Exhibit 10.1


Exhibit 10.1




McMoRan
EXPLORATION CO.

2005
STOCK INCENTIVE PLAN

 

SECTION
1  

 

Purpose. The
purpose of the McMoRan Exploration Co. 2005 Stock Incentive Plan (the “Plan”) is
to motivate and reward key employees, consultants and advisers by giving them a
proprietary interest in the Company’s success.

 

SECTION
2  

 

Definitions. As used
in the Plan, the following terms shall have the meanings set forth
below:

 

“Award”
shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted
Stock Unit or Other Stock-Based Award.

 

“Award
Agreement” shall mean any written or electronic notice of grant, agreement,
contract or other instrument or document evidencing any Award, which may, but
need not, be required to be executed,
acknowledged or accepted by a Participant.

 

“Board”
shall mean the Board of Directors of the Company.

 

“Code”
shall mean the Internal Revenue Code of 1986, as amended from time to
time.

 

“Committee”
shall mean, until otherwise determined by the Board, the Corporate Personnel
Committee of the Board.

 

“Common
Stock” shall mean shares of common stock, par value $0.01 per share, of the
Company.

 

“Company”
shall mean McMoRan Exploration Co.

 

“Designated
Beneficiary” shall mean the beneficiary designated by the Participant, in a
manner determined by the Committee, to receive the benefits due the Participant
under the Plan in the event of the Participant’s death. In the absence of an
effective designation by the Participant, Designated Beneficiary shall mean the
Participant’s estate.

 

“Eligible
Individual” shall mean (i) any person providing services as an officer of the
Company or a Subsidiary, whether or not employed by such entity, including any
such person who is also a director of the Company, (ii) any employee of the
Company or a Subsidiary, including any director who is also an employee of the
Company or a Subsidiary, (iii) any officer or employee of an entity with which
the Company has contracted to receive executive, management or legal services
who provides services to the Company or a Subsidiary through such arrangement,
(iv) any consultant or adviser to the Company, a Subsidiary or to an entity
described in clause (iii) hereof who provides services to the Company or a
Subsidiary through such arrangement and (v) any person who has agreed in writing
to become a person described in clauses (i), (ii), (iii) or (iv) within not more
than 30 days following the date of grant of such person’s first Award under the
Plan.

 

“Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended from time to
time.

 

“Incentive
Stock Option” shall mean an option granted under Section 6 of the Plan that is
intended to meet the requirements of Section 422 of the Code or any successor
provision thereto.

 

“Nonqualified
Stock Option” shall mean an option granted under Section 6 of the Plan that is
not intended to be an Incentive Stock Option.

 

“Option”
shall mean an Incentive Stock Option or a Nonqualified Stock
Option.

 

“Other
Stock-Based Award” shall mean any right or award granted under Section 10 of the
Plan.

 

“Participant”
shall mean any Eligible Individual granted an Award under the Plan.

 

“Person”
shall mean any individual, corporation, partnership, limited liability company,
association, joint-stock company, trust, unincorporated organization, government
or political subdivision thereof or other entity.

 

“Restricted
Stock” shall mean any restricted stock granted under Section 8 of the
Plan.

 

“Restricted
Stock Unit” shall mean any restricted stock unit granted under Section 9 of the
Plan.

 

“Section
162(m)” shall mean Section 162(m) of the Code and all regulations promulgated
thereunder as in effect from time to time.

 

“Section
409A” shall mean Section 409A of the Code and all regulations and guidance
promulgated thereunder as in effect from time to time.

 

“Shares”
shall mean the shares of Common Stock and such other securities of the Company
or a Subsidiary as the Committee may from time to time designate.

 

“Stock
Appreciation Right” shall mean any right granted under Section 7 of the
Plan.

 

“Subsidiary”
shall mean (i) any corporation or other entity in which the Company possesses
directly or indirectly equity interests representing at least 50% of the total
ordinary voting power or at least 50% of the total value of all classes of
equity interests of such corporation or other entity and (ii) any other entity
in which the Company has a direct or indirect economic interest that is
designated as a Subsidiary by the Committee.

 

SECTION
3  

 

(a)  Administration. The
Plan shall be administered by the Committee. Subject to the terms of the Plan
and applicable law, and in addition to other express powers and authorizations
conferred on the Committee by the Plan, the Committee shall have full power and
authority to: (i) designate Participants; (ii) determine the type or types of
Awards to be granted to an Eligible Individual; (iii) determine the number of
Shares to be covered by, or with respect to which payments, rights or other
matters are to be calculated in connection with, Awards; (iv) determine the
terms and conditions of any Award; (v) determine whether, to what extent, and
under what circumstances Awards may be settled or exercised in cash, whole
Shares, other whole securities, other Awards, other property or other cash
amounts payable by the Company upon the exercise of that or other Awards, or
canceled, forfeited or suspended and the method or methods by which Awards may
be settled, exercised, canceled, forfeited or suspended; (vi) determine whether,
to what extent, and under what circumstances cash, Shares, other securities,
other Awards, other property, and other amounts payable by the Company with
respect to an Award shall be deferred either automatically or at the election of
the holder thereof or of the Committee; (vii) interpret and administer the Plan
and any instrument or agreement relating to, or Award made under, the Plan;
(viii) establish, amend, suspend or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper administration of the
Plan; and (ix) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be
made at any time and shall be final, conclusive and binding upon all Persons,
including the Company, any Subsidiary, any Participant, any holder or
beneficiary of any Award, any stockholder of the Company and any Eligible
Individual.

 

(b)  Delegation. Subject
to the terms of the Plan and applicable law, the Committee may delegate to one
or more officers of the Company the authority, subject to such terms and
limitations as the Committee shall determine, to grant and set the terms of, to
cancel, modify or waive rights with respect to, or to alter, discontinue,
suspend, or terminate Awards held by Eligible Individuals who are not officers
or directors of the Company for purposes of Section 16 of the Exchange Act, or
any successor section thereto, or who are otherwise not subject to such Section;
provided, however, that the per share exercise price of any Option granted under
this Section 3(b) shall be equal to the fair market value of the underlying
Shares on the date of grant.

 

SECTION
4  

 

Eligibility. Any
Eligible Individual shall be eligible to be granted an Award.

 

SECTION
5  

 

(a)  Shares
Available for Awards. Subject
to adjustment as provided in Section 5(b):

 

(i)  Calculation
of Number of Shares Available.

 

(A)  Subject
to the other provisions of this Section 5(a), the number of Shares with respect
to which Awards payable in Shares may be granted under the Plan shall be
3,500,000. Awards that by their terms may be settled only in cash shall not be
counted against the maximum number of Shares provided herein.

 

(B)  The
number of Shares that may be issued pursuant to Incentive Stock Options may not
exceed 3,500,000 Shares.

 

(C)  Subject
to the other provisions of this Section 5(a):

 

(1)  the
maximum number of Shares with respect to which Awards in the form of Restricted
Stock, Restricted Stock Units or Other Stock-Based Awards payable in Shares for
which a per share purchase price that is less than 100% of the fair market value
of the securities to which the Award relates shall be 875,000 Shares;
and

 

(2)  up to
150,000 Shares may be issued pursuant to Awards in the form of Restricted Stock,
Restricted Stock Units or Other Stock-Based Awards payable in Shares without
compliance with the minimum vesting periods set forth in Sections 8(b), 9(b),
and 10(b), respectively. If (x) Restricted Stock, Restricted Stock Units or an
Other Stock-Based Award is granted with a minimum vesting period of at least
three years or a minimum vesting period of at least one year, subject to the
attainment of specific performance goals, and (y) the vesting of such Award is
accelerated in accordance with Section 12(a) hereof as a result of the
Participant’s death, retirement or other termination of employment or cessation
of consulting or advisory services to the Company, or a change in control of the
Company, such Shares shall not count against the 150,000 limitation described
herein. 

 

(D)  To the
extent any Shares covered by an Award are not issued because the Award is
forfeited or canceled or the Award is settled in cash, such Shares shall again
be available for grant pursuant to new Awards under the Plan.

 

(E)  In the
event that Shares are issued as Restricted Stock or Other Stock-Based Awards
under the Plan and thereafter are forfeited or reacquired by the Company
pursuant to rights reserved upon issuance thereof, such Shares shall again be
available for grant pursuant to new Awards under the Plan. With respect to Stock
Appreciation Rights, if the Award is payable in Shares, all Shares to which the
Award relates are counted against the Plan limits, rather than the net number of
Shares delivered upon exercise of the Award.

 

(ii)  Shares
Deliverable Under Awards. Any
Shares delivered pursuant to an Award may consist of authorized and unissued
Shares or of treasury Shares, including Shares held by the Company or a
Subsidiary and Shares acquired in the open market or otherwise obtained by the
Company or a Subsidiary. The issuance of Shares may be effected on a
non-certificated basis, to the extent not prohibited by applicable law or the
applicable rules of any stock exchange.

 

(iii)  Individual
Limit. Any
provision of the Plan to the contrary notwithstanding, no individual may receive
in any year Awards under the Plan, whether payable in cash or Shares, that
relate to more than 500,000 Shares. 

 

(iv)  Use of
Shares. Subject
to the terms of the Plan and the overall limitation on the number of Shares that
may be delivered under the Plan, the Committee may use available Shares as the
form of payment for compensation, grants or rights earned or due under any other
compensation plans or arrangements of the Company or a Subsidiary and the plans
or arrangements of the Company or a Subsidiary assumed in business
combinations.

 

(b)  Adjustments. In the
event that the Committee determines that any dividend or other distribution
(whether in the form of cash, Shares, Subsidiary securities, 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 the Company, issuance of
warrants or other rights to purchase Shares or other securities of the Company,
or other similar corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate to prevent dilution
or enlargement of the benefits or potential benefits intended to be made
available under the Plan, then the Committee may, in its sole discretion and in
such manner as it may deem equitable, adjust any or all of (i) the number and
type of Shares (or other securities or property) with respect to which Awards
may be granted, (ii) the number and type of Shares (or other securities or
property) subject to outstanding Awards, and (iii) the grant or exercise price
with respect to any Award and, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award and, if deemed appropriate, adjust
outstanding Awards to provide the rights contemplated by Section 11(b) hereof;
provided, in each case, that with respect to Awards of Incentive Stock Options
no such adjustment shall be authorized to the extent that such authority would
cause the Plan to violate Section 422(b)(1) of the Code or any successor
provision thereto and, with respect to all Awards under the Plan, no such
adjustment shall be authorized to the extent that such authority would be
inconsistent with the requirements for full deductibility under Section 162(m);
and provided further that the number of Shares subject to any Award denominated
in Shares shall always be a whole number.

 

(c)  Performance
Goals for Section 162(m) Awards. The
Committee shall determine at the time of grant if the grant of Restricted Stock,
Restricted Stock Units or an Other Stock-Based Award is intended to qualify as
“performance-based compensation” as that term is used in Section 162(m). Any
such grant shall be conditioned on the achievement of one or more performance
measures. The performance measures pursuant to which Restricted Stock,
Restricted Stock Units and Other Stock-Based Awards shall vest shall be any or a
combination of the following: earnings per share, return on assets, an economic
value added measure, shareholder return, earnings, share price, return on
equity, return on investment, return on fully-employed capital, reduction of
expenses, containment of expenses within budget, reserve recognition, addition
to reserves, cash provided by operating activities, increase in cash flow,
return on cash flow, cash flow per equivalent barrel, finding costs per
equivalent barrel, or increase in production of the Company, a division of the
Company or a Subsidiary. For any performance period, such performance objectives
may be measured on an absolute basis or relative to a group of peer companies
selected by the Committee, relative to internal goals or relative to levels
attained in prior years. For grants of Restricted Stock, Restricted Stock Units
and Other Stock-Based Awards intended to qualify as “performance-based
compensation,” the grants and the establishment of performance measures shall be
made during the period required under Section 162(m).

 

SECTION
6  

 

(a)  Stock
Options. Subject
to the provisions of the Plan, the Committee shall have sole and complete
authority to determine the Eligible Individuals to whom Options shall be
granted, the number of Shares to be covered by each Option, the option price
thereof, the conditions and limitations applicable to the exercise of the Option
and the other terms thereof. The Committee shall have the authority to grant
Incentive Stock Options, Nonqualified Stock Options or both. In the case of
Incentive Stock Options, the terms and conditions of such grants shall be
subject to and comply with such rules as may be required by Section 422 of the
Code, as from time to time amended, and any implementing regulations. Except in
the case of an Option granted in assumption of or substitution for an
outstanding award of a company acquired by the Company or with which the Company
combines, the exercise price of any Option granted under this Plan shall not be
less than 100% of the fair market value of the underlying Shares on the date of
grant.

 

(b)  Exercise. Each
Option shall be exercisable at such times and subject to such terms and
conditions as the Committee may, in its sole discretion, specify in the
applicable Award Agreement or thereafter, provided, however, that in no event
may any Option granted hereunder be exercisable after the expiration of 10 years
after the date of such grant. The Committee may impose such conditions with
respect to the exercise of Options, including without limitation, any condition
relating to the application of Federal or state securities laws, as it may deem
necessary or advisable. An Option may be exercised, in whole or in part, by
giving written notice to the Company, specifying the number of Shares to be
purchased. The exercise notice shall be accompanied by the full purchase price
for the Shares. 

 

(c)  Payment. The
Option price shall be payable in United States dollars and may be paid by (i)
cash or cash equivalent; (ii) delivery of shares of Common Stock, which shares
shall be valued for this purpose at the fair market value (valued in accordance
with procedures established by the Committee) on the business day immediately
preceding the date such Option is exercised and, unless otherwise determined by
the Committee, shall have been held by the optionee for at least six months; or
(iii) in such other manner as may be authorized from time to time by the
Committee. Prior to the issuance of Shares upon the exercise of an Option, a
Participant shall have no rights as a shareholder.

 

SECTION
7  

 

(a)  Stock
Appreciation Rights. Subject
to the provisions of the Plan, the Committee shall have sole and complete
authority to determine the Eligible Individuals to whom Stock Appreciation
Rights shall be granted, the number of Shares to be covered by each Award of
Stock Appreciation Rights, the grant price thereof, the conditions and
limitations applicable to the exercise of the Stock Appreciation Right and the
other terms thereof. Stock Appreciation Rights may be granted in tandem with
another Award, in addition to another Award, or freestanding and unrelated to
any other Award. Stock Appreciation Rights granted in tandem with or in addition
to an Option or other Award may be granted either at the same time as the Option
or other Award or at a later time. Stock Appreciation Rights shall not be
exercisable after the expiration of 10 years after the date of grant. Except in
the case of a Stock Appreciation Right granted in assumption of or substitution
for an outstanding award of a company acquired by the Company or with which the
Company combines, the grant price of any Stock Appreciation Right granted under
this Plan shall not be less than 100% of the fair market value of the Shares
covered by such Stock Appreciation Right on the date of grant or, in the case of
a Stock Appreciation Right granted in tandem with a then outstanding Option or
other Award, on the date of grant of such related Option or Award.

 

(b)  A Stock
Appreciation Right shall entitle the holder thereof to receive upon exercise,
for each Share to which the Stock Appreciation Right relates, an amount equal to
the excess, if any, of the fair market value of a Share on the date of exercise
of the Stock Appreciation Right over the grant price. The Committee shall
determine at the time of grant of a Stock Appreciation Right whether it shall be
settled in cash, Shares or a combination of cash and Shares. 

 

SECTION
8  

 

(a)  Restricted
Stock. Subject
to the provisions of the Plan, the Committee shall have sole and complete
authority to determine the Eligible Individuals to whom Restricted Stock shall
be granted, the number of Shares to be covered by each Award of Restricted Stock
and the terms, conditions, and limitations applicable thereto. An Award of
Restricted Stock may be subject to the attainment of specified performance goals
or targets, restrictions on transfer, forfeitability provisions and such other
terms and conditions as the Committee may determine, subject to the provisions
of the Plan. An award of Restricted Stock may be made in lieu of the payment of
cash compensation otherwise due to an Eligible Individual. To the extent that
Restricted Stock is intended to qualify as “performance-based compensation”
under Section 162(m), it must be made subject to the attainment of one or more
of the performance goals specified in Section 5(c) hereof and meet the
additional requirements imposed by Section 162(m).

 

(b)  The
Restricted Period. At the
time that an Award of Restricted Stock is made, the Committee shall establish a
period of time during which the transfer of the Shares of Restricted Stock shall
be restricted (the “Restricted Period”). Each Award of Restricted Stock may have
a different Restricted Period. Except for Restricted Stock that vests based on
the attainment of performance goals, and except as provided in Section
5(a)(i)(C)(2), a Restricted Period of at least three years is required with
incremental vesting of the Award over the three-year period permitted. If the
grant or vesting of the Shares is subject to the attainment of specified
performance goals, a Restricted Period of at least one year with incremental
vesting is permitted. The expiration of the Restricted Period shall also occur
as provided in the Award Agreement in accordance with Section 12(a) hereof.


 

(c)  Escrow. The
Participant receiving Restricted Stock shall enter into an Award Agreement with
the Company setting forth the conditions of the grant. Certificates representing
Shares of Restricted Stock shall be registered in the name of the Participant
and deposited with the Company, together with a stock power endorsed in blank by
the Participant. Each such certificate shall bear a legend in substantially the
following form:

 

The
transferability of this certificate and the shares of Common Stock represented
by it are subject to the terms and conditions (including conditions of
forfeiture) contained in the McMoRan Exploration Co. 2005 Stock Incentive Plan
(the “Plan”) and a notice of grant issued thereunder to the registered owner by
McMoRan Exploration Co. Copies of the Plan and the notice of grant are on file
at the principal office of McMoRan Exploration Co.

 

(d)  Dividends
on Restricted Stock. Any and
all cash and stock dividends paid with respect to the Shares of Restricted Stock
shall be subject to any restrictions on transfer, forfeitability provisions or
reinvestment requirements as the Committee may, in its discretion, prescribe in
the Award Agreement.

 

(e)  Forfeiture. In the
event of the forfeiture of any Shares of Restricted Stock under the terms
provided in the Award Agreement (including any additional Shares of Restricted
Stock that may result from the reinvestment of cash and stock dividends, if so
provided in the Award Agreement), such forfeited shares shall be surrendered and
the certificates canceled. The Participants shall have the same rights and
privileges, and be subject to the same forfeiture provisions, with respect to
any additional Shares received pursuant to Section 5(b) or Section 11(b) due to
a recapitalization, merger or other change in capitalization.

 

(f)  Expiration
of Restricted Period. Upon
the expiration or termination of the Restricted Period and the satisfaction of
any other conditions prescribed by the Committee or at such earlier time as
provided in the Award Agreement or an amendment thereto, the restrictions
applicable to the Restricted Stock shall lapse and a stock certificate for the
number of Shares of Restricted Stock with respect to which the restrictions have
lapsed shall be delivered, free of all such restrictions and legends, except any
that may be imposed by law, to the Participant or the Participant’s estate, as
the case may be.

 

(g)  Rights
as a Stockholder. Subject
to the terms and conditions of the Plan and subject to any restrictions on the
receipt of dividends that may be imposed in the Award Agreement, each
Participant receiving Restricted Stock shall have all the rights of a
stockholder with respect to Shares of stock during any period in which such
Shares are subject to forfeiture and restrictions on transfer, including without
limitation, the right to vote such Shares.

 

SECTION
9   

 

(a)  Restricted
Stock Units. Subject
to the provisions of the Plan, the Committee shall have sole and complete
authority to determine the Eligible Individuals to whom Restricted Stock Units
shall be granted, the number of Shares to be covered by each Award of Restricted
Stock Units and the terms, conditions, and limitations applicable thereto. An
Award of Restricted Stock Units is a right to receive shares of Common Stock in
the future and may be subject to the attainment of specified performance goals
or targets, restrictions on transfer, forfeitability provisions and such other
terms and conditions as the Committee may determine, subject to the provisions
of the Plan. An award of Restricted Stock Units may be made in lieu of the
payment of cash compensation otherwise due to an Eligible Individual. To the
extent that an Award of Restricted Stock Units is intended to qualify as
“performance-based compensation” under Section 162(m), it must be made subject
to the attainment of one or more of the performance goals specified in Section
5(c) hereof and meet the additional requirements imposed by Section
162(m).

 

(b)  The
Vesting Period. At the
time that an Award of Restricted Stock Units is made, the Committee shall
establish a period of time during which the Restricted Stock Units shall vest
(the “Vesting Period”). Each Award of Restricted Stock may have a different
Vesting Period. Except for Restricted Stock Units that vest based on the
attainment of performance goals, and except as provided in Section
5(a)(i)(C)(2), a Vesting Period of at least three years is required with
incremental vesting of the Award over the three-year period permitted. If the
grant or vesting is subject to the attainment of specified performance goals, a
Vesting Period of at least one year with incremental vesting is permitted. The
expiration of the Vesting Period shall also occur as provided in the Award
Agreement in accordance with Section 12(a) hereof. 

 

(c)  Rights
as a Stockholder. Subject
to the terms and conditions of the Plan and subject to any restrictions may be
imposed in the Award Agreement, each Participant receiving Restricted Stock
Units shall have no rights as a stockholder with respect to such Restricted
Stock Units until such time as Shares are issued to the
Participant.

 

SECTION
10  

 

(a)  Other
Stock-Based Awards. The
Committee is hereby authorized to grant to Eligible Individuals an “Other
Stock-Based Award”, which shall consist of an Award that is not an instrument or
Award specified in Sections 6 through 9 of this Plan, the value of which is
based in whole or in part on the value of Shares. Other Stock-Based Awards may
be awards of Shares or may be denominated or payable in, valued in whole or in
part by reference to, or otherwise based on or related to, Shares (including,
without limitation, securities convertible or exchangeable into or exercisable
for Shares), as deemed by the Committee consistent with the purposes of the
Plan. The Committee shall determine the terms and conditions of any such Other
Stock-Based Award and may provide that such awards would be payable in whole or
in part in cash. To the extent that an Other Stock-Based Award is intended to
qualify as “performance-based compensation” under Section 162(m), it must be
made subject to the attainment of one or more of the performance goals specified
in Section 5(c) hereof and meet the additional requirements imposed by Section
162(m).

 

(b)  Limitations. Except
for Other Stock-Based Awards that vest based on the attainment of performance
goals, and except as provided in Section 5(a)(i)(C)(2), a vesting period of at
least three years is required with incremental vesting of the Award over the
three-year period permitted. If the grant or vesting is subject to the
attainment of specified performance goals, a vesting period of at least one year
with incremental vesting is permitted. The expiration of the vesting period
shall also occur as provided in the Award Agreement in accordance with Section
12(a) hereof. 

 

(c)  Dividend
Equivalents. In the
sole and complete discretion of the Committee, an Award, whether made as an
Other Stock-Based Award under this Section 10 or as an Award granted pursuant to
Sections 6 through 9 hereof, may provide the holder thereof with dividends or
dividend equivalents, payable in cash, Shares, Subsidiary securities, other
securities or other property on a current or deferred basis.

 

SECTION
11  

 

(a)  Amendment
or Discontinuance of the Plan. The
Board may amend or discontinue the Plan at any time; provided, however, that no
such amendment may 

 

(i)  without
the approval of the stockholders, (a) increase, subject to adjustments permitted
herein, the maximum number of shares of Common Stock that may be issued through
the Plan, (b) materially increase the benefits accruing to Participants under
the Plan, (c) materially expand the classes of persons eligible to participate
in the Plan, (d) expand the types of Awards available for grant under the Plan,
(e) materially extend the term of the Plan, (f) materially change the method of
determining the exercise price of Options or Stock Appreciation Rights, or (g)
amend Section 11(c) to permit a reduction in the exercise price of Options;
or

 

(ii)  materially
impair, without the consent of the recipient, an Award previously
granted.

 

(b)  Adjustment
of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
Events. The
Committee is hereby authorized to make adjustments in the terms and conditions
of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in
Section 5(b) hereof) affecting the Company, or the financial statements of the
Company or any Subsidiary, or of changes in applicable laws, regulations, or
accounting principles, whenever the Committee determines that such adjustments
are appropriate to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan.

 

(c)  Cancellation. Any
provision of this Plan or any Award Agreement to the contrary notwithstanding,
the Committee may cause any Award granted hereunder to be canceled in
consideration of a cash payment or alternative Award made to the holder of such
canceled Award equal in value to such canceled Award. Notwithstanding the
foregoing, except for adjustments permitted under Sections 5(b) and 11(b), no
action by the Committee shall, unless approved by the stockholders of the
Company, (i) cause a reduction in the exercise price of Options granted under
the Plan or (ii) permit an outstanding Option with an exercise price greater
than the current fair market value of a Share to be surrendered as consideration
for a new Option with a lower exercise price, shares of Restricted Stock,
Restricted Stock Units, and Other Stock-Based Award, a cash payment or Common
Stock. The determinations of value under this subparagraph shall be made by the
Committee in its sole discretion.

 

SECTION
12  

 

(a)  Award
Agreements. Each
Award hereunder shall be evidenced by an agreement or notice delivered to the
Participant (by paper copy or electronically) that shall specify the terms and
conditions thereof and any rules applicable thereto, including but not limited
to the effect on such Award of the death, retirement or other termination of
employment or cessation of consulting or advisory services of the Participant
and the effect thereon, if any, of a change in control of the
Company.

 

(b)  Withholding. 
 (i) A
Participant shall be required to pay to the Company, and the Company shall have
the right to deduct from all amounts paid to a Participant (whether under the
Plan or otherwise), any taxes required by law to be paid or withheld in respect
of Awards hereunder to such Participant. The Committee may provide for
additional cash payments to holders of Awards to defray or offset any tax
arising from the grant, vesting, exercise or payment of any Award.

 

(ii)  At any
time that a Participant is required to pay to the Company an amount required to
be withheld under the applicable tax laws in connection with the issuance of
Shares under the Plan, the Participant may, if permitted by the Committee,
satisfy this obligation in whole or in part by electing (the “Election”) to have
the Company withhold from the issuance Shares having a value equal to the
minimum amount required to be withheld. The value of the Shares withheld shall
be based on the fair market value of the Shares on the date as of which the
amount of tax to be withheld shall be determined in accordance with applicable
tax laws (the “Tax Date”).

 

(iii)  If
permitted by the Committee, a Participant may also satisfy up to his or her
total tax liability related to an Award by delivering Shares owned by the
Participant, which Shares may be subject to holding period requirements
determined by the Committee. The value of the Shares delivered shall be based on
the fair market value of the Shares on the Tax Date.

 

(iv)  Each
Election to have Shares withheld must be made prior to the Tax Date. If a
Participant wishes to deliver Shares in payment of taxes, the Participant must
so notify the Company prior to the Tax Date. 

 

(c)  Transferability. No
Awards granted hereunder may be transferred, pledged, assigned or otherwise
encumbered by a Participant except: (i) by will; (ii) by the laws of descent and
distribution; (iii) pursuant to a domestic relations order, as defined in the
Code, if permitted by the Committee and so provided in the Award Agreement or an
amendment thereto; or (iv) if permitted by the Committee and so provided in the
Award Agreement or an amendment thereto, Options may be transferred or assigned
(w) to Immediate Family Members, (x) to a partnership in which Immediate Family
Members, or entities in which Immediate Family Members are the owners, members
or beneficiaries, as appropriate, are the partners, (y) to a limited liability
company in which Immediate Family Members, or entities in which Immediate Family
Members are the owners, members or beneficiaries, as appropriate, are the
members, or (z) to a trust for the benefit of Immediate Family Members;
provided, however, that no more than a de minimus beneficial interest in a
partnership, limited liability company or trust described in (x), (y) or (z)
above may be owned by a person who is not an Immediate Family Member or by an
entity that is not beneficially owned solely by Immediate Family Members.
“Immediate Family Members” shall be defined as the spouse and natural or adopted
children or grandchildren of the Participant and their spouses. To the extent
that an Incentive Stock Option is permitted to be transferred during the
lifetime of the Participant, it shall be treated thereafter as a Nonqualified
Stock Option. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of Awards, or levy of attachment or similar process upon Awards not
specifically permitted herein, shall be null and void and without effect. The
designation of a Designated Beneficiary shall not be a violation of this Section
12(c).

 

(d)  Share
Certificates. All
certificates for Shares or other securities delivered under the Plan pursuant to
any Award or the exercise thereof shall be subject to such stop transfer orders
and other restrictions as the Committee may deem advisable under the Plan or the
rules, regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares or other securities are
then listed, and any applicable federal or state laws, and the Committee may
cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

 

(e)  No
Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company from adopting or continuing in
effect other compensation arrangements, which may, but need not, provide for the
grant of options, stock appreciation rights and other types of Awards provided
for hereunder (subject to stockholder approval of any such arrangement if
approval is required), and such arrangements may be either generally applicable
or applicable only in specific cases.

 

(f)  No
Right to Employment. The
grant of an Award shall not be construed as giving a Participant the right to be
retained in the employ of or as a consultant or adviser to the Company or any
Subsidiary or in the employ of or as a consultant or adviser to any other entity
providing services to the Company. The Company or any Subsidiary or any such
entity may at any time dismiss a Participant from employment, or terminate any
arrangement pursuant to which the Participant provides services to the Company
or a Subsidiary, free from any liability or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Award Agreement. No Eligible
Individual or other person shall have any claim to be granted any Award, and
there is no obligation for uniformity of treatment of Eligible Individuals,
Participants or holders or beneficiaries of Awards.

 

(g)  Governing
Law. The
validity, construction, and effect of the Plan, any rules and regulations
relating to the Plan and any Award Agreement shall be determined in accordance
with the laws of the State of Delaware.

 

(h)  Severability. If any
provision of the Plan or any Award is or becomes or is deemed to be invalid,
illegal, or unenforceable in any jurisdiction or as to any Person or Award, or
would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
the Award, such provision shall be stricken as to such jurisdiction, Person or
Award and the remainder of the Plan and any such Award shall remain in full
force and effect.

 

(i)  No
Trust or Fund Created. Neither
the Plan nor any Award shall create or be construed to create a trust or
separate fund of any kind or a fiduciary relationship between the Company and a
Participant or any other Person. To the extent that any Person acquires a right
to receive payments from the Company pursuant to an Award, such right shall be
no greater than the right of any unsecured general creditor of the
Company.

 

(j)  No
Fractional Shares. No
fractional Shares shall be issued or delivered pursuant to the Plan or any
Award, and the Committee shall determine whether cash, other securities or other
property shall be paid or transferred in lieu of any fractional Shares or
whether such fractional Shares or any rights thereto shall be canceled,
terminated, or otherwise eliminated.

 

(k)  Compliance
with Law. The
Company intends that Awards granted under the Plan, or any deferrals thereof,
will comply with the requirements of Section 409A to the extent
applicable.

 

(l)  Deferral
Permitted. Payment
of cash or distribution of any Shares to which a Participant is entitled under
any Award shall be made as provided in the Award Agreement. Payment may be
deferred at the option of the Participant if provided in the Award
Agreement.

 

(m)  Headings.
Headings are given to the subsections of the Plan solely as a convenience to
facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of the Plan or any provision
thereof.

 

SECTION
13  

 

Term
of the Plan. Subject
to Section 11(a), no Awards may be granted under the Plan after May 5, 2015,
which is ten years after the date the Plan was approved by the Company’s
stockholders; provided, however, that Awards granted prior to such date shall
remain in effect until such Awards have either been satisfied, expired or
canceled under the terms of the Plan, and any restrictions imposed on Shares in
connection with their issuance under the Plan have lapsed.