a material failure to perform
substantially and adequately the duties assigned to the
Participant or (vii) any illegal act detrimental to the
Company or its Subsidiaries or affiliates.



     
“Cash Performance Award” means a right
to receive cash based on the attainment of pre-established
Performance Goals.



     
“Change in Control” means the
occurrence of any of the following:




		
	 	     
    (i) any “person,” including a
    “group” (as those terms are used in
    Sections 13(d) and 14(d) of the Exchange Act, but excluding
    the Company, any entity, controlled by or under common control
    with the Company, any employee benefit plan of the Company or
    any such entity, and, with respect to any particular Participant, the Participant and any
    “group” (as that term is used in Section 13(d)(3)
    of the Exchange Act) of which the Participant is a member),
    becomes the beneficial owner (as defined in Rule 13d-3
    under the Exchange Act), directly or indirectly, of securities
    of the Company representing a majority of either (A) the
    combined voting power of the Company’s then outstanding
    securities or (B) the Shares then outstanding (in either
    such case other than as a result of an acquisition of securities
    directly from the Company); provided, however, that, in no event
    shall a Change in Control be deemed to have occurred (x) by
    reason of an increase in the percentage beneficial ownership of
    any person or group that results from a reduction in the number
    of outstanding Shares or (y) by reason of an increase in
    the beneficial ownership of a person or group of less than
    5% per year or (z) by reason of any increase in the
    beneficial ownership of a person or group that on the date the
    Company first became subject to the periodic reporting
    obligations imposed under the Exchange Act was the beneficial
    owner of the Shares then outstanding; or
    













 


		
	 	     
    (ii) any consolidation or merger of the
    Company in which the stockholders of the Company immediately
    prior to the consolidation or merger, would not, immediately
    after the consolidation or merger, beneficially own (as that
    term is defined in Rule 13d-3 under the Exchange Act),
    directly or indirectly, shares representing in the aggregate 50%
    or more of the combined voting power of the securities of the
    corporation issuing cash or securities in the consolidation or
    merger (or of its ultimate parent corporation, if any); or
    
	 
	 	     
    (iii) any sale, lease, exchange or other
    transfer (in one transaction or a series of transactions
    contemplated or arranged by any party as a single plan) of all
    or substantially all of the assets of the Company, other than a
    sale or disposition by the Company of all or substantially all
    of the Company’s assets to an entity, at least a majority
    of the combined voting power of the voting securities of which
    are owned by persons in substantially the same proportion as
    their ownership of the Company immediately prior to such sale,
    or the approval by the Company’s stockholders, in
    accordance with the requirements of applicable law, of any plan
    or proposal for the liquidation or dissolution of the Company.
    




     
“Code” means the Internal Revenue Code
of 1986, as amended.



     
“Committee” means the committee
appointed by the Board pursuant to Section 3, or as the
context requires, any subcommittee thereof appointed for the
purposes of the Plan.



     
“Common Stock” means the Company’s
Common Stock, par value $.01, either currently existing or
authorized hereafter.



     
“Company” means Inveresk Research
Group, Inc., a Delaware corporation.



     
“Disability” means, unless otherwise
provided by the Committee in the Participant’s Award
Agreement, a disability which renders the Participant incapable
of performing all of his or her material duties for a period of
at least 180 consecutive or non-consecutive days during any
consecutive twelve-month period.



     
“Effective Date” means June 27,
2002.



     
“Embedded Value” means, with respect to
any Option, as of any date, the excess of (i) the Option
Price then in effect over (ii) the Fair Market Value on
that date.



     
“Exchange Act” means the Securities
Exchange Act of 1934, as amended.



     
“Exchange Options” means all Options
granted as described in Section 4(a) of the Plan.



     
“Fair Market Value” means, as of any
date, the value of a Share determined as follows: (i) if
the Common Stock is listed on any established stock exchange or
a national market system, including without limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, the Fair Market Value of each Share shall
be the closing sales price for such stock (or the closing bid,
if no sales were reported) on such exchange or system on the
last trading day preceding the date of determination, as
reported in The Wall Street Journal or such other source
as the Committee deems reliable; (ii) if the Common Stock
is regularly quoted by a recognized securities dealer but
selling prices are not reported, the Fair Market Value of a
Share shall be the mean between the high bid and low asked
prices for the Common Stock on the day of determination, as reported in
The Wall Street Journal or such other source as the
Committee deems reliable; and (iii) in the absence of an
established market for the Common Stock, the Fair Market Value
shall be determined in good faith by the Committee.



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     “Incentive Stock Option” means an
“incentive stock option” within the meaning of
Section 422(b) of the Code.



     
“Non-Qualified Stock Option” means an
Option which is not an Incentive Stock Option.



     
“Old Inveresk Option” means each option
to subscribe for ordinary shares or B ordinary shares of
Inveresk Research Group Limited that is outstanding immediately
prior to the time Inveresk Research Group Limited becomes a
wholly-owned subsidiary of the Company.



     
“Old Inveresk Optionee” means each
person who is a holder of Old Inveresk Options immediately prior
to the time Inveresk Research Group Limited becomes a
wholly-owned subsidiary of the Company.



     
“Option” means the right to purchase,
at a price and for the term fixed by the Committee in accordance
with the Plan, and subject to such other limitations and
restrictions in the Plan and the applicable Award Agreement, a
number of Shares determined by the Committee.



     
“Optionee” means a person to whom an
Option is granted pursuant to the provisions of this Plan and,
except where the context requires otherwise, includes, the
Successors of any such person.



     
“Option Price” means, with respect to
any Option, the exercise price per Share.



     
“Participant” means an officer,
employee or consultant who has received an Award under the Plan.



     
“Performance Goals” means for the
purposes of an Award, including any Award that is intended to
qualify as performance-based compensation under
Section 162(m), any one or more of the following: revenue,
profits, net income, pre-tax income, operating income, earnings
per share, total shareholder return, return on equity, return on
capital, cash flow, stock price, operating margin, pretax
margin, and net income margin. These performance criteria can be
used individually or in any combination, can be measured
annually or cumulatively, can be measured on an absolute basis
or relative basis, compared to other companies or indices, and
can apply to the entire Company or a business unit.



     
“Performance Stock Award” means a right
to receive Shares, subject to performance and other conditions
specified in the applicable Award Agreement, but does not
include an Option.



     
“Performance Option” means an Option
that is subject to performance goals specified in the applicable
Award Agreement.



     
“Performance Restricted Stock Award”
means a right to receive Shares, subject to performance and
other limitations and restrictions specified in the Plan and the
applicable Award Agreement, but does not include an Option.



     
“Plan” means this 2002 Stock Option and
Incentive Compensation Plan, as amended and restated as of
May 4, 2004 and as it and may from time to time be further
amended.



     
“Restricted Stock Award” means a right
to receive Shares, subject to limitations and restrictions
specified in the Plan and the applicable Award Agreement.



     
“Retirement” means, unless otherwise
provided by the Committee in the applicable Award Agreement, the
voluntary termination of employment (or other termination of
service, in the case of a consultant) of a Participant on or
after the Participant’s attainment of age 65.



     
“Securities Act” means the Securities
Act of 1933, as amended.



     
“Shares” means shares of Common Stock
of the Company.



     
“Stock Appreciation Rights” or
“SARs” means the right to receive payment in cash,
Shares or a combination of both, in an amount equal to the
product of (x) the number of Shares specified in the applicable Award Agreement and (y) the
excess of the Fair Market Value at the time of exercise over the
exercise (or “strike”) price as specified in the
applicable Award Agreement.



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     “Stock Unit” means a right to receive
Shares, subject to limitations and restrictions specified in the
Plan and the Applicable Award Agreement.



     “Subsidiary” means any corporation
(other than the Company) that is a “subsidiary
corporation” with respect to the Company under
Section 424(f) of the Code. In the event the Company
becomes a subsidiary of another company, the provisions hereof
applicable to subsidiaries shall, unless otherwise determined by
the Committee, also be applicable to any company that is a
“parent corporation” with respect to the Company under
Section 424(e) of the Code.



     
“Successor” means, with respect to any
Participant who has died, the legal representative of the estate
of the person or persons who acquire the right to exercise an
Option by bequest or inheritance or otherwise by operation of
law.




2.     Approval; Effective Date;
Termination


     
The 2002 Stock Option Plan was effective on the
Effective Date. The Plan was amended and restated as of
May 4, 2004. The Plan shall terminate on, and no Option
shall be granted hereunder on or after, the tenth anniversary of
the Effective Date of the Plan; provided, however, that the
Board may terminate the Plan at any time prior to that date.




3.     Administration of Plan


     
The Plan shall be administered by the Committee
appointed by the Board. The Committee shall consist of at least
two individuals, each of whom shall be a “non-employee
director” as defined in Rule 16b-3 promulgated by the
Securities and Exchange Commission (“Rule 16b-3”)
under the Exchange Act and shall, at such times as the Company
is subject to Section 162(m) of the Code (to the extent
relief from the limitation of Section 162(m) of the Code is
sought with respect to Awards), qualify as “outside
directors” for purposes of Section 162(m) of the Code.
The Committee may appoint any appropriate subcommittee
consisting solely of two or more directors who qualify as
“outside directors” and “non-employee
directors” and delegate any of its authority to such
subcommittee. The acts of a majority of the members present at
any meeting of the Committee at which a quorum is present, or
acts approved in writing by a majority of the entire Committee,
shall be the acts of the Committee for purposes of the Plan. If
and to the extent applicable, no member of the Committee may act
as to matters under the Plan specifically relating to such
member. If no Committee is designated by the Board to act for
these purposes, the Board shall have the rights and
responsibilities of the Committee hereunder and under the Award
Agreements.




4.     Eligibility
and Grant of Awards; Committee Authority.


     
(a) Following the Effective Date, the
Company granted Options to each Old Inveresk Optionee, against
and in consideration of the cancellation of all Old Inveresk
Options held by such Old Inveresk Optionee. The Exchange Options
so granted are intended in the aggregate to confer on the Old
Inveresk Optionee, to the extent reasonably practicable in the
circumstances, substantially the same economic and other rights
as were provided under the Old Inveresk Options that are so
cancelled.



     
(b) Subject to the provisions of the Plan,
the Committee may, in its discretion as reflected by the terms
of the Award Agreements: (i) cause the Company to grant
Awards to employees, officers and consultants of the Company and
its Subsidiaries; (ii) determine and designate from time to
time those employees, officers and consultants of the Company
and its Subsidiaries to whom Awards are to be granted and the
number of Shares to be included in or covered by such Awards;
and (iii) determine and impose such other terms and
conditions in respect of each Award as it shall deem appropriate.



     
(c) In determining the eligibility of an
employee, officer or consultant to receive an Award, as well as
in determining the terms of the Award, the Committee may
consider the position and responsibilities of the employee,
officer or consultant, the nature and value to the Company of
the employee’s, officer’s or consultant’s services and accomplishments
whether directly or through its Subsidiaries, the
employee’s, officer’s or consultant’s present and
potential contribution to the success of the Company whether
directly or through its Subsidiaries and such other factors as
the Committee may deem relevant. The Award Agreement shall
contain such other terms, provisions and conditions not
inconsistent herewith as shall be determined by the Committee.
The Committee may require as a condition to the grant of any
Award that a Participant shall take whatever additional actions
and execute whatever additional documents the Committee may in
its reasonable judgment deem necessary or advisable in order to
carry out or effect one or more of the obligations or
restrictions imposed on the Participant pursuant to the express
provisions of the Plan and the Award Agreement, and the
Participant by accepting the Award subject to such a condition
shall be deemed to have accepted those obligations. If any Award
Agreement or Award provides (without regard to this sentence)
for the obligation of the Company or any affiliate thereof to
purchase or repurchase Shares from a Participant or any other
person, then, notwithstanding the provisions of the Award
Agreement or such other agreement, such obligation shall not
apply to the extent that the purchase or repurchase would not be
permitted under Delaware law.



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5.     Number of Shares Subject to Awards.


     (a) Subject to the provisions of
Section 16, Awards with respect to an aggregate of no more
than 5,365,589 Shares may be granted under the Plan;
provided, however, that if when an Award expires, terminates or
is forfeited, any Shares covered by the Award have not been
issued or transferred to the Participant (and are not required
to be so issued or transferred), those Shares shall not be
counted against the foregoing limitation and may be the subject
of further Awards. For purposes of the foregoing limitation,
each Share covered by a Performance Stock Award or a Restricted
Stock Award shall be treated as an Award covering three Shares.



     (b) Subject to the requirements of
applicable law, Shares issued hereunder may consist, in whole or
in part, of authorized and unissued shares or treasury shares.
The certificates for Shares issued hereunder may include any
legend which the Committee deems appropriate to reflect any
restrictions on transfer hereunder or under the Award Agreement,
or as the Committee otherwise may deem appropriate.



     (c) The aggregate Fair Market Value,
determined as of the date an Option is granted, of the Common
Stock for which any Participant may be awarded Incentive Stock
Options which are first exercisable by the Participant during
any calendar year under the Plan (or any other stock option plan
required to be taken into account under Section 422(d) of
the Code) shall not exceed $100,000.



     (d) Following the Amendment Date and until
the tenth anniversary of the Effective Date, no Participant may
be granted as an average per year over any three consecutive
calendar years Awards of (i) Restricted Stock, Stock Units,
Performance Stock or Performance Restricted Stock with respect
to more than 100,000 Shares or (ii) Stock Options or
Stock Appreciation Rights with respect to more than
300,000 Shares or (iii) Cash Performance Awards of
more than $3 million.




6.     Types of Awards.


     (a) Options may be granted at the discretion
of the Committee. The Option Price in respect of each Option
shall be determined by the Committee at the time of grant and
reflected in the Award Agreement in respect of that Option, as
amended from time to time; provided, however, that except for
(i) the Exchange Options; (ii) actions taken by the
Committee pursuant to Section 16 of the Plan and
(iii) as determined by the Committee in respect of options
granted in connection with business combination transactions,
the Option Price with respect any particular Award shall in no
event be less than 100% of the Fair Market Value of a Share on
the day the Option is granted. Any particular Award Agreement
may provide for different exercise prices for specified amounts
of Shares subject to the Option. The Option Price with respect
to each Incentive Stock Option shall not be less than 100% (or
110%, in the case of an individual described in
Section 422(b)(6) of the Code (relating to certain 10%
owners)) of the Fair Market Value of a Share on the day the
Option is granted. For each Award of Options, the Committee
shall specify whether the Options are intended to be Incentive
Stock Options, Non-Qualified Stock Options, or both. To the
extent that any Option does not qualify as an Incentive Stock Option, it
shall constitute a separate Non-Qualified Stock Option.
Incentive Stock Options may be granted only to employees.
Notwithstanding anything to the contrary in the Plan, Options
shall not be granted to consultants in the United Kingdom unless
the Committee expressly determines otherwise.



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     (b) Performance Stock Awards may be granted
at the discretion of the Committee. Each Performance Stock Award
shall consist of an award of Shares, the grant, issuance and
vesting of which shall be subject to Performance Goals and such
other conditions as the Committee shall specify at the time of
grant. An Award shall specify the maximum number of Shares
subject to the Performance Stock Award and its terms and
conditions. The Committee shall set the Performance Goals and
the period within which they must be achieved, in its
discretion. Subject to the terms of the applicable Award
Agreement, as soon as practicable following the time the
Performance Goals and other conditions are met, Shares shall be
paid to the Participant. The Performance Goals may be used to
satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code and to
the extent any particular Performance Stock Award is intended by
the Committee to comply with Section 162(m), the
Performance Goals shall be deemed satisfied only when the
Committee (or an applicable subcommittee thereof) so certifies.



     (c) Restricted Stock Awards may be granted
at the discretion of the Committee. Shares may be issued
pursuant to a Restricted Stock Award subject to such conditions
on forfeiture, restrictions on sale or transfer and other terms
and conditions as the Committee shall specify at the time of
grant. Unless otherwise determined by the Committee, a
Participant who has received a Restricted Stock Award shall have
all the rights and privileges of a stockholder with respect to
the Shares covered by the Award during the period in which the
Participant’s rights in respect of the Shares remain
subject to restrictions, but all of the Participant’s
rights in respect of those Shares shall terminate if the
Restricted Stock Award is forfeited or terminated in accordance
with its terms before those restrictions expire.



     (d) Performance Restricted Stock Awards may
be granted at the discretion of the Committee. The rights of a
Participant in the Shares covered by a Performance Restricted
Stock Award shall be subject to Performance Goals and such
conditions on forfeiture, restrictions on sale or transfer and
other terms and conditions as the Committee shall specify at the
time of grant. Unless otherwise determined by the Committee, a
Participant who has received a Performance Restricted Stock
Award shall have all the rights and privileges of a stockholder
with respect to the Shares covered by the Award during the
period in which the Participant’s rights in respect of the
Shares remain subject to restrictions, but all of the
Participant’s rights shall terminate if the Performance
Restricted Stock Award is forfeited or terminated in accordance
with its terms before those restrictions expire. The Performance
Goals specified in the terms of the Award may be used to satisfy
the requirements for “performance-based compensation”
under Section 162(m) of the Code and to the extent any
particular Performance Restricted Stock Award is intended by the
Committee to comply with Section 162(m), the Performance
Goals shall be deemed satisfied only when the Committee (or an
applicable subcommittee thereof) so certifies.



     (e) Cash Performance Awards may be granted
at the discretion of the Committee. The rights of a Participant
in respect of a Cash Performance Award shall be subject to
Performance Goals and such other conditions and terms as the
Committee shall specify at the time of grant. The Committee
shall specify as to each Cash Performance Award the maximum cash
amount payable, the Performance Goals, the period within which
the Performance Goals must be achieved, and such other terms and
conditions as the Committee shall determine. As soon as
practicable following the time the Performance Goals are met,
the applicable cash payment shall be made to the Participant or
deferred to the extent permitted by the Committee. The
Performance Goals specified in the terms of the Award may be
used to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code and to
the extent any particular Cash Performance Award is intended by
the Committee to comply with Section 162(m), the
Performance Goals shall be deemed satisfied only when the
Committee (or an applicable subcommittee thereof) so certifies.



     (f) Stock Appreciation Rights may be granted
at the discretion of the Committee, either in tandem with an
Award of an Option or as a “stand-alone” SAR. The
exercise price per share of a tandem SAR shall be the Option
Price of the related Option. The exercise price of a stand-alone
SAR shall be an amount determined by the Committee, but in no event less than 100% of
the Fair Market Value of a Share on the date the SAR is granted.
SARs shall be exercisable and vest upon the terms and conditions
determined by the Committee at the time of the grant. Unless
earlier expired, forfeited, or otherwise terminated, each SAR
shall expire on a date determined by the Committee at the time
of grant, provided that the term of a tandem SAR shall not
exceed the term of the related Option and the term of a
stand-alone SAR shall not exceed 10 years. Upon exercise of
a SAR, the Participant shall receive payment in cash, Shares or
a combination of both, as determined by the Committee, in an
amount equal to the excess of the Fair Market Value on the
exercise date of the number of Shares covered by the SAR (or in
the case of a partial exercise, of the number of Shares as to
which the SAR us being exercised) over the aggregate exercise
price. To the extent payment is made in Shares, unless otherwise
specified by the Committee the Shares delivered in payment shall
be valued for purposes of the payment at their Fair Market Value
on the date of exercise.



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     (g) Performance Options may be granted at
the discretion of the Committee. The rights of Participant in
respect of a Performance Option shall be subject to Performance
Goals and such other conditions and terms as the Committee shall
specify at the time of grant. The exercise price per share for
each Performance Option shall not be less than 100% of the Fair
Market Value on the date of grant. Unless earlier expired,
forfeited, or otherwise terminated, each Performance Option
shall expire upon the tenth anniversary of the date of grant or
on such other date as is specified in the applicable Award
Agreement.



     (h) Stock Units may be granted at the
discretion of the Committee. Stock Units will constitute an
unfunded commitment by the Company to transfer to the
Participant the number of Shares specified by the Committee in
the terms of the Award. Stock Unit Awards shall be subject to
such conditions, limitations, and vesting requirements as the
Committee shall specify at the time of grant. At the discretion
of the Committee, and subject to the limitations on the number
of Shares that may be granted under the Plan, the Company may
credit to a hypothetical account an amount equal to any
dividends or distributions declared by the Company, that would
have been payable on the number of Shares payable to the
Participant pursuant to such Award if those Shares had been
outstanding on the record date established for the dividend or
distribution.




7.     Term of Awards; Vesting.


     (a) Unless earlier expired, forfeited or
otherwise terminated, each Award shall expire in its entirety
upon the tenth anniversary of the date of grant or shall have
such other term (which may be shorter, but not longer, in the
case of Incentive Stock Options) as is set forth in the
applicable Award Agreement (except that, in the case of an
individual described in Section 422(b)(6) of the Code
(relating to certain 10% owners) who is granted an Incentive
Stock Option, the term of such Option shall be no more than five
years from the date of grant). The Option shall also expire, be
forfeited and terminate at such times and in such circumstances
as otherwise provided hereunder or under the Award Agreement.



     (b) Each Award, to the extent that there has
been no termination of the Participant’s employment (or
other service, if applicable) and the Award has not otherwise
lapsed, expired, terminated or been forfeited, shall first
become exercisable according to the terms and conditions set
forth in the Award Agreement, as determined by the Committee at
the time of grant. Unless otherwise provided in the Award
Agreement or herein, no Award (or portion thereof) shall ever be
exercisable if the Participant’s employment or other
service with the Company and its Subsidiaries has terminated
before the time at which such Award would otherwise have become
exercisable, and any Award that would otherwise become
exercisable after such termination shall not become exercisable
and shall be forfeited upon such termination. Notwithstanding
the foregoing provisions of this Section 7(b), Awards
exercisable pursuant to the schedule set forth by the Committee
at the time of grant may be fully or more rapidly exercisable or
otherwise vested at any time in the discretion of the Committee.
Upon and after the death of a Participant, such
Participant’s Awards, if and to the extent otherwise
exercisable hereunder or under the applicable Award Agreement
after the Participant’s death, may be exercised by the
Successors of the Participant.



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8.     Exercisability
Upon and After Termination of Participant.


     (a) Unless otherwise provided in an Award
Agreement, if the Participant’s employment (or other
service, if applicable) with the Company and its Subsidiaries is
terminated other than (i) by voluntary resignation of the
Participant, (ii) by termination by the Company for Cause,
or (iii) by termination by reason of death, Retirement or
Disability, an Option or other Award subject to the
Participant’s exercise may be exercised (but only to the
extent the Award otherwise was exercisable on the date of
termination) until the earlier of (i) three months from the
date of termination of employment or (ii) the date on which
the term of the Award expires in accordance with the provisions
of the applicable Award Agreement and this Plan.



     (b) Unless otherwise provided in the
applicable Award Agreement, if the Participant’s employment
with the Company and its Subsidiaries terminates due to the
death, Retirement or Disability of the Participant, any Option
or other Award that remains subject to exercise by the
Participant on the date of termination may be exercised (but
only to the extent the Award otherwise was exercisable on the
date of termination) until the earlier of (i) one year from
the date of termination of employment (or other service, if
applicable) of the Participant, or (ii) the date on which
the term of the Award expires in accordance with the provisions
of the applicable Award Agreement and this Plan.



     (c) Notwithstanding any other provision of
this Plan, unless otherwise specifically provided in an Award
Agreement, if (i) the Participant’s employment is
terminated by the Company or any of its Subsidiaries for Cause
or (ii) the Participant terminates his employment with the
Company and its Subsidiaries (other than on account of death,
Retirement or Disability) the Participant’s Awards, to the
extent then unexercised, unvested or unpaid, shall thereupon
cease to be exercisable or otherwise payable and shall be deemed
immediately cancelled.




9.     Exercise of
Awards.


     (a) Subject to vesting, other restrictions
on exercisability and other restrictions provided for hereunder
or otherwise imposed in accordance herewith, an Award that is
subject to exercise by a Participant may be exercised, and
payment by a Participant made only by written notice (in the
form prescribed by the Committee) to the Company specifying the
number of Shares with respect to which the Award shall be
exercised.



     
(b) Without limiting the scope of the
Committee’s discretion hereunder, the Committee may impose
such other restrictions on the exercise of Options and other
Awards (whether or not in the nature of the foregoing
restrictions) as it may deem necessary or appropriate.



     
(c) If Shares acquired upon exercise of an
Incentive Stock Option are disposed of in a disqualifying
disposition within the meaning of Section 422 of the Code
by a Participant prior to the expiration of either two years
from the date of grant of such Option or one year from the
transfer of Shares to the Participant pursuant to the exercise
of such Option, or in any other disqualifying disposition within
the meaning of Section 422 of the Code, such Participant
shall notify the Company in writing as soon as practicable
thereafter of the date and terms of such disposition and, if the
Company (or any affiliate thereof) thereupon has a
tax-withholding obligation, shall pay to the Company (or such
affiliate) an amount equal to any withholding tax the Company
(or affiliate) is required to pay as a result of the
disqualifying disposition.



     
(d) The aggregate Option Price shall be paid
in full upon the exercise of an Option. Payment must be made by
one of the following methods:




		
	 	     
    (i) a certified or bank cashier’s check;
    
	 
	 	     
    (ii) the proceeds of a Company loan program
    or third-party sale program or a notice acceptable to the
    Committee given as consideration under such a program, in each
    case if permitted by the Committee in its discretion, if such a
    program has been established and provided the Participant is
    eligible to participate therein;
    




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    (iii) if approved by the Committee in its
    discretion, Shares of previously owned Common Stock having an
    aggregate Fair Market Value on the date of exercise equal to the
    aggregate Option Price, which Common Stock was owned by the
    Participant at least six months prior to such delivery;
    
	 
	 	     
    (iv) if approved by the Committee in its
    discretion, through the written election of the Participant to
    have Shares withheld by the Company from the Shares otherwise to
    be received, with such withheld Shares having an aggregate Fair
    Market Value on the date of exercise equal to the aggregate
    Option Price;
    
	 
	 	     
    (v) if approved by the Committee, by
    surrendering Options in exchange for Shares having an aggregate
    Fair Market Value on the date of the surrender equal to the
    aggregate Embedded Value on that date of the Options so
    surrendered; or
    
	 
	 	     
    (vi) by any combination of such methods of
    payment or any other method as the Committee in its discretion
    may approve.
    




     
(e) The Committee, in its discretion, may
also permit the Participant to elect to exercise an Option by
delivering to the Company a combination of Shares and cash with
an aggregate Fair Market Value equal to the applicable Option
Price, as determined as of the day the Option is exercised.



     
(f) Except in the case of Options exercised
by certified or bank cashier’s check, the Committee may
impose limitations and prohibitions on the exercise of Options
as it deems appropriate, including, without limitation, any
limitation or prohibition designed to avoid accounting
consequences which may result from the use of Common Stock as
payment upon exercise of an Option.



     
(g) The Committee may provide that no Option
may be exercised with respect to any fractional Share. Any
fractional Shares resulting from an Optionee’s exercise
that is accepted by the Company shall in the discretion of the
Committee be paid in cash.




10.     Tax
Withholding.


     
The Committee may, in its discretion, require a
Participant to pay to the Company at the time of exercise of any
Option or SAR, or vesting of any Performance Stock Award or
Restricted Stock Award or payment under any other Award the
amount that the Committee deems necessary to satisfy the
Company’s obligation to withhold federal, state or local
income or other taxes incurred by reason of the exercise or
other income recognition event. The Committee may in its
discretion elect to withhold issuance of Shares pursuant to
Performance Stock Awards or Restricted Stock Awards in amounts
sufficient to cover any withholding tax obligation. Upon
exercise of an Option, the Optionee may, if approved by the
Committee in its discretion, make a written election to have
Shares then issued withheld by the Company from the Shares
otherwise to be received, or to deliver previously owned Shares,
in order to satisfy the liability for such withholding taxes. In
the event of any withholding of Shares in respect of the
withholding, the number of Shares so withheld or delivered shall
have an aggregate Fair Market Value on the date of exercise
sufficient to satisfy the applicable withholding taxes. Where
the exercise or vesting of an Award does not give rise to an
obligation by the Company to withhold federal, state or local
income or other taxes on the date of exercise, but may give rise
to such an obligation in the future, the Committee may, in its
discretion, make such arrangements and impose such requirements
as it deems necessary or appropriate. Notwithstanding anything
contained in the Plan or the Award Agreement to the contrary,
the Participant’s satisfaction of any tax-withholding
requirements imposed by the Committee in its discretion shall be
a condition precedent to the Company’s obligation, as may
otherwise be provided hereunder, to provide Shares or other
benefits to the Participant, and the failure of the Participant
to satisfy such requirements with respect to any Award shall
cause such Award to be forfeited.




11.     Exercise by
Successors.


     
An Award may be exercised by the Successors of
the Optionee only by written notice (in the form prescribed by
the Committee) to the Company specifying terms and manner of the
exercise.



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12.     Nontransferability of Option.


     Each Award granted under the Plan shall be
nontransferable by the Optionee except by will or the laws of
descent and distribution of the state wherein the Participant is
domiciled at the time of his death; provided, however, that the
Committee may (but need not) permit other transfers, where the
Committee concludes that such transferability (i) does not
result in accelerated income taxation, (ii) does not cause
any Option intended to be an Incentive Stock Option to fail to
be described in Section 422(b) of the Code, and
(iii) is otherwise appropriate and desirable.




13.     Regulations and Approvals.


     
(a) The obligation of the Company to issue,
transfer or sell Shares with respect to Awards granted under the
Plan shall be subject to all applicable laws, rules and
regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate
by the Committee.



     
(b) The Committee may make such changes to
the Plan as may be necessary or appropriate to comply with the
rules and regulations of any government authority or to obtain
tax benefits applicable to stock options.



     
(c) Each Award is subject to the requirement
that, if at any time the Committee determines, in its
discretion, that the listing, registration or qualification of
Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with,
the grant of an Award or the issuance of Shares, no Awards shall
be granted or payment made or Shares issued, in whole or in
part, unless listing, registration, qualification, consent or
approval has been effected or obtained free of any conditions in
a manner acceptable to the Committee.



     
(d) In the event that the disposition of
stock acquired pursuant to the Plan is not covered by a then
current registration statement under the Securities Act, and is
not otherwise exempt from such registration, such Shares shall
be restricted against transfer to the extent required under the
Securities Act and any other applicable law, and the Committee
may require any individual receiving Shares pursuant to the
Plan, as a condition precedent to receipt of such Shares, to
represent to the Company in writing that the Shares acquired by
such individual are acquired for investment only and not with a
view to distribution and that such Shares will be disposed of
only if registered for sale under the Securities Act or if there
is an available exemption for such disposition.




14.     Administrative
Rules; Interpretation.


     
The Committee may make such rules and regulations
and establish such procedures for the administration of the Plan
as it deems appropriate. Without limiting the generality of the
foregoing, the Committee may (i) determine (A) the
conditions under which a Participant will be considered to have
retired or become disabled and (B) whether any Participant
has done so; (ii) establish or assist in the establishment
of a program (which need not be administered in a
nondiscriminatory or uniform manner) under which the Company or
a third party may make bona-fide loans on arm’s-length
terms to any or all Participants to assist such Participants
with the satisfaction of any or all of the obligations that such
Participants may have hereunder and under any Award Agreement or
under which third-party sales may be made for such purpose
(including, without limitation, but subject to any limitations
or prohibitions imposed under applicable law, a loan program
under which the Company or a third party would advance to a
holder of an Option the aggregate Option Price payable under the
Option and be repaid with Option Shares or the proceeds thereof
and a sale program under which funds to pay for Option Shares
are delivered by a third party upon the third party’s
receipt from the Company of stock certificates);
(iii) determine the extent, if any, to which Awards or
Shares issued or issuable pursuant to any Award shall be
forfeited (whether or not such forfeiture is expressly
contemplated hereunder); (iv) interpret the Plan and the
Award Agreements hereunder, with such interpretations to be
conclusive and binding on all persons and otherwise accorded the
maximum deference permitted by law, and (v) take any other
actions and make any other determinations or decisions that it
deems necessary or appropriate in connection with the Plan or
the administration or interpretation thereof. In the event of any dispute or disagreement as to the
interpretation of the Plan or of any rule, regulation or
procedure, or as to any question, right or obligation arising
from or related to the Plan, the decision of the Committee shall
be final and binding upon all persons. Unless otherwise
expressly provided hereunder, the Committee, with respect to any
Award, may exercise its discretion hereunder at the time of the
Award or thereafter.



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15.     Amendments.


     
The Board may amend the Plan as it shall deem
advisable, except that no amendment may adversely affect a
Participant with respect to Awards previously granted unless
such amendments are in connection with compliance with
applicable laws; provided that the Board may not make any
amendment in the Plan that would, if such amendment were not
approved by the holders of the Common Stock, cause the Plan to
fail to comply with any requirement of applicable law or
regulation, unless and until the approval of the holders of such
Common Stock is obtained. Without limiting the generality of the
foregoing, the Committee may (subject to such considerations as
may arise under Section 15 of the Exchange Act, or under
other corporate, securities or tax laws) take any steps it deems
appropriate, that are not inconsistent with the purposes and
intent of the Plan, to take into account the provisions of
Section 162(m) of the Code.




16.     Changes in
Capital Structure.


     
(a) If (i) the Company shall at any
time be involved in a merger, consolidation, dissolution,
liquidation, reorganization, exchange of shares, sale of all or
substantially all of the assets or stock of the Company or a
transaction similar thereto, (ii) any stock dividend, stock
split, reverse stock split, stock combination, reclassification,
recapitalization or other similar change in the capital
structure of the Company, or any distribution to holders of
Common Stock other than cash dividends, shall occur or
(iii) any other event shall occur which in the judgment of
the Committee necessitates action by way of adjusting the terms
of the outstanding Awards, then the Committee may forthwith take
any such action as in its judgment shall be necessary to
maintain the Participants’ rights hereunder (including
under the Award Agreements) so that they are substantially
proportionate to the rights existing prior to such event, and to
maintain the continuing availability of Shares under
Section 5 (if Shares are otherwise then available) in a
manner consistent with the intent hereof, including, without
limitation, adjustments in (x) the number and kind of
shares or other property subject to Awards, (y) the Option
Price (if applicable), and (z) the number and kind of
shares available under Section 5. To the extent that such
action shall include an increase or decrease in the number of
Shares (or units of other property then available) subject to
outstanding Awards, the number of Shares (or units) available
under Section 5 shall be increased or decreased, as the
case may be, proportionately, as may be provided by Committee in
its discretion.



     
(b) If a Change in Control shall occur, then
the Committee as constituted immediately before the Change in
Control may make such adjustments as it, in its discretion,
determines are necessary or appropriate in light of the Change
in Control (including, without limitation, the substitution of
stock, cash or other property for the Shares otherwise issuable
on exercise of Awards, the acceleration of the exercisability of
Awards or substitution of cash or other property for any Award).



     
(c) The judgment of the Committee with
respect to any matter referred to in this Section 16 shall
be conclusive and binding upon each Optionee without the need
for any amendment to the Plan.




17.     Notices.


     
All notices under the Plan shall be in writing,
and if to the Company, shall be delivered to the Board or mailed
to its principal office, addressed to the attention of the
Board; and if to the Participant, shall be delivered personally,
sent by facsimile transmission or mailed to the Participant at
the address appearing in the records of the Company. Such
addresses may be changed at any time by written notice to the
other party given in accordance with this Section 17.



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18.     Rights as
Stockholder.


     
Neither the Participant nor any person entitled
to exercise the Participant’s rights in the event of death
shall have any rights of a stockholder with respect to the
Shares subject to an Award, except to the extent that a
certificate for such Shares shall have been issued upon the
Award or exercise of the Award as provided for herein.




19.     Rights to
Employment.


     
Nothing in the Plan or in any Award granted
pursuant to the Plan shall confer on any individual any right to
continue in the employ or other service of the Company or its
Subsidiaries or interfere in any way with the right of the
Company or its Subsidiaries to terminate the individual’s
employment or other service at any time.




20.     Exculpation
and Indemnification.


     
The Company shall indemnify and hold harmless the
members of the Board and the members of the Committee from and
against any and all liabilities, costs and expenses incurred by
such persons as a result of any act or omission to act in
connection with the performance of such person’s duties,
responsibilities and obligations under the Plan, to the maximum
extent permitted by law, other than such liabilities, costs and
expenses as may result from the gross negligence, bad faith,
willful misconduct or criminal acts of such persons.




21.     Non-U.S. Employees.


     
Without amending the Plan, the Committee may
grant Awards to eligible employees and consultants who are
foreign nationals on such terms and conditions different from
those specified in this Plan as may in the judgment of the
Committee be necessary or desirable to foster and promote
achievement of the purposes of the Plan, and, in furtherance of
such purposes the Committee may make such modifications,
amendments, procedures, subplans and the like as may be
necessary or advisable to comply with provisions of laws in
other countries in which the Company or its Subsidiaries
operates or has employees.




22.     Captions.


     
The use of captions in this Plan is for
convenience. The captions are not intended to and do not provide
substantive rights.




23.     Severability.


     
The invalidity or unenforceability of any
provision of the Plan shall not affect the validity or
enforceability of any other provision of the Plan, which shall
remain in full force and effect.




24.     Governing
Law.


     
THE PLAN SHALL BE GOVERNED BY THE LAWS OF
DELAWARE, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS.



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