GENTA
INCORPORATED




2009
STOCK INCENTIVE PLAN







TABLE
OF CONTENTS





PageARTICLE
      I
              GENERAL
              11.1
              Purpose
              11.2
              Administration
              11.3
              Persons
      Eligible for Awards
              21.4
              Types
      of Awards Under Plan
              21.5
              Shares
      Available for Awards
              31.6
              Definitions
      of Certain Terms
              3ARTICLE
      II
              AWARDS
      UNDER THE PLAN
              52.1
              Agreements
      Evidencing Awards
              52.2
              No
      Rights as a Shareholder
              52.3
              Grant
      of Stock Options, Stock Appreciation Rights and Reload
    Options
              52.4
              Exercise
      of Options and Stock Appreciation Rights
              72.5
              Termination
      of Employment; Death
              82.6
              Grant
      of Restricted Stock
              92.7
              Grant
      of Restricted Stock Units
              92.8
              Other
      Stock-Based Awards
              102.9
              Grant
      of Dividend Equivalent Rights
              102.10
              Right
      of Recapture
              10ARTICLE
      III
              AUTOMATIC
      GRANT PROGRAM FOR NON-EMPLOYEE DIRECTORS
              113.1
              Automatic
      Grants
              113.2
              Initial
      Grants
              113.3
              Annual
      Grants
              113.4
              Vesting
      of Awards
              12ARTICLE
      IV
              MISCELLANEOUS
              124.1
              Amendment
      of the Plan; Modification of Awards
              124.2
              Tax
      Withholding
              134.3
              Restrictions
              134.4
              Nonassignability
              134.5
              Requirement
      of Notification of Election Under Section 83(b) of the
Code
              13


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TABLE
OF CONTENTS


(continued)




Page4.6
              Requirement
      of Notification Upon Disqualifying Disposition Under Section 421(b) of the
      Code
              144.7
              Change
      in Control, Dissolution, Liquidation, Merger
              144.8
              Right
      of Discharge Reserved
              154.9
              Nature
      of Payments
              154.10
              Non-Uniform
      Determinations
              154.11
              Other
      Payments or Awards
              164.12
              Section
      Headings
              164.13
              Effective
      Date and Term of Plan
              164.14
              Governing
      Law
              16


-ii-


ARTICLE
I




GENERAL




1.1         Purpose




The
purpose of the Genta Incorporated 2009 Stock Incentive Plan (the “Plan”) is to provide
for officers, other employees and directors of, and consultants to, Genta
Incorporated (the “Company”) and its
subsidiaries an incentive (a) to enter into and remain in the service of the
Company, (b) to enhance the long-term performance of the Company, and (c) to
acquire a proprietary interest in the success of the Company.




1.2         Administration




1.2.1      Subject
to Section 1.2.6, the Plan shall be administered by the Compensation Committee
(the “Committee”) of the
board of directors of the Company (the “Board”), which shall
consist of not less than two directors.  The members of the Committee
shall be appointed by, and serve at the pleasure of, the Board.  To
the extent required for transactions under the Plan to qualify for the
exemptions available under Rule 16b-3 (“Rule 16b-3”)
promulgated under the Securities Exchange Act of 1934 (the “1934 Act”), all
actions relating to awards to persons subject to Section 16 of the 1934 Act
shall be taken by the Board unless each person who serves on the Committee is a
“non-employee director” within the meaning of Rule 16b-3 or such actions are
taken by a sub-committee of the Committee (or the Board) comprised solely of
“non-employee directors”.  To the extent required for compensation
realized from awards under the Plan to be deductible by the Company pursuant to
section 162(m) of the Internal Revenue Code of 1986, as amended, and the
regulations and rulings promulgated thereunder (collectively, the “Code”), the members
of the Committee shall be “outside directors” within the meaning of such section
162(m).




1.2.2      The
Committee shall have the authority (a) to exercise all of the powers granted to
it under the Plan; (b) to construe, interpret and implement the Plan and any
plan agreements executed pursuant to Section 2.1; (c) to prescribe, or amend and
rescind rules and regulations relating to the Plan, including rules governing
its own operations; (d) to make all determinations necessary or advisable in
administering the Plan; (e) to correct any defect, supply any omission and
reconcile any inconsistency in the Plan; (f) to amend the Plan to reflect
changes in applicable law; (g) to determine whether, to what extent and under
what circumstances awards may be settled or exercised in cash, Shares of Common
Stock, other securities, other awards or other property, or canceled, forfeited
or suspended and the method or methods by which awards may be settled, canceled,
forfeited or suspended; (h) to determine whether, to what extent and under what
circumstances cash, shares of Common Stock, other securities, other awards or
other property and other amounts payable with respect to an award shall be
deferred either automatically or at the election of the holder thereof or of the
Committee; (i) to determine whether, to what extent and under what circumstances
the management of the day-to-day operations of the Plan and the functions of the
Company with respect thereto, including, without limitation, processing of the
exercise of options and holding and sales of option shares by grantees, shall be
delegated to a registered broker-dealer or other qualified third party; and (j)
to direct that a) a stop order may be placed in effect with respect to shares
issued pursuant to the Plan and b) any stock certificate evidencing shares
issued pursuant to the Plan shall bear a legend setting forth such restrictions
on transferability as may apply to such shares pursuant to the
Plan.







1.2.3      Actions
of the Committee shall be taken by the vote of a majority of its
members.  Any action may be taken by a written instrument signed by a
majority of the Committee members, and action so taken shall be fully as
effective as if it had been taken by a vote at a meeting.




1.2.4      The
determination of the Committee on all matters relating to the Plan or any plan
agreement shall be final, binding and conclusive.




1.2.5      No
member of the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any award thereunder.




1.2.6      Notwithstanding
anything to the contrary contained herein:  (a) until the Board shall
appoint the members of the Committee, the Plan shall be administered by the
Board; and (b) the Board may, in its sole discretion, at any time and from time
to time, grant awards or resolve to administer the Plan.  In either of
the foregoing events, the Board shall have all of the authority and
responsibility granted to the Committee herein.




1.3         Persons Eligible for
Awards




Awards
under the Plan may be made to such directors (including directors who are not
employees), officers and other employees of the Company and its subsidiaries
(including prospective employees conditioned on their becoming employees), and
to such consultants, advisers and other independent contractors of the Company
and its subsidiaries (collectively, “key persons”), as the
Committee shall select in its discretion.




1.4         Types of Awards Under
Plan




Awards
may be made under the Plan in the form of (a) incentive stock options (within
the meaning of section 422 of the Code); (b) non-qualified stock options; (c)
stock appreciation rights; (d) dividend equivalent rights; (e) restricted stock;
(f) restricted stock units; and (g) other stock-based awards, all as more fully
set forth in Article II.  The term “award” means any of the
foregoing.  No incentive stock option (other than an incentive stock
option that may be assumed or issued by the Company in connection with a
transaction to which section 424(a) of the Code applies) may be granted to a
person who is not an employee of the Company on the date of
grant.


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1.5         Shares Available for
Awards




1.5.1      Total shares
available.  The shares issuable under the Plan may be
authorized but unissued shares of common stock of the Company, par value $0.001
per share (“Common
Stock”),or authorized and issued Common Stock held in the Company’s
treasury or acquired by the Company for the purposes of the
Plan.  Subject to adjustment from time to time as provided in Section
1.5.3, the total number of shares of Common Stock reserved for issuance pursuant
to awards granted under the Plan shall be 83,478,929 (representing 15% of the
fully diluted outstanding shares of the Company as of the Plan Effective Date
(as such term is defined in Section 4.13.1) as determined by the Company,
rounded up to the nearest whole share).  If, after the effective date
of the Plan, any award is forfeited or any award otherwise terminates or is
cancelled without the delivery of shares of Common Stock, then the shares
covered by such award or to which such award relates shall again become
available for transfer pursuant to awards granted or to be granted under this
Plan.  Any shares of Common Stock delivered by the Company, any shares
of Common Stock with respect to which awards are made by the Company and any
shares of Common Stock with respect to which the Company becomes obligated to
make awards, through the assumption of, or in substitution for, outstanding
awards previously granted by an acquired entity, shall not be counted against
the shares available for awards under this Plan.




1.5.2      Individual
Limit.  The total number of shares of Common Stock with respect
to which stock options and stock appreciation rights may be granted to any one
employee of the Company or a subsidiary during any one calendar year shall not
exceed 28 million shares.




1.5.3      Adjustments.  Subject
to any required action by the shareholders of the Company, the number of shares
of Common Stock covered by each outstanding award, the number of shares
available for awards, the number of shares that may be subject to awards to any
one employee, and the price per share of Common Stock covered by each such
outstanding award shall be proportionately adjusted for any increase or decrease
in the number of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or any other increase or decrease in the number of issued shares
of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been “effected without receipt of
consideration.”  Such adjustment shall be made by the Committee, whose
determination in that respect shall be final, binding and
conclusive.  Except as expressly provided herein or in the applicable
plan agreement, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an award.  After any adjustment
made pursuant to this Section 1.5.3, the number of shares subject to each
outstanding award shall be rounded to the nearest whole number.




1.5.4      Except
as provided in this Section 1.5 and in Section 2.3.8, there shall be no limit on
the number or the value of the shares of Common Stock that may be subject to
awards to any individual under the Plan.




1.6         Definitions of Certain
Terms




1.6.1      The
“Fair Market
Value” of a share of Common Stock on any day shall be determined as
follows.




(a)           If
the principal market for the Common Stock (the “Market”) is a national
securities exchange or the National Association of Securities Dealers Automated
Quotation System (“NASDAQ”) National Market or Small Cap Market, the last sale
price or, if no reported sales take place on the applicable date, the average of
the high bid and low asked price of Common Stock as reported for such Market on
such date or, if no such quotation is made on such date, on the next preceding
day on which there were quotations, provided that such quotations shall have
been made within the ten (10) business days preceding the applicable
date;


3




(b)           If
the Common Stock is actively traded but paragraph (a) does not apply, the
average of the high bid and low asked price for Common Stock on the applicable
date, or, if no such quotations shall have been made on such date, on the next
preceding day on which there were quotations, provided that such quotations
shall have been made within the ten (10) business days preceding the applicable
date; or,




(c)           In
the event that neither paragraph (a) nor (b) shall apply, the Fair Market Value
of a share of Common Stock on any day shall be determined in good faith by the
Committee.  Fair Market Value shall be determined in a manner that
complies with requirements of Section 409A of the Code.




1.6.2      The
term “incentive stock
option” means an option that is intended to qualify for special federal
income tax treatment pursuant to sections 421 and 422 of the Code, as now
constituted or subsequently amended, or pursuant to a successor provision of the
Code, and which is so designated in the applicable plan
agreement.  Any option that is not specifically designated as an
incentive stock option shall under no circumstances be considered an incentive
stock option.  Any option that is not an incentive stock option is
referred to herein as a “nonqualified stock
option.”




1.6.3      The
term “employment” means, in
the case of a grantee of an award under the Plan who is not an employee of the
Company, the grantee’s association with the Company or a subsidiary as a
director, consultant, adviser, other independent contractor or
otherwise.




1.6.4      A
grantee shall be deemed to have a “termination of
employment” upon ceasing to be employed by the Company and all of its
subsidiaries or by a corporation assuming awards in a transaction to which
section 424(a) of the Code applies.  The Committee may in its
discretion determine (a) whether any leave of absence constitutes a termination
of employment for purposes of the Plan; (b) the impact, if any, of any such
leave of absence on awards theretofore made under the Plan; and (c) when a
change in a non-employee’s association with the Company constitutes a
termination of employment for purposes of the Plan.  The Committee
shall have the right to determine whether a grantee’s termination of employment
is a dismissal for cause and the date of termination in such case, which date
the Committee may retroactively deem to be the date of the action that is cause
for dismissal.  Such determinations of the Committee shall be final,
binding and conclusive.




1.6.5      The
term “cause,”
when used in connection with termination of a grantee’s employment, shall have
the meaning set forth in any then-effective employment agreement between the
grantee and the Company or a subsidiary thereof.  In the absence of
such an employment agreement provision, “cause” means:  (a) conviction
of any crime (whether or not involving the Company or its subsidiaries)
constituting a felony in the jurisdiction involved; (b) engaging in any act
which, in each case, subjects, or if generally known would subject, the Company
or its subsidiaries to public ridicule or embarrassment; (c) material violation
of the Company’s or a subsidiary’s policies, including, without limitation,
those relating to sexual harassment or the disclosure or misuse of confidential
information; or (d) serious neglect or misconduct in the performance of the
grantee’s duties for the Company or a subsidiary or willful or repeated failure
or refusal to perform such duties; in each case as determined by the Committee,
which determination shall be final, binding and conclusive.


4




1.6.6      The
term “date of grant” of an award in this Plan means  the date on which
the award is approved by the Committee, or such later date as may be specified
by the Committee in authorizing such award.




ARTICLE
II




AWARDS
UNDER THE PLAN




2.1         Agreements Evidencing
Awards




Each
award granted under the Plan (except an award of unrestricted stock) shall be
evidenced by a written agreement (“plan agreement”)
which shall contain such provisions as the Committee in its discretion deems
necessary or desirable.  Such provisions may include, without
limitation, a requirement that the grantee acknowledge that such shares are
acquired for investment purposes only.  The Committee may grant awards
in tandem with or in substitution for any other award or awards granted under
this Plan or any award granted under any other plan of the Company or any
subsidiary.  Payments or transfers to be made by the Company or any
subsidiary upon the grant, exercise or payment of an award may be made in such
form as the Committee shall determine, including cash, shares of Common Stock,
other securities, other awards or other property and may be made in a single
payment or transfer, in installments or on a deferred basis, in each case in
accordance with rules established by the Committee.  By accepting an
award pursuant to the Plan, a grantee thereby agrees that the award shall be
subject to all of the terms and provisions of the Plan, the applicable plan
agreement, and the determinations of the Committee.




2.2         No Rights as a
Shareholder




No
grantee of an option or stock appreciation right (or other person having the
right to exercise such award) shall have any of the rights of a shareholder of
the Company with respect to shares subject to such award until a) the issuance
of a stock certificate to such person for such shares or b) the book-entry
ownership is reflected for the nominee of such person who holds such shares in
“street name.”  Except as otherwise provided in Section 1.5.3, no
adjustment shall be made for dividends, distributions or other rights (whether
ordinary or extraordinary, and whether in cash, securities or other property)
for which the record date is prior to the date such shares are
issued.




2.3         Grant of Stock Options,
Stock Appreciation Rights and Reload Options




2.3.1      The
Committee may grant incentive stock options and nonqualified stock options
(collectively, “options”) to purchase
shares of Common Stock from the Company, to such key persons, in such amounts
and subject to such terms and conditions, as the Committee shall determine in
its discretion, subject to the provisions of the Plan.


5




2.3.2      The
Committee may grant stock appreciation rights to such key persons, in such
amounts and subject to such terms and conditions, as the Committee shall
determine in its discretion, subject to the provisions of the
Plan.  Stock appreciation rights may be granted in connection with all
or any part of, or independently of, any option granted under the
Plan.  A stock appreciation right granted in connection with a
nonqualified stock option may be granted at or after the date of grant of such
option.  A stock appreciation right granted in connection with an
incentive stock option may be granted only at the date of grant of such
option.




2.3.3      The
grantee of a stock appreciation right shall have the right, subject to the terms
of the Plan and the applicable plan agreement, to receive from the Company an
amount equal to (a) the excess of the Fair Market Value of a share of Common
Stock on the date of exercise of the stock appreciation right over (b) the
exercise price of such right as set forth in the plan agreement (or over the
option exercise price if the stock appreciation right is granted in connection
with an option), multiplied by (c) the number of shares with respect to which
the stock appreciation right is exercised.  Payment upon exercise of a
stock appreciation right shall be in cash or in shares of Common Stock (valued
at their Fair Market Value on the date of exercise of the stock appreciation
right) or both, all as the Committee shall determine in its
discretion.  Upon the exercise of a stock appreciation right granted
in connection with an option, the number of shares subject to the option shall
be correspondingly reduced by the number of shares with respect to which the
stock appreciation right is exercised.  Upon the exercise of an option
in connection with which a stock appreciation right has been granted, the number
of shares subject to the stock appreciation right shall be correspondingly
reduced by the number of shares with respect to which the option is
exercised.




2.3.4      Each
plan agreement with respect to an option shall set forth the amount (the “option exercise
price”) payable by the grantee to the Company upon exercise of the option
evidenced thereby.  The option exercise price per share shall be
determined by the Committee in its discretion; provided, however, that the
option exercise price of any  stock option shall be at least 100% of
the Fair Market Value of a share of Common Stock on the date the option is
granted (except as permitted in connection with the assumption or issuance of
options in a transaction to which section 424(a) of the Code
applies).




2.3.5      Each
plan agreement with respect to an option or stock appreciation right shall set
forth the periods during which the award evidenced thereby shall be exercisable,
whether in whole or in part.  Such periods shall be determined by the
Committee in its discretion; provided, however, that no stock option (or a stock
appreciation right granted in connection with an incentive stock option) shall
be exercisable more than 10 years after the date of grant.




2.3.6      The
Committee may in its discretion include in any plan agreement with respect to an
option (the “original option”) a provision that an additional option (the
“additional option”) shall be granted to any grantee who, pursuant to Section
2.4.3(b), delivers shares of Common Stock in partial or full payment of the
exercise price of the original option.  The additional option shall be
for a number of shares of Common Stock equal to the number thus delivered, shall
have an exercise price equal to the Fair Market Value of a share of Common Stock
on the date of exercise of the original option, and shall have an expiration
date no later than the expiration date of the original option.  In the
event that a plan agreement provides for the grant of an additional option, such
agreement shall also provide that the exercise price of the original option be
no less than the Fair Market Value of a share of Common Stock on its date of
grant, and that any shares that are delivered pursuant to Section 2.4.3(b) in
payment of such exercise price shall have been held for at least six
months.


6




2.3.7      To
the extent that the aggregate Fair Market Value (determined as of the date of
grant of the option) of the stock with respect to which incentive stock options
granted under this Plan and all other plans of the Company and any subsidiary
are first exercisable by any employee during any calendar year shall exceed the
maximum limit (currently, $100,000), if any, imposed from time to time under
section 422 of the Code, such options shall be treated as nonqualified stock
options.




2.3.8      Notwithstanding
the provisions of Sections 2.3.4 and 2.3.5, to the extent required under section
422 of the Code, an incentive stock option may not be granted under the Plan to
an individual who, at the date of grant of  the option, owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of his employer corporation or of its parent or subsidiary corporations
(as such ownership may be determined for purposes of section 422(b)(6) of the
Code) unless (a) at the date of grant of  such incentive stock option,
the option exercise price is at least 110% of the Fair Market Value of the
shares subject thereto and (b) the incentive stock option by its terms is not
exercisable after the expiration of five (5) years from the date of
grant.




2.4         Exercise of Options and
Stock Appreciation Rights




Subject
to the provisions of this Article II, each option or stock appreciation right
granted under the Plan shall be exercisable as follows:




2.4.1      Unless
the applicable plan agreement otherwise provides, an option or stock
appreciation right shall become exercisable in four substantially equal
installments, on each of the first, second, third and fourth anniversaries of
the date of grant, and each installment, once it becomes exercisable, shall
remain exercisable until expiration, cancellation or termination of the
award.




2.4.2      Unless
the applicable plan agreement otherwise provides, an option or stock
appreciation right may be exercised from time to time as to all or part of the
shares as to which such award is then exercisable (but, in any event, only for
whole shares).  A stock appreciation right granted in connection with
an option may be exercised at any time when, and to the same extent that, the
related option may be exercised.  An option or stock appreciation
right shall be exercised by the filing of a written notice with the Company, on
such form and in such manner as the Committee shall prescribe.




2.4.3      Any
written notice of exercise of an option shall be accompanied by payment for the
shares being purchased or such other document that the Committee may
prescribe.  Such payment shall be made:  (a) by certified or
official bank check (or the equivalent thereof acceptable to the Company) for
the full option exercise price; or (b) unless the applicable plan agreement
provides otherwise, by delivery of shares of Common Stock held for the requisite
period necessary to avoid a charge to the Company’s earnings for financial
accounting purposes  and having a Fair Market Value (determined as of
the exercise date) equal to all or part of the option exercise price and a
certified or official bank check (or the equivalent thereof acceptable to the
Company) for any remaining portion of the full option exercise price; or (c) at
the discretion of the Committee and to the extent permitted by law, by such
other method as the Committee may from time to time prescribe.


7




2.4.4      Promptly
after receiving payment of the full option exercise price, or after receiving
notice of the exercise of a stock appreciation right for which payment will be
made partly or entirely in shares, the Company shall, subject to the provisions
of Section 3.3 (relating to certain restrictions), provide for the issuance of
the shares of Common Stock for which the award has been exercised.  If
the method of payment employed upon option exercise so requires, and if
applicable law permits, an optionee may direct the Company to deliver the
certificate(s) to the optionee’s stockbroker.




2.5         Termination of Employment;
Death




2.5.1      Except
to the extent otherwise provided in Section 2.5.2 or 2.5.3 or in the applicable
plan agreement, all options and stock appreciation rights not theretofore
exercised shall terminate upon termination of the grantee’s employment for any
reason (including death).




2.5.2      Except
to the extent otherwise provided in the applicable plan agreement, if a
grantee’s employment terminates for any reason other than death or dismissal for
cause, the grantee may exercise any outstanding option or stock appreciation
right on the following terms and conditions:  (a) exercise may be made
only to the extent that the grantee was entitled to exercise the award on the
date of employment termination; and (b) exercise must occur within three (3)
months  after employment terminates, except that this three month
period shall be increased to one year if the termination is by reason of
disability, but in no event after the expiration date of the award as set forth
in the plan agreement.  The term “disability” for purposes of the
preceding sentence shall have the meaning given to it by section 422(c)(6) of
the Code.




2.5.3      Except
to the extent otherwise provided in the applicable plan agreement, if a grantee
dies while employed by the Company or any subsidiary, or after employment
termination but during the period in which the grantee’s awards are exercisable
pursuant to Section 2.5.2, any outstanding option or stock appreciation right
shall be exercisable on the following terms and conditions:  (a)
exercise may be made only to the extent that the grantee was entitled to
exercise the award on the date of death; and (b) exercise must occur by the
earlier of the first anniversary of the grantee’s death or the expiration date
of the award.  Any such exercise of an award following a grantee’s
death shall be made only by the grantee’s executor or administrator, unless the
grantee’s will specifically disposes of such award, in which case such exercise
shall be made only by the recipient of such specific disposition.  If
a grantee’s personal representative or the recipient of a specific disposition
under the grantee’s will shall be entitled to exercise any award pursuant to the
preceding sentence, such representative or recipient shall be bound by all the
terms and conditions of the Plan and the applicable plan agreement which would
have applied to the grantee.


8


2.6         Grant of Restricted
Stock




2.6.1      The
Committee may grant restricted shares of Common Stock to such key persons, in
such amounts, and subject to such terms and conditions as the Committee shall
determine in its discretion, subject to the provisions of the
Plan.  Restricted stock awards may be made independently of or in
connection with any other award under the Plan.  A grantee of a
restricted stock award shall have no rights with respect to such award unless
such grantee accepts the award within such period as the Committee shall specify
by executing a plan agreement in such form as the Committee shall determine and,
if the Committee shall so require, makes payment to the Company by certified or
official bank check (or the equivalent thereof acceptable to the Company) in
such amount as the Committee may determine.




2.6.2      Promptly
after a grantee accepts a restricted stock award, the Company shall issue in the
grantee’s name a certificate or certificates for the shares of Common Stock
covered by the award.  Upon the issuance of such certificate(s), the
grantee shall have the rights of a shareholder with respect to the restricted
stock, subject to the non-transferability restrictions and Company repurchase
rights described in Sections 2.6.4 and 2.6.5 and to such other restrictions and
conditions as the Committee in its discretion may include in the applicable plan
agreement.




2.6.3      Unless
the Committee shall otherwise determine, any certificate issued evidencing
shares of restricted stock shall remain in the possession of the Company until
such shares are free of any restrictions specified in the applicable plan
agreement.




2.6.4      Shares
of restricted stock may not be sold, assigned, transferred, pledged or otherwise
encumbered or disposed of except as specifically provided in this Plan or the
applicable plan agreement.  The Committee at the time of grant shall
specify the date or dates (which may depend upon or be related to the attainment
of performance goals and other conditions) on which the non-transferability of
the restricted stock shall lapse.  Unless the applicable plan
agreement provides otherwise, additional shares of Common Stock or other
property distributed to the grantee in respect of shares of restricted stock, as
dividends or otherwise, shall be subject to the same restrictions applicable to
such restricted stock.




2.6.5      Upon
the termination of the grantee’s employment for any reason while holding one or
more shares to which restrictions on transferability apply, then those shares
shall be immediately surrendered to the Company for cancellation and the grantee
shall have no further rights with respect to those shares.  To the
extent the surrendered shares were issued for consideration paid in cash or cash
equivalent, the Company shall repay to the grantee (or the grantee’s estate) the
lesser of (a) the Fair Market Value of the shares on the date of such
termination of employment, or (b) any amount paid by the grantee for such
shares.




2.7         Grant of Restricted Stock
Units




2.7.1      The
Committee may grant awards of restricted stock units to such key persons, in
such amounts, and subject to such terms and conditions as the Committee shall
determine in its discretion, subject to the provisions of the
Plan.  Restricted stock units may be awarded independently of or in
connection with any other award under the Plan.


9


2.7.2      At
the time of grant, the Committee shall specify the date or dates on which the
restricted stock units shall become fully vested and nonforfeitable, and may
specify such conditions to vesting as it deems appropriate.  In the
event of the termination of the grantee’s employment by the Company and its
subsidiaries for any reason, restricted stock units that have not become
nonforfeitable shall be forfeited and cancelled.




2.7.3      At
the time of grant, the Committee shall specify the date of issuance of the
shares subject to each grant of restricted stock units.  Such date may
be the vesting date or dates of the award or any date following such vesting
date(s) consistent with the applicable requirements of Section 409A of the
Code.  On the specified issuance date, the Company shall transfer to
the grantee one unrestricted, fully transferable share of Common Stock for each
vested restricted stock unit.  The Committee shall specify the
purchase price, if any, to be paid by the grantee to the Company for such shares
of Common Stock.




2.8         Other Stock-Based
Awards




The
Committee may grant other types of stock-based awards (including the grant of
unrestricted shares) to such key persons, in such amounts and subject to such
terms and conditions, as the Committee shall in its discretion determine,
subject to the provisions of the Plan.  Such awards may entail the
transfer of actual shares of Common Stock to Plan participants, or payment in
cash or otherwise of amounts based on the value of shares of Common
Stock.




2.9         Grant of Dividend Equivalent
Rights




The
Committee may in its discretion include in the plan agreement with respect to
any award a dividend equivalent right entitling the grantee to receive amounts
equal to the ordinary dividends that would be paid, during the time such award
is outstanding and unexercised, on the shares of Common Stock covered by such
award if such shares were then outstanding.  In the event such a
provision is included in a plan agreement, the Committee shall determine whether
such payments shall be made in cash, in shares of Common Stock or in another
form, whether they shall be conditioned upon the exercise of the award to which
they relate, the time or times at which they shall be made, and such other terms
and conditions as the Committee shall deem appropriate consistent with the
applicable requirements of Section 409A of the Code.




2.10       Right of
Recapture




2.10.1   
If at any time within one year after the date on which a participant exercises
an option or stock appreciation right, or on which restricted stock vests, or
which is the maturity date of restricted stock units, or on which income is
realized by a participant in connection with any other stock-based award (each
of which events is a “realization event”), the participant (a) is terminated for
cause or (b) engages in any activity determined in the discretion of the
Committee to be in competition with any activity of the Company, or otherwise
inimical, contrary or harmful to the interests of the Company (including, but
not limited to, accepting employment with or serving as a consultant, adviser or
in any other capacity to an entity that is in competition with or acting against
the interests of the Company), then any gain realized by the participant from
the realization event shall be paid by the participant to the Company upon
notice from the Company.  Such gain shall be determined as of the date
of the realization event, without regard to any subsequent change in the Fair
Market Value of a share of Common Stock.  The Company shall have the
right to offset such gain against any amounts otherwise owed to the participant
by the Company (whether as wages, vacation pay, or pursuant to any benefit plan
or other compensatory arrangement).


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ARTICLE
III




AUTOMATIC
GRANT PROGRAM FOR NON-EMPLOYEE DIRECTORS




3.1         Automatic
Grants




Awards
shall be made automatically to non-employee Board members in accordance with the
provisions of this Article III.




3.2         Initial
Grants




3.2.1      On
Thursday, July 16, 2009, each individual who (i) is to be nominated for
re-election as a director at the regular 2009 Annual Stockholders Meeting and
(ii) has tendered for cancellation his or her outstanding equity awards pursuant
to the Company's Equity Award Exchange Offer shall automatically be granted an
award of restricted stock units with respect to 695,658 shares of Common Stock
(representing 0.125% of the fully diluted outstanding shares of the Company as
of the Plan Effective Date as determined by the Company, rounded up to the
nearest whole share).  Each restricted stock unit shall entitle the
individual to receive one share of Common Stock following vesting of the
award.




3.2.2      Each
individual who is first elected or appointed as a non-employee Board member at
any time after the Plan Effective Date shall automatically be granted on the
date of such election or appointment, an award in the form of shares of Common
Stock.  The number of shares subject to such award shall be equal to
the lower of (i) 0.125% of the fully diluted outstanding shares of the Company
as of the date of such election or appointment as determined by the Company
(rounded up to the nearest whole share) or (ii) the number of shares of Common
stock (adjusted for any increase or decrease in the number of issued shares of
Common Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company) subject to the award granted to a non-employee
Board member pursuant to section 3.2.1.




3.3         Annual
Grants




On the
date of each annual stockholders meeting, beginning with the 2010 Annual
Meeting, each individual who is at that time serving as, and is to continue to
serve as, a non-employee Board member shall automatically be granted an award
(the “Annual Award”) in the form of shares of Common Stock and/or options with a
value equal to the Applicable Annual Amount.  The Committee shall have
the sole discretion to determine the amount and type of award for each year
within the foregoing limitations.  For such purposes, the value of the
Annual Award shall be calculated as follows:  (A) the value of an
option share shall be equal to the fair value of an option share as estimated on
the date of grant under a valuation model approved by the Financial Accounting
Standards Board (“FASB”) for purposes of the Company’s financial statements
under FAS 123 (or any successor provision); and (B) the value of a share subject
to the stock award shall be equal to the Fair Market Value per share of Common
Stock on the award date.  The Applicable Annual Amount shall be
determined by the Committee on or before the date of the grant, but in no event
shall exceed One Hundred Thousand Dollars ($100,000).


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3.4         Vesting of
Awards




Each
award granted to a non-employee Board member under Section 3.2.1 shall become
fully vested on the date (the “Vesting Date”) of approval of the Plan by the
Company’s shareholders provided the individual continues in Board service
through the Vesting Date.  Each award granted under Sections 3.2.2 and
3.3 shall be fully vested on the date of grant.




ARTICLE
IV




MISCELLANEOUS




4.1         Amendment of the Plan;
Modification of Awards




4.1.1      The
Board may from time to time suspend, discontinue, revise or amend the Plan in
any respect whatsoever, except that no such amendment shall materially impair
any rights or materially increase any obligations under any award theretofore
made under the Plan without the consent of the grantee (or, after the grantee’s
death, the person having the right to exercise the award).  For
purposes of this Section 4.1, any action of the Board or the Committee that
alters or affects the tax treatment of any award shall not be considered to
materially impair any rights of any grantee.




4.1.2      Shareholder
approval of any amendment shall be obtained to the extent necessary to comply
with section 422 of the Code (relating to incentive stock options) or other
applicable law or regulation.




4.1.3      Except
as otherwise provided in Section 4.1.4 hereof, the Committee may amend any
outstanding plan agreement, including, without limitation, by amendment which
would accelerate the time or times at which the award becomes unrestricted or
may be exercised, or waive or amend any goals, restrictions or conditions set
forth in the agreement.  However, any such amendment (other than an
amendment pursuant to Section 4.7.2, relating to change in control) that
materially impairs the rights or materially increases the obligations of a
grantee under an outstanding award shall be made only with the consent of the
grantee (or, upon the grantee’s death, the person having the right to exercise
the award).




4.1.4      The
Committee shall not (i) implement any cancellation/regrant program pursuant to
which outstanding options or stock appreciation rights under the Plan are
cancelled and new options or stock appreciation rights are granted in
replacement with a lower exercise price per share, (ii) cancel outstanding
options or stock appreciation rights under the Plan with exercise prices per
share in excess of the then current Fair Market Value per share of Common Stock
of the Corporation or (iii) otherwise directly reduce the exercise price in
effect for outstanding options or stock appreciation rights under the Plan,
without in each such instance obtaining shareholder approval.


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4.2         Tax
Withholding




4.2.1      As
a condition to the receipt of any shares of Common Stock pursuant to any award
or the lifting of restrictions on any award, or in connection with any other
event that gives rise to a federal or other governmental tax withholding
obligation on the part of the Company relating to an award (including, without
limitation, FICA tax), the Company shall be entitled to require that the grantee
remit to the Company an amount sufficient in the opinion of the Company to
satisfy such withholding obligation.




4.2.2      The
Committee may, in its discretion, provide the grantee with the right to satisfy
the withholding obligation imposed under Section 4.2.1 by electing to have the
Company withhold shares with a Fair Market Value of an amount that does not
exceed the amount of the Company’s withholding obligations using the grantee’s
minimum applicable withholding tax rate for federal (including, without
limitation, FICA tax) or other governmental tax liabilities.




4.3         Restrictions




4.3.1      If
the Committee shall at any time determine that any consent (as hereinafter
defined) is necessary or desirable as a condition of, or in connection with, the
granting of any award under the Plan, the issuance or purchase of shares or
other rights thereunder, or the taking of any other action thereunder (each such
action a “plan action”), then such plan action shall not be taken, in whole or
in part, unless and until such consent shall have been effected or obtained to
the full satisfaction of the Committee.




4.3.2      The
term “consent” as used herein with respect to any plan action means (a) any and
all listings, registrations or qualifications in respect thereof upon any
securities exchange or under any federal, state or local law, rule or
regulation, (b) any and all written agreements and representations by the
grantee with respect to the disposition of shares, or with respect to any other
matter, which the Committee shall deem necessary or desirable to comply with the
terms of any such listing, registration or qualification or to obtain an
exemption from the requirement that any such listing, qualification or
registration be made and (c) any and all consents, clearances and approvals in
respect of a plan action by any governmental or other regulatory
bodies.




4.4         Nonassignability




Except to
the extent otherwise provided in the applicable plan agreement, no award or
right granted to any person under the Plan shall be assignable or transferable
other than by will or by the laws of descent and distribution, and all such
awards and rights shall be exercisable during the life of the grantee only by
the grantee or the grantee’s legal representative.




4.5         Requirement of Notification
of Election Under Section 83(b) of the Code




If any
grantee shall, in connection with the acquisition of shares of Common Stock
under the Plan, make the election permitted under section 83(b) of the Code
(that is, an election to include in gross income in the year of transfer the
amounts specified in such section 83(b)), such grantee shall notify the Company
of such election as required pursuant to regulations issued under Code section
83(b), in addition to any filing and notification required pursuant to such
regulations.


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4.6         Requirement of Notification
Upon Disqualifying Disposition Under Section 421(b) of the
Code




If any
grantee shall make any disposition of shares of Common Stock issued pursuant to
the exercise of an incentive stock option under the circumstances described in
section 421(b) of the Code (relating to certain disqualifying dispositions),
such grantee shall notify the Company of such disposition within 10 days
thereof.




4.7         Change in Control,
Dissolution, Liquidation, Merger




4.7.1      For
purposes of this Section 4.7, a “change in control” shall have occurred
if:




(a)           any
“person”, as such term is used in Sections 13(d) and 14(d) of the 1934 Act other
than (i) the Company or any subsidiary of the Company, (ii) any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
any subsidiary of the Company, or (iii) any company owned, directly or
indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company), is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or
indirectly, of securities of the Company representing more than 50% of the
combined voting power of the Company’s then outstanding securities without the
prior written consent of the Committee or the Board; or




(b)           during
any period of twenty-four (24) consecutive months, individuals who at the
effective date of the Plan constitute the Board and any new director whose
election by the Board or nomination for election by the Company shareholders was
approved by a vote of at least a majority of the directors then still in office
who either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least a majority thereof;




(c)           the
shareholders of the Company approve a merger or consolidation of the Company
with any other company (other than a wholly-owned subsidiary of the Company),
other than (i) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) 50% or more of the combined voting power of
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or (ii) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no “person” (as defined in Section 4.7.1(a) above
with the exceptions noted in section 4.7.1(a)) acquires more than 50% of the
combined voting power of the Company’s then outstanding securities;
or




(d)           the
shareholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets (or any transaction having a similar
effect).


14




4.7.2      Upon
the happening of a change in control:




(a)           subject
to the provisions of Section 2.5 above, in the event of a change in control, any
option or stock appreciation right or other awardthen outstanding shall
become fully vested and immediately exercisable upon such change in control
unless the applicable plan agreement expressly provides otherwise;
and




(b)           to
the fullest extent permitted by law, the Committee may, in its sole discretion,
amend any plan agreement in such manner as it deems appropriate, including,
without limitation, by amendments that advance the dates upon which any or all
outstanding awards of any type shall terminate.




4.7.3      In
the event of the proposed dissolution or liquidation of the Company, all
outstanding awards will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Committee.  The
Committee may, in the exercise of its sole discretion in such instances,
accelerate the date on which any award becomes exercisable or fully vested
and/or declare that any award shall terminate as of a specified
date.




4.8         Right of Discharge
Reserved




Nothing
in the Plan or in any plan agreement shall confer upon any grantee the right to
continue in the employ of the Company or any subsidiary or affect any right
which the Company or any subsidiary may have to terminate such
employment.




4.9         Nature of
Payments




4.9.1      Any
and all grants of awards and issuances of shares of Common Stock under the Plan
shall be in consideration of services performed for the Company by the
grantee.




4.9.2      All
such grants and issuances shall constitute a special incentive payment to the
grantee and shall not be taken into account in computing the amount of salary or
compensation of the grantee for the purpose of determining any benefits under
any pension, retirement, profit-sharing, bonus, life insurance or other benefit
plan of the Company or of any subsidiary or under any agreement with the
grantee, unless such plan or agreement specifically provides
otherwise.




4.10       Non-Uniform
Determinations




The
Committee’s determinations under the Plan need not be uniform and may be
made by it selectively among persons who receive, or are eligible to receive,
awards under the Plan (whether or not such persons are similarly
situated).  Without limiting the generality of the foregoing, the
Committee shall be entitled, among other things, to make non-uniform and
selective determinations, and to enter into non-uniform and selective Plan
agreements, as to (a) the persons to receive awards under the Plan, (b) the
terms and provisions of awards under the Plan and (c) the treatment of leaves of
absence pursuant to Section 1.6.4.


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4.11       Other Payments or
Awards




Nothing
contained in the Plan shall be deemed in any way to limit or restrict the
Company from making any award or payment to any person under any other plan,
arrangement or understanding, whether now existing or hereafter in
effect.




4.12       Section
Headings




The
section headings contained herein are for the purpose of convenience only and
are not intended to define or limit the contents of the sections.




4.13       Effective Date and Term of
Plan




4.13.1    The
Plan was adopted by the Board on July 9, 2009 (the “Plan Effective Date”),
subject to approval by the Company’s shareholders at the regular 2009 Annual
Stockholders Meeting.  Any awards that are granted under the Plan
prior to such shareholder and noteholder approval are subject to, and
conditioned upon, in their entirety, such approvals.  If such
approvals are not obtained on or prior to the first anniversary of the Plan
Effective Date, the Plan and all awards thereunder shall terminate on such
anniversary date.




4.13.2    Unless
sooner terminated by the Board, the Plan shall terminate on the day before the
tenth anniversary of the Plan Effective Date, and no awards shall thereafter be
made under the Plan.  All awards made under the Plan prior to its
termination shall remain in effect until such awards have been satisfied or
terminated in accordance with the terms and provisions of the Plan and the
applicable plan agreements.




4.14       Governing
Law




All
rights and obligations under the Plan shall be construed and interpreted in
accordance with the laws of the State of Delaware, without giving effect to
principles of conflict of laws.


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