**Exhibit 10.1**

**PDL BIOPHARMA, INC.**

**2005 EQUITYINCENTIVE PLAN**

**(AMENDEDAND RESTATEDEFFECTIVE JUNE 4, 2009)**

**PDL BIOPHARMA, INC.**

**2005 EQUITY INCENTIVE PLAN**

**(AMENDEDAND RESTATED EFFECTIVE JUNE 4, 2009)**

**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
  7
3.     Administration
  7
3.1    Administration by the Committee
  7
3.2    Authority of Officers
  7
3.3    Administration with Respect to Insiders
  7
3.4    Committee Complying with Section 162(m)
  7
3.5    Powers of the Committee
  7
3.6    Option or SAR Repricing
  8
3.7    Indemnification
  8
4.     Shares Subject to Plan
  9
4.1    Maximum Number of Shares Issuable
  9
4.2    Share Accounting
  9
4.3    Adjustments for Changes in Capital Structure
  9
5.     Eligibility, Participation and Award Limitations
  10
5.1    Persons Eligible for Awards
  10
5.2    Participation in Plan
  10
5.3    Award Limitations
  10
6.     Stock Options
  12
6.1    Exercise Price
  12
6.2    Exercisability and Term of Options
  12
6.3    Payment of Exercise Price
  12
6.4    Effect of Termination of Service
  13
6.5    Transferability of Options
  13
7.     Stock Appreciation Rights
  14
7.1    Types of SARs Authorized
  14
7.2    Exercise Price
  14
7.3    Exercisability and Term of SARs
  14
7.4    Exercise of SARs
  14
7.5    Deemed Exercise of SARs
  15
7.6    Effect of Termination of Service
  15
7.7    Nontransferability of SARs
  15
8.     Restricted Stock Awards
  15
8.1    Types of Restricted Stock Awards Authorized
  15
8.2    Purchase Price
  15
8.3    Purchase Period
  15
8.4    Payment of Purchase Price
  15
8.5    Vesting and Restrictions on Transfer
  16
8.6    Voting Rights; Dividends and Distributions
  16
8.7    Effect of Termination of Service
  16
8.8    Nontransferability of Restricted Stock Award Rights
  16
 

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   **Page**
9.     Restricted Stock Unit Awards
  17
9.1    Grant of Restricted Stock Unit Awards
  17
9.2    Purchase Price
  17
9.3    Vesting
  17
9.4    Voting Rights, Dividend Equivalent Rights and Distributions
  17
9.5    Effect of Termination of Service
  18
9.6    Settlement of Restricted Stock Unit Awards
  18
9.7    Nontransferability of Restricted Stock Unit Awards
  18
10.   Performance Awards
  18
10.1    Types of Performance Awards Authorized
  18
10.2    Initial Value of Performance Shares and Performance Units
  18
10.3    Establishment of Performance Period, Performance Goals and Performance Award Formula
  19
10.4    Measurement of Performance Goals
  19
10.5    Settlement of Performance Awards
  20
10.6    Voting Rights; Dividend Equivalent Rights and Distributions
  21
10.7    Effect of Termination of Service
  22
10.8    Nontransferability of Performance Awards
  22
11.   Cash-Based Awards and Other Stock-Based Awards
  22
11.1    Grant of Cash-Based Awards
  22
11.2    Grant of Other Stock-Based Awards
  23
11.3    Value of Cash-Based and Other Stock-Based Awards
  23
11.4    Payment or Settlement of Cash-Based Awards and Other Stock-Based Awards
  23
11.5    Voting Rights; Dividend Equivalent Rights and Distributions
  23
11.6    Effect of Termination of Service
  23
11.7    Nontransferability of Cash-Based Awards and Other Stock-Based Awards
  23
12.   Standard Forms of Award Agreement
  24
12.1    Award Agreements
  24
12.2    Authority to Vary Terms
  24
13.   Change in Control
  24
13.1    Effect of Change in Control on Awards
  24
13.2    Federal Excise Tax Under Section 4999 of the Code
  25
14.   Compliance with Securities Law
  25
15.   Tax Withholding
  26
15.1    Tax Withholding in General
  26
15.2    Withholding in Shares
  26
16.   Amendment or Termination of Plan
  26
17.   Compliance with Section 409A
  26
17.1    Awards Subject to Section 409A
  26
17.2    Deferral and/or Distribution Elections
  27
17.3    Subsequent Elections
  27
17.4    Distributions Pursuant to Deferral Elections
  27
17.5    Unforeseeable Emergency
  28
17.6    Disabled
  28
17.7    Death
  28
17.8    No Acceleration of Distributions
  29
 

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   **Page**
18.   Miscellaneous Provisions
  29
18.1    Repurchase Rights
  29
18.2    Forfeiture Events
  29
18.3    Provision of Information
  29
18.4    Rights as Employee, Consultant or Director
  29
18.5    Rights as a Stockholder
  29
18.6    Delivery of Title to Shares
  30
18.7    Fractional Shares
  30
18.8    Retirement and Welfare Plans
  30
18.9    Beneficiary Designation
  30
18.10  Severability
  30
18.11  No Constraint on Corporate Action
  30
18.12  Unfunded Obligation
  30
18.13  Choice of Law
  31
 

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**PDL BIOPHARMA, INC.**

**2005 EQUITY INCENTIVE PLAN**

**(AMENDEDAND RESTATED EFFECTIVE JUNE 4, 2009)**

1.     **Establishment, Purpose and Term of Plan.**

1.1    **Establishment**. The PDL BioPharma, Inc. 2005 Equity Incentive Plan (the *“****Plan****”*) ishereby established effective as of June 8, 2005, the date of its approval by the stockholders of the Company (the *“****Effective Date****”*). 

1.2    **Purpose**. The purpose of the Plan is to advance the interests of the Participating Company Group and its stockholders byproviding 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 toachieve 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 OtherStock-Based Awards. 

1.3    **Term of Plan**. The Plan shall continue in effect until its termination by theCommittee; *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**. Wheneverused herein, the following terms shall have their respective meanings set forth below: 

(a)    *“****Affiliate****”* means (i) an entity, other than a Parent Corporation, that directly, or indirectly through one or more intermediary entities, controls the Company or(ii) an 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 term “control” (including the term “controlledby”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of the relevant entity, whether through the ownership of voting securities, by contract or otherwise; or shall have suchother meaning assigned such term for the purposes of registration on Form S-8 under the Securities Act. 

(b)    *“****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. 

(c)    *“****AwardAgreement****”* means a written or electronic agreement between the Company and a Participant setting forth the terms, conditions and restrictions of the Award granted to the Participant. 

(d)    *“****Board****”* means the Board of Directors of the Company. 

(e)    “***Cash-Based Award***” means an Award denominated in cash and granted pursuant to Section 11.

(f)    *“****Cause****”* means, unless such term or an equivalent term is otherwisedefined with respect to an Award by the Participant’s Award Agreement or by a written contract of employment or service, any of the following: (i) the Participant’s theft, dishonesty, willful misconduct, breach of fiduciary duty forpersonal profit, or falsification of any Participating Company documents or records; (ii) the Participant’s material failure to abide by a Participating Company’s code of conduct or other policies (including, without limitation,policies relating to confidentiality and reasonable workplace conduct); (iii) the Participant’s unauthorized use, misappropriation, destruction or diversion of any tangible or intangible asset or corporate opportunity of a ParticipatingCompany (including, without limitation, the Participant’s improper use or disclosure of a Participating Company’s 

 

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confidential or proprietary information); (iv) any intentional act by the Participant which has a material detrimental effect on a ParticipatingCompany’s reputation or business; (v) the Participant’s repeated failure or inability to perform any reasonable assigned duties after written notice from a Participating Company of, and a reasonable opportunity to cure, such failureor inability; (vi) any material breach by the Participant of any employment, service, non-disclosure, non-competition, non-solicitation or other similar agreement between the Participant and a Participating Company, which breach is not curedpursuant to the terms of such agreement; or (vii) the Participant’s conviction (including any plea of guilty or nolo contendere) of any criminal act involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs theParticipant’s ability to perform his or her duties with a Participating Company. 

(g)    *“****Changein Control****”* means, unless such term or an equivalent term is otherwise defined with respect to an Award by the Participant’s Award Agreement or by a written contract of employment or service, the occurrence of any of thefollowing: 

(i)    any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person) “beneficial ownership” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, ofsecurities of the Company possessing thirty-five percent (35%) or more of the total combined voting power of the Company’s then-outstanding securities entitled to vote generally in the election of Directors; *provided*,*however*, that the following acquisitions shall not constitute a Change in Control: (1) an acquisition by any such person who prior to such acquisition is the beneficial owner of thirty-five percent (35%) or more of such votingpower, (2) any acquisition directly from the Company, including, without limitation, a public offering of securities, (3) any acquisition by the Company, (4) any acquisition by a trustee or other fiduciary under an employee benefitplan of a Participating Company or (5) 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 voting securities of the Company or, in the case of an Ownership Change Event described in Section 2.1(bb)(iii), the entity to which the assets of the Company were transferred(the *“****Transferee****”*), as the case may be; or 

(iii)    a liquidation ordissolution of the Company. 

For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resultingfrom 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 have the right to determine whether multiple sales or exchanges of the voting securities of the Company or multiple Ownership Change Events are related, and its determination shall be final, binding and conclusive.Notwithstanding the foregoing, 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 constitutinga 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. 

(h)    *“****Code****”* means the Internal Revenue Code of 1986, as amended, and any applicableregulations or administrative guidelines promulgated thereunder. 

(i)    *“****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 ineach 

 

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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 thePlan, 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. 

(j)    *“****Company****”* means PDL BioPharma, Inc., a Delaware corporation, or any successor corporation thereto. 

(k)    *“****Consultant****”* means a person engaged to provide consulting or advisory services (otherthan 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 orselling securities to such person pursuant to the Plan in reliance on registration on a Form S-8 Registration Statement under the Securities Act. 

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

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

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

(o)    *“****Dividend Equivalent****”*means a credit, made at the discretion of the Committee or as otherwise provided by the Plan, to the account of a 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 bysuch Participant. 

(p)    *“****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 422of 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 inthe 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’srights, 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. 

(q)    *“****Exchange Act****”* means the Securities Exchange Act of 1934, as amended. 

(r)    *“****Fair Market Value****”* means, as of any date, the value of a share of Stock or otherproperty 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 on a national or regional securitiesexchange or market system, the Fair Market Value of a share of Stock shall be the closing price of a share of Stock (or the mean of the closing bid and asked prices of a share of Stock if the Stock is so quoted instead) as quoted on the NASDAQ StockMarket or such other national or regional securities exchange or market system constituting the primary market for the Stock, as reported in *The Wall Street Journal*

 

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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 ormarket system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock was so traded 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 on thebasis 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 actualtransactions in the Stock as reported on a national or regional securities exchange or market system and consistently applied, or on any other basis consistent with the requirements of Section 409A. The Committee may also determine the FairMarket 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, thecommitment to grant such Award based on such valuation method must be irrevocable before the beginning of the specified period and such valuation method must be used consistently for grants of Options and SARs under the same and substantiallysimilar programs. 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 on a national or regional securities exchange or market system, the Fair MarketValue 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. 

(s)    *“****Full Value Award****”* means any Award settled in Stock, other than (i) an Option,(ii) a Stock Appreciation Right, (iii) a Restricted Stock Purchase Right or an Other Stock-Based Award under which the Company will receive monetary consideration equal to the Fair Market Value (determined as of the date of grant) of theshares subject to such Award or (iv) an Other Stock-Based award based on appreciation in the Fair Market Value of the Stock. 

(t)    *“****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 ofSection 422(b) of the Code. 

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

(v)    *“****Net-Exercise****”* means a procedure by which the Participant will be issued a number of shares of Stock upon the exercise of an Option determined in accordance with the followingformula: 

 
 N =X(A-B)/A, where    “N” = the number of shares of Stock to be issued to the Participant upon exercise of the Option;    “X” = the total number of shares with respect to which the Participant has elected to exercise the Option;    “A” = the Fair Market Value of one (1) share of Stock determined on the exercise date; and    “B” = the exercise price per share (as defined in the Participant’s Award Agreement) 
(w)    *“****Nonstatutory Stock Option****”* means an Option not intended to be (as set forth in theAward Agreement) an incentive stock option within the meaning of Section 422(b) of the Code. 

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

(y)    *“****Option****”* means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to Section 6. 

 

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(z)    *“****Other Stock-Based Award****”* means anAward denominated in shares of Stock and granted pursuant to Section 11. 

(aa)    *“****OutsideDirector****”* means a Director who is neither an Employee nor a Consultant, 

(bb)    *“****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 ofrelated transactions by the stockholders of the Company of more than fifty percent (50%) of the voting stock of the Company; (ii) a merger or consolidation in which the Company is a party; or (iii) the sale, exchange or transfer ofall or substantially all of the assets of the Company (other than a sale, exchange or transfer to one or more subsidiaries of the Company). 

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

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

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

(ff)    *“****Participating Company Group****”*means, at any point in time, all entities collectively which are then Participating Companies. 

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

(hh)    *“****Performance Award Formula****”* means, for any Performance Award, a formula or table established by the Committee pursuant to Section 10.3 whichprovides the basis for computing the value of a Performance Award at one or more threshold levels of attainment of the applicable Performance Goal(s) measured as of the end of the applicable Performance Period. 

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

(jj)    *“****Performance Goal****”* means a performance goal established by the Committee pursuant to Section 10.3. 

(kk)    *“****Performance Period****”* means a period established by the Committee pursuant toSection 10.3 at the end of which one or more Performance Goals are to be measured. 

(ll)    *“****Performance Share****”* means a right granted to a Participant pursuant to Section 10 to receive a payment equal to the value of a Performance Share, as determined by theCommittee, based on performance. 

(mm)    *“****Performance Unit****”* means a rightgranted to a Participant pursuant to Section 10 to receive a payment equal to the value of a Performance Unit, as determined by the Committee, based upon performance. 

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

(oo)    *“****Restricted Stock Bonus****”* means Stock granted to aParticipant pursuant to Section 8. 

 

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(pp)    *“****Restricted Stock Purchase Right****”*means a right to purchase Stock granted to a Participant pursuant to Section 8. 

(qq)    *“****Restricted Stock Unit”*** or *“****Stock Unit****”* means a right granted to a Participant pursuant to Section 9, respectively, to receive a share ofStock on a date determined in accordance with the provisions of Section 9, as applicable, and the Participant’s Award Agreement. 

(rr)    *“****Restriction Period****”* means the period established in accordance with Section 8.5 during which shares subject to a Restricted Stock Award are subject to VestingConditions. 

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

(tt)    *“****SAR****”* or *“****Stock Appreciation Right****”* means a right granted to a Participant pursuant to Section 7 to receive payment of an amountequal 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. 

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

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

(ww)    “***Section 409A Deferred Compensation****”* means compensation provided pursuant to the Plan that constitutes deferred compensation subject to and not exempted from the requirements ofSection 409A. 

(xx)    *“****Securities Act****”* means the Securities Act of 1933,as amended. 

(yy)    *“****Service****”* means a Participant’s employment or servicewith the Participating Company Group, whether in the capacity of 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 inthe 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 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 theCommittee, 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 theParticipant’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 purposesof 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 entity for which the Participant performs Service ceasingto 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. 

(zz)    *“****Stock****”* means the common stock of the Company, as adjusted from time to time inaccordance with Section 4.3. 

(aaa)    *“****Subsidiary Corporation****”* means anypresent or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code. 

(bbb)    *“****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 totalcombined 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. 

 

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(ccc)    *“****Trading Compliance Policy****”* means thewritten 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 informationregarding the Company or its securities.**

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

2.2    **Construction**. Captions andtitles 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 thesingular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise. 

3.    **Administration**. 

3.1    **Administration by the Committee**. ThePlan shall be administered by the Committee. All questions of interpretation of the Plan or of any Award shall be determined by the Committee, and such determinations shall be final and binding upon all persons having an interest in the Plan or suchAward. In addition, any and all actions, decisions and determinations taken or made by the Committee in the exercise of its discretion pursuant to the Plan, including, without limitation, pursuant to Section 3.5 below, or Award Agreement orother agreement thereunder shall be final, binding and conclusive upon all persons having an interest therein. 

3.2    **Authority of Officers**. The Chief Executive Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election which is theresponsibility of or which is allocated to the Company herein. 

3.3    **Administration with Respect to Insider**.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, ifany, of Rule 16b-3. 

3.4    **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 inthe payment of Performance-Based Compensation. 

3.5    **Powers of the Committee***.* In addition to any otherpowers 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 purchaseprice 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, 

 

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including by the withholding or delivery of shares of Stock, (iv) the timing, terms and conditions of the exercisability or vesting of any Award or anyshares 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 ofthe 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 notinconsistent with the terms of the Plan; 

(e)    to determine whether an Award will be settled in shares of Stock,cash, 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 anyshares acquired pursuant thereto; 

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

(i)    without the consent of the affected Participant and notwithstanding the provisions of any Award Agreement to the contrary, to unilaterally substitute at any time a Stock Appreciation Right providing for settlementsolely in shares of Stock in place of any outstanding Option, *provided* that such Stock Appreciation Right covers the same number of shares of Stock and provides for the same exercise price (subject in each case to adjustment in accordancewith Section 4.3) as the replaced Option and otherwise provides substantially equivalent terms and conditions as the replaced Option, as determined by the Committee; 

(j)    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 jurisdictionswhose citizens may be granted Awards; and 

(k)    to correct any defect, supply any omission or reconcile anyinconsistency 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 thePlan or applicable law. 

3.6    **Option or SAR Repricing**. Without the affirmative vote of holders of a majorityof 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 Board shall not approve either(a) the cancellation of outstanding Options or SARs and the grant in substitution therefor of new Options or SARs having a lower exercise price or (b) the amendment of outstanding Options or SARs to reduce the exercise price thereof. Thisparagraph shall not be construed to apply to “issuing or assuming a stock option in a transaction to which Section 424(a) applies,” within the meaning of Section 424 of the Code. 

3.7    **Indemnification**. In addition to such other rights of indemnification as they may have as members of the Board or theCommittee or as officers or employees of the Participating Company Group, 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 isdelegated 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 appealtherein, 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 

 

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Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legalcounsel 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 forgross 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, theopportunity at its own expense to handle and defend the same. 

4.    **Shares Subject to Plan**. 

4.1    **Maximum Number of Shares Issuable****.** Subject to adjustment as provided in Sections 4.2 and 4.3, themaximum aggregate number of shares of Stock that may be issued under the Plan shall be equal to five million two hundred thousand (5,200,000) shares, and shall consist of authorized but unissued or reacquired shares of Stock or any combinationthereof. 

4.2    **Share Accounting**. If an outstanding Award for any reason expires or is terminated or canceledwithout 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 originalpurchase price, the shares of Stock allocable to the terminated portion of such Award or such forfeited or repurchased shares of Stock shall not again be available for issuance under the Plan. In addition, Shares withheld or reacquired by theCompany in satisfaction of tax withholding obligations pursuant to Section 15.3 shall not 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 portionof an Award, other than an Option or SAR, that is settled in cash. 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 forwhich the SAR is 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 issuanceunder the Plan shall be reduced by the gross number of shares for which the Option is exercised. 

4.3    **Adjustmentsfor Changes in Capital Structure**. Subject to any required action by the stockholders of the Company and the requirements of Section 409A to the extent applicable, in the event of any change in the Stock effected without receipt ofconsideration 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 normal cash dividends) that has amaterial 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, in the Award limits set forth inSection 5.3 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 convertiblesecurities 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 providethat 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 theCommittee, 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 amountless than the par value, if any, of the stock subject to such Award. The Committee, in its sole 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 ordistributions as it deems appropriate, including modification of Performance Goals, Performance Award Formulas and 

 

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Performance Periods. The adjustments determined by the Committee pursuant to this Section shall be final, binding and conclusive. 

The Committee may, without affecting the number of Shares reserved or available hereunder, authorize the issuance or assumption of benefits under thisPlan 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 Sections 409A and 422 and any related guidance issuedby the U.S. Treasury Department, where applicable. 

5.    **Eligibility, Participation and AwardLimitations**. 

5.1    **Persons Eligible for Awards****.** Awards may be granted only to Employees,Consultants and Outside Directors. 

5.2    **Participation in Plan****.** Awards are granted solely at thediscretion 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 additionalAward. 

5.3    **Award Limitations**. 

(a)    ***Incentive Stock Option Limitations***. 

(i)    **Maximum Number of Shares Issuable Pursuant to**Incentive**Stock Options****.** Subject to adjustment as providedin Section 4.3, 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 five million two hundred thousand (5,200,000) shares. The maximumaggregate number of shares of Stock that may be issued under the Plan pursuant to all Awards other than Incentive Stock Options shall be the number of shares determined in accordance with Section 4.1, subject to adjustment as provided inSection 4.2 and Section 4.3.****

(ii)    **Persons Eligible.** An Incentive Stock Option may begranted 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 notan 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. An Incentive Stock Option granted to a prospective Employee upon the condition that suchperson become an Employee of an ISO-Qualifying Corporation shall be deemed granted effective on the date such person commences Service as an Employee of an ISO-Qualifying Corporation, with an exercise price determined as of such date in accordancewith Section 6.1. 

(iii)    **Fair Market Value Limitation.** To the extent that options designated asIncentive 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 thanone 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 inthe 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 thisSection, 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 andas 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 bedeemed 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. 

 

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(b)    ***Aggregate Limit on Full Value Awards.*** In no event shall morethan fifty percent (50%) of the maximum aggregate number of shares of Stock that may be issued under the Plan, determined in accordance with Sections 4.1, 4.2 and 4.3, be issued pursuant to Full Value Awards. 

(c)    ***Aggregate Limit on Full Value Awards Without Minimum Vesting.*** Notwithstanding any provision of the Plan to thecontrary, no more than ten percent (10%) of the maximum aggregate number of shares of Stock that may be issued under the Plan, determined in accordance with Sections 4.1, 4.2 and 4.3, shall be issued pursuant to Full Value Awards havingVesting Conditions which (i) if based upon a Service requirement, provide for vesting more rapid than annual pro rata vesting over a period of three (3) years or (ii) if based upon the attainment of one or more Performance Goals,provide for a Performance Period of less than twelve (12) months; *provided*, *however*, that such limitations shall not preclude the acceleration of vesting of any such Award upon the death, disability, retirement or involuntarytermination of Service of the Participant or upon or following a Change in Control, as determined by the Committee in its discretion. 

(d)    ***Maximum Annual Aggregate Award Limits.*** Subject to adjustment as provided in Section 4.3, no Participant shall be granted within any fiscal year of the Company, other than the fiscal year inwhich such Participant’s Service with the Company commences, one or more Awards that may be settled in Stock which in the aggregate are for more than a number of shares equal to nine percent (9%) of the maximum aggregate number of sharesof Stock that may be issued under the Plan as set forth in Section 4.1.******

(e)    ***Section 162(m) Award Limits.*** The following limits shall apply to the grant of any Award intended to qualify for treatment as Performance-Based Compensation: 

(i)    **Options and SARs.** Subject to adjustment as provided in Section 4.3, no Employee shall be granted within anyfiscal year of the Company one or more Options or Freestanding SARs which in the aggregate are for more than one million six hundred thousand (1,600,000) shares. 

(ii)    **Restricted Stock Awards and Restricted Stock Unit Awards.** Subject to adjustment as provided in Section 4.3, no Employee shall be granted within any fiscal year of the Companyone or more Restricted Stock Awards or Restricted Stock Unit Awards for more than seven hundred and fifty thousand (750,000) shares. 

(iii)    **Performance Awards.** Subject to adjustment as provided in Section 4.3, no Employee shall be granted (1) Performance Shares which could result in such Employee receiving more than one hundredthousand (100,000) shares for each full fiscal year of the Company contained in the Performance Period for such Award, or (2) Performance Units which could result in such Employee receiving more than two million dollars ($2,000,000) foreach full fiscal year of the Company contained in the Performance Period for such Award. 

(iv)    **Cash-Based Awardsand Other Stock-Based Awards.** Subject to adjustment as provided in Section 4.3, no Employee shall be granted (1) Cash-Based Awards in any fiscal year of the Company which could result in such Employee receiving more than two milliondollars ($2,000,000) for each full fiscal year of the Company contained in the Performance Period for such Award, or (2) Other Stock-Based Awards in any fiscal year of the Company which could result in such Employee receiving more than onehundred thousand (100,000) shares for each full fiscal year of the Company contained in the Performance Period for such Award. 

 

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6.    **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 totime 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: 

6.1    **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 PercentOwner 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 IncentiveStock 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 qualifyingunder the provisions of Section 424(a) of the Code. 

6.2    **Exercisability and Term of Options.** Optionsshall 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 suchOption; *provided*, *however*, that (a) no Option shall be exercisable after the expiration of seven (7) years after the effective date of grant of such Option and (b) no Incentive Stock Option granted to a Ten Percent Ownershall be exercisable after the expiration of five (5) years after the effective date of grant of such Option. Subject to the foregoing, unless otherwise specified by the Committee in the grant of an Option, each Option shall terminate seven(7) years after the effective date of grant of the Option, unless earlier terminated in accordance with its provisions. 

6.3    **Payment of Exercise Price.**

(a)    ***Forms of ConsiderationAuthorized.*** 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 or by check or cash equivalent, (ii) by tender to theCompany, or attestation to the ownership, of shares of Stock owned by the Participant having a Fair Market Value not less than the exercise price, (iii) by delivery of a properly executed notice of exercise together with irrevocableinstructions 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 exercisecomplying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System) (a *“****Cashless Exercise****”*), (iv) by delivery of a properly executednotice electing a Net-Exercise, (v) by such other consideration as may be approved by the Committee from time to time to the extent permitted by applicable law, or (vi) by any combination thereof. The Committee may at any time or from timeto 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)    **Tender of Stock.** Notwithstanding the foregoing, an Option may not be exercised by tender to the Company, orattestation to the ownership, of shares of Stock to the extent such tender or attestation would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock. Unless otherwiseprovided by the Committee, 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 more than six (6) months (or such otherperiod, if any, as the Committee may permit) and not used for another Option exercise by attestation during such period, or were not acquired, directly or indirectly, from the Company. 

 

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(ii)    **Cashless Exercise.** The Company reserves, at any and all times, theright, 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 Participantsspecified by the Company notwithstanding that such program or procedures may be available to other Participants. 

6.4    **Effect of Termination of Service.**

(a)    ***OptionExercisability.*** Subject to earlier termination of the Option as otherwise provided herein and unless otherwise provided by the Committee in the grant of an Option and set forth in the Award Agreement, an Option shall terminate immediatelyupon 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 determinedin accordance with this Section and thereafter shall terminate: 

(i)    **Disability.** If the Participant’sService terminates because of the Disability of the Participant, the Option, to the extent unexercised and exercisable on the date on which the Participant’s Service terminated, may be exercised by the Participant (or the Participant’sguardian 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 asset 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 on the date on which the Participant’s Serviceterminated, 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 afterthe 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)    **Other Termination of Service.** Ifthe Participant’s Service terminates for any reason, except Disability or death, the Option, to the extent unexercised and exercisable by the Participant on the date on which the Participant’s Service terminated, may be exercised by theParticipant 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, if the exercise of an Option within theapplicable time periods set forth in Section 6.4(a) is prevented by the provisions of Section 14 below, the Option shall remain exercisable until thirty (30) days after the date such exercise would no longer be prevented by suchprovisions, but in any event no later than the Option Expiration Date. 

6.5    **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 extentpermitted by the Committee, in its discretion, and set forth in the Award Agreement evidencing such Option, a Nonstatutory Stock Option shall be assignable or transferable subject to the applicable limitations, if any, described in the GeneralInstructions to Form S-8 under the Securities Act. 

 

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7.    **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 theCommittee 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: 

7.1    **Types of SARs Authorized.** SARs may be granted in tandem with all or any portion of a related Option (a *“TandemSAR”*) 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. 

7.2    **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 notless than the Fair Market Value of a share of Stock on the effective date of grant of the SAR.****

7.3    **Exercisability and Term of SARs.**

(a)    ***Tandem SARs.*** TandemSARs 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 fullnumber 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 suchapproval 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 orcanceled. 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 theexercise 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 suchevent 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 no Freestanding SARshall be exercisable after the expiration of seven (7) years after the effective date of grant of such SAR. 

7.4    **Exercise of SARs.** Upon the exercise (or deemed exercise pursuant to Section 7.7) of an SAR, the Participant (or the Participant’s legal representative or other person who acquired the right toexercise 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 thedate 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 as soon as practicable following the date of exercise of the SAR and (b) inthe case of a Freestanding SAR, in cash, shares of Stock, or any combination thereof as determined by the Committee in compliance with Section 409A. Unless otherwise provided in the Award Agreement evidencing a Freestanding SAR, payment shallbe made in a lump sum as soon as practicable following the date of exercise of the SAR. The Award Agreement evidencing any Freestanding SAR may provide for deferred payment in a lump sum or in installments in compliance with Section 409A. Whenpayment 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 this Section 7, an SAR shall be deemedexercised on the date on which the Company receives notice of exercise from the Participant or as otherwise provided in Section 7.7. 

 

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7.5    **Deemed Exercise of SARs.** If, on the date on which an SAR wouldotherwise 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 notpreviously been exercised shall automatically be deemed to be exercised as of such date with respect to such portion. 

7.6    **Effect of Termination of Service.** Subject to earlier termination of the SAR as otherwise provided herein and unless otherwise provided by the Committee in the grant of an SAR and set forth in the AwardAgreement, 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 6.4 (treating the SAR as if it were an Option) andthereafter shall terminate. 

7.7    **Nontransferability of SARs.** During the lifetime of the Participant, an SARshall be exercisable only by the Participant or the Participants guardian or legal representative. An SAR shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment bycreditors of the Participant or the Participants 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 AwardAgreement 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 FormS8 under theSecurities Act. 

8.    **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 PurchaseRight 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 andshall comply with and be subject to the following terms and conditions: 

8.1****    **Types of Restricted StockAwards Authorized.** Restricted Stock Awards may be granted in the form of either a Restricted Stock Bonus or a Restricted Stock Purchase Right; *provided* that Outside Directors shall be eligible for Restricted Stock Awards only in the formof Restricted Stock Bonus. 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 10.4. If eitherthe grant of a Restricted Stock Award or the lapsing of the Restriction Period is to be contingent upon the attainment of one or more Performance Goals, the Committee shall follow procedures substantially equivalent to those set forth inSections 10.3 through 10.5(a). 

8.2    **Purchase Price.** The purchase price for shares of Stock issuableunder 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 receiving shares of Stock pursuant to a RestrictedStock 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 inthe 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. 

8.3    **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. 

8.4    **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 or by check or cash equivalent, (b) by such other consideration as may be approved by the Committee 

 

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from time to time to the extent permitted by applicable law, or (c) by any combination thereof. The Committee may at any time or from time to time grantRestricted Stock Purchase Rights which do not permit all of the foregoing forms of consideration to be used in payment of the purchase price or which otherwise restrict one or more forms of consideration. 

8.5    **Vesting and Restrictions on Transfer.** Subject to Section 5.4(c), Shares issued pursuant to any Restricted StockAward 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 inSection 10.4, as shall be established by the Committee and set forth in the Award Agreement evidencing such Award. During any Restriction 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 8.8. The Committee, in its discretion, may provide in any Award Agreementevidencing 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 Company’sTrading 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, eachParticipant 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 forthe placement on such certificates of appropriate legends evidencing any such transfer restrictions. 

8.6    **Voting Rights; Dividends and Distributions.** Except as provided in this Section, Section 8.5 and any Award Agreement, during any Restriction Period applicable to shares subject to a Restricted StockAward, 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. However, inthe 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 4.3, any and all new, substituted or additionalsecurities or other property (other than normal 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 theRestricted Stock Award with respect to which such dividends or distributions were paid or adjustments were made. Notwithstanding the foregoing, and except as may be provided in the applicable Award Agreement, any cash dividends and distributionspaid with respect to the shares subject to the Restricted Stock Award of an Outside Director shall be accumulated and paid to the Outside Director on the earlier of (i) the satisfaction of the Vesting Conditions for the shares subject to theRestricted Stock Award and (ii) March 15th following the year in which thedividend or distribution was paid to stockholders generally. 

8.7    **Effect of Termination of Service.** Unlessotherwise 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 ofthe 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 theParticipant’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. 

8.8    **Nontransferability of Restricted Stock Award Rights.** Rights to acquire shares of Stock pursuant to a RestrictedStock 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 

 

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Participant’s beneficiary, except transfer by will or the laws of descent and distribution. All rights with respect to a Restricted Stock Award grantedto a Participant hereunder shall be exercisable during his or her lifetime only by such Participant or the Participant’s guardian or legal representative. 

9.    **Restricted Stock Unit Awards.**

Restricted Stock Unit Awards shallbe 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 ofthe terms of the Plan by reference and shall comply with and be subject to the following terms and conditions: 

9.1    **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 morePerformance Goals described in Section 10.4. 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 shallfollow procedures substantially equivalent to those set forth in Sections 10.3 through 10.5(a). 

9.2    **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 servicesactually 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 aParticipating 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. 

9.3    **Vesting.** Subject to Section 5.4(c), Restricted Stock Unit Awards may (but need not) be made subject to Vesting Conditions based upon the satisfaction of such Servicerequirements, conditions, restrictions or performance criteria, including, without limitation, Performance Goals as described in Section 10.4, 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 thesale 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 suchshares would not violate the Trading Compliance Policy or (b) the later of (i) the 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 originalvesting date occurred. 

9.4    **Voting Rights, Dividend Equivalent Rights and Distributions.** Participants shallhave 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 ofthe 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 receive Dividend Equivalents with respect to the payment of cashdividends on Stock during the period beginning on the date such Award is granted and ending, with respect to the particular shares subject to the Award, on the earlier of the date the Award is settled or the date on which it is terminated. SuchDividend Equivalents, if any, shall be paid by crediting the Participant with additional whole Restricted Stock Units as of the date of payment of such cash dividends on Stock. The number of additional Restricted Stock Units (rounded to the nearestwhole number) 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 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 (or as soon thereafter aspracticable) as the Restricted Stock Units originally subject to the Restricted Stock Unit Award. In 

 

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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 theCompany as described in Section 4.3, 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 orother property (other than normal cash dividends) to which the Participant would 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 beimmediately subject to the same Vesting Conditions as are applicable to the Award. 

9.5    **Effect of Termination ofService.** 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 theParticipant’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.

9.6    **Settlement of Restricted Stock Unit Awards.** The Company shall issue to a Participant on the date onwhich 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 othernew, substituted or additional securities or other property pursuant to an adjustment described in Section 9.4) for each Restricted Stock Unit then becoming vested or otherwise to be settled on such date, subject to the withholding ofapplicable taxes. If permitted by the Committee, subject to the provisions of Section 17 with respect to Section 409A, the Participant may elect in accordance with terms specified in the Award Agreement to defer receipt of all or anyportion of the shares of Stock or other property otherwise issuable to the Participant pursuant to this Section, and such deferred issuance date(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 otherwiseissuable to the Participant pursuant to this Section. 

9.7    **Nontransferability of Restricted Stock UnitAwards.** 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 theParticipant 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 herlifetime only by such Participant or the Participant’s guardian or legal representative. 

10.    **PerformanceAwards.**

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: 

10.1    **Types of Performance Awards Authorized.** Performance Awards may be granted in the form of either Performance Shares orPerformance 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 tothe Award, and the other terms, conditions and restrictions of the Award. 

10.2    **Initial Value of PerformanceShares and Performance Units.** Unless otherwise provided by the Committee in granting a Performance Award, each Performance Share shall have an initial monetary value equal to the Fair Market Value of one (1) share of Stock, subject toadjustment as provided in Section 4.3, 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 theParticipant in settlement of a 

 

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Performance Award determined on the basis of the applicable Performance Award Formula will depend on the extent to which Performance Goals established by theCommittee are attained within the applicable Performance Period established by the Committee. 

10.3    **Establishmentof 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 Goalswhich, 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 therequirements 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 eachPerformance 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 twenty-five percent (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 thePerformance 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. 

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

  (a)    ***Performance Measures.*** Performance Measures shall have thesame meanings as used in the Company’s financial statements, or, if such terms are not used in the Company’s financial statements, they shall have the meaning applied pursuant to generally accepted accounting principles, or as usedgenerally in the Company’s industry. 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 beselected by the Committee. For purposes of the Plan, the Performance Measures applicable to a Performance Award shall be calculated in accordance with generally accepted accounting principles, if applicable, but prior to the accrual or payment ofany Performance Award for the same Performance Period and excluding the effect (whether positive or negative) of any change in accounting standards or any extraordinary, unusual or nonrecurring item, as determined by the Committee, occurring afterthe 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 inorder to prevent the dilution or enlargement of the Participant’s rights with respect to a Performance 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; 

 

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  (viii) pre-tax profit; 

  (ix) net operating income; 

  (x) net income; 

  (xi) economic value added; 

  (xii) free cash flow; 

  (xiii) operating cash flow; 

  (xiv) stock price; 

  (xv) earnings per share; 

  (xvi) return on stockholder equity; 

  (xvii) return on capital; 

  (xviii) return on assets; 

  (xix) return on investment; 

  (xx) employee satisfaction; 

  (xxi) employee retention; 

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

  (xxiii) market share; 

  (xxiv) product regulatory approvals; 

  (xxv) projects in development; 

  (xxvi) regulatory filings; 

  (xxvii) research and development expenses; and 

  (xxviii) 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 underthe applicable Performance Award Formula by the level attained during the applicable Performance Period. A Performance Target may be stated as an absolute value or as a value determined relative to an index, budget or other standard selected by theCommittee. 

10.5    **Settlement of Performance Awards.********

  (a) ***Determination of Final Value.*** As soon as practicable following the completion of the Performance Period applicable to aPerformance Award, the Committee shall certify in writing the extent to 

 

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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 itssettlement in accordance with the applicable Performance Award Formula. 

  (b)    ***DiscretionaryAdjustment 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 aPerformance 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 aCovered 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 theCovered 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 inthe 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 whohas 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 Participantwas not on a leave of absence. 

  (d)    ***Notice to Participants.*** As soon as practicablefollowing the Committee’s determination and certification in accordance with Sections 10.5(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’sdetermination and certification in accordance with Sections 10.5(a) and (b), but in any event within the Short-Term Deferral Period described in Section 17.1 (except as otherwise provided below or consistent with the requirements ofSection 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 ofthe 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 Participant pursuant to thisSection, 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 thedeferral period of Dividend Equivalents or interest.******

  (f)    ***Provisions Applicable toPayment 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 value of a share of Stock determined by the method specified in theAward Agreement. Such methods may include, without limitation, the closing market price on a specified date (such as the settlement date) or an average of market prices over a series of trading days. Shares of Stock issued in payment of anyPerformance Award may be fully vested and freely transferable shares or may be shares of Stock subject to Vesting Conditions as provided in Section 8.5. Any shares subject to Vesting Conditions shall be evidenced by an appropriate AwardAgreement and shall be subject to the provisions of Sections 8.5 through 8.8 above. 

10.6    **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 appropriateentry 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 

 

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Agreement evidencing any Performance Share Award that the Participant shall be entitled to receive Dividend Equivalents with respect to the payment of cashdividends on Stock during the period beginning on the date the Award is granted and ending, with respect to the particular shares subject to the Award, on the earlier of the date on which the Performance Shares are settled or the date on which theyare forfeited. Such Dividend Equivalents, if any, shall be credited to the Participant in the form of additional whole Performance Shares as of the date of payment of such cash dividends on Stock. The number of additional Performance Shares (roundedto the nearest whole number) 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 previouslycredited to the Participant by (b) the Fair Market Value per share of Stock on such date. Dividend Equivalents may be paid currently or may be accumulated and paid to the extent that Performance Shares become nonforfeitable, as determined bythe Committee. Settlement of Dividend Equivalents 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 inSection 10.5. Dividend Equivalents 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 ofthe Company as described in Section 4.3, 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 orother property (other than normal cash dividends) to which the Participant would 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 otherproperty shall be immediately subject to the same Performance Goals as are applicable to the Award. 

10.7    **Effectof 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 Participants Service terminates because of the death orDisability of the Participant before the completion of the Performance Period applicable to the Performance Award, the final value of the Participants Performance Award shall be determined by the extent to which the applicable Performance Goals havebeen attained with respect to the entire Performance Period and shall be prorated based on the number of days of the Participants Service during the Performance Period. Payment shall be made following the end of the Performance Period in any mannerpermitted by Section 10.5. 

  (b)    ***Other Termination of Service.*** If the Participant’sService 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. 

10.8    **Nontransferability of Performance Awards.** Prior to settlement in accordance with the provisions of the Plan, noPerformance 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 orby 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 legalrepresentative. 

11.    **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 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    **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. 

 

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11.2    **Grant of Other Stock-Based Awards.** The Committee may grant other typesof 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 intocommon stock or other forms determined by the Committee) in such amounts and subject to such terms and conditions as the Committee shall determine. Such Awards may involve the transfer of actual shares of Stock to Participants, or payment in cash orotherwise 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. 

11.3    **Value of Cash-Based and Other Stock-Based Awards.** Each Cash-Based Award shall specify a monetary payment amount orpayment 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. Subject to Section 5.4(c), the Committee mayrequire the satisfaction of such Service requirements, conditions, restrictions or performance criteria, including, without limitation, Performance Goals as described in Section 10.4, as shall be established by the Committee and set forth inthe 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 extentto 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 proceduressubstantially equivalent to those applicable to Performance Awards set forth in Section 10. 

11.4    **Payment orSettlement 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 orother 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 Compensationshall comply with the requirements applicable to Performance Awards set forth in Section 10. To the extent applicable, payment or settlement with respect to each Cash-Based Award and Other Stock-Based Award shall be made in compliance withrequirements of Section 409A. 

11.5    **Voting Rights; Dividend Equivalent Rights and Distributions.**Participants shall have no voting rights with respect to shares of Stock represented by Other 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 dulyauthorized 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 receiveDividend Equivalents 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 the particular shares subject to the Award, on the earlier of the date the Award issettled or the date on which it is terminated. Such Dividend Equivalents, if any, shall be paid in accordance with the provisions set forth in Section 9.4. Dividend Equivalent rights shall not be granted with respect to Cash-Based Awards.

11.6    **Effect of Termination of Service.** Each Award Agreement evidencing a Cash-Based Award or OtherStock-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 sole 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. 

11.7    **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 toanticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participants beneficiary, except transfer by will or by the laws 

 

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of descent and distribution. The Committee may impose such additional restrictions on any shares of Stock issued in settlement of Cash-Based Awards and OtherStock-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 ofStock are then listed and/or traded, or under any state securities laws applicable to such shares of Stock. 

12.    **Standard Forms of Award Agreement.**

12.1    **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 bindingobligation of the Company unless evidenced by a fully executed Award Agreement, which execution may be evidenced by electronic means or transmission. Any Award Agreement may consist of an appropriate form of Notice of Grant and a form of Agreementincorporated therein by reference, or such other form or forms, including electronic media, as the Committee may approve from time to time. 

12.2    **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 individualAward 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 theterms of the Plan. 

13.    **Change in Control.**

13.1    **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.***The Committee may, in its discretion, provide in any Award Agreement or, in the event of a Change in Control, may take such actions as it deems appropriate to provide for the acceleration of the exercisability, vesting and/or settlement inconnection with such Change in Control of each or any outstanding Award or portion thereof and shares acquired pursuant thereto upon such conditions, including termination of the Participant’s Service prior to, upon, or following such Change inControl, to such extent as the Committee shall determine. 

  (b)    ***Assumption, Continuation orSubstitution.*** 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, either 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 suchoutstanding Award or portion thereof a substantially equivalent award with respect to the Acquiror’s stock, as applicable. For purposes of this Section, if so determined by the Committee, in its discretion, an Award denominated in shares ofStock 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 immediatelyprior 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; *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 ofStock 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 neitherassumed 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 ofthe Change in Control. 

 

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  (c)    ***Cash-Out of Outstanding Stock-Based Awards.*** TheCommittee 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 Changein Control and not previously exercised or 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 ofthe consideration to be paid per share of Stock in the Change in Control, reduced by the exercise or purchase price per share, if any, under such Award. In the event such determination is made by the Committee, the amount of such payment (reduced byapplicable withholding taxes, if any) shall be paid 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 theircanceled Awards in accordance with the vesting schedules applicable to such Awards. 

13.2    **Federal Excise TaxUnder Section 4999 of the Code.**

  (a)    ***Excess Parachute Payment.*** In the event thatany 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 ofsuch acceleration of vesting, payment or benefit as an “excess parachute payment” under Section 280G of the Code, the Participant may elect, in his or her sole discretion and in compliance with the requirements of Section 409A,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 13.2(a), no later than the date of the occurrence of any event thatmight reasonably be anticipated to result in an “excess parachute payment” to the Participant as described in Section 13.2(a), the Company shall request a determination in writing by independent public accountants selected by theCompany (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 benefitswhich 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. TheCompany 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 mayreasonably charge in connection with their services contemplated by this Section. 

14.    **Compliance withSecurities Law.**

The grant of Awards and the issuance of shares of Stock pursuant to any Award shall be subject to compliance withall applicable requirements of federal, state and foreign law 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 sharesissued 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 legalcounsel 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 anyregulatory 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 hereunder shall relieve the Company of any liability in respect of the failure toissue 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, toevidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company. 

 

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15.    **Tax Withholding.**

15.1    **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, if any, required by law to be withheld by the Participating Company Group withrespect 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 underthe Plan until the Participating Company Group’s tax withholding obligations have been satisfied by the Participant. 

15.2    **Withholding in Shares**. The Company shall have the right, but not the obligation, to deduct from the shares of Stock issuable to a Participant upon the exercise or settlement of an Award, or to accept fromthe Participant the tender of, a number of whole shares of Stock having a Fair Market Value, as determined by the Company, equal to all or any part of the tax withholding obligations of the Participating Company Group. The Fair Market Value of anyshares 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. 

16.    **Amendment 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 ofStock that may be issued under the Plan (except by operation of the provisions of Section 4.3), (b) no change in the class of persons eligible to receive Incentive Stock Options, and (c) no other amendment of the Plan that wouldrequire approval of the Company’s stockholders under any applicable law, regulation or rule, including the rules of any stock exchange or market system upon which the Stock may then be listed. No amendment, suspension or termination of the Planshall 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 adversely affect any then outstanding Award without the consent ofthe 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 retroactivelyor 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. 

17.    **Compliance with Section 409A.**

17.1    **Awards Subject to Section 409A.** The provisions of this Section 17 shall apply to any Award or portionthereof that is or becomes subject to Section 409A, notwithstanding any provision to the contrary contained in the Plan or the Award Agreement applicable to such Award. Awards subject to Section 409A include, without limitation:

  (a)    Any Nonstatutory Stock Option or SAR that permits the deferral of compensation other than thedeferral of recognition of income until the exercise of the Award. 

  (b)    Any Restricted Stock UnitAward, Performance Award, Cash-Based Award or Other Stock-Based Award if either (i) the Award provides by its terms for settlement of all or any portion of the Award on one or more dates following the Short-Term Deferral Period (as definedbelow) or (ii) the Committee permits or requires the Participant to elect one or more dates on which the Award will be settled. 

Subject to any applicable U.S. Treasury Regulations promulgated pursuant to Section 409A or other applicable guidance, the term *“****Short-Term Deferral Period****”* means the periodending on the later of (i) the fifteenth (15th) day of the third(3rd) month following the end of the Company’s fiscal year in which theapplicable portion of the Award is no longer subject to a substantial risk of forfeiture or (ii) the fifteenth 

 

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(15th) day of the third (3rd) month followingthe end of the Participant’s taxable year in which the applicable portion of the Award is no longer subject to a substantial risk of forfeiture. For this purpose, the term “substantial risk of forfeiture” shall have the meaning setforth in any applicable U.S. Treasury Regulations promulgated pursuant to Section 409A or other applicable guidance. 

17.2    **Deferral and/or Distribution Elections.** Except as otherwise permitted or required by Section 409A or any applicable U.S. Treasury Regulations promulgated pursuant to Section 409A or otherapplicable guidance, the following rules shall apply to any deferral and/or distribution elections (each, an *“****Election****”*) that may be permitted or required by the Committee pursuant to an Award subject toSection 409A: 

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

  (b)    All 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; *provided*,*however*, that if the Award qualifies as “performance-based compensation” for purposes of Section 409A and is based on services performed over a period of at least twelve (12) months, then the Election may be made no laterthan six (6) months prior to the end of such period. 

  (c)    Elections shall continue in effect untila written election to revoke or change such Election is received by the Company, except that a written election to revoke or change such Election must be made prior to the last day for making an Election determined in accordance withparagraph (b) above or as permitted by Section 17.3. 

17.3    **Subsequent Elections.** Except asotherwise permitted or required by Section 409A or any applicable U.S. Treasury Regulations promulgated pursuant to Section 409A or other applicable guidance, any Award subject to Section 409A which permits a subsequent Election todelay the distribution or change the form of distribution 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 distribution in settlement of an Award not described in thisSection 17.3(b), 17.4(b), or 17.4(f) must result in a delay of the distribution for a period of not less than five (5) years from the date such distribution would otherwise have been made; and 

  (c)    No subsequent Election related to a distribution pursuant to Section 17.4(d) shall be made less than twelve(12) months prior to the date of the first scheduled payment under such distribution. 

17.4    **DistributionsPursuant to Deferral Elections.** Except as otherwise permitted or required by Section 409A or any applicable U.S. Treasury Regulations promulgated pursuant to Section 409A or other applicable guidance, no distribution in settlement ofan Award subject to Section 409A may commence earlier than: 

  (a)    Separation from service (asdetermined by the Secretary of the United States Treasury); 

  (b)    The date the Participant becomesDisabled (as defined below); 

  (c)    Death; 

  (d)    A specified time (or pursuant to a fixed schedule) that is either (i) specified by the Committee upon thegrant 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 17.2 and/or 17.3, as applicable; 

 

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  (e)    To the extent provided by the Secretary of the U.S. Treasury, achange in the ownership or effective control or the Company or in the ownership of a substantial portion of the assets of the Company; or 

  (f)    The occurrence of an “Unforeseeable Emergency” (as defined by applicable U.S. Treasury Regulations promulgated pursuant to Section 409A). 

Notwithstanding anything else herein to the contrary, to the extent that a Participant is a “Specified Employee” (as defined inSection 409A(a)(2)(B)(i) of the Code) of the Company, no distribution pursuant to Section 17.4(a) in settlement of an Award subject to Section 409A may be made before the date (the *“****Delayed PaymentDate****”*) which is six (6) months after such Participant’s date of separation from service, or, if earlier, the date of the Participant’s death. All such amounts that would, but for this paragraph, become payableprior to the Delayed Payment Date shall be accumulated and paid on the Delayed Payment Date. 

17.5    **UnforeseeableEmergency.** The Committee shall have the authority to provide in the Award Agreement evidencing any Award subject to Section 409A for distribution 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 necessary to satisfy such Unforeseeable Emergencyplus amounts necessary to pay taxes reasonably anticipated as a result of such distribution(s), after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise, byliquidation 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 Emergencyshall be made in a lump sum as soon as practicable following the Committee’s determination that an Unforeseeable Emergency has occurred. 

The occurrence of an Unforeseeable Emergency shall be judged and determined by the Committee. The Committee’s decision with respect to whether an Unforeseeable Emergency has occurred and the manner in which, if at all, the distributionin settlement of an Award shall be altered or modified, shall be final, conclusive, and not subject to approval or appeal. 

17.6    **Disabled.** The Committee shall have the authority to provide in any Award subject to Section 409A for distribution in settlement of such Award in the event that the Participant becomes Disabled. AParticipant shall be considered “Disabled” if either: 

  (a)    the Participant is unable toengage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or

  (b)    the Participant is, by reason of any medically determinable physical or mental impairment whichcan be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and healthplan covering employees of the Participant’s employer. 

All distributions payable by reason of a Participant becoming Disabled shallbe paid in a lump sum or in periodic installments as established by the Participant’s Election, commencing as soon as practicable following the date the Participant becomes Disabled. If the Participant has made no Election with respect todistributions upon becoming Disabled, all such distributions shall be paid in a lump sum as soon as practicable following the date the Participant becomes Disabled. 

17.7    **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 distributedto his or her beneficiary under the distribution method for death established by the Participant’s Election as soon as administratively possible 

 

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following receipt by the Committee of satisfactory notice and confirmation of the Participant’s death. If the Participant has made no Election withrespect to distributions upon death, all such distributions shall be paid in a lump sum as soon as practicable following the date of the Participant’s death. 

17.8    **No Acceleration of Distributions.** Notwithstanding anything to the contrary herein, this Plan does not permit the acceleration of the time or schedule of any distribution under anAward subject to Section 409A, except as provided by Section 409A and/or the Secretary of the U.S. Treasury. 

18.    **Miscellaneous Provisions.**

18.1    **Repurchase Rights.** Sharesissued 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 timeany 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 transferrestrictions 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 legendsevidencing any such transfer restrictions. 

18.2    **Forfeiture Events.**

  (a)    The Committee may specify in an Award Agreement that the Participant’s rights, payments, and benefits withrespect 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, butshall 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 themisconduct, 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 the amount of any payment in settlement of an Award earned or accruedduring 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.

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

18.4    **Rightsas Employee, Consultant or Director.** No person, even though eligible pursuant to Section 5, 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 anyAward 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 Participant’s Service at any time. Tothe 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 Employeehas an employment relationship with the Company. 

18.5    **Rights as a Stockholder.** A Participant shall have norights 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 

 

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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 rightsfor which the record date is prior to the date such shares are issued, except as provided in Section 4.3 or another provision of the Plan. 

18.6    **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 toor 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 Stockfor 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. 

18.7    **Fractional Shares.** The Company shall not be required to issue fractional shares upon the exercise or settlement of anyAward. 

18.8    **Retirement and Welfare Plans.** Neither Awards made under this Plan nor shares of Stock or cashpaid 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 benefitplans unless such other plan expressly provides that such compensation shall be taken into account in computing a Participant’s benefit. 

18.9    **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 theParticipant 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 suchdesignation 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 unpaidbenefits to the Participant’s legal representative. 

18.10    **Severability.** If any one or more of theprovisions (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 theremaining provisions (or any part thereof) of the Plan shall not in any way be affected or impaired thereby. 

18.11    **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 makeadjustments, 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 powerof the Company or another Participating Company to take any action which such entity deems to be necessary or appropriate. 

18.12    **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 unfunded and unsecured obligationsfor 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 establishany 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. Anyinvestments 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 vestedor beneficial interest in any Participant or the Participant’s creditors in any assets of any Participating Company. The Participants shall have no claim against 

 

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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. 

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

 

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