**Exhibit 10.1**

 

**ENDOCARDIAL SOLUTIONS, INC.2003 STOCK INCENTIVE PLAN**

 

**Section 1.****                                          Purpose**

 

The purpose ofthe Plan is to promote the interests of the Company and its stockholders byaiding the Company in attracting and retaining employees, officers, consultants,independent contractors and directors capable of assuring the future success ofthe Company, to offer such persons incentives to put forth maximum efforts forthe success of the Company’s business and to afford such persons an opportunityto acquire a proprietary interest in the Company.

 

**Section 2.****                                          Definitions**

 

As used in thePlan, the following terms shall have the meanings set forth below:

 

(a)                                  “Affiliate”shall mean (i) any entity that, directly or indirectly through one or moreintermediaries, is controlled by the Company and (ii) any entity in whichthe Company has a significant equity interest, in each case as determined bythe Committee.

 

(b)                                 “Award”shall mean any Option, Stock Appreciation Right, Restricted Stock, RestrictedStock Unit, Performance Award, Dividend Equivalent, Other Stock Grant or OtherStock-Based Award granted under the Plan.

 

(c)                                  “AwardAgreement” shall mean any written agreement, contract or other instrument ordocument evidencing any Award granted under the Plan.  Each Award Agreement shall be subject to the applicable terms andconditions of the Plan and any other terms and conditions (not inconsistentwith the Plan) determined by the Committee.

 

(d)                                 “Board”shall mean the Board of Directors of the Company.

 

(e)                                  “Code”shall mean the Internal Revenue Code of 1986, as amended from time to time, andany regulations promulgated thereunder.

 

(f)                                    “Committee”shall mean a committee of Directors designated by the Board to administer thePlan, which shall initially be the Company’s compensation committee.  The Committee shall be comprised of not lessthan such number of Directors as shall be required to permit Awards grantedunder the Plan to qualify under Rule 16b-3 and Section 162(m) of theCode, and each member of the Committee shall be a “Non-Employee Director.”

 

(g)                                 “Company”shall mean Endocardial Solutions, Inc., a Delaware corporation, and anysuccessor corporation.

 

(h)                                 “Director”shall mean a member of the Board, including any Non-Employee Director.

 

(i)                                     “DividendEquivalent” shall mean any right granted under Section 6(e) of the Plan.

 

(j)                                     “EligiblePerson” shall mean any employee, officer, consultant, independent contractor ordirector providing services to the Company or any Affiliate who the Committeedetermines to be an Eligible Person.

 

(k)                                  “ExchangeAct” shall mean the Securities Exchange Act of 1934, as amended.

 

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(l)                                     “FairMarket Value” shall mean, with respect to any property (including, withoutlimitation, any Shares or other securities), the fair market value of suchproperty determined by such methods or procedures as shall be established fromtime to time by the Committee. Notwithstanding the foregoing and unless otherwise determined by theCommittee, the Fair Market Value of a Share as of a given date shallbe, if the Shares are then listed on the Nasdaq National Market, theaverage of the high and low sales price of one Share as reported on the NasdaqNational Market on such date or, if the Nasdaq National Market is not open fortrading on such date, on the most recent preceding date when it is open fortrading.

 

(m)                               “IncentiveStock Option” shall mean an option granted under Section 6(a) of the Planthat is intended to qualify as an “incentive stock option” in accordance withthe terms of Section 422 of the Code or any successor provision.

 

(n)                                 “Non-EmployeeDirector” shall mean any Director who is not also an employee of the Company oran Affiliate within the meaning of Rule 16b-3 and an “outside director” withinthe meaning of Section 162(m) of the Code.

 

(o)                                 “Non-QualifiedStock Option” shall mean an option granted under Section 6(a) of the Planthat is not an Incentive Stock Option.

 

(p)                                 “Option”shall mean an Incentive Stock Option or a Non-Qualified Stock Option.

 

(q)                                 “OtherStock Grant” shall mean any right granted under Section 6(f) of the Plan.

 

(r)                                    “OtherStock-Based Award” shall mean any right granted under Section 6(g) of thePlan.

 

(s)                                  “Participant”shall mean an Eligible Person designated to be granted an Award under the Plan.

 

(t)                                    “PerformanceAward” shall mean any right granted under Section 6(d) of the Plan.

 

(u)                                 “Person”shall mean any individual or entity, including a corporation, partnership,limited liability company, association, joint venture or trust.

 

(v)                                 “Plan”shall mean the Endocardial Solutions, Inc. 2003 Stock Incentive Plan, asamended from time to time, the provisions of which are set forth herein.

 

(w)                               “ReloadOption” shall mean any Option granted under Section 6(a)(v) of the Plan.

 

(x)                                   “RestrictedStock” shall mean any Share granted under Section 6(c) of the Plan.

 

(y)                                 “RestrictedStock Unit” shall mean any unit granted under Section 6(c) of the Planevidencing the right to receive a Share (or a cash payment equal to the FairMarket Value of a Share) at some future date.

 

(z)                                   “Rule 16b-3”shall mean Rule 16b-3 promulgated by the Securities and ExchangeCommission under the Securities Exchange Act of 1934, as amended, or anysuccessor rule or regulation.

 

(aa)                            “SecuritiesAct” shall mean the Securities Act of 1933, as amended.

 

(bb)                          “Share”or “Shares” shall mean a share or shares of common stock, $0.01 par value pershare, of the Company or such other securities or property as may becomesubject to Awards pursuant to an adjustment made under Section 4(c) of thePlan.

 

(cc)                            “StockAppreciation Right” shall mean any right granted under Section 6(b) of thePlan.

 

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# **Section 3.**                                          Administration

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(a)                                  Powerand Authority of the Committee.  ThePlan shall be administered by the Committee. Subject to the express provisions of the Plan and to applicable law, theCommittee shall have full power and authority to:  (i) designate Participants; (ii) determine the type ortypes of Awards to be granted to each Participant under the Plan;(iii) determine the number of Shares to be covered by (or the method bywhich payments or other rights are to be determined in connection with) eachAward; (iv) determine the terms and conditions of any Award or Award Agreement;(v) amend the terms and conditions of any Award or Award Agreement andaccelerate the exercisability of any Option or waive any restrictions relatingto any Award; (vi) determine whether, to what extent and under whatcircumstances Awards may be exercised in cash, Shares, promissory notes (*provided*,*however*, that the par value of any Shares to be issued pursuant tosuch exercise shall be paid in the form of cash, services rendered, personalproperty, real property or a combination thereof, and *provided, further* that the acceptance ofsuch promissory notes does not conflict with Section 402 of theSarbanes-Oxley Act of 2002), other securities, other Awards or other property,or canceled, forfeited or suspended; (vii) determine whether, to whatextent and under what circumstances cash, Shares, promissory notes (*provided, however*, that the acceptance ofsuch promissory notes does not conflict with Section 402 of theSarbanes-Oxley Act of 2002),****othersecurities, other Awards, other property and other amounts payable with respectto an Award under the Plan shall be deferred either automatically or at theelection of the holder thereof or the Committee (*provided*, *however*,that the par value of any Shares and Restricted Stock shall be paid in the formof cash, services rendered, personal property, real property or a combinationthereof prior to their issuance); (viii) interpret and administer the Planand any instrument or agreement, including an Award Agreement, relating to thePlan; (ix) establish, amend, suspend or waive such rules and regulationsand appoint such agents as it shall deem appropriate for the properadministration of the Plan; and (x) make any other determination and takeany other action that the Committee deems necessary or desirable for theadministration of the Plan.  Unlessotherwise expressly provided in the Plan, all designations, determinations,interpretations and other decisions under or with respect to the Plan or anyAward shall be within the sole discretion of the Committee, may be made at anytime and shall be final, conclusive and binding upon any Eligible Person andany holder or beneficiary of any Award.

 

(b)                                 Powerand Authority of the Board. Notwithstanding anything to the contrary contained herein, the Boardmay, at any time and from time to time, without any further action of theCommittee, exercise the powers and duties of the Committee under the Plan.

 

# **Section 4.**                                          SharesAvailable for Awards

 

(a)                                  SharesAvailable.  Subject to adjustment asprovided in Section 4(c) of the Plan, the aggregate number of Shares thatmay be issued under the Plan shall be 1,250,000.  Shares to be issuedunder the Plan may be either authorized but unissued Shares or Sharesre-acquired and held in treasury.

 

(b)                                 Accountingfor Awards.  For purposes of thisSection 4, if an Award entitles the holder thereof to receive or purchaseShares, the number of Shares covered by such Award or to which such Awardrelates shall be counted on the date of grant of such Award against theaggregate number of Shares available for granting Awards under the Plan.  Any Shares that are used by a Participant asfull or partial payment to the Company of the purchase price relating to anAward, including Shares tendered in connection with the grant of a ReloadOption, or in connection with the satisfaction of tax obligations relating toan Award, shall again be available for granting Awards (other than IncentiveStock Options) under the Plan.  Inaddition, if any Shares covered by an Award or to which an Award relates arenot purchased or are forfeited, or if an Award otherwise terminates withoutdelivery of any Shares, then the number of Shares counted against the aggregatenumber of Shares available under the Plan with respect to such Award, to theextent of any such forfeiture or termination, shall again be available forgranting Awards under the Plan.

 

(c)                                  Adjustments.  In the event that the Committee shalldetermine that any dividend or other distribution (whether in the form of cash,Shares, other securities or other property), recapitalization, stock split,reverse stock split, reorganization, merger, consolidation, split-up, spin-off,combination, repurchase or exchange of Shares or other securities of theCompany, issuance of warrants or other rights to purchase Shares or othersecurities

 

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of the Company or other similarcorporate transaction or event affects the Shares such that an adjustment isdetermined by the Committee to be appropriate in order to prevent dilution orenlargement of the benefits or potential benefits intended to be made availableunder the Plan, then the Committee shall, in such manner as it may deemequitable, adjust any or all of (i) the number and type of Shares (orother securities or other property) that thereafter may be made the subject ofAwards, (ii) the number and type of Shares (or other securities or otherproperty) subject to outstanding Awards and (iii) the purchase price orexercise price with respect to any Award; *provided*, *however*, that the number ofShares covered by any Award or to which such Award relates shall always be awhole number.  Notwithstanding theabove, in the event (i) of any reorganization, merger, consolidation, split-up,spin-off, combination, repurchase or exchange of Shares or other securities ofthe Company or any other similar corporate transaction or event or (ii) theCompany shall enter into a written agreement to undergo such a transaction orevent, the Committee may, in its sole discretion, cancel any or all outstandingAwards and pay to the holders of any such Awards that are otherwise vested, incash, the value of such Awards based upon the price per share of capital stockreceived or to be received by other stockholders of the Company in such event.

 

(d)                                 AwardLimitations Under the Plan.  NoEligible Person may be granted any Award or Awards under the Plan, the value ofwhich Award or Awards is based solely on an increase in the value of the Sharesafter the date of grant of such Award or Awards, for more than 300,000 Shares(subject to adjustment as provided for in Section 4(c) of the Plan), inthe aggregate in any taxable year.  Theforegoing annual limitation specifically includes the grant of any Award orAwards representing “qualified performance-based compensation” within themeaning of Section 162(m) of the Code.

 

# **Section 5.**                                          Eligibility

 

Any EligiblePerson shall be eligible to be designated a Participant.  In determining which Eligible Persons shallreceive an Award and the terms of any Award, the Committee may take intoaccount the nature of the services rendered by the respective Eligible Persons,their present and potential contributions to the success of the Company or suchother factors as the Committee, in its discretion, shall deem relevant.  Notwithstanding the foregoing, an IncentiveStock Option may only be granted to full-time or part-time employees (whichterm as used herein includes, without limitation, officers and directors whoare also employees), and an Incentive Stock Option shall not be granted to anemployee of an Affiliate unless such Affiliate is also a “subsidiarycorporation” of the Company within the meaning of Section 424(f) of theCode or any successor provision.

 

# **Section 6.**                                          Awards

 

(a)                                  Options.  The Committee is hereby authorized to grantOptions to Eligible Persons with the following terms and conditions and withsuch additional terms and conditions not inconsistent with the provisions ofthe Plan as the Committee shall determine:

 

### (i)                                     ExercisePrice.  The purchase price per Sharepurchasable under an Option shall be determined by the Committee; *provided*,*however*,that such purchase price shall not be less than 100% of the Fair Market Valueof a Share on the date of grant of such Option.

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### (ii)                                  OptionTerm.  The term of each Option shallbe fixed by the Committee at the time of grant.

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### (iii)                               Timeand Method of Exercise.  TheCommittee shall determine the time or times at which an Option may be exercisedin whole or in part and the method or methods by which, and the form or forms(including, without limitation, cash, Shares, promissory notes (*provided*,*however*, that the par value of any Shares to be issued pursuant tosuch exercise shall be paid in the form of cash, services rendered, personalproperty, real property or a combination thereof, and *provided, further*, the acceptance of suchpromissory notes does not conflict with Section 402 of the Sarbanes-OxleyAct of 2002),****other securities,other Awards or other property, or any combination thereof, having a FairMarket Value on the exercise date equal to the applicable exercise price) inwhich, payment of the exercise price with respect thereto may be made or deemedto have been made.

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### (iv)                              IncentiveStock Options.  Notwithstanding anythingin the Plan to the contrary, the following additional provisions shall apply tothe grant of stock options which are intended to qualify as Incentive StockOptions:

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#### (A)                              TheCommittee will not grant Incentive Stock Options in which the aggregate FairMarket Value (determined as of the time the option is granted) of the Shareswith respect to which Incentive Stock Options are exercisable for the firsttime by any Participant during any calendar year (under this Plan and all otherplans of the Company and its Affiliates) shall exceed $100,000.

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#### (B)                                AllIncentive Stock Options must be granted within ten years from the earlier ofthe date on which this Plan was adopted by the Board or the date this Plan wasapproved by the stockholders of the Company.

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#### (C)                                Unlesssooner exercised, all Incentive Stock Options shall expire and no longer beexercisable no later than 10 years after the date of grant; *provided*,*however*,that in the case of a grant of an Incentive Stock Option to a Participant who,at the time such Option is granted, owns (within the meaning ofSection 422 of the Code) stock possessing more than 10% of the totalcombined voting power of all classes of stock of the Company or of itsAffiliate, such Incentive Stock Option shall expire and no longer beexercisable no later than 5 years from the date of grant.

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#### (D)                               Thepurchase price per Share for an Incentive Stock Option shall be not less than100% of the Fair Market Value of a Share on the date of grant of the IncentiveStock Option; *provided*, *however*, that, in the case of the grant ofan Incentive Stock Option to a Participant who, at the time such Option isgranted, owns (within the meaning of Section 422 of the Code) stockpossessing more than 10% of the total combined voting power of all classes ofstock of the Company or of its Affiliate, the purchase price per Sharepurchasable under an Incentive Stock Option shall be not less than 110% of theFair Market Value of a Share on the date of grant of the Inventive StockOption.

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#### (E)                                 AnyIncentive Stock Option authorized under the Plan shall contain such otherprovisions as the Committee shall deem advisable, but shall in all events beconsistent with and contain all provisions required in order to qualify theOption as an Incentive Stock Option.

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### (v)                                 ReloadOptions.  The Committee may grantReload Options, separately or together with another Option and subject to theterms and conditions established by the Committee, pursuant to which theParticipant would be granted a new Non-Qualified Stock Option when the paymentof the exercise price of a previously granted option for common stock is madeby the delivery of Shares owned by the Participant pursuant to Section6(a)(iii) hereof or the relevant provisions of another plan of the Company,when Shares are tendered or withheld as payment of the amount to be withheldunder applicable income tax laws in connection with the exercise of an Option,which new Non-Qualified Stock Option would be a Non-Qualified Stock Option topurchase the number of Shares not exceeding the sum of (A) the number ofShares so provided as consideration upon the exercise of the previously grantedoption to which such Reload Option relates and (B) the number of Shares,if any, tendered or withheld as payment of the amount to be withheld underapplicable tax laws in connection with the exercise of the option to which suchReload Option relates pursuant to the relevant provisions of the plan oragreement relating to such option. Reload Options may be granted with respect to options previously grantedunder the Plan or any other stock option plan of the Company or any Affiliateor may be granted in connection with any option granted under the Plan or anyother stock option plan of the Company or any Affiliate at the time of suchgrant.  Such Reload Options shall have aper share exercise price equal to the Fair Market Value of one Share as of thedate of grant of the new Non-Qualified Stock Option.  Any Reload Option shall be subject to availability of sufficientShares for grant under the Plan.  Sharessurrendered as part or all of the exercise price of the Non-Qualified StockOption to which it relates that have been owned by the optionee less than sixmonths

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will not becounted for purposes of determining the number of Shares that may be purchasedpursuant to a Reload Option.

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(b)                                 StockAppreciation Rights.  The Committeeis hereby authorized to grant Stock Appreciation Rights to Eligible Personssubject to the terms of the Plan.  EachStock Appreciation Right granted under the Plan shall confer on the holder uponexercise the right to receive, as determined by the Committee, cash or a numberof Shares equal to the excess of (a) the Fair Market Value of one Share onthe date of exercise (or, if the Committee shall so determine, at any timeduring a specified period before or after the date of exercise) over(b) the grant price of the Stock Appreciation Right as determined by theCommittee, which grant price shall not be less than 100% of the Fair MarketValue of one Share on the date of grant of the Stock Appreciation Right.  Subject to the terms of the Plan, the grantprice, term, methods of exercise, dates of exercise, methods of settlement andany other terms and conditions (including conditions or restrictions on theexercise thereof) of any Stock Appreciation Right shall be as determined by theCommittee.

 

(c)                                  RestrictedStock and Restricted Stock Units. The Committee is hereby authorized to grant Restricted Stock andRestricted Stock Units to Eligible Persons with the following terms andconditions and with such additional terms and conditions not inconsistent withthe provisions of the Plan as the Committee shall determine:

 

### (i)                                     Restrictions.  Shares of Restricted Stock and RestrictedStock Units shall be subject to such restrictions as the Committee may impose(including, without limitation, a restriction on or prohibition against theright to receive any dividend or other right or property with respect thereto),which restrictions may lapse separately or in combination at such time ortimes, in such installments or otherwise as the Committee may deem appropriate.

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### (ii)                                  StockCertificates.  Any Restricted Stockgranted under the Plan shall be evidenced by the issuance of a stock certificateor certificates, which shall be held by the Company.  Such certificate or certificates shall be registered in the nameof the Participant and shall bear an appropriate legend referring to theapplicable Award Agreement and possible forfeiture of such shares of RestrictedStock.

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### (iii)                               Forfeiture.  Except as otherwise determined by theCommittee, upon a Participant’s termination of employment (as determined undercriteria established by the Committee) during the applicable restrictionperiod, all applicable Shares of Restricted Stock and Restricted Stock Units atsuch time subject to restriction shall be forfeited and reacquired by theCompany; *provided*,*however*,that the Committee may, when it finds that a waiver would be in the bestinterest of the Company, waive in whole or in part any or all remainingrestrictions with respect to Shares of Restricted Stock or Restricted StockUnits.

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(d)                                 PerformanceAwards.  The Committee is herebyauthorized to grant Performance Awards to Eligible Persons subject to the termsof the Plan.  A Performance Awardgranted under the Plan (i) may be denominated or payable in cash, Shares(including, without limitation, Restricted Stock and Restricted Stock Units),other securities, other Awards or other property and (ii) shall confer onthe holder thereof the right to receive payments, in whole or in part, upon theachievement of such performance goals during such performance periods as theCommittee shall establish.  Subject tothe terms of the Plan, the performance goals to be achieved during anyperformance period, the length of any performance period, the amount of anyPerformance Award granted, the amount of any payment or transfer to be madepursuant to any Performance Award and any other terms and conditions of any PerformanceAward shall be determined by the Committee.

 

(e)                                  DividendEquivalents.  The Committee ishereby authorized to grant Dividend Equivalents to Eligible Persons under whichthe Participant shall be entitled to receive payments (in cash, Shares, othersecurities, other Awards or other property as determined in the discretion ofthe Committee) equivalent to the amount of cash dividends paid by the Companyto holders of Shares with respect to a number of Shares determined by theCommittee.  Subject to the terms of thePlan, such Dividend Equivalents may have such terms and conditions as theCommittee shall determine.

 

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(f)                                    OtherStock Grants.  The Committee ishereby authorized, subject to the terms of the Plan, to grant to EligiblePersons Shares without restrictions thereon as are deemed by the Committee tobe consistent with the purpose of the Plan.

 

(g)                                 OtherStock-Based Awards.  The Committeeis hereby authorized to grant to Eligible Persons, subject to the terms of thePlan, such other Awards that are denominated or payable in, valued in whole orin part by reference to, or otherwise based on or related to, Shares(including, without limitation, securities convertible into Shares), as aredeemed by the Committee to be consistent with the purpose of the Plan.  Shares or other securities deliveredpursuant to a purchase right granted under this Section 6(g) shall bepurchased for such consideration, which may be paid by such method or methodsand in such form or forms (including, without limitation, cash, Shares,promissory notes (*provided*, *however*, that the par value of any Sharesto be issued pursuant to such exercise shall be paid in the form of cash,services rendered, personal property, real property or a combination thereof,and *provided, further*, theacceptance of such promissory notes does not conflict with Section 402 ofthe Sarbanes-Oxley Act of 2002), other securities, other Awards or otherproperty or any combination thereof), as the Committee shall determine, thevalue of which consideration, as established by the Committee, shall not beless than 100% of the Fair Market Value of such Shares or other securities asof the date such purchase right is granted.

 

(h)                                 General.

 

### (i)                                     Considerationfor Awards.  Awards may be grantedfor no cash consideration or for any cash or other consideration as determinedby the Committee and required by applicable law.

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### (ii)                                  AwardsMay Be Granted Separately or Together. Awards may, in the discretion of the Committee, be granted either aloneor in addition to, in tandem with or in substitution for any other Award or anyaward granted under any plan of the Company or any Affiliate.  Awards granted in addition to or in tandem withother Awards or in addition to or in tandem with awards granted under any suchother plan of the Company or any Affiliate may be granted either at the sametime as or at a different time from the grant of such other Awards or awards.

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### (iii)                               Formsof Payment under Awards.  Subject tothe terms of the Plan, payments or transfers to be made by the Company or anAffiliate upon the grant, exercise or payment of an Award may be made in suchform or forms as the Committee shall determine (including, without limitation,cash, Shares, promissory notes (*provided,however*, that the acceptance of such promissory notes does notconflict with Section 402 of the Sarbanes-Oxley Act of 2002), othersecurities, other Awards or other property or any combination thereof), and maybe made in a single payment or transfer, in installments or on a deferredbasis, in each case in accordance with rules and procedures established by theCommittee.  Such rules and proceduresmay include, without limitation, provisions for the payment or crediting ofreasonable interest on installment or deferred payments or the grant orcrediting of Dividend Equivalents with respect to installment or deferredpayments.

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### (iv)                              Limitson Transfer of Awards.  No Award(other than Other Stock Grants) and no right under any such Award shall be transferableby a Participant otherwise than by will or by the laws of descent anddistribution and the Company shall not be required to recognize any attemptedassignment of such rights by any Participant; *provided*, *however*,that, if so determined by the Committee, a Participant may, in the mannerestablished by the Committee, designate a beneficiary or beneficiaries toexercise the rights of the Participant and receive any property distributablewith respect to any Award upon the death of the Participant; *provided*,*further*,that, if so determined by the Committee, a Participant may transfer aNon-Qualified Stock Option to any Family Member (as such term is defined in theGeneral Instructions to Form S-8 (or successor to such Instructions or suchForm)) at any time that such Participant holds such Option, *provided* that the Participant may notreceive any consideration for such transfer, the Family Member may not make anysubsequent transfers other than by will or by the laws of descent anddistribution and the Company receives written notice of such transfer, *provided*,*further*,that, if so determined by the Committee and except in the case of an IncentiveStock Option, Awards may be transferable as determined by the Committee.  Except as otherwise determined by theCommittee, each 

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### Award (other than an Incentive Stock Option) or rightunder any such Award shall be exercisable during the Participant’s lifetimeonly by the Participant or, if permissible under applicable law, by theParticipant’s guardian or legal representative.  Except as otherwise determined by the Committee, no Award (otherthan an Incentive Stock Option) or right under any such Award may be pledged, alienated,attached or otherwise encumbered, and any purported pledge, alienation,attachment or other encumbrance thereof shall be void and unenforceable againstthe Company or any Affiliate.

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### (v)                                 Termof Awards.  Subject to Section6(a)(iv)(C), the term of each Award shall be for such period as may bedetermined by the Committee.

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### (vi)                              Restrictions;Securities Exchange Listing.  AllShares or other securities delivered under the Plan pursuant to any Award orthe exercise thereof shall be subject to such stop transfer orders and otherrestrictions as the Committee may deem advisable under the Plan, applicablefederal or state securities laws and regulatory requirements, and the Committeemay direct appropriate stop transfer orders and cause other legends to beplaced on the certificates for such Shares or other securities to reflect suchrestrictions.  If the Shares or othersecurities are traded on a securities exchange, the Company shall not berequired to deliver any Shares or other securities covered by an Award unlessand until such Shares or other securities have been admitted for trading onsuch securities exchange.

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### (vii)                           Prohibitionon Option Repricing.  Except asprovided in Section 4(c) hereof, no Option may be amended to reduce itsinitial exercise price and no Option shall be canceled and replaced with anOption or Options having a lower exercise price, without the approval of thestockholders of the Company or unless there would be no material adverse effecton the Company’s financial statements as prepared in accordance with GenerallyAccepted Accounting Principles.

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# **Section 7.**                                          Amendmentand Termination; Adjustments

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(a)                                  Amendmentsto the Plan.  The Board may amend,alter, suspend, discontinue or terminate the Plan at any time; *provided*,*however*,that, notwithstanding any other provision of the Plan or any Award Agreement,without the approval of the stockholders of the Company, no such amendment,alteration, suspension, discontinuation or termination shall be made that,absent such approval:

 

### (i)                                     violatesthe rules or regulations of the National Association of Securities Dealers,Inc. or any other securities exchange that are applicable to the Company;

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### (ii)                                  causesthe Company to be unable, under the Code, to grant Incentive Stock Optionsunder the Plan;

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### (iii)                               increasesthe number of shares authorized under the Plan as specified inSection 4(a);

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### (iv)                              permitsthe award of Options or Stock Appreciation Rights at a price less than 100% ofthe Fair Market Value of a Share on the date of grant of such Option or StockAppreciation Right, as prohibited by Sections 6(a)(i) and 6(b)(ii) of the Planor the repricing of Options or Stock Appreciation Rights, as prohibited bySection 3(a)(v) of the Plan; or

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### (v)                                 wouldprevent the grant of Options or Stock Appreciation Rights that would qualifyunder Section 162(m) of the Code.

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(b)                                 Amendmentsto Awards.  The Committee may waiveany conditions of or rights of the Company under any outstanding Award,prospectively or retroactively.  Exceptas otherwise provided herein or in an Award Agreement, the Committee may notamend, alter, suspend, discontinue or terminate any outstanding Award,prospectively or retroactively, if such action would adversely affect therights of the holder of such Award, without the consent of the Participant orholder or beneficiary thereof.

 

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(c)                                  Correctionof Defects, Omissions and Inconsistencies. The Committee may correct any defect, supply any omission or reconcileany inconsistency in the Plan or any Award in the manner and to the extent itshall deem desirable to carry the Plan into effect.

 

# **Section 8.**                                          IncomeTax Withholding

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In order tocomply with all applicable federal, state or local income tax laws orregulations, the Company may take such action as it deems appropriate to ensurethat all applicable federal, state or local payroll, withholding, income orother taxes, which are the sole and absolute responsibility of a Participant,are withheld or collected from such Participant.  In order to assist a Participant in paying all or a portion ofthe federal, state and local taxes to be withheld or collected upon exercise orreceipt of (or the lapse of restrictions relating to) an Award, the Committee,in its discretion and subject to such additional terms and conditions as it mayadopt, may permit the Participant to satisfy such tax obligation by(i) electing to have the Company withhold a portion of the Sharesotherwise to be delivered upon exercise or receipt of (or the lapse ofrestrictions relating to) such Award with a Fair Market Value equal to theamount of such taxes (but only to the extent of the minimum amount required tobe withheld under applicable laws or regulations) or (ii) delivering tothe Company Shares other than Shares issuable upon exercise or receipt of (or thelapse of restrictions relating to) such Award with a Fair Market Value equal tothe amount of such taxes.  The election,if any, must be made on or before the date that the amount of tax to bewithheld is determined.

 

# **Section 9.**                                          GeneralProvisions

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(a)                                  NoRights to Awards.  No EligiblePerson or other Person shall have any claim to be granted any Award under thePlan, and there is no obligation for uniformity of treatment of EligiblePersons or holders or beneficiaries of Awards under the Plan.  The terms and conditions of Awards need notbe the same with respect to any Participant or with respect to differentParticipants.

 

(b)                                 AwardAgreements.  No Participant willhave rights under an Award granted to such Participant unless and until anAward Agreement shall have been duly executed on behalf of the Company and, ifrequested by the Company, signed by the Participant.

 

(c)                                  PlanProvisions Control.  In the eventthat any provision of an Award Agreement conflicts with or is inconsistent inany respect with the terms of the Plan as set forth herein or subsequentlyamended, the terms of the Plan shall control.

 

(d)                                 NoRights of Stockholders.  Except withrespect to Shares of Restricted Stock as to which the Participant has beengranted the right to vote, neither a Participant nor the Participant’s legalrepresentative shall be, or have any of the rights and privileges of, astockholder of the Company with respect to any Shares issuable to suchParticipant upon the exercise or payment of any Award, in whole or in part,unless and until such Shares have been issued in the name of such Participantor such Participant’s legal representative without restrictions thereto.

 

(e)                                  NoLimit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliatefrom adopting or continuing in effect other or additional compensationarrangements, and such arrangements may be either generally applicable orapplicable only in specific cases.

 

(f)                                    NoRight to Employment.  The grant ofan Award shall not be construed as giving a Participant the right to beretained in the employ, or us giving a director of the Company or an Affiliatethe right to continue as a director or an Affiliate of the Company or anyAffiliate, nor will it affect in any way the right of the Company or anAffiliate to terminate such employment at any time, with or without cause.  In addition, the Company or an Affiliate mayat any time dismiss a Participant from employment, or terminate the term of adirector of the Company or an Affiliate, free from any liability or any claimunder the Plan or any Award, unless otherwise expressly provided in the Plan orin any Award Agreement.  Nothing in thisPlan shall confer on any person any legal or equitable right against the Companyor any Affiliate, directly or indirectly, or give rise to any cause of actionat law or in equity against the Company or an Affiliate.  The Awards granted hereunder shall not formany part of the wages or salary of any Eligible Person for purposes of severancepay or termination indemnities, irrespective of the

 

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reason for termination ofemployment.  Under no circumstancesshall any person ceasing to be an employee of the Company or any Affiliate beentitled to any compensation for any loss of any right or benefit under thePlan which such employee might otherwise have enjoyed but for termination ofemployment, whether such compensation is claimed by way of damages for wrongfulor unfair dismissal, breach of contract or otherwise.  By participating in the Plan, each Participant shall be deemed tohave accepted all the conditions of the Plan and the terms and conditions ofany rules and regulations adopted by the Committee and shall be fully boundthereby.

 

(g)                                 GoverningLaw.  The validity, construction andeffect of the Plan or any Award, and any rules and regulations relating to thePlan or any Award, shall be determined in accordance with the internal laws,and not the law of conflicts, of the State of Delaware.

 

(h)                                 Severability.  If any provision of the Plan or any Award isor becomes or is deemed to be invalid, illegal or unenforceable in anyjurisdiction or would disqualify the Plan or any Award under any law deemedapplicable by the Committee, such provision shall be construed or deemedamended to conform to applicable laws, or if it cannot be so construed ordeemed amended without, in the determination of the Committee, materiallyaltering the purpose or intent of the Plan or the Award, such provision shallbe stricken as to such jurisdiction or Award, and the remainder of the Plan orany such Award shall remain in full force and effect.

 

(i)                                     NoTrust or Fund Created.  Neither thePlan nor any Award shall create or be construed to create a trust or separatefund of any kind or a fiduciary relationship between the Company or anyAffiliate and an Eligible Person or any other Person.  To the extent that any Person acquires a right to receivepayments from the Company or any Affiliate pursuant to an Award, such rightshall be no greater than the right of any unsecured general creditor of theCompany or any Affiliate.

 

(j)                                     OtherBenefits.  No compensation orbenefit awarded to or realized by any Participant under the Plan shall beincluded for the purpose of computing such Participant’s compensation under anycompensation-based retirement, disability, or similar plan of the Companyunless required by law or otherwise provided by such other plan.

 

(k)                                  NoFractional Shares.  No fractionalShares shall be issued or delivered pursuant to the Plan or any Award, and theCommittee shall determine whether cash shall be paid in lieu of any fractionalShares or whether such fractional Shares or any rights thereto shall becanceled, terminated or otherwise eliminated.

 

(l)                                     Headings.  Headings are given to the Sections andsubsections of the Plan solely as a convenience to facilitate reference.  Such headings shall not be deemed in any waymaterial or relevant to the construction or interpretation of the Plan or anyprovision thereof.

 

(m)                               Section 16Compliance; Section 162(m) Administration.  The Plan is intended to comply in all respects withRule 16b-3 or any successor provision, as in effect from time to time, andin all events the Plan shall be construed in accordance with the requirementsof Rule 16b-3.  If any Planprovision does not comply with Rule 16b-3 as hereafter amended orinterpreted, the provision shall be deemed inoperative.  The Board of Directors, in its absolutediscretion, may bifurcate the Plan so as to restrict, limit or condition theuse of any provision of the Plan with respect to persons who are officers ordirectors subject to Section 16 of the Exchange Act without sorestricting, limiting or conditioning the Plan with respect to other EligiblePersons.  With respect to Options andStock Appreciation Rights, the Company intends to have the Plan administered inaccordance with the requirements for the award of “qualified performance-basedcompensation” within the meaning of Section 162(m) of the Code.

 

(n)                                 ConditionsPrecedent to Issuance of Shares. Shares shall not be issued pursuant to the exercise or payment of thepurchase price relating to an Award unless such exercise or payment and theissuance and delivery of such Shares pursuant thereto shall comply with allrelevant provisions of law, including, without limitation, the Securities Act,the Exchange Act, the rules and regulations promulgated thereunder, therequirements of any applicable Stock Exchange and the Delaware GeneralCorporation Law.  As a condition to theexercise or payment of the purchase price relating to such Award, the Companymay require that the person exercising or paying the purchase price representand warrant that the Shares are being purchased only for investment and withoutany 

 

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present intention to sell ordistribute such Shares if, in the opinion of counsel for the Company, such arepresentation and warranty is required by law.

 

# **Section 10.**                                   EffectiveDate of the Plan

# ** **

The Plan shallbe effective upon its adoption by the Board, *provided*,*however*, that in the event thePlan is not approved by the stockholders of the Company within one yearthereafter, the Plan will be terminated and all Awards granted under the Planwill be terminated and deemed null and void,and *provided, further*,that no Award may vest and no Shares (including Shares of Restricted Stock) maybe issued under the Plan prior to approval of the Plan by the stockholders ofthe Company.

 

# **Section 11.**                                   Termof the Plan

# ** **

No Award shallbe granted under the Plan after tenyears from earlier of date of adoption of the Plan by the Board or date ofstockholder approval or any earlier date of discontinuation ortermination established pursuant to Section 7(a) of the Plan.  However, unless otherwise expressly providedin the Plan or in an applicable Award Agreement, any Award theretofore grantedmay extend beyond such date, and the authority of the Committee provided forhereunder with respect to the Plan and any Awards, and the authority of theBoard to amend the Plan, shall extend beyond the termination of the Plan.

 

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