exv10w16






EXHIBIT 10.16




REVA MEDICAL, INC.




2010 EQUITY INCENTIVE PLAN



 









 







TABLE OF CONTENTS



	 	 	 	 	 	 	 
	 	 	 	 	 	Page	 
	1.
	 	Establishment, Purpose and Term of Plan	 	 	1	 
	 
	 	1.1                           Establishment	 	 	1	 
	 
	 	1.2                           Purpose	 	 	1	 
	 
	 	1.3                           Term of Plan	 	 	1	 
	 
	 	 	 	 	 	 
	2.
	 	Definitions and Construction	 	 	1	 
	 
	 	2.1                           Definitions	 	 	1	 
	 
	 	2.2                           Construction	 	 	8	 
	 
	 	 	 	 	 	 
	3.
	 	Administration	 	 	9	 
	 
	 	3.1                           Administration by the Committee	 	 	9	 
	 
	 	3.2                           Authority of Officers	 	 	9	 
	 
	 	3.3                           Administration with Respect to Insiders	 	 	9	 
	 
	 	3.4                           Committee Complying with Section 162(m)	 	 	9	 
	 
	 	3.5                           Powers of the Committee	 	 	9	 
	 
	 	3.6                           Option or SAR Repricing	 	 	10	 
	 
	 	3.7                           Indemnification	 	 	11	 
	 
	 	 	 	 	 	 
	4.
	 	Shares Subject to Plan	 	 	11	 
	 
	 	4.1                           Maximum Number of Shares Issuable	 	 	11	 
	 
	 	4.2                           Annual Increase in Maximum Number of Shares Issuable	 	 	11	 
	 
	 	4.3                           Share Counting	 	 	11	 
	 
	 	4.4                           Adjustments for Changes in Capital Structure	 	 	12	 
	 
	 	4.5                           Assumption or Substitution of Awards	 	 	12	 
	 
	 	 	 	 	 	 
	5.
	 	Eligibility, Participation and Award Limitations	 	 	13	 
	 
	 	5.1                           Persons Eligible for Awards	 	 	13	 
	 
	 	5.2                           Participation in the Plan	 	 	13	 
	 
	 	5.3                           Incentive Stock Option Limitations	 	 	13	 
	 
	 	 	 	 	 	 
	6.
	 	Stock Options	 	 	14	 
	 
	 	6.1                           Exercise Price	 	 	14	 
	 
	 	6.2                           Exercisability and Term of Options	 	 	14	 
	 
	 	6.3                           Payment of Exercise Price	 	 	14	 
	 
	 	6.4                           Effect of Termination of Service	 	 	15	 
	 
	 	6.5                           Transferability of Options	 	 	16	 
	 
	 	 	 	 	 	 
	7.
	 	Stock Appreciation Rights	 	 	17	 
	 
	 	7.1                           Types of SARs Authorized	 	 	17	 
	 
	 	7.2                           Exercise Price	 	 	17	 
	 
	 	7.3                           Exercisability and Term of SARs	 	 	187	 






 









 





TABLE OF CONTENTS

(continued)



	 	 	 	 	 	 	 
	 	 	 	 	 	Page	 
	 
	 	7.4                           Exercise of SARs	 	 	18	 
	 
	 	7.5                           Deemed Exercise of SARs	 	 	18	 
	 
	 	7.6                           Effect of Termination of Service	 	 	18	 
	 
	 	7.7                           Transferability of SARs	 	 	18	 
	 
	 	 	 	 	 	 
	8.
	 	Restricted Stock Awards	 	 	19	 
	 
	 	8.1                           Types of Restricted Stock Awards Authorized	 	 	19	 
	 
	 	8.2                           Purchase Price	 	 	19	 
	 
	 	8.3                           Purchase Period	 	 	19	 
	 
	 	8.4                           Payment of Purchase Price	 	 	19	 
	 
	 	8.5                           Vesting and Restrictions on Transfer	 	 	19	 
	 
	 	8.6                           Voting Rights; Dividends and Distributions	 	 	20	 
	 
	 	8.7                           Effect of Termination of Service	 	 	20	 
	 
	 	8.8                           Nontransferability of Restricted Stock Award Rights	 	 	20	 
	 
	 	 	 	 	 	 
	9.
	 	Restricted Stock Unit Awards	 	 	21	 
	 
	 	9.1                           Grant of Restricted Stock Unit Awards	 	 	21	 
	 
	 	9.2                           Purchase Price	 	 	21	 
	 
	 	9.3                           Vesting	 	 	21	 
	 
	 	9.4                           Voting Rights, Dividend Equivalent Rights and Distributions	 	 	21	 
	 
	 	9.5                           Effect of Termination of Service	 	 	22	 
	 
	 	9.6                           Settlement of Restricted Stock Unit Awards	 	 	22	 
	 
	 	9.7                           Nontransferability of Restricted Stock Unit Awards	 	 	22	 
	 
	 	 	 	 	 	 
	10.
	 	Performance Awards	 	 	23	 
	 
	 	10.1                          Types of Performance Awards Authorized	 	 	23	 
	 
	 	10.2                          Initial Value of Performance Shares and Performance Units	 	 	23	 
	 
	 	10.3                          Establishment of Performance Period, Performance Goals and Performance Award Formula	 	 	23	 
	 
	 	10.4                         Measurement of Performance Goals	 	 	24	 
	 
	 	10.5                         Settlement of Performance Awards	 	 	25	 
	 
	 	10.6                         Voting Rights; Dividend Equivalent Rights and Distributions	 	 	27	 
	 
	 	10.7                         Effect of Termination of Service	 	 	27	 
	 
	 	10.8                         Nontransferability of Performance Awards	 	 	28	 
	 
	 	 	 	 	 	 
	11.
	 	Cash-Based Awards and Other Stock-Based Awards	 	 	28	 
	 
	 	11.1                         Grant of Cash-Based Awards	 	 	28	 
	 
	 	11.2                         Grant of Other Stock-Based Awards	 	 	28	 
	 
	 	11.3                         Value of Cash-Based and Other Stock-Based Awards	 	 	29	 
	 
	 	11.4                         Payment or Settlement of Cash-Based Awards and Other Stock-Based Awards	 	 	29	 
	 
	 	11.5                         Voting Rights; Dividend Equivalent Rights and Distributions	 	 	29	 






 









 





TABLE OF CONTENTS

(continued)



	 	 	 	 	 	 	 
	 	 	 	 	 	Page	 
	 
	 	11.6                         Effect of Termination of Service	 	 	29	 
	 
	 	11.7                         Nontransferability of Cash-Based Awards and Other Stock-Based Awards	 	 	30	 
	 
	 	 	 	 	 	 
	12.
	 	Standard Forms of Award Agreement	 	 	30	 
	 
	 	12.1                         Award Agreements	 	 	30	 
	 
	 	12.2                         Authority to Vary Terms	 	 	30	 
	 
	 	 	 	 	 	 
	13.
	 	Change in Control	 	 	30	 
	 
	 	13.1                         Effect of Change in Control on Awards	 	 	30	 
	 
	 	13.2                         Effect of Change in Control on Nonemployee Director Awards	 	 	31	 
	 
	 	13.3                         Federal Excise Tax Under Section 4999 of the Code	 	 	32	 
	 
	 	 	 	 	 	 
	14.
	 	Compliance with Securities Law	 	 	32	 
	 
	 	 	 	 	 	 
	15.
	 	Compliance with Section 409A	 	 	33	 
	 
	 	15.1                         Awards Subject to Section 409A	 	 	33	 
	 
	 	15.2                         Deferral and/or Distribution Elections	 	 	33	 
	 
	 	15.3                         Subsequent Elections	 	 	34	 
	 
	 	15.4                         Payment of Section 409A Deferred Compensation	 	 	34	 
	 
	 	 	 	 	 	 
	16.
	 	Tax Withholding	 	 	36	 
	 
	 	16.1                         Tax Withholding in General	 	 	36	 
	 
	 	16.2                         Withholding in or Directed Sale of Shares	 	 	36	 
	 
	 	 	 	 	 	 
	17.
	 	Amendment, Suspension or Termination of Plan	 	 	37	 
	 
	 	 	 	 	 	 
	18.
	 	Miscellaneous Provisions	 	 	37	 
	 
	 	18.1                         Repurchase Rights	 	 	37	 
	 
	 	18.2                         Forfeiture Events	 	 	37	 
	 
	 	18.3                         Provision of Information	 	 	38	 
	 
	 	18.4                         Rights as Employee, Consultant or Director	 	 	38	 
	 
	 	18.5                         Rights as a Stockholder	 	 	38	 
	 
	 	18.6                         Delivery of Title to Shares	 	 	89	 
	 
	 	18.7                         Fractional Shares	 	 	38	 
	 
	 	18.8                         Retirement and Welfare Plans	 	 	38	 
	 
	 	18.9                         Beneficiary Designation	 	 	39	 
	 
	 	18.10                        Severability	 	 	39	 
	 
	 	18.11                        No Constraint on Corporate Action	 	 	39	 
	 
	 	18.12                        Unfunded Obligation	 	 	39	 
	 
	 	18.13                        Choice of Law	 	 	39	 







 












 





REVA Medical, Inc.

2010 Equity Incentive Plan




     1. Establishment, Purpose and Term of Plan.



          1.1 Establishment. The REVA Medical, Inc. 2010 Equity Incentive Plan (the “Plan”) is hereby
established effective as of __________, 2010 (the “Effective Date”).



          1.2 Purpose. The purpose of the Plan is to advance the interests of the Participating Company
Group and its stockholders by providing an incentive to attract, retain and reward persons
performing services for the Participating Company Group and by motivating such persons to
contribute to the growth and profitability of the Participating Company Group. The Plan seeks to
achieve this purpose by providing for Awards in the form of Options, Stock Appreciation Rights,
Restricted Stock Purchase Rights, Restricted Stock Bonuses, Restricted Stock Units, Performance
Shares, Performance Units, Cash-Based Awards and Other Stock-Based Awards.



          1.3 Term of Plan. The Plan shall continue in effect until its termination by the Committee;
provided, however, that all Awards shall be granted, if at all, within ten (10) years from the
Effective Date.



     2. Definitions and Construction.



          2.1 Definitions. Whenever used herein, the following terms shall have their respective
meanings set forth below:



               (a) “Affiliate” means (i) a parent entity, other than a Parent Corporation, that directly, or
indirectly through one or more intermediary entities, controls the Company or (ii) a subsidiary
entity, other than a Subsidiary Corporation, that is controlled by the Company directly or
indirectly through one or more intermediary entities. For this purpose, the terms “parent,”
“subsidiary,” “control” and “controlled by” shall have the meanings assigned such terms for the
purposes of registration of securities on Form S-8 under the Securities Act.



               (b) “ASX” means ASX Limited ACN 008 624 691 or the market it operates, as the context
requires.



               (c) “ASX Listing Rules” means the Listing Rules of ASX and any other rules of ASX which are
applicable while the Company is admitted to the official list of ASX, each as amended or replaced
from time to time, except to the extent of any express written waiver by ASX.



               (d) “Award” means any Option, Stock Appreciation Right, Restricted Stock Purchase Right,
Restricted Stock Bonus, Restricted Stock Unit, Performance Share, Performance Unit, Cash-Based
Award or Other Stock-Based Award granted under the Plan.



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               (e) “Award Agreement” means a written or electronic agreement between the Company and a
Participant setting forth the terms, conditions and restrictions applicable to an Award.



               (f) “Board” means the Board of Directors of the Company.



               (g) “Cash-Based Award” means an Award denominated in cash and granted pursuant to Section 12.



               (h) “Cashless Exercise” means a Cashless Exercise as defined in Section 7.3(b)(i).



               (i) “Cause” means, unless such term or an equivalent term is otherwise defined by the
applicable Award Agreement or other written agreement between a Participant and a Participating
Company applicable to an Award, any of the following: (i) the Participant’s failure to
substantially perform the Participant’s customary duties with a Participating Company in the
ordinary course (other than such failure resulting from the Participant’s incapacity due to
physical or mental illness) that, if susceptible to cure, has not been cured as determined by the
Participating Company within 30 days after a written demand for substantial performance is
delivered to the Participant by the Participating Company, which demand specifically identifies the
manner in which the Participating Company believes that the Participant has not substantially
performed the Participant’s duties; (ii) the Participant’s gross negligence, intentional misconduct
or fraud in the performance of his or her Service; (iii) the Participant’s indictment (or
equivalent) for a felony or to a crime involving fraud or dishonesty; (iv) a judicial determination
that the Participant committed fraud or dishonesty against any natural person, firm, partnership,
limited liability company, association, corporation, company, trust, business trust, governmental
authority or other entity; (v) the Participant’s material violation of one or more of the
Participating Company Group’s policies applicable to the Participant’s Service as may be in effect
from time to time; or (vi) the Participant’s conduct that brings or could reasonably be expected to
bring the Participating Company Group into public disgrace or disrepute and that has a material
adverse effect on the business of the Participating Company Group.



               (j) “Change in Control” means, unless such term or an equivalent term is otherwise defined by
the applicable Award Agreement, the occurrence of any one or a combination of the following:



                    (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
becomes the “beneficial owner” (as such term is defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of the Company representing more than fifty
percent (50%) of the total Fair Market Value or total combined voting power of the Company’s
then-outstanding securities entitled to vote generally in the election of Directors; provided,
however, that a Change in Control shall not be deemed to have occurred if such degree of beneficial
ownership results from any of the following: (A) an acquisition by any person who on the Effective
Date is the beneficial owner of more than fifty percent (50%) of such voting power, (B) any
acquisition directly from the Company, including, without limitation, pursuant to or in connection
with a public offering of securities, (C) any



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acquisition by the Company, (D) any acquisition by a trustee or other fiduciary under an
employee benefit plan of a Participating Company or (E) any acquisition by an entity owned directly
or indirectly by the stockholders of the Company in substantially the same proportions as their
ownership of the voting securities of the Company; or




                    (ii) an Ownership Change Event or series of related Ownership Change Events (collectively, a
“Transaction”) in which the stockholders of the Company immediately before the Transaction do not
retain immediately after the Transaction direct or indirect beneficial ownership of more than fifty
percent (50%) of the total combined voting power of the outstanding securities entitled to vote
generally in the election of Directors or, in the case of an Ownership Change Event described in
Section 2.1(gg)(iii), the entity to which the assets of the Company were transferred (the
“Transferee”), as the case may be; or



                    (iii) approval by the stockholders of a plan of complete liquidation or dissolution of the
Company;


provided, however, that a Change in Control shall be deemed not to include a transaction described
in subsections (i) or (ii) of this Section 2.1(j) in which a majority of the members of the board
of directors of the continuing, surviving or successor entity, or parent thereof, immediately after
such transaction is comprised of Incumbent Directors.




     For purposes of the preceding sentence, indirect beneficial ownership shall include, without
limitation, an interest resulting from ownership of the voting securities of one or more
corporations or other business entities which own the Company or the Transferee, as the case may
be, either directly or through one or more subsidiary corporations or other business entities. The
Committee shall determine whether multiple acquisitions of the voting securities of the Company
and/or multiple Ownership Change Events are related and to be treated in the aggregate as a single
Change in Control, and its determination shall be final, binding and conclusive.



               (k) “Code” means the United States Internal Revenue Code of 1986, as amended, and any
applicable regulations or administrative guidelines promulgated thereunder.



               (l) “Committee” means the Compensation Committee and such other committee or subcommittee of
the Board, if any, duly appointed to administer the Plan and having such powers in each instance as
shall be specified by the Board. If, at any time, there is no committee of the Board then
authorized or properly constituted to administer the Plan, the Board shall exercise all of the
powers of the Committee granted herein, and, in any event, the Board may in its discretion exercise
any or all of such powers.



               (m) “Company” means REVA Medical, Inc., a Delaware corporation, or any successor corporation
thereto.



               (n) “Consultant” means a person engaged to provide consulting or advisory services (other than
as an Employee or a member of the Board) to a Participating Company, provided that the identity of
such person, the nature of such services or the entity to which such services are provided would
not preclude the Company from offering or selling



3









 




securities to such person pursuant to the Plan in reliance on registration on Form S-8 under
the Securities Act.




               (o) “Covered Employee” means, at any time the Plan is subject to Section 162(m), any Employee
who is or may reasonably be expected to become a “covered employee” as defined in Section 162(m),
or any successor statute, and who is designated, either as an individual Employee or a member of a
class of Employees, by the Committee no later than the earlier of (i) the date that is ninety (90)
days after the beginning of the Performance Period, or (ii) the date on which twenty-five percent
(25%) of the Performance Period has elapsed, as a “Covered Employee” under this Plan for such
applicable Performance Period.



               (p) “Director” means a member of the Board.



               (q) “Disability” means the permanent and total disability of the Participant, within the
meaning of Section 22(e)(3) of the Code.



               (r) “Dividend Equivalent Right” means the right of a Participant, granted at the discretion of
the Committee or as otherwise provided by the Plan, to receive a credit for the account of such
Participant in an amount equal to the cash dividends paid on one share of Stock for each share of
Stock represented by an Award held by such Participant.



               (s) “Employee” means any person treated as an employee (including an Officer or a member of
the Board who is also treated as an employee) in the records of a Participating Company and, with
respect to any Incentive Stock Option granted to such person, who is an employee for purposes of
Section 422 of the Code; provided, however, that neither service as a member of the Board nor
payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan.
The Company shall determine in good faith and in the exercise of its discretion whether an
individual has become or has ceased to be an Employee and the effective date of such individual’s
employment or termination of employment, as the case may be. For purposes of an individual’s
rights, if any, under the terms of the Plan as of the time of the Company’s determination of
whether or not the individual is an Employee, all such determinations by the Company shall be
final, binding and conclusive as to such rights, if any, notwithstanding that the Company or any
court of law or governmental agency subsequently makes a contrary determination as to such
individual’s status as an Employee.



               (t) “Exchange Act” means the United States Securities Exchange Act of 1934, as amended.



               (u) “Fair Market Value” means, as of any date, the value of a share of Stock or other property
as determined by the Committee, in its discretion, or by the Company, in its discretion, if such
determination is expressly allocated to the Company herein, subject to the following:



                    (i) Except as otherwise determined by the Committee, if, on such date, the Stock is listed or
quoted on a securities exchange or quotation system (including without limitation ASX), the Fair
Market Value of a share of Stock shall be the closing price of a



4









 




share of Stock as quoted on that securities exchange or quotation system constituting the
primary market for the Stock, as reported in The Wall Street Journal, the Australian Financial
Review or such other source as the Company deems reliable. If the relevant date does not fall on a
day on which the Stock has traded on such securities exchange or quotation system, the date on
which the Fair Market Value shall be established shall be the last day on which the Stock was so
traded or quoted prior to the relevant date, or such other appropriate day as shall be determined
by the Committee, in its discretion.




                    (ii) Notwithstanding the foregoing, the Committee may, in its discretion, determine the Fair
Market Value of a share of Stock on the basis of the opening, closing, or average of the high and
low sale prices of a share of Stock on such date or the preceding trading day, the actual sale
price of a share of Stock received by a Participant, any other reasonable basis using actual
transactions in the Stock as reported on a securities exchange or quotation system, or on any other
basis consistent with the requirements of Section 409A. The Committee may also determine the Fair
Market Value upon the average selling price of the Stock during a specified period that is within
thirty (30) days before or thirty (30) days after such date, provided that, with respect to the
grant of an Option or SAR, the commitment to grant such Award based on such valuation method must
be irrevocable before the beginning of the specified period. The Committee may vary its method of
determination of the Fair Market Value as provided in this Section for different purposes under the
Plan to the extent consistent with the requirements of Section 409A.



                    (iii) If, on such date, the Stock is not listed or quoted on a securities exchange or
quotation system, the Fair Market Value of a share of Stock shall be as determined by the Committee
in good faith without regard to any restriction other than a restriction which, by its terms, will
never lapse, and in a manner consistent with the requirements of Section 409A.



               (v) “Incentive Stock Option” means an Option intended to be (as set forth in the Award
Agreement) and which qualifies as an incentive stock option within the meaning of Section 422(b) of
the Code.



               (w) “Incumbent Director” means a director who either (i) is a member of the Board as of the
Effective Date or (ii) is elected, or nominated for election, to the Board with the affirmative
votes of at least a majority of the Incumbent Directors at the time of such election or nomination
(but excluding a director who was elected or nominated in connection with an actual or threatened
proxy contest relating to the election of directors of the Company).



               (x) “Insider” means an Officer, Director or any other person whose transactions in Stock are
subject to Section 16 of the Exchange Act.



               (y) “Listing Rules” means the applicable listing rules of the securities exchange market on
which the Company’s Stock is listed for trading, which include, while the Company is listed on ASX,
the ASX Listing Rules.



               (z) “Net Exercise” means a Net Exercise as defined in Section 7.3(b)(iii).



5









 





               (aa) “Nonemployee Director” means a Director who is not an Employee.



               (bb) “Nonemployee Director Award” means any Award granted to a Nonemployee Director.



               (cc) “Nonstatutory Stock Option” means an Option not intended to be (as set forth in the Award
Agreement) or which does not qualify as an incentive stock option within the meaning of Section
422(b) of the Code.



               (dd) “Officer” means any person designated by the Board as an officer of the Company.



               (ee) “Option” means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant
to the Plan.



               (ff) “Other Stock-Based Award” means an Award denominated in shares of Stock and granted
pursuant to Section 12.



               (gg) “Ownership Change Event” means the occurrence of any of the following with respect to the
Company: (i) the direct or indirect sale or exchange in a single or series of related transactions
by the stockholders of the Company of securities of the Company representing more than fifty
percent (50%) of the total combined voting power of the Company’s then outstanding securities
entitled to vote generally in the election of Directors; (ii) a merger or consolidation in which
the Company is a party; or (iii) the sale, exchange, or transfer of all or substantially all of the
assets of the Company (other than a sale, exchange or transfer to one or more subsidiaries of the
Company).



               (hh) “Parent Corporation” means any present or future “parent corporation” of the Company, as
defined in Section 424(e) of the Code.



               (ii) “Participant” means any eligible person who has been granted one or more Awards.



               (jj) “Participating Company” means the Company or any Parent Corporation, Subsidiary
Corporation or Affiliate.



               (kk) “Participating Company Group” means, at any point in time, the Company and all other
entities collectively which are then Participating Companies.



               (ll) “Performance Award” means an Award of Performance Shares or Performance Units.



               (mm) “Performance Award Formula” means, for any Performance Award, a formula or table
established by the Committee pursuant to Section 11.3 which provides the basis for computing the
value of a Performance Award at one or more levels of attainment of the applicable Performance
Goal(s) measured as of the end of the applicable Performance Period.



6









 





               (nn) “Performance-Based Compensation” means compensation under an Award that satisfies the
requirements of Section 162(m) for certain performance-based compensation paid to Covered
Employees.



               (oo) “Performance Goal” means a performance goal established by the Committee pursuant to
Section 11.3.



               (pp) “Performance Period” means a period established by the Committee pursuant to Section 11.3
at the end of which one or more Performance Goals are to be measured.



               (qq) “Performance Share” means a right granted to a Participant pursuant to Section 11 to
receive a payment equal to the value of a Performance Share, as determined by the Committee, based
upon attainment of applicable Performance Goal(s).



               (rr) “Performance Unit” means a right granted to a Participant pursuant to Section 11 to
receive a payment equal to the value of a Performance Unit, as determined by the Committee, based
upon attainment of applicable Performance Goal(s).



               (ss) “Restricted Stock Award” means an Award of a Restricted Stock Bonus or a Restricted Stock
Purchase Right.



               (tt) “Restricted Stock Bonus” means Stock granted to a Participant pursuant to Section 9.



               (uu) “Restricted Stock Purchase Right” means a right to purchase Stock granted to a
Participant pursuant to Section 9.



               (vv) “Restricted Stock Unit” means a right granted to a Participant pursuant to Section 10 to
receive on a future date or event a share of Stock or cash in lieu thereof, as determined by the
Committee.



               (ww) “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from time to time, or
any successor rule or regulation.



               (xx) “SAR” or “Stock Appreciation Right” means a right granted to a Participant pursuant to
Section 8 to receive payment, for each share of Stock subject to such Award, of an amount equal to
the excess, if any, of the Fair Market Value of a share of Stock on the date of exercise of the
Award over the exercise price thereof.



               (yy) “Section 162(m)” means Section 162(m) of the Code.



               (zz) “Section 409A” means Section 409A of the Code.



               (aaa) “Section 409A Deferred Compensation” means compensation provided pursuant to an Award
that constitutes nonqualified deferred compensation within the meaning of Section 409A.



7









 





               (bbb) “Securities Act” means the United States Securities Act of 1933, as amended.



               (ccc) “Service” means a Participant’s employment or service with the Participating Company
Group, whether as an Employee, a Director or a Consultant. Unless otherwise provided by the
Committee, a Participant’s Service shall not be deemed to have terminated merely because of a
change in the capacity in which the Participant renders such Service or a change in the
Participating Company for which the Participant renders such Service, provided that there is no
interruption or termination of the Participant’s Service. Furthermore, a Participant’s Service
shall not be deemed to have been interrupted or terminated if the Participant takes any military
leave, sick leave, or other bona fide leave of absence approved by the Company. However, unless
otherwise provided by the Committee, if any such leave taken by a Participant exceeds ninety (90)
days, then on the ninety-first (91st) day following the commencement of such leave the
Participant’s Service shall be deemed to have terminated, unless the Participant’s right to return
to Service is guaranteed by statute or contract. Notwithstanding the foregoing, unless otherwise
designated by the Company or required by law, an unpaid leave of absence shall not be treated as
Service for purposes of determining vesting under the Participant’s Award Agreement. A
Participant’s Service shall be deemed to have terminated either upon an actual termination of
Service or upon the business entity for which the Participant performs Service ceasing to be a
Participating Company. Subject to the foregoing, the Company, in its discretion, shall determine
whether the Participant’s Service has terminated and the effective date of such termination.



               (ddd) “Stock” means the common stock of the Company, as adjusted from time to time in
accordance with Section 5.4.



               (eee) “Stock Tender Exercise” means a Stock Tender Exercise as defined in Section 7.3(b)(ii).



               (fff) “Subsidiary Corporation” means any present or future “subsidiary corporation” of the
Company, as defined in Section 424(f) of the Code.



               (ggg) “Ten Percent Owner” means a Participant who, at the time an Option is granted to the
Participant, owns stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of a Participating Company (other than an Affiliate) within the meaning of
Section 422(b)(6) of the Code.



               (hhh) “Trading Compliance Policy” means the written policy of the Company pertaining to the
purchase, sale, transfer or other disposition of the Company’s equity securities by Directors,
Officers, Employees or other service providers who may possess material, nonpublic information
regarding the Company or its securities.



               (iii) “Vesting Conditions” mean those conditions established in accordance with the Plan prior
to the satisfaction of which an Award or shares subject to an Award remain subject to forfeiture or
a repurchase option in favor of the Company exercisable for the Participant’s monetary purchase
price, if any, for such shares upon the Participant’s termination of Service.



8









 





          2.2 Construction. Captions and titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated
by the context, the singular shall include the plural and the plural shall include the singular.
Use of the term “or” is not intended to be exclusive, unless the context clearly requires
otherwise.




     3. Effect of ASX Listing Rules on operation of the plan



          3.1 If the Company is admitted to the official list of ASX, then, for so long as the Company
is admitted to the official list of ASX, the following Sections apply:




               (a) Notwithstanding anything contained in this Plan, if the ASX Listing Rules prohibit an act
being done, the act shall not be done.



               (b) Nothing contained in this Plan prevents an act being done that the ASX Listing Rules
require to be done.



               (c) If the ASX Listing Rules require an act to be done or not to be done, authority is given
for that act to be done or not to be done (as the case may be).



               (d) If the ASX Listing Rules require this Plan to contain a provision and it does not contain
such a provision, this Plan is deemed to contain that provision.



               (e) If the ASX Listing Rules require this Plan not to contain a provision and it contains such
a provision, this Plan is deemed not to contain that provision.



               (f) If any provision of this Plan is or becomes inconsistent with the ASX Listing Rules, this
Plan is deemed not to contain that provision to the extent of the inconsistency.



     4. Administration.



          4.1 Administration by the Committee. The Plan shall be administered by the Committee. All
questions of interpretation of the Plan, of any Award Agreement or of any other form of agreement
or other document employed by the Company in the administration of the Plan or of any Award shall
be determined by the Committee, and such determinations shall be final, binding and conclusive upon
all persons having an interest in the Plan or such Award, unless fraudulent or made in bad faith.
Any and all actions, decisions and determinations taken or made by the Committee in the exercise of
its discretion pursuant to the Plan or Award Agreement or other agreement thereunder (other than
determining questions of interpretation pursuant to the preceding sentence) shall be final, binding
and conclusive upon all persons having an interest therein. All expenses reasonably incurred by
the Company in the administration of the Plan shall be paid by the Company.




          4.2 Authority of Officers. Any Officer shall have the authority to act on behalf of the
Company with respect to any matter, right, obligation, determination or election that is the
responsibility of or that is allocated to the Company herein, provided that the Officer has actual
authority with respect to such matter, right, obligation, determination or election. The






9









 







Board or Committee may, in its discretion, delegate to a committee comprised of one or more
Officers the authority to grant one or more Awards, without further approval of the Board or the
Committee, to any Employee, other than a person who, at the time of such grant, is an Insider or a
Covered Person; provided, however, that (a) the exercise price per share of each such Award which
is an Option or SAR shall be not less than the Fair Market Value per share of the Stock on the
effective date of grant (or, if the Stock has not traded on such date, on the last day preceding
the effective date of grant on which the Stock was traded), (b) each such Award shall be subject to
the terms and conditions of the appropriate standard form of Award Agreement approved by the Board
or the Committee and shall conform to the provisions of the Plan, and (c) each such Award shall
conform to guidelines as shall be established from time to time by resolution of the Board or the
Committee.




          4.3 Administration with Respect to Insiders. With respect to participation by Insiders in the
Plan, at any time that any class of equity security of the Company is registered pursuant to
Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements,
if any, of Rule 16b-3.




          4.4 Committee Complying with Section 162(m). If the Company is a “publicly held corporation”
within the meaning of Section 162(m), the Board may establish a Committee of “outside directors”
within the meaning of Section 162(m) to approve the grant of any Award intended to result in the
payment of Performance-Based Compensation.




          4.5 Powers of the Committee. In addition to any other powers set forth in the Plan and
subject to the provisions of the Plan, the Committee shall have the full and final power and
authority, in its discretion:




               (a) to determine the persons to whom, and the time or times at which, Awards shall be granted
and the number of shares of Stock, units or monetary value to be subject to each Award;



               (b) to determine the type of Award granted;



               (c) to determine the Fair Market Value of shares of Stock or other property;



               (d) to determine the terms, conditions and restrictions applicable to each Award (which need
not be identical) and any shares acquired pursuant thereto, including, without limitation, (i) the
exercise or purchase price of shares pursuant to any Award, (ii) the method of payment for shares
purchased pursuant to any Award, (iii) the method for satisfaction of any tax withholding
obligation arising in connection with any Award, including by the withholding or delivery of
shares, (iv) the timing, terms and conditions of the exercisability or vesting of any Award or any
shares acquired pursuant thereto, (v) the Performance Measures, Performance Period, Performance
Award Formula and Performance Goals applicable to any Award and the extent to which such
Performance Goals have been attained, (vi) the time of the expiration of any Award, (vii) the
effect of the Participant’s termination of Service on any of the foregoing, and (viii) all other
terms, conditions and restrictions applicable to any Award or shares acquired pursuant thereto not
inconsistent with the terms of the Plan;



10









 





               (e) to determine whether an Award will be settled in shares of Stock, cash, other property or
in any combination thereof;



               (f) to approve one or more forms of Award Agreement;



               (g) to amend, modify, extend, cancel or renew any Award or to waive any restrictions or
conditions applicable to any Award or any shares acquired pursuant thereto;



               (h) to accelerate, continue, extend or defer the exercisability or vesting of any Award or any
shares acquired pursuant thereto, including with respect to the period following a Participant’s
termination of Service;



               (i) to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to
adopt sub-plans or supplements to, or alternative versions of, the Plan, including, without
limitation, as the Committee deems necessary or desirable to comply with the laws or regulations of
or to accommodate the tax policy, accounting principles or custom of, foreign jurisdictions whose
citizens may be granted Awards; and



               (j) to correct any defect, supply any omission or reconcile any inconsistency in the Plan or
any Award Agreement and to make all other determinations and take such other actions with respect
to the Plan or any Award as the Committee may deem advisable to the extent not inconsistent with
the provisions of the Plan or applicable law.



          4.6 Option or SAR Repricing. without the affirmative vote of holders of a majority of the
shares of Stock cast in person or by proxy at a meeting of the stockholders of the Company at which
a quorum representing a majority of all outstanding shares of Stock is present or represented by
proxy, the Committee shall not approve a program providing for the cancellation of outstanding
Options or SARs having exercise prices per share greater than the then Fair Market Value of a share
of Stock (“Underwater Awards”) and the grant in substitution therefore of new Options or SARs
having a lower exercise price or payments in cash. This Section shall not apply to adjustments
pursuant to the assumption of or substitution for an Option or SAR in a manner that would comply
with Section 424(a) or Section 409A of the Code or to an adjustment pursuant to Section 5.4.




          4.7 Indemnification. In addition to such other rights of indemnification as they may have as
members of the Board or the Committee or as officers or employees of the Participating Company
Group, to the extent permitted by applicable law, members of the Board or the Committee and any
officers or employees of the Participating Company Group to whom authority to act for the Board,
the Committee or the Company is delegated shall be indemnified by the Company against all
reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection
with the defense of any action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken or failure to act under or
in connection with the Plan, or any right granted hereunder, and against all amounts paid by them
in settlement thereof (provided such settlement is approved by independent legal counsel selected
by the Company) or paid by them in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for gross






11









 







negligence, bad faith or intentional misconduct in duties; provided, however, that within
sixty (60) days after the institution of such action, suit or proceeding, such person shall offer
to the Company, in writing, the opportunity at its own expense to handle and defend the same.




     5. Shares Subject to Plan.



          5.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in Sections 5.2,
5.3 and 5.4, the maximum aggregate number of shares of Stock that may be issued under the Plan
shall be equal to two million six hundred twenty eight thousand and eight hundred and thirty eight
(2,628,838) and shall consist of authorized but unissued or reacquired shares of Stock or any
combination thereof.




          5.2 Annual Increase in Maximum Number of Shares Issuable. Subject to adjustment as provided
in Section 5.4, the maximum aggregate number of shares of Stock that may be issued under the Plan
as set forth in Section 5.1 shall be cumulatively increased automatically on January 1, 2011 and on
each subsequent January 1 through and including January 1, 2020, by a number of shares (the “Annual
Increase”) equal to the smaller of (a) three percent (3%) of the number of shares of Stock issued
and outstanding on the immediately preceding December 31, or (b) an amount determined by the Board.




          5.3 Share Counting. If an outstanding Award for any reason expires or is terminated or
canceled without having been exercised or settled in full, or if shares of Stock acquired pursuant
to an Award subject to forfeiture or repurchase are forfeited or repurchased by the Company for an
amount not greater than the Participant’s purchase price, the shares of Stock allocable to the
terminated portion of such Award or such forfeited or repurchased shares of Stock shall again be
available for issuance under the Plan. Shares of Stock shall not be deemed to have been issued
pursuant to the Plan with respect to any portion of an Award that is settled in cash. Shares
withheld or reacquired by the Company in satisfaction of tax withholding obligations pursuant to
Section 17.2 shall not again be available for issuance under the Plan. Upon payment in shares of
Stock pursuant to the exercise of an SAR, the number of shares available for issuance under the
Plan shall be reduced by the gross number of shares for which such SAR was exercised. If the
exercise price of an Option is paid by tender to the Company, or attestation to the ownership, of
shares of Stock owned by the Participant, or by means of a Net Exercise, the number of shares
available for issuance under the Plan shall be reduced by the gross number of shares for which the
Option is exercised.




          5.4 Adjustments for Changes in Capital Structure. Subject to any required action by the
stockholders of the Company and the requirements of Sections 409A and 424 of the Code to the extent
applicable, in the event of any change in the Stock effected without receipt of consideration by
the Company, whether through merger, consolidation, reorganization, reincorporation,
recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up,
split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital
structure of the Company, or in the event of payment of a dividend or distribution to the
stockholders of the Company in a form other than Stock (excepting regular, periodic cash dividends)
that has a material effect on the Fair Market Value of shares of Stock, appropriate and
proportionate adjustments shall be made in the number and kind of shares subject to the Plan and to
any outstanding Awards, the number of shares resulting from any prior Annual Increase, the






12









 







Award limits set forth in Section 6.3, and in the exercise or purchase price per share under
any outstanding Award in order to prevent dilution or enlargement of Participants’ rights under the
Plan. For purposes of the foregoing, conversion of any convertible securities of the Company shall
not be treated as “effected without receipt of consideration by the Company.” If a majority of the
shares which are of the same class as the shares that are subject to outstanding Awards are
exchanged for, converted into, or otherwise become (whether or not pursuant to an Ownership Change
Event) shares of another corporation (the “New Shares”), the Committee may unilaterally amend the
outstanding Awards to provide that such Awards are for New Shares. In the event of any such
amendment, the number of shares subject to, and the exercise or purchase price per share of, the
outstanding Awards shall be adjusted in a fair and equitable manner as determined by the Committee,
in its discretion. Any fractional share resulting from an adjustment pursuant to this Section
shall be rounded down to the nearest whole number, and in no event may the exercise or purchase
price under any Award be decreased to an amount less than the par value, if any, of the stock
subject to such Award. The Committee, in its discretion, may also make such adjustments in the
terms of any Award to reflect, or related to, such changes in the capital structure of the Company
or distributions as it deems appropriate, including modification of Performance Goals, Performance
Award Formulas and Performance Periods. The adjustments determined by the Committee pursuant to
this Section shall be final, binding and conclusive.




          5.5 Assumption or Substitution of Awards. The Committee may, without affecting the number of
shares of Stock reserved or available hereunder, authorize the issuance or assumption of benefits
under this Plan in connection with any merger, consolidation, acquisition of property or stock, or
reorganization upon such terms and conditions as it may deem appropriate, subject to compliance
with Section 409A and any other applicable provisions of the Code.




     6. Eligibility, Participation and Award Limitations.



          6.1 Persons Eligible for Awards. Awards may be granted only to Employees, Consultants and
Directors.




          6.2 Participation in the Plan. Awards are granted solely at the discretion of the Committee.
Eligible persons may be granted more than one Award. However, eligibility in accordance with this
Section shall not entitle any person to be granted an Award, or, having been granted an Award, to
be granted an additional Award.




          6.3 Incentive Stock Option Limitations.




               (a) Maximum Number of Shares Issuable Pursuant to Incentive Stock Options. Subject to
adjustment as provided in Section 5.4, the maximum aggregate number of shares of Stock that may be
issued under the Plan pursuant to the exercise of Incentive Stock Options shall not exceed
2,628,838 shares, cumulatively increased on January 1, 2011 and on each subsequent January 1,
through and including January 1, 2020, by a number of shares equal to the Annual Increase
determined under Section 5.2. The maximum aggregate number of shares of Stock that may be issued
under the Plan pursuant to all Awards other than Incentive



13









 




Stock Options shall be the number of shares determined in accordance with Section 5.1, subject
to adjustment as provided in Sections 5.2, 5.3 and 5.4.




               (b) Persons Eligible. An Incentive Stock Option may be granted only to a person who, on the
effective date of grant, is an Employee of the Company, a Parent Corporation or a Subsidiary
Corporation (each being an “ISO-Qualifying Corporation”). Any person who is not an Employee of an
ISO-Qualifying Corporation on the effective date of the grant of an Option to such person may be
granted only a Nonstatutory Stock Option.



               (c) Fair Market Value Limitation. To the extent that options designated as Incentive Stock
Options (granted under all stock option plans of the Participating Company Group, including the
Plan) become exercisable by a Participant for the first time during any calendar year for stock
having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portion of
such options which exceeds such amount shall be treated as Nonstatutory Stock Options. For
purposes of this Section, options designated as Incentive Stock Options shall be taken into account
in the order in which they were granted, and the Fair Market Value of stock shall be determined as
of the time the option with respect to such stock is granted. If the Code is amended to provide
for a limitation different from that set forth in this Section, such different limitation shall be
deemed incorporated herein effective as of the date and with respect to such Options as required or
permitted by such amendment to the Code. If an Option is treated as an Incentive Stock Option in
part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this
Section, the Participant may designate which portion of such Option the Participant is exercising.
In the absence of such designation, the Participant shall be deemed to have exercised the Incentive
Stock Option portion of the Option first. Upon exercise, shares issued pursuant to each such
portion shall be separately identified.



     7. Stock Options.



          Options shall be evidenced by Award Agreements specifying the number of shares of Stock
covered thereby, in such form as the Committee shall from time to time establish. Award Agreements
evidencing Options may incorporate all or any of the terms of the Plan by reference and shall
comply with and be subject to the following terms and conditions:



          7.1 Exercise Price. The exercise price for each Option shall be established in the discretion
of the Committee; provided, however, that (a) the exercise price per share shall be not less than
the Fair Market Value of a share of Stock on the effective date of grant of the Option and (b) no
Incentive Stock Option granted to a Ten Percent Owner shall have an exercise price per share less
than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the effective
date of grant of the Option. Notwithstanding the foregoing, an Option (whether an Incentive Stock
Option or a Nonstatutory Stock Option) may be granted with an exercise price lower than the minimum
exercise price set forth above if such Option is granted pursuant to an assumption or substitution
for another option in a manner that would qualify under the provisions of Section 409A or 424(a) of
the Code.



          7.2 Exercisability and Term of Options. Options shall be exercisable at such time or times,
or upon such event or events, and subject to such terms, conditions, performance criteria and
restrictions as shall be determined by the Committee and set forth in the



14









 




Award Agreement evidencing such Option; provided, however, that (a) no Option shall be
exercisable after the expiration of ten (10) years after the effective date of grant of such
Option, (b) no Incentive Stock Option granted to a Ten Percent Owner shall be exercisable after the
expiration of five (5) years after the effective date of grant of such Option and (c) no Option
granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of
1938, as amended, shall be first exercisable until at least six (6) months following the date of
grant of such Option (except in the event of such Employee’s death, disability or retirement, upon
a Change in Control, or as otherwise permitted by the Worker Economic Opportunity Act). Subject to
the foregoing, unless otherwise specified by the Committee in the grant of an Option, each Option
shall terminate ten (10) years after the effective date of grant of the Option, unless earlier
terminated in accordance with its provisions. Notwithstanding the foregoing, for so long as the
Plan is intended to comply with Section 25102(o) of the California Corporations Code, to the extent
required by applicable law Options issued under the Plan shall contain the minimum post termination
exercise periods required under Section 25102(o) and the applicable regulations promulgated
thereunder.




          7.3 Payment of Exercise Price.



               (a) Forms of Consideration Authorized. Except as otherwise provided below, payment of the
exercise price for the number of shares of Stock being purchased pursuant to any Option shall be
made (i) in cash, by check or in cash equivalent; (ii) if permitted by the Committee and subject to
the limitations contained in Section 7.3(b), by means of (1) a Cashless Exercise, (2) a Stock
Tender Exercise or (3) a Net Exercise; (iii) by such other consideration as may be approved by the
Committee from time to time to the extent permitted by applicable law, or (iv) by any combination
thereof. The Committee may at any time or from time to time grant Options which do not permit all
of the foregoing forms of consideration to be used in payment of the exercise price or which
otherwise restrict one or more forms of consideration.



               (b) Limitations on Forms of Consideration.



                    (i) Cashless Exercise. A “Cashless Exercise” means the delivery of a properly executed notice
of exercise together with irrevocable instructions to a broker providing for the assignment to the
Company of the proceeds of a sale or loan with respect to some or all of the shares being acquired
upon the exercise of the Option (including, without limitation, through an exercise complying with
the provisions of Regulation T as promulgated from time to time by the Board of Governors of the
Federal Reserve System). The Company reserves, at any and all times, the right, in the Company’s
sole and absolute discretion, to establish, decline to approve or terminate any program or
procedures for the exercise of Options by means of a Cashless Exercise, including with respect to
one or more Participants specified by the Company notwithstanding that such program or procedures
may be available to other Participants.



                    (ii) Stock Tender Exercise. A “Stock Tender Exercise” means the delivery of a properly
executed exercise notice accompanied by a Participant’s tender to the Company, or attestation to
the ownership, in a form acceptable to the Company of whole shares of Stock owned by the
Participant having a Fair Market Value that does not exceed the



15









 




aggregate exercise price for the shares with respect to which the Option is exercised. A
Stock Tender Exercise shall not be permitted if it would constitute a violation of the provisions
of any law, regulation or agreement restricting the redemption of the Company’s stock. If required
by the Company, an Option may not be exercised by tender to the Company, or attestation to the
ownership, of shares of Stock unless such shares either have been owned by the Participant for a
period of time required by the Company (and not used for another option exercise by attestation
during such period) or were not acquired, directly or indirectly, from the Company.




                    (iii) Net Exercise. A “Net Exercise” means the delivery of a properly executed exercise
notice followed by a procedure pursuant to which (1) the Company will reduce the number of shares
otherwise issuable to a Participant upon the exercise of an Option by the largest whole number of
shares having a Fair Market Value that does not exceed the aggregate exercise price for the shares
with respect to which the Option is exercised, and (2) the Participant shall pay to the Company in
cash the remaining balance of such aggregate exercise price not satisfied by such reduction in the
number of whole shares to be issued.



          7.4 Effect of Termination of Service.



               (a) Option Exercisability. Subject to earlier termination of the Option as otherwise provided
by this Plan and unless otherwise provided by the Committee, an Option shall terminate immediately
upon the Participant’s termination of Service to the extent that it is then unvested and shall be
exercisable after the Participant’s termination of Service to the extent it is then vested only
during the applicable time period determined in accordance with this Section and thereafter shall
terminate.



                    (i) Disability. If the Participant’s Service terminates because of the Disability of the
Participant, the Option, to the extent unexercised and exercisable for vested shares on the date on
which the Participant’s Service terminated, may be exercised by the Participant (or the
Participant’s guardian or legal representative) at any time prior to the expiration of twelve (12)
months after the date on which the Participant’s Service terminated, but in any event no later than
the date of expiration of the Option’s term as set forth in the Award Agreement evidencing such
Option (the “Option Expiration Date”).



                    (ii) Death. If the Participant’s Service terminates because of the death of the Participant,
the Option, to the extent unexercised and exercisable for vested shares on the date on which the
Participant’s Service terminated, may be exercised by the Participant’s legal representative or
other person who acquired the right to exercise the Option by reason of the Participant’s death at
any time prior to the expiration of twelve (12) months after the date on which the Participant’s
Service terminated, but in any event no later than the Option Expiration Date. The Participant’s
Service shall be deemed to have terminated on account of death if the Participant dies within three
(3) months after the Participant’s termination of Service.



                    (iii) Termination for Cause. Notwithstanding any other provision of the Plan to the contrary,
if the Participant’s Service is terminated for Cause or if, following the Participant’s termination
of Service and during any period in which the Option otherwise would remain exercisable, the
Participant engages in any act that would constitute



16









 




Cause, the Option shall terminate in its entirety and cease to be exercisable immediately upon
such termination of Service or act.




                    (iv) Other Termination of Service. If the Participant’s Service terminates for any reason,
except Disability, death or Cause, the Option, to the extent unexercised and exercisable for vested
shares on the date on which the Participant’s Service terminated, may be exercised by the
Participant at any time prior to the expiration of three (3) months after the date on which the
Participant’s Service terminated, but in any event no later than the Option Expiration Date.



               (b) Extension if Exercise Prevented by Law. Notwithstanding the foregoing, other than
termination of Service for Cause, if the exercise of an Option within the applicable time periods
set forth in Section 7.4(a) is prevented by the provisions of Section 15 below, the Option shall
remain exercisable until the later of (i) thirty (30) days after the date such exercise first would
no longer be prevented by such provisions or (ii) the end of the applicable time period under
Section 7.4(a), but in any event no later than the Option Expiration Date.



          7.5 Transferability of Options. During the lifetime of the Participant, an Option shall be
exercisable only by the Participant or the Participant’s guardian or legal representative. An
Option shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer,
assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the
Participant’s beneficiary, except transfer by will or by the laws of descent and distribution.
Notwithstanding the foregoing, to the extent permitted by the Committee, in its discretion, and set
forth in the Award Agreement evidencing such Option, an Option shall be assignable or transferable
subject to the applicable limitations, if any, described in the General Instructions to Form S-8
under the Securities Act or, in the case of an Incentive Stock Option, only as permitted by
applicable regulations under Section 421 of the Code in a manner that does not disqualify such
Option as an Incentive Stock Option.



     8. Stock Appreciation Rights.



          Stock Appreciation Rights shall be evidenced by Award Agreements specifying the number of
shares of Stock subject to the Award, in such form as the Committee shall from time to time
establish. Award Agreements evidencing SARs may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and conditions:



          8.1 Types of SARs Authorized. SARs may be granted in tandem with all or any portion of a
related Option (a “Tandem SAR”) or may be granted independently of any Option (a “Freestanding
SAR”). A Tandem SAR may only be granted concurrently with the grant of the related Option.



          8.2 Exercise Price. The exercise price for each SAR shall be established in the discretion of
the Committee; provided, however, that (a) the exercise price per share subject to a Tandem SAR
shall be the exercise price per share under the related Option and (b) the exercise price per share
subject to a Freestanding SAR shall be not less than the Fair Market Value of a share of Stock on
the effective date of grant of the SAR. Notwithstanding the



17









 




foregoing, an SAR may be granted with an exercise price lower than the minimum exercise price
set forth above if such SAR is granted pursuant to an assumption or substitution for another stock
appreciation right in a manner that would qualify under the provisions of Section 409A of the Code.




          8.3 Exercisability and Term of SARs.



               (a) Tandem SARs. Tandem SARs shall be exercisable only at the time and to the extent, and
only to the extent, that the related Option is exercisable, subject to such provisions as the
Committee may specify where the Tandem SAR is granted with respect to less than the full number of
shares of Stock subject to the related Option. The Committee may, in its discretion, provide in
any Award Agreement evidencing a Tandem SAR that such SAR may not be exercised without the advance
approval of the Company and, if such approval is not given, then the Option shall nevertheless
remain exercisable in accordance with its terms. A Tandem SAR shall terminate and cease to be
exercisable no later than the date on which the related Option expires or is terminated or
canceled. Upon the exercise of a Tandem SAR with respect to some or all of the shares subject to
such SAR, the related Option shall be canceled automatically as to the number of shares with
respect to which the Tandem SAR was exercised. Upon the exercise of an Option related to a Tandem
SAR as to some or all of the shares subject to such Option, the related Tandem SAR shall be
canceled automatically as to the number of shares with respect to which the related Option was
exercised.



               (b) Freestanding SARs. Freestanding SARs shall be exercisable at such time or times, or upon
such event or events, and subject to such terms, conditions, performance criteria and restrictions
as shall be determined by the Committee and set forth in the Award Agreement evidencing such SAR;
provided, however, that (i) no Freestanding SAR shall be exercisable after the expiration of ten
(10) years after the effective date of grant of such SAR and (ii) no Freestanding SAR granted to an
Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as
amended, shall be first exercisable until at least six (6) months following the date of grant of
such SAR (except in the event of such Employee’s death, disability or retirement, upon a Change in
Control, or as otherwise permitted by the Worker Economic Opportunity Act). Subject to the
foregoing, unless otherwise specified by the Committee in the grant of a Freestanding SAR, each
Freestanding SAR shall terminate ten (10) years after the effective date of grant of the SAR,
unless earlier terminated in accordance with its provisions.



          8.4 Exercise of SARs. Upon the exercise (or deemed exercise pursuant to Section 8.5) of an
SAR, the Participant (or the Participant’s legal representative or other person who acquired the
right to exercise the SAR by reason of the Participant’s death) shall be entitled to receive
payment of an amount for each share with respect to which the SAR is exercised equal to the excess,
if any, of the Fair Market Value of a share of Stock on the date of exercise of the SAR over the
exercise price. Payment of such amount shall be made (a) in the case of a Tandem SAR, solely in
shares of Stock in a lump sum upon the date of exercise of the SAR and (b) in the case of a
Freestanding SAR, in cash, shares of Stock, or any combination thereof as determined by the
Committee, in a lump sum upon the date of exercise of the SAR. When payment is to be made in
shares of Stock, the number of shares to be issued shall be determined on the basis of the Fair
Market Value of a share of Stock on the date of exercise of the SAR. For purposes of



18









 




Section 8, an SAR shall be deemed exercised on the date on which the Company receives notice
of exercise from the Participant or as otherwise provided in Section 8.5.




          8.5 Deemed Exercise of SARs. If, on the date on which an SAR would otherwise terminate or
expire, the SAR by its terms remains exercisable immediately prior to such termination or
expiration and, if so exercised, would result in a payment to the holder of such SAR, then any
portion of such SAR which has not previously been exercised shall automatically be deemed to be
exercised as of such date with respect to such portion.



          8.6 Effect of Termination of Service. Subject to earlier termination of the SAR as otherwise
provided herein and unless otherwise provided by the Committee, an SAR shall be exercisable after a
Participant’s termination of Service only to the extent and during the applicable time period
determined in accordance with Section 7.4 (treating the SAR as if it were an Option) and thereafter
shall terminate.



          8.7 Transferability of SARs. During the lifetime of the Participant, an SAR shall be
exercisable only by the Participant or the Participant’s guardian or legal representative. An SAR
shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer,
assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the
Participant’s beneficiary, except transfer by will or by the laws of descent and distribution.
Notwithstanding the foregoing, to the extent permitted by the Committee, in its discretion, and set
forth in the Award Agreement evidencing such Award, a Tandem SAR related to a Nonstatutory Stock
Option or a Freestanding SAR shall be assignable or transferable subject to the applicable
limitations, if any, described in the General Instructions to Form S-8 under the Securities Act.



     9. Restricted Stock Awards.



          Restricted Stock Awards shall be evidenced by Award Agreements specifying whether the Award is
a Restricted Stock Bonus or a Restricted Stock Purchase Right and the number of shares of Stock
subject to the Award, in such form as the Committee shall from time to time establish. Award
Agreements evidencing Restricted Stock Awards may incorporate all or any of the terms of the Plan
by reference and shall comply with and be subject to the following terms and conditions:



          9.1 Types of Restricted Stock Awards Authorized. Restricted Stock Awards may be granted in
the form of either a Restricted Stock Bonus or a Restricted Stock Purchase Right. Restricted Stock
Awards may be granted upon such conditions as the Committee shall determine, including, without
limitation, upon the attainment of one or more Performance Goals described in Section 11.4. If
either the grant of or satisfaction of Vesting Conditions applicable to a Restricted Stock Award is
to be contingent upon the attainment of one or more Performance Goals, the Committee shall follow
procedures substantially equivalent to those set forth in Sections 11.3 through 11.5(a).



          9.2 Purchase Price. The purchase price for shares of Stock issuable under each Restricted
Stock Purchase Right shall be established by the Committee in its discretion. No monetary payment
(other than applicable tax withholding) shall be required as a condition of



19









 




receiving shares of Stock pursuant to a Restricted Stock Bonus, the consideration for which
shall be services actually rendered to a Participating Company or for its benefit. Notwithstanding
the foregoing, if required by applicable state corporate law, the Participant shall furnish
consideration in the form of cash or past services rendered to a Participating Company or for its
benefit having a value not less than the par value of the shares of Stock subject to a Restricted
Stock Award.




          9.3 Purchase Period. A Restricted Stock Purchase Right shall be exercisable within a period
established by the Committee, which shall in no event exceed thirty (30) days from the effective
date of the grant of the Restricted Stock Purchase Right.



          9.4 Payment of Purchase Price. Except as otherwise provided below, payment of the purchase
price for the number of shares of Stock being purchased pursuant to any Restricted Stock Purchase
Right shall be made (a) in cash, by check or in cash equivalent, (b) by such other consideration as
may be approved by the Committee from time to time to the extent permitted by applicable law, or
(c) by any combination thereof.



          9.5 Vesting and Restrictions on Transfer. Shares issued pursuant to any Restricted Stock
Award may (but need not) be made subject to Vesting Conditions based upon the satisfaction of such
Service requirements, conditions, restrictions or performance criteria, including, without
limitation, Performance Goals as described in Section 11.4, as shall be established by the
Committee and set forth in the Award Agreement evidencing such Award. During any period in which
shares acquired pursuant to a Restricted Stock Award remain subject to Vesting Conditions, such
shares may not be sold, exchanged, transferred, pledged, assigned or otherwise disposed of other
than pursuant to an Ownership Change Event or as provided in Section 9.8. The Committee, in its
discretion, may provide in any Award Agreement evidencing a Restricted Stock Award that, if the
satisfaction of Vesting Conditions with respect to any shares subject to such Restricted Stock
Award would otherwise occur on a day on which the sale of such shares would violate the provisions
of the Trading Compliance Policy, then satisfaction of the Vesting Conditions automatically shall
be determined on the next trading day on which the sale of such shares would not violate the
Trading Compliance Policy. Upon request by the Company, each Participant shall execute any
agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder
and shall promptly present to the Company any and all certificates representing shares of Stock
acquired hereunder for the placement on such certificates of appropriate legends evidencing any
such transfer restrictions.



          9.6 Voting Rights; Dividends and Distributions. Except as provided in this Section, Section
9.5 and any Award Agreement, during any period in which shares acquired pursuant to a Restricted
Stock Award remain subject to Vesting Conditions, the Participant shall have all of the rights of a
stockholder of the Company holding shares of Stock, including the right to vote such shares and to
receive all dividends and other distributions paid with respect to such shares; provided, however,
that unless otherwise determined by the Committee and provided by the Award Agreement, such
dividends and distributions shall be subject to the same Vesting Conditions as the shares subject
to the Restricted Stock Award with respect to which such dividends or distributions were paid, and
otherwise shall be paid no later than the end of the calendar year in which such dividends or
distributions are paid to stockholders (or, if later, the 15th day of the third month following the
date such dividends or distributions are paid to



20









 




stockholders). In the event of a dividend or distribution paid in shares of Stock or other
property or any other adjustment made upon a change in the capital structure of the Company as
described in Section 5.4, any and all new, substituted or additional securities or other property
(other than regular, periodic cash dividends) to which the Participant is entitled by reason of the
Participant’s Restricted Stock Award shall be immediately subject to the same Vesting Conditions as
the shares subject to the Restricted Stock Award with respect to which such dividends or
distributions were paid or adjustments were made.




          9.7 Effect of Termination of Service. Unless otherwise provided by the Committee in the Award
Agreement evidencing a Restricted Stock Award, if a Participant’s Service terminates for any
reason, whether voluntary or involuntary (including the Participant’s death or disability), then
(a) the Company shall have the option to repurchase for the purchase price paid by the Participant
any shares acquired by the Participant pursuant to a Restricted Stock Purchase Right which remain
subject to Vesting Conditions as of the date of the Participant’s termination of Service and (b)
the Participant shall forfeit to the Company any shares acquired by the Participant pursuant to a
Restricted Stock Bonus which remain subject to Vesting Conditions as of the date of the
Participant’s termination of Service. The Company shall have the right to assign at any time any
repurchase right it may have, whether or not such right is then exercisable, to one or more persons
as may be selected by the Company.



          9.8 Nontransferability of Restricted Stock Award Rights. Rights to acquire shares of Stock
pursuant to a Restricted Stock Award shall not be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance or garnishment by creditors
of the Participant or the Participant’s beneficiary, except transfer by will or the laws of descent
and distribution. All rights with respect to a Restricted Stock Award granted to a Participant
hereunder shall be exercisable during his or her lifetime only by such Participant or the
Participant’s guardian or legal representative.



     10. Restricted Stock Unit Awards.



          Restricted Stock Unit Awards shall be evidenced by Award Agreements specifying the number of
Restricted Stock Units subject to the Award, in such form as the Committee shall from time to time
establish. Award Agreements evidencing Restricted Stock Units may incorporate all or any of the
terms of the Plan by reference and shall comply with and be subject to the following terms and
conditions:



          10.1 Grant of Restricted Stock Unit Awards. Restricted Stock Unit Awards may be granted upon
such conditions as the Committee shall determine, including, without limitation, upon the
attainment of one or more Performance Goals described in Section 11.4. If either the grant of a
Restricted Stock Unit Award or the Vesting Conditions with respect to such Award is to be
contingent upon the attainment of one or more Performance Goals, the Committee shall follow
procedures substantially equivalent to those set forth in Sections 11.3 through 11.5(a).



          10.2 Purchase Price. No monetary payment (other than applicable tax withholding, if any)
shall be required as a condition of receiving a Restricted Stock Unit Award, the consideration for
which shall be services actually rendered to a Participating Company or for



21









 




its benefit. Notwithstanding the foregoing, if required by applicable state corporate law,
the Participant shall furnish consideration in the form of cash or past services rendered to a
Participating Company or for its benefit having a value not less than the par value of the shares
of Stock issued upon settlement of the Restricted Stock Unit Award.




          10.3 Vesting. Restricted Stock Unit Awards may (but need not) be made subject to Vesting
Conditions based upon the satisfaction of such Service requirements, conditions, restrictions or
performance criteria, including, without limitation, Performance Goals as described in Section
11.4, as shall be established by the Committee and set forth in the Award Agreement evidencing such
Award. The Committee, in its discretion, may provide in any Award Agreement evidencing a
Restricted Stock Unit Award that, if the satisfaction of Vesting Conditions with respect to any
shares subject to the Award would otherwise occur on a day on which the sale of such shares would
violate the provisions of the Trading Compliance Policy, then the satisfaction of the Vesting
Conditions automatically shall be determined on the first to occur of (a) the next trading day on
which the sale of such shares would not violate the Trading Compliance Policy or (b) the later of
(i) last day of the calendar year in which the original vesting date occurred or (ii) the last day
of the Company’s taxable year in which the original vesting date occurred.



          10.4 Voting Rights, Dividend Equivalent Rights and Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by Restricted Stock Units until the date
of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company). However, the Committee, in its discretion,
may provide in the Award Agreement evidencing any Restricted Stock Unit Award that the Participant
shall be entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on
Stock during the period beginning on the date such Award is granted and ending, with respect to
each share subject to the Award, on the earlier of the date the Award is settled or the date on
which it is terminated. Such Dividend Equivalent Rights, if any, shall be paid by crediting the
Participant with a cash amount or with additional whole Restricted Stock Units as of the date of
payment of such cash dividends on Stock, as determined by the Committee. The number of additional
Restricted Stock Units (rounded to the nearest whole number), if any, to be so credited shall be
determined by dividing (a) the amount of cash dividends paid on such date with respect to the
number of shares of Stock represented by the Restricted Stock Units previously credited to the
Participant by (b) the Fair Market Value per share of Stock on such date. Such cash amounts and/or
additional Restricted Stock Units shall be subject to the same terms and conditions and shall be
settled in the same manner and at the same time as the Restricted Stock Units originally subject to
the Restricted Stock Unit Award. In the event of a dividend or distribution paid in shares of
Stock or other property or any other adjustment made upon a change in the capital structure of the
Company as described in Section 5.4, appropriate adjustments shall be made in the Participant’s
Restricted Stock Unit Award so that it represents the right to receive upon settlement any and all
new, substituted or additional securities or other property (other than regular, periodic cash
dividends) to which the Participant would be entitled by reason of the shares of Stock issuable
upon settlement of the Award, and all such new, substituted or additional securities or other
property shall be immediately subject to the same Vesting Conditions as are applicable to the
Award.



22









 





          10.5 Effect of Termination of Service. Unless otherwise provided by the Committee and set
forth in the Award Agreement evidencing a Restricted Stock Unit Award, if a Participant’s Service
terminates for any reason, whether voluntary or involuntary (including the Participant’s death or
disability), then the Participant shall forfeit to the Company any Restricted Stock Units pursuant
to the Award which remain subject to Vesting Conditions as of the date of the Participant’s
termination of Service.



          10.6 Settlement of Restricted Stock Unit Awards. The Company shall issue to a Participant on
the date on which Restricted Stock Units subject to the Participant’s Restricted Stock Unit Award
vest or on such other date determined by the Committee, in its discretion, and set forth in the
Award Agreement one (1) share of Stock (and/or any other new, substituted or additional securities
or other property pursuant to an adjustment described in Section 10.4) for each Restricted Stock
Unit then becoming vested or otherwise to be settled on such date, subject to the withholding of
applicable taxes, if any. If permitted by the Committee, the Participant may elect, consistent
with the requirements of Section 409A, to defer receipt of all or any portion of the shares of
Stock or other property otherwise issuable to the Participant pursuant to this Section, and such
deferred issuance date(s) and amount(s) elected by the Participant shall be set forth in the Award
Agreement. Notwithstanding the foregoing, the Committee, in its discretion, may provide for
settlement of any Restricted Stock Unit Award by payment to the Participant in cash of an amount
equal to the Fair Market Value on the payment date of the shares of Stock or other property
otherwise issuable to the Participant pursuant to this Section.



          10.7 Nontransferability of Restricted Stock Unit Awards. The right to receive shares pursuant
to a Restricted Stock Unit Award shall not be subject in any manner to anticipation, alienation,
sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the
Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and
distribution. All rights with respect to a Restricted Stock Unit Award granted to a Participant
hereunder shall be exercisable during his or her lifetime only by such Participant or the
Participant’s guardian or legal representative.



     11. Performance Awards.



          Performance Awards shall be evidenced by Award Agreements in such form as the Committee shall
from time to time establish. Award Agreements evidencing Performance Awards may incorporate all or
any of the terms of the Plan by reference and shall comply with and be subject to the following
terms and conditions:



          11.1 Types of Performance Awards Authorized. Performance Awards may be granted in the form of
either Performance Shares or Performance Units. Each Award Agreement evidencing a Performance
Award shall specify the number of Performance Shares or Performance Units subject thereto, the
Performance Award Formula, the Performance Goal(s) and Performance Period applicable to the Award,
and the other terms, conditions and restrictions of the Award.



          11.2 Initial Value of Performance Shares and Performance Units. Unless otherwise provided by
the Committee in granting a Performance Award, each Performance Share



23









 




shall have an initial monetary value equal to the Fair Market Value of one (1) share of Stock,
subject to adjustment as provided in Section 5.4, on the effective date of grant of the Performance
Share, and each Performance Unit shall have an initial monetary value established by the Committee
at the time of grant. The final value payable to the Participant in settlement of a Performance
Award determined on the basis of the applicable Performance Award Formula will depend on the extent
to which Performance Goals established by the Committee are attained within the applicable
Performance Period established by the Committee.




          11.3 Establishment of Performance Period, Performance Goals and Performance Award Formula. In
granting each Performance Award, the Committee shall establish in writing the applicable
Performance Period, Performance Award Formula and one or more Performance Goals which, when
measured at the end of the Performance Period, shall determine on the basis of the Performance
Award Formula the final value of the Performance Award to be paid to the Participant. Unless
otherwise permitted in compliance with the requirements under Section 162(m) with respect to each
Performance Award intended to result in the payment of Performance-Based Compensation, the
Committee shall establish the Performance Goal(s) and Performance Award Formula applicable to each
Performance Award no later than the earlier of (a) the date ninety (90) days after the commencement
of the applicable Performance Period or (b) the date on which 25% of the Performance Period has
elapsed, and, in any event, at a time when the outcome of the Performance Goals remains
substantially uncertain. Once established, the Performance Goals and Performance Award Formula
applicable to a Covered Employee shall not be changed during the Performance Period. The Company
shall notify each Participant granted a Performance Award of the terms of such Award, including the
Performance Period, Performance Goal(s) and Performance Award Formula.



          11.4 Measurement of Performance Goals. Performance Goals shall be established by the
Committee on the basis of targets to be attained (“Performance Targets”) with respect to one or
more measures of business or financial performance (each, a “Performance Measure”), subject to the
following:



               (a) Performance Measures. Performance Measures shall be calculated in accordance with the
Company’s financial statements, or, if such terms are not used in the Company’s financial
statements, they shall be calculated in accordance with generally accepted accounting principles, a
method used generally in the Company’s industry, or in accordance with a methodology established by
the Committee prior to the grant of the Performance Award. Performance Measures shall be
calculated with respect to the Company and each Subsidiary Corporation consolidated therewith for
financial reporting purposes or such division or other business unit as may be selected by the
Committee. Unless otherwise determined by the Committee prior to the grant of the Performance
Award, the Performance Measures applicable to the Performance Award shall be calculated prior to
the accrual of expense for any Performance Award for the same Performance Period and excluding the
effect (whether positive or negative) on the Performance Measures of any change in accounting
standards or any extraordinary, unusual or nonrecurring item, as determined by the Committee,
occurring after the establishment of the Performance Goals applicable to the Performance Award.
Each such adjustment, if any, shall be made solely for the purpose of providing a consistent basis
from period to period for the calculation of Performance Measures in order to prevent the dilution
or enlargement of the Participant’s rights with respect to a Performance



24









 




Award. Performance Measures may be one or more of the following, as determined by the
Committee:




                    (i) revenue;



                    (ii) sales;



                    (iii) expenses;



                    (iv) operating income;



                    (v) gross margin;



                    (vi) operating margin;



                    (vii) earnings before any one or more of: stock-based compensation expense, interest, taxes,
depreciation and amortization;



                    (viii) pre-tax profit;



                    (ix) net operating income;



                    (x) net income;



                    (xi) economic value added;



                    (xii) free cash flow;



                    (xiii) operating cash flow;



                    (xiv) balance of cash, cash equivalents and marketable securities;



                    (xv) stock price;



                    (xvi) earnings per share;



                    (xvii) return on stockholder equity;



                    (xviii) return on capital;



                    (xix) return on assets;



                    (xx) return on investment;



                    (xxi) total stockholder return;



                    (xxii) employee satisfaction;



                    (xxiii) employee retention;



25









 





                    (xxiv) market share;



                    (xxv) customer satisfaction;



                    (xxvi) product development;



                    (xxvii) research and development expenses;



                    (xxviii) completion of an identified special project; and



                    (xxix) completion of a joint venture or other corporate transaction.



               (b) Performance Targets. Performance Targets may include a minimum, maximum, target level and
intermediate levels of performance, with the final value of a Performance Award determined under
the applicable Performance Award Formula by the level attained during the applicable Performance
Period. A Performance Target may be stated as an absolute value, an increase or decrease in a
value, or as a value determined relative to an index, budget or other standard selected by the
Committee.



          11.5 Settlement of Performance Awards.




               (a) Determination of Final Value. As soon as practicable following the completion of the
Performance Period applicable to a Performance Award, the Committee shall certify in writing the
extent to which the applicable Performance Goals have been attained and the resulting final value
of the Award earned by the Participant and to be paid upon its settlement in accordance with the
applicable Performance Award Formula.



               (b) Discretionary Adjustment of Award Formula. In its discretion, the Committee may, either
at the time it grants a Performance Award or at any time thereafter, provide for the positive or
negative adjustment of the Performance Award Formula applicable to a Performance Award granted to
any Participant who is not a Covered Employee to reflect such Participant’s individual performance
in his or her position with the Company or such other factors as the Committee may determine. If
permitted under a Covered Employee’s Award Agreement, the Committee shall have the discretion, on
the basis of such criteria as may be established by the Committee, to reduce some or all of the
value of the Performance Award that would otherwise be paid to the Covered Employee upon its
settlement notwithstanding the attainment of any Performance Goal and the resulting value of the
Performance Award determined in accordance with the Performance Award Formula. No such reduction
may result in an increase in the amount payable upon settlement of another Participant’s
Performance Award that is intended to result in Performance-Based Compensation.



               (c) Effect of Leaves of Absence. Unless otherwise required by law or a Participant’s Award
Agreement, payment of the final value, if any, of a Performance Award held by a Participant who has
taken in excess of thirty (30) days in unpaid leaves of absence during a Performance Period shall
be prorated on the basis of the number of days of the Participant’s Service during the Performance
Period during which the Participant was not on an unpaid leave of absence.



26









 





               (d) Notice to Participants. As soon as practicable following the Committee’s determination
and certification in accordance with Sections 11.5(a) and (b), the Company shall notify each
Participant of the determination of the Committee.



               (e) Payment in Settlement of Performance Awards. As soon as practicable following the
Committee’s determination and certification in accordance with Sections 11.5(a) and (b), but in any
event within the Short-Term Deferral Period described in Section 16.1 (except as otherwise provided
below or consistent with the requirements of Section 409A), payment shall be made to each eligible
Participant (or such Participant’s legal representative or other person who acquired the right to
receive such payment by reason of the Participant’s death) of the final value of the Participant’s
Performance Award. Payment of such amount shall be made in cash, shares of Stock, or a combination
thereof as determined by the Committee. Unless otherwise provided in the Award Agreement
evidencing a Performance Award, payment shall be made in a lump sum. If permitted by the
Committee, the Participant may elect, consistent with the requirements of Section 409A, to defer
receipt of all or any portion of the payment to be made to the Participant pursuant to this
Section, and such deferred payment date(s) elected by the Participant shall be set forth in the
Award Agreement. If any payment is to be made on a deferred basis, the Committee may, but shall
not be obligated to, provide for the payment during the deferral period of Dividend Equivalent
Rights or interest.



               (f) Provisions Applicable to Payment in Shares. If payment is to be made in shares of Stock,
the number of such shares shall be determined by dividing the final value of the Performance Award
by the Fair Market Value of a share of Stock determined by the method specified in the Award
Agreement. Shares of Stock issued in payment of any Performance Award may be fully vested and
freely transferable shares or may be shares of Stock subject to Vesting Conditions as provided in
Section 9.5. Any shares subject to Vesting Conditions shall be evidenced by an appropriate Award
Agreement and shall be subject to the provisions of Sections 9.5 through 9.8 above.



          11.6 Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by Performance Share Awards until the
date of the issuance of such shares, if any (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company). However, the Committee, in its
discretion, may provide in the Award Agreement evidencing any Performance Share Award that the
Participant shall be entitled to Dividend Equivalent Rights with respect to the payment of cash
dividends on Stock during the period beginning on the date the Award is granted and ending, with
respect to each share subject to the Award, on the earlier of the date on which the Performance
Shares are settled or the date on which they are forfeited. Such Dividend Equivalent Rights, if
any, shall be credited to the Participant either in cash or in the form of additional whole
Performance Shares as of the date of payment of such cash dividends on Stock, as determined by the
Committee. The number of additional Performance Shares (rounded to the nearest whole number), if
any, to be so credited shall be determined by dividing (a) the amount of cash dividends paid on the
dividend payment date with respect to the number of shares of Stock represented by the Performance
Shares previously credited to the Participant by (b) the Fair Market Value per share of Stock on
such date. Dividend Equivalent Rights may be paid currently or may be accumulated and paid to the
extent that Performance Shares become nonforfeitable, as determined by the Committee.






27









 







Settlement of Dividend Equivalent Rights may be made in cash, shares of Stock, or a
combination thereof as determined by the Committee, and may be paid on the same basis as settlement
of the related Performance Share as provided in Section 11.5. Dividend Equivalent Rights shall not
be paid with respect to Performance Units. In the event of a dividend or distribution paid in
shares of Stock or other property or any other adjustment made upon a change in the capital
structure of the Company as described in Section 5.4, appropriate adjustments shall be made in the
Participant’s Performance Share Award so that it represents the right to receive upon settlement
any and all new, substituted or additional securities or other property (other than regular,
periodic cash dividends) to which the Participant would be entitled by reason of the shares of
Stock issuable upon settlement of the Performance Share Award, and all such new, substituted or
additional securities or other property shall be immediately subject to the same Performance Goals
as are applicable to the Award.




          11.7 Effect of Termination of Service. Unless otherwise provided by the Committee and set
forth in the Award Agreement evidencing a Performance Award, the effect of a Participant’s
termination of Service on the Performance Award shall be as follows:




               (a) Death or Disability. If the Participant’s Service terminates because of the death or
Disability of the Participant before the completion of the Performance Period applicable to the
Performance Award, the final value of the Participant’s Performance Award shall be determined by
the extent to which the applicable Performance Goals have been attained with respect to the entire
Performance Period and shall be prorated based on the number of months of the Participant’s Service
during the Performance Period. Payment shall be made following the end of the Performance Period
in any manner permitted by Section 11.5.



               (b) Other Termination of Service. If the Participant’s Service terminates for any reason
except death or Disability before the completion of the Performance Period applicable to the
Performance Award, such Award shall be forfeited in its entirety; provided, however, that in the
event of an involuntary termination of the Participant’s Service, the Committee, in its discretion,
may waive the automatic forfeiture of all or any portion of any such Award and determine the final
value of the Performance Award in the manner provided by Section 11.7(a). Payment of any amount
pursuant to this Section shall be made following the end of the Performance Period in any manner
permitted by Section 11.5.



          11.8 Nontransferability of Performance Awards. Prior to settlement in accordance with the
provisions of the Plan, no Performance Award shall be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors
of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of
descent and distribution. All rights with respect to a Performance Award granted to a Participant
hereunder shall be exercisable during his or her lifetime only by such Participant or the
Participant’s guardian or legal representative.



     12. Cash-Based Awards and Other Stock-Based Awards.



          Cash-Based Awards and Other Stock-Based Awards shall be evidenced by Award Agreements in such
form as the Committee shall from time to time establish. Award Agreements evidencing Cash-Based
Awards and Other Stock-Based Awards may incorporate all



28









 




or any of the terms of the Plan by reference and shall comply with and be subject to the
following terms and conditions:




          12.1 Grant of Cash-Based Awards. Subject to the provisions of the Plan, the Committee, at any
time and from time to time, may grant Cash-Based Awards to Participants in such amounts and upon
such terms and conditions, including the achievement of performance criteria, as the Committee may
determine.



          12.2 Grant of Other Stock-Based Awards. The Committee may grant other types of equity-based
or equity-related Awards not otherwise described by the terms of this Plan (including the grant or
offer for sale of unrestricted securities, stock-equivalent units, stock appreciation units,
securities or debentures convertible into common stock or other forms determined by the Committee)
in such amounts and subject to such terms and conditions as the Committee shall determine. Other
Stock-Based Awards may be made available as a form of payment in the settlement of other Awards or
as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock-Based
Awards may involve the transfer of actual shares of Stock to Participants, or payment in cash or
otherwise of amounts based on the value of Stock and may include, without limitation, Awards
designed to comply with or take advantage of the applicable local laws of jurisdictions other than
the United States.



          12.3 Value of Cash-Based and Other Stock-Based Awards. Each Cash-Based Award shall specify a
monetary payment amount or payment range as determined by the Committee. Each Other Stock-Based
Award shall be expressed in terms of shares of Stock or units based on such shares of Stock, as
determined by the Committee. The Committee may require the satisfaction of such Service
requirements, conditions, restrictions or performance criteria, including, without limitation,
Performance Goals as described in Section 11.4, as shall be established by the Committee and set
forth in the Award Agreement evidencing such Award. If the Committee exercises its discretion to
establish performance criteria, the final value of Cash-Based Awards or Other Stock-Based Awards
that will be paid to the Participant will depend on the extent to which the performance criteria
are met. The establishment of performance criteria with respect to the grant or vesting of any
Cash-Based Award or Other Stock-Based Award intended to result in Performance-Based Compensation
shall follow procedures substantially equivalent to those applicable to Performance Awards set
forth in Section 11.



          12.4 Payment or Settlement of Cash-Based Awards and Other Stock-Based Awards. Payment or
settlement, if any, with respect to a Cash-Based Award or an Other Stock-Based Award shall be made
in accordance with the terms of the Award, in cash, shares of Stock or other securities or any
combination thereof as the Committee determines. The determination and certification of the final
value with respect to any Cash-Based Award or Other Stock-Based Award intended to result in
Performance-Based Compensation shall comply with the requirements applicable to Performance Awards
set forth in Section 11. To the extent applicable and permitted, payment or settlement with
respect to each Cash-Based Award and Other Stock-Based Award shall be made in compliance with the
requirements of Section 409A.



          12.5 Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by Other



29









 




Stock-Based Awards until the date of the issuance of such shares of Stock (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer agent of the
Company), if any, in settlement of such Award. However, the Committee, in its discretion, may
provide in the Award Agreement evidencing any Other Stock-Based Award that the Participant shall be
entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on Stock
during the period beginning on the date such Award is granted and ending, with respect to each
share subject to the Award, on the earlier of the date the Award is settled or the date on which it
is terminated. Such Dividend Equivalent Rights, if any, shall be paid in accordance with the
provisions set forth in Section 10.4. Dividend Equivalent Rights shall not be granted with respect
to Cash-Based Awards. In the event of a dividend or distribution paid in shares of Stock or other
property or any other adjustment made upon a change in the capital structure of the Company as
described in Section 5.4, appropriate adjustments shall be made in the Participant’s Other
Stock-Based Award so that it represents the right to receive upon settlement any and all new,
substituted or additional securities or other property (other than regular, periodic cash
dividends) to which the Participant would be entitled by reason of the shares of Stock issuable
upon settlement of such Award, and all such new, substituted or additional securities or other
property shall be immediately subject to the same Vesting Conditions and performance criteria, if
any, as are applicable to the Award.




          12.6 Effect of Termination of Service. Each Award Agreement evidencing a Cash-Based Award or
Other Stock-Based Award shall set forth the extent to which the Participant shall have the right to
retain such Award following termination of the Participant’s Service. Such provisions shall be
determined in the discretion of the Committee, need not be uniform among all Cash-Based Awards or
Other Stock-Based Awards, and may reflect distinctions based on the reasons for termination,
subject to the requirements of Section 409A, if applicable.



          12.7 Nontransferability of Cash-Based Awards and Other Stock-Based Awards. Prior to the
payment or settlement of a Cash-Based Award or Other Stock-Based Award, the Award shall not be
subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge,
encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary,
except transfer by will or by the laws of descent and distribution. The Committee may impose such
additional restrictions on any shares of Stock issued in settlement of Cash-Based Awards and Other
Stock-Based Awards as it may deem advisable, including, without limitation, minimum holding period
requirements, restrictions under applicable federal securities laws, under the requirements of any
stock exchange or market upon which such shares of Stock are then listed and/or traded, or under
any state securities laws or foreign law applicable to such shares of Stock.



     13. Standard Forms of Award Agreement.



          13.1 Award Agreements. Each Award shall comply with and be subject to the terms and
conditions set forth in the appropriate form of Award Agreement approved by the Committee and as
amended from time to time. No Award or purported Award shall be a valid and binding obligation of
the Company unless evidenced by a fully executed Award Agreement, which execution may be evidenced
by electronic means.



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          13.2 Authority to Vary Terms. The Committee shall have the authority from time to time to
vary the terms of any standard form of Award Agreement either in connection with the grant or
amendment of an individual Award or in connection with the authorization of a new standard form or
forms; provided, however, that the terms and conditions of any such new, revised or amended
standard form or forms of Award Agreement are not inconsistent with the terms of the Plan.



     14. Change in Control.



          14.1 Effect of Change in Control on Awards. Subject to the requirements and limitations of
Section 409A, if applicable, the Committee may provide for any one or more of the following:



               (a) Accelerated Vesting. In its discretion, the Committee may provide in the grant of any
Award or at any other time may take such action as it deems appropriate to provide for acceleration
of the exercisability, vesting and/or settlement in connection with a Change in Control of each or
any outstanding Award or portion thereof and shares acquired pursuant thereto upon such conditions
and to such extent as the Committee shall determine.



               (b) Assumption, Continuation or Substitution. In the event of a Change in Control, the
surviving, continuing, successor, or purchasing corporation or other business entity or parent
thereof, as the case may be (the “Acquiror”), may, without the consent of any Participant, assume
or continue the Company’s rights and obligations under each or any Award or portion thereof
outstanding immediately prior to the Change in Control or substitute for each or any such
outstanding Award or portion thereof a substantially equivalent award with respect to the
Acquiror’s stock, as applicable. For the purposes of this Section, if so determined by the
Committee in its discretion, an Award denominated in shares of Stock shall be deemed assumed if,
following the Change in Control, the Award confers the right to receive, subject to the terms and
conditions of the Plan and the applicable Award Agreement, for each share of Stock subject to the
Award immediately prior to the Change in Control, the consideration (whether stock, cash, other
securities or property or a combination thereof) to which a holder of a share of Stock on the
effective date of the Change in Control was entitled (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of the outstanding
shares of Stock); provided, however, that if such consideration is not solely common stock of the
Acquiror, the Committee may, with the consent of the Acquiror, provide for the consideration to be
received upon the exercise or settlement of the Award, for each share of Stock subject to the
Award, to consist solely of common stock of the Acquiror equal in Fair Market Value to the per
share consideration received by holders of Stock pursuant to the Change in Control. Any Award or
portion thereof which is neither assumed or continued by the Acquiror in connection with the Change
in Control nor exercised or settled as of the time of consummation of the Change in Control shall
terminate and cease to be outstanding effective as of the time of consummation of the Change in
Control.



               (c) Cash-Out of Outstanding Stock-Based Awards. The Committee may, in its
discretion and without the consent of any Participant, determine that, upon the occurrence of a
Change in Control, each or any Award denominated in shares of Stock or portion thereof outstanding
immediately prior to the Change in Control and not previously exercised or



31









 




settled shall be canceled in exchange for a payment with respect to each vested share (and
each unvested share, if so determined by the Committee) of Stock subject to such canceled Award in
(i) cash, (ii) stock of the Company or of a corporation or other business entity a party to the
Change in Control, or (iii) other property which, in any such case, shall be in an amount having a
Fair Market Value equal to the Fair Market Value of the consideration to be paid per share of Stock
in the Change in Control, reduced (but not below zero) by the exercise or purchase price per share,
if any, under such Award. In the event such determination is made by the Committee, an Award
having an exercise or purchase price per share equal to or greater than the Fair Market Value of
the consideration to be paid per share of Stock in the Change in Control may be canceled without
payment of consideration to the holder thereof. Payment pursuant to this Section (reduced by
applicable withholding taxes, if any) shall be made to Participants in respect of the vested
portions of their canceled Awards as soon as practicable following the date of the Change in
Control and in respect of the unvested portions of their canceled Awards in accordance with the
vesting schedules applicable to such Awards.




          14.2 Effect of Change in Control on Nonemployee Director Awards. Subject to the requirements
and limitations of Section 409A, if applicable, including as provided by Section 16.4(f), in the
event of a Change in Control, each outstanding Nonemployee Director Award shall become immediately
exercisable and vested in full and, except to the extent assumed, continued or substituted for
pursuant to Section 14.1(b), shall be settled effective immediately prior to the time of
consummation of the Change in Control.



          14.3 Federal Excise Tax Under Section 4999 of the Code.



               (a) Excess Parachute Payment. In the event that any acceleration of vesting pursuant to an
Award and any other payment or benefit received or to be received by a Participant would subject
the Participant to any excise tax pursuant to Section 4999 of the Code due to the characterization
of such acceleration of vesting, payment or benefit as an “excess parachute payment” under Section
280G of the Code, the Participant may elect to reduce the amount of any acceleration of vesting
called for under the Award in order to avoid such characterization.



               (b) Determination by Independent Accountants. To aid the Participant in making any election
called for under Section 14.3(a), no later than the date of the occurrence of any event that might
reasonably be anticipated to result in an “excess parachute payment” to the Participant as
described in Section 14.3(a), the Company shall request a determination in writing by independent
public accountants selected by the Company (the “Accountants”). As soon as practicable thereafter,
the Accountants shall determine and report to the Company and the Participant the amount of such
acceleration of vesting, payments and benefits which would produce the greatest after-tax benefit
to the Participant. For the purposes of such determination, the Accountants may rely on
reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and the Participant shall furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to make their required determination.
The Company shall bear all fees and expenses the Accountants charge in connection with their
services contemplated by this Section.



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     15. Compliance with Securities Law.



          The grant of Awards and the issuance of shares of Stock pursuant to any Award shall be subject
to compliance with all applicable requirements of federal, state and foreign law (including any
applicable Listing Rules) with respect to such securities and the requirements of any stock
exchange or market system upon which the Stock may then be listed. In addition, no Award may be
exercised or shares issued pursuant to an Award unless (a) a registration statement under the
Securities Act shall at the time of such exercise or issuance be in effect with respect to the
shares issuable pursuant to the Award, or (b) in the opinion of legal counsel to the Company, the
shares issuable pursuant to the Award may be issued in accordance with the terms of an applicable
exemption from the registration requirements of the Securities Act. The inability of the Company
to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the
Company’s legal counsel to be necessary to the lawful issuance and sale of any shares under the
Plan shall relieve the Company of any liability in respect of the failure to issue or sell such
shares as to which such requisite authority shall not have been obtained. As a condition to
issuance of any Stock, the Company may require the Participant to satisfy any qualifications that
may be necessary or appropriate to evidence compliance with any applicable law or regulation and to
make any representation or warranty with respect thereto as may be requested by the Company.



     16. Compliance with Section 409A.



          16.1 Awards Subject to Section 409A. The Company intends that Awards granted pursuant to the
Plan shall either be exempt from or comply with Section 409A, and the Plan shall be so construed.
The provisions of this Section 16 shall apply to any Award or portion thereof that constitutes or
provides for payment of Section 409A Deferred Compensation. Such Awards may include, without
limitation:



               (a) A Nonstatutory Stock Option or SAR that includes any feature for the deferral of
compensation other than the deferral of recognition of income until the later of (i) the exercise
or disposition of the Award or (ii) the time the stock acquired pursuant to the exercise of the
Award first becomes substantially vested.



               (b) Any Restricted Stock Unit Award, Performance Award, Cash-Based Award or Other Stock-Based
Award that either (i) provides by its terms for settlement of all or any portion of the Award at a
time or upon an event that will or may occur later than the end of the Short-Term Deferral Period
(as defined below) or (ii) permits the Participant granted the Award to elect one or more dates or
events upon which the Award will be settled after the end of the Short-Term Deferral Period.



     Subject to the provisions of Section 409A, the term “Short-Term Deferral Period” means the 21/2
month period ending on the later of (i) the 15th day of the third month following the end of the
Participant’s taxable year in which the right to payment under the applicable portion of the Award
is no longer subject to a substantial risk of forfeiture or (ii) the 15th day of the third month
following the end of the Company’s taxable year in which the right to payment under the applicable
portion of the Award is no longer subject to a substantial risk of forfeiture.



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For this purpose, the term “substantial risk of forfeiture” shall have the meaning provided by
Section 409A.




          16.2 Deferral and/or Distribution Elections. Except as otherwise permitted or required by
Section 409A, the following rules shall apply to any compensation deferral and/or payment elections
(each, an “Election”) that may be permitted or required by the Committee pursuant to an Award
providing Section 409A Deferred Compensation:



               (a) Elections must be in writing and specify the amount of the payment in settlement of an
Award being deferred, as well as the time and form of payment as permitted by this Plan.



               (b) Elections shall be made by the end of the Participant’s taxable year prior to the year in
which services commence for which an Award may be granted to such Participant.



               (c) Elections shall continue in effect until a written revocation or change in Election is
received by the Company, except that a written revocation or change in Election must be received by
the Company prior to the last day for making the Election determined in accordance with paragraph
(b) above or as permitted by Section 16.3.



          16.3 Subsequent Elections. Except as otherwise permitted or required by Section 409A, any
Award providing Section 409A Deferred Compensation which permits a subsequent Election to delay the
payment or change the form of payment in settlement of such Award shall comply with the following
requirements:



               (a) No subsequent Election may take effect until at least twelve (12) months after the date on
which the subsequent Election is made.



               (b) Each subsequent Election related to a payment in settlement of an Award not described in
Section 16.4(a)(ii), 16.4(a)(iii) or 16.4(a)(vi) must result in a delay of the payment for a period
of not less than five (5) years from the date on which such payment would otherwise have been made.



               (c) No subsequent Election related to a payment pursuant to Section 16.4(a)(iv) shall be made
less than twelve (12) months before the date on which such payment would otherwise have been made.



               (d) Subsequent Elections shall continue in effect until a written revocation or change in the
subsequent Election is received by the Company, except that a written revocation or change in a
subsequent Election must be received by the Company prior to the last day for making the subsequent
Election determined in accordance the preceding paragraphs of this Section 16.3.



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          16.4 Payment of Section 409A Deferred Compensation.



               (a) Permissible Payments. Except as otherwise permitted or required by Section 409A, an Award
providing Section 409A Deferred Compensation must provide for payment in settlement of the Award
only upon one or more of the following:



                    (i) The Participant’s “separation from service” (as defined by Section 409A);



                    (ii) The Participant’s becoming “disabled” (as defined by Section 409A);



                    (iii) The Participant’s death;



                    (iv) A time or fixed schedule that is either (i) specified by the Committee upon the grant of
an Award and set forth in the Award Agreement evidencing such Award or (ii) specified by the
Participant in an Election complying with the requirements of Section 16.2 or 16.3, as applicable;



                    (v) A change in the ownership or effective control of the Company or in the ownership of a
substantial portion of the assets of the Company determined in accordance with Section 409A; or



                    (vi) The occurrence of an “unforeseeable emergency” (as defined by Section 409A).



               (b) Installment Payments. It is the intent of this Plan that any right of a Participant to
receive installment payments (within the meaning of Section 409A) shall, for all purposes of
Section 409A, be treated as a right to a series of separate payments.



               (c) Required Delay in Payment to Specified Employee Pursuant to Separation from Service.
Notwithstanding any provision of the Plan or an Award Agreement to the contrary, except as
otherwise permitted by Section 409A, no payment pursuant to Section 16.4(a)(i) in settlement of an
Award providing for Section 409A Deferred Compensation may be made to a Participant who is a
“specified employee” (as defined by Section 409A) as of the date of the Participant’s separation
from service before the date (the “Delayed Payment Date”) that is six (6) months after the date of
such Participant’s separation from service, or, if earlier, the date of the Participant’s death.
All such amounts that would, but for this paragraph, become payable prior to the Delayed Payment
Date shall be accumulated and paid on the Delayed Payment Date.



               (d) Payment Upon Disability. All distributions of Section 409A Deferred Compensation payable
by reason of a Participant becoming disabled shall be paid in a lump sum or in periodic
installments as established by the Participant’s Election. If the Participant has made no Election
with respect to distributions of Section 409A Deferred Compensation upon becoming disabled, all
such distributions shall be paid in a lump sum upon the determination that the Participant has
become disabled.



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               (e) Payment Upon Death. If a Participant dies before complete distribution of amounts payable
upon settlement of an Award subject to Section 409A, such undistributed amounts shall be
distributed to his or her beneficiary under the distribution method for death established by the
Participant’s Election upon receipt by the Committee of satisfactory notice and confirmation of the
Participant’s death. If the Participant has made no Election with respect to distributions of
Section 409A Deferred Compensation upon death, all such distributions shall be paid in a lump sum
upon receipt by the Committee of satisfactory notice and confirmation of the Participant’s death.



               (f) Payment Upon Change in Control. Notwithstanding any provision of the Plan or an Award
Agreement to the contrary, to the extent that any amount constituting Section 409A Deferred
Compensation would become payable under this Plan by reason of a Change in Control, such amount
shall become payable only if the event constituting a Change in Control would also constitute a
change in ownership or effective control of the Company or a change in the ownership of a
substantial portion of the assets of the Company within the meaning of Section 409A. Any Award
which constitutes Section 409A Deferred Compensation and which would vest and otherwise become
payable upon a Change in Control as a result of the failure of the Acquiror to assume, continue or
substitute for such Award in accordance with Section 14.1(b) shall vest to the extent provided by
such Award but shall be converted automatically at the effective time of such Change in Control
into a right to receive, in cash on the date or dates such award would have been settled in
accordance with its then existing settlement schedule (or as required by Section 16.4(c)), an
amount or amounts equal in the aggregate to the intrinsic value of the Award at the time of the
Change in Control.



               (g) Payment Upon Unforeseeable Emergency. The Committee shall have the authority to provide
in the Award Agreement evidencing any Award providing for Section 409A Deferred Compensation for
payment in settlement of all or a portion of such Award in the event that a Participant
establishes, to the satisfaction of the Committee, the occurrence of an unforeseeable emergency.
In such event, the amount(s) distributed with respect to such unforeseeable emergency cannot exceed
the amounts reasonably necessary to satisfy the emergency need plus amounts necessary to pay taxes
reasonably anticipated as a result of such distribution(s), after taking into account the extent to
which such emergency need is or may be relieved through reimbursement or compensation by insurance
or otherwise, by liquidation of the Participant’s assets (to the extent the liquidation of such
assets would not itself cause severe financial hardship) or by cessation of deferrals under the
Award. All distributions with respect to an unforeseeable emergency shall be made in a lump sum
upon the Committee’s determination that an unforeseeable emergency has occurred. The Committee’s
decision with respect to whether an unforeseeable emergency has occurred and the manner in which,
if at all, the payment in settlement of an Award shall be altered or modified, shall be final,
conclusive, and not subject to approval or appeal.



               (h) Prohibition of Acceleration of Payments. Notwithstanding any provision of the Plan or an
Award Agreement to the contrary, this Plan does not permit the acceleration of the time or schedule
of any payment under an Award providing Section 409A Deferred Compensation, except as permitted by
Section 409A.



36









 





               (i) No Representation Regarding Section 409A Compliance. Notwithstanding any other provision
of the Plan, the Company makes no representation that Awards shall be exempt from or comply with
Section 409A. No Participating Company shall be liable for any tax, penalty or interest imposed on
a Participant by Section 409A.



     17. Tax Withholding.



          17.1 Tax Withholding in General. The Company shall have the right to deduct from any and all
payments made under the Plan, or to require the Participant, through payroll withholding, cash
payment or otherwise, to make adequate provision for, the federal, state, local and foreign taxes
(including social insurance), if any, required by law to be withheld by any Participating Company
with respect to an Award or the shares acquired pursuant thereto. The Company shall have no
obligation to deliver shares of Stock, to release shares of Stock from an escrow established
pursuant to an Award Agreement, or to make any payment in cash under the Plan until the
Participating Company Group’s tax withholding obligations have been satisfied by the Participant.



          17.2 Withholding in or Directed Sale of Shares. The Committee shall have the right, but not
the obligation, to cause the Company to deduct from the shares of Stock issuable to a Participant
upon the exercise or settlement of an Award, or to accept from the Participant the tender of, a
number of whole shares of Stock having a Fair Market Value, as determined by the Committee, equal
to all or any part of the tax withholding obligations of any Participating Company (provided such
shares of Stock are not pledged or otherwise serve as security and the withholding of which would
not trigger adverse accounting treatment). The Fair Market Value of any shares of Stock withheld
or tendered to satisfy any such tax withholding obligations shall not exceed the amount determined
by the applicable minimum statutory withholding rates. The Committee may require a Participant to
direct a broker, upon the vesting, exercise or settlement of an Award, to sell a portion of the
shares subject to the Award determined by the Committee in its discretion to be sufficient to cover
the tax withholding obligations of any Participating Company and to remit an amount equal to such
tax withholding obligations to such Participating Company in cash.



     18. Amendment, Suspension or Termination of Plan.



          The Committee may amend, suspend or terminate the Plan at any time. However, without the
approval of the Company’s stockholders, there shall be (a) no increase in the maximum aggregate
number of shares of Stock that may be issued under the Plan (except by operation of the provisions
of Section 5.4), (b) no change in the class of persons eligible to receive Incentive Stock Options,
and (c) no other amendment of the Plan that would require approval of the Company’s stockholders
under any applicable law, regulation or rule, including the rules of any stock exchange or
quotation system upon which the Stock may then be listed or quoted. No amendment, suspension or
termination of the Plan shall affect any then outstanding Award unless expressly provided by the
Committee. Except as provided by the next sentence, no amendment, suspension or termination of the
Plan may have a materially adverse effect on any then outstanding Award without the consent of the
Participant. Notwithstanding any other provision of the Plan to the contrary, the Committee may,
in its sole and absolute discretion and without the consent of any Participant, amend the Plan or
any Award Agreement, to take effect



37









 




retroactively or otherwise, as it deems necessary or advisable for the purpose of conforming
the Plan or such Award Agreement to any present or future law, regulation or rule applicable to the
Plan, including, but not limited to, Section 409A.




     19. Miscellaneous Provisions.



          19.1 Repurchase Rights. Shares issued under the Plan may be subject to one or more repurchase
options, or other conditions and restrictions as determined by the Committee in its discretion at
the time the Award is granted. The Company shall have the right to assign at any time any
repurchase right it may have, whether or not such right is then exercisable, to one or more persons
as may be selected by the Company. Upon request by the Company, each Participant shall execute any
agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder
and shall promptly present to the Company any and all certificates representing shares of Stock
acquired hereunder for the placement on such certificates of appropriate legends evidencing any
such transfer restrictions.



          19.2 Forfeiture Events.



               (a) The Committee may specify in an Award Agreement that the Participant’s rights, payments,
and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or
recoupment upon the occurrence of specified events, in addition to any otherwise applicable vesting
or performance conditions of an Award. Such events may include, but shall not be limited to,
termination of Service for Cause or any act by a Participant, whether before or after termination
of Service, that would constitute Cause for termination of Service.



               (b) If the Company is required to prepare an accounting restatement due to the material
noncompliance of the Company, as a result of misconduct, with any financial reporting requirement
under the securities laws, any Participant who knowingly or through gross negligence engaged in the
misconduct, or who knowingly or through gross negligence failed to prevent the misconduct, and any
Participant who is one of the individuals subject to automatic forfeiture under Section 304 of the
Sarbanes-Oxley Act of 2002, shall reimburse the Company for (i) the amount of any payment in
settlement of an Award received by such Participant during the twelve- (12-) month period following
the first public issuance or filing with the United States Securities and Exchange Commission
(whichever first occurred) of the financial document embodying such financial reporting
requirement, and (ii) any profits realized by such Participant from the sale of securities of the
Company during such twelve- (12-) month period.



          19.3 Provision of Information. Each Participant shall be given access to information
concerning the Company equivalent to that information generally made available to the Company’s
common stockholders.



          19.4 Rights as Employee, Consultant or Director. No person, even though eligible pursuant to
Section 6, shall have a right to be selected as a Participant, or, having been so selected, to be
selected again as a Participant. Nothing in the Plan or any Award granted under the Plan shall
confer on any Participant a right to remain an Employee, Consultant or Director or interfere with
or limit in any way any right of a Participating Company to terminate the



38









 




Participant’s Service at any time. To the extent that an Employee of a Participating Company
other than the Company receives an Award under the Plan, that Award shall in no event be understood
or interpreted to mean that the Company is the Employee’s employer or that the Employee has an
employment relationship with the Company.




          19.5 Rights as a Stockholder. A Participant shall have no rights as a stockholder with
respect to any shares covered by an Award until the date of the issuance of such shares (as
evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company). No adjustment shall be made for dividends, distributions or other rights
for which the record date is prior to the date such shares are issued, except as provided in
Section 5.4 or another provision of the Plan.



          19.6 Delivery of Title to Shares. Subject to any governing rules or regulations, the Company
shall issue or cause to be issued the shares of Stock acquired pursuant to an Award and shall
deliver such shares to or for the benefit of the Participant by means of one or more of the
following: (a) by delivering to the Participant evidence of book entry shares of Stock credited to
the account of the Participant, (b) by depositing such shares of Stock for the benefit of the
Participant with any broker with which the Participant has an account relationship, or (c) by
delivering such shares of Stock to the Participant in certificate form.



          19.7 Fractional Shares. The Company shall not be required to issue fractional shares upon the
exercise or settlement of any Award.



          19.8 Retirement and Welfare Plans. Neither Awards made under this Plan nor shares of Stock or
cash paid pursuant to such Awards may be included as “compensation” for purposes of computing the
benefits payable to any Participant under any Participating Company’s retirement plans (both
qualified and non-qualified) or welfare benefit plans unless such other plan or the relevant laws
expressly provide that such compensation shall be taken into account in computing a Participant’s
benefit.



          19.9 Beneficiary Designation. Subject to local laws and procedures, each Participant may file
with the Company a written designation of a beneficiary who is to receive any benefit under the
Plan to which the Participant is entitled in the event of such Participant’s death before he or she
receives any or all of such benefit. Each designation will revoke all prior designations by the
same Participant, shall be in a form prescribed by the Company, and will be effective only when
filed by the Participant in writing with the Company during the Participant’s lifetime. If a
married Participant designates a beneficiary other than the Participant’s spouse, the effectiveness
of such designation may be subject to the consent of the Participant’s spouse. If a Participant
dies without an effective designation of a beneficiary who is living at the time of the
Participant’s death, the Company will pay any remaining unpaid benefits to the Participant’s legal
representative.



          19.10 Severability. If any one or more of the provisions (or any part thereof) of this Plan
shall be held invalid, illegal or unenforceable in any respect, such provision shall be modified so
as to make it valid, legal and enforceable, and the validity, legality and enforceability of the
remaining provisions (or any part thereof) of the Plan shall not in any way be affected or impaired
thereby.



39









 





          19.11 No Constraint on Corporate Action. Nothing in this Plan shall be construed to: (a)
limit, impair, or otherwise affect the Company’s or another Participating Company’s right or power
to make adjustments, reclassifications, reorganizations, or changes of its capital or business
structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of
its business or assets; or (b) limit the right or power of the Company or another Participating
Company to take any action which such entity deems to be necessary or appropriate.



          19.12 Unfunded Obligation. Participants shall have the status of general unsecured creditors
of the Company. Any amounts payable to Participants pursuant to the Plan shall be considered
unfunded and unsecured obligations for all purposes, including, without limitation, Title I of the
Employee Retirement Income Security Act of 1974. No Participating Company shall be required to
segregate any monies from its general funds, or to create any trusts, or establish any special
accounts with respect to such obligations. The Company shall retain at all times beneficial
ownership of any investments, including trust investments, which the Company may make to fulfill
its payment obligations hereunder. Any investments or the creation or maintenance of any trust or
any Participant account shall not create or constitute a trust or fiduciary relationship between
the Committee or any Participating Company and a Participant, or otherwise create any vested or
beneficial interest in any Participant or the Participant’s creditors in any assets of any
Participating Company. The Participants shall have no claim against any Participating Company for
any changes in the value of any assets which may be invested or reinvested by the Company with
respect to the Plan.



          19.13 Choice of Law. Except to the extent governed by applicable federal law, the validity,
interpretation, construction and performance of the Plan and each Award Agreement shall be governed
by the laws of the State of Delaware, without regard to its conflict of law rules.



     IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the foregoing sets
forth the REVA Medical, Inc. 2010 Equity Incentive Plan as duly adopted by the Board on __________,
2010.



	 	 	 	 	 
	 	 	 
	 	  	 	 
	 	 	Katrina Thompson, Corporate Secretary 	 
	 	 	 	 
	 




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