Exhibit 10.1


 


VIASYS HEALTHCARE INC.


 


EQUITY INCENTIVE PLAN


(As Amended and
Restated on January 25, 2006)


1.               PURPOSE


The purpose of this
Equity Incentive Plan (the “Plan”) is to secure for VIASYS Healthcare Inc. (the
“Company”) and its stockholders (the “Stockholders”) the benefits arising from
capital stock ownership by employees, officers and directors of, and
consultants to, the Company and its subsidiaries or other persons who are
expected to make significant contributions to the future growth and success of
the Company and its subsidiaries. The Plan is intended to accomplish these
goals by enabling the Company to offer such persons equity-based interests,
equity-based incentives or performance-based stock incentives in the Company,
or any combination thereof (collectively, “Awards”).


2.               ADMINISTRATION


The Plan will be
administered by the Board of Directors of the Company (the “Board”). Subject to
Section 6.1.8, the Board shall have full power to interpret and administer the
Plan, to prescribe, amend and rescind rules and regulations relating to the
Plan and Awards, and full authority to select the persons to whom Awards will
be granted (“Participants”), determine the type and amount of Awards to be
granted to Participants (including, without limitation, any combination of
Awards), determine the terms and conditions of Awards granted under the Plan
(including, without limitation, terms and conditions relating to events of
merger, consolidation, dissolution and liquidation, change of control, vesting,
forfeiture, restrictions, dividends and interest, if any, on deferred amounts),
waive compliance by a participant with any obligation to be performed by him or
her under an Award, waive any term or condition of an Award, cancel an existing
Award in whole or in part with the consent of a Participant, grant replacement
Awards, accelerate the vesting or lapse of any restrictions of any Award,
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or in any Award and adopt the form of instruments evidencing Awards under
the Plan and change such forms from time to time.  Any interpretation by the Board of the terms
and provisions of the Plan or any Award thereunder and the administration
thereof, and all action taken by the Board, shall be final, binding and
conclusive on all parties and any person claiming under or through any party.
No Director shall be liable for any action or determination made in good faith.
The Board may, to the full extent permitted by law, delegate any or all of its
responsibilities under the Plan to a committee (the “Committee”) appointed by
the Board and consisting of members of the Board, and such Committee may
delegate any or all of its responsibilities to one or more officers of the
Company to the extent authorized by the Board (a “Delegated Officer”).  All reference in the Plan to the “Board”
shall mean the Board, a Committee of the Board, or a Delegated Officer to the
extent that the Board’s powers or authority under the Plan have been validly
delegated to such person.








3.               EFFECTIVE DATE


The Plan was approved by
the Board and the Stockholders on September 24, 2001 and was subsequently
amended on February 14, 2002 and May 5, 2004. 
The Plan was amended and restated by the Board on December 7, 2005 and
January 25, 2006 to (i) increase the share reserve by 2,000,000 shares, (ii) establish
a limit on the number of such shares with respect to which Awards other than
options may be granted, (iii) require that the exercise price of an option must
be equal to at least the fair market value per share of common stock on the
option grant date, and (iv) effect certain other changes to facilitate Plan
administration.  The share increase is
subject to stockholder approval at the 2006 Annual Stockholders Meeting.


4.               SHARES SUBJECT TO THE PLAN


Subject to adjustment as
provided in Section 10.6, the total number of shares of common stock of the
Company, par value $.01 per share (“Common Stock”), reserved and available for
distribution under the Plan is 8,680,000 shares including the 2 million share
increase approved by the Board on December 7, 2005, subject to stockholder
approval.  If the stockholders approve
the 2 million share increase, a maximum of 1,900,000 shares may be issued under
Awards other than option grants.  Shares issued
under the Plan may consist, in whole or in part, of authorized and unissued
shares or treasury shares.


If any Award of shares of
Common Stock requiring exercise by the Participant for delivery of such shares
expires or terminates without having been exercised in full, or if any Award is
forfeited or is otherwise terminated without a payment being made to the
Participant in the form of Common Stock, or if any shares of Common Stock
subject to restrictions are repurchased by the Company pursuant to the terms of
any Award, such shares shall be available for distribution in connection with
future Awards under the Plan.


5.               ELIGIBILITY


Employees, officers and
Directors of, and consultants to, the Company and its subsidiaries, or other
persons who are expected to make significant contributions to the future growth
and success of the Company and its subsidiaries shall be eligible to receive
Awards under the Plan. The Board, or other appropriate committee or person to
the extent permitted pursuant to the last sentence of Section 2, shall from
time to time select from among such eligible persons those who will receive
Awards under the Plan.


6.               TYPES OF AWARDS


The Board may offer
Awards under the Plan in any form of equity-based interest, equity-based
incentive or performance-based stock incentive in Common Stock of the Company
or any combination thereof. The type, terms and conditions and restrictions of
an Award shall be determined by the Board at the time such Award is made to a
Participant; provided however that the maximum number of shares permitted to be
subject to Awards or combination of Awards to any Participant during any one
calendar year may not exceed 1,800,000 shares of Common Stock, subject to
adjustment as provided under Section 10.6.


 


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An Award shall be made at
the time specified by the Board and shall be subject to such conditions or
restrictions as may be imposed by the Board and shall conform to the general
rules applicable under the Plan as well as any special rules then applicable
under United States or foreign tax laws, securities laws, other applicable law
or relevant rules of any stock exchange or quotation system on what the Common
Stock is traded.


Without limiting the
foregoing, Awards may take the following forms and shall be subject to the
following rules and conditions:


6.1  OPTIONS. 
An option is an Award that entitles the holder on exercise thereof to
purchase Common Stock at a specified exercise price. Options granted under the
Plan may be either incentive stock options (“incentive stock options”) that
meet the requirements of Section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”), or options that are not intended to meet the requirements
of Section 422 (“non-statutory options”).


6.1.1 OPTION PRICE.  The price at which Common Stock may be
purchased upon exercise of an option shall be determined by the Board, provided
however, the exercise price shall not be less than the fair market value per
share of Common Stock on the option grant date. 
The fair market value of Common Stock on the option grant date means the
value of Common Stock determined as follows:


 (i)           If
the Common Stock is listed on any established stock exchange or a national
market system, including without limitation the Nasdaq National Market or The
Nasdaq SmallCap Market of The Nasdaq Stock 
Market, its Fair Market Value shall be the closing sales price for such
stock (or the closing bid, if no sales were reported) as quoted on such
exchange or system as of the date of grant, as reported in The Wall Street
Journal or such other source as the Board deems reliable;


 (ii)          If
the Common Stock is regularly quoted by a recognized securities dealer but
selling prices are not reported as of the date of grant, the Fair Market Value
of a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable;


 (iii)         In
the absence of an established market for the Common Stock, the Fair Market
Value shall be determined in good faith by the Board.


6.1.2 OPTION GRANTS.  The granting of an option shall take place at
the time specified by the Board. Options shall be evidenced by option
agreements. Such agreements shall conform to the requirements of the Plan, and
may contain such other provisions (including, without limitation, to vesting
and forfeiture provisions, acceleration, change of control, protection in the
event of merger, consolidations, dissolutions and liquidations) as the Board
shall deem advisable. Option agreements shall expressly state whether an option
grant is intended to qualify as an incentive stock option or non-statutory option.


6.1.3 OPTION PERIOD.  An option will become exercisable at such
time or times (which may be immediately or in such installments as the Board
shall determine) and on such terms and conditions as the Board shall specify.
The option agreements shall specify the 


 


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terms and conditions
applicable in the event of an option holder’s termination of employment during
the option’s term.  The option term shall
be determined by the Board and may extend as long as ten (10) years.


Any exercise of an option
must be in writing, signed by the proper person and delivered or mailed to the
Company, accompanied by (1) any additional documents required by the Board and
(2) payment in full in accordance with Section 6.1.4 for the number of shares
for which the option is exercised.


6.1.4 PAYMENT OF EXERCISE
PRICE. Stock purchased on exercise of an option shall be paid for as follows:
(1) in cash or by check (subject to such guidelines as the Company may
establish for this purpose), bank draft or money order payable to the order of
the Company or (2) if so permitted by the instrument evidencing the option (or
in the case of a non-statutory option, by the Board at or after grant of the
option), (i) through the delivery of shares of Common Stock that have been
outstanding for at least six months (unless the Board expressly approves a
shorter period) and that have a fair market value (determined in accordance
with procedures prescribed by the Board) equal to the exercise price, (ii) by
delivery of a promissory note of the option holder to the Company, payable on
such terms as are specified by the Board, (iii) in cash, on the T+3 settlement
date that occurs after the exercise date specified in the notice of exercise,
provided that the Participant exercises the option through an irrevocable
agreement with a registered broker and the payment is made in accordance with
procedures permitted by Regulation T of the Federal Reserve Board and such
procedures do not violate applicable law, or (iv) by any combination of the
foregoing permissible forms of payment.


6.1.5 BUYOUT PROVISION. Subject
to Section 6.1.8, the Board may at any time offer to buy out for a payment in
cash, shares of Common Stock, deferred stock or restricted stock, an option previously
granted, based on such terms and conditions as the Board shall establish and
communicate to the option holder at the time that such offer is made.


6.1.6 SPECIAL RULES FOR
INCENTIVE STOCK OPTIONS. Each provision of the Plan and each option agreement
evidencing an incentive stock option shall be construed so that each incentive
stock option shall be an incentive stock option as defined in Section 422 of
the Code or any statutory provision that may replace such Section, and any
provisions thereof that cannot be so construed shall be disregarded.
Instruments evidencing incentive stock options shall contain such provisions as
are required under applicable provisions of the Code.


Incentive stock options
may be granted only to employees of the Company and its subsidiaries.  The exercise price of an incentive stock option
granted to a more than ten percent Stockholder of the Company shall not be less
than 110% of the fair market value of the Common Stock on the date of grant, as
determined by the Board.  An incentive
stock option may not be granted after the tenth anniversary of the date on
which the Plan was adopted by the Board and the latest date on which an
incentive stock option may be exercised shall be the tenth anniversary (fifth
anniversary, in the case of any incentive stock option granted to a more than
ten percent Stockholder of the Company) of the date of grant, as determined by
the Board.  In the event that an
incentive stock options loses its status as such, the option shall be treated
as a non-statutory option.


 


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6.1.7 RELOAD OPTIONS. In
the event that shares of Common Stock are used to exercise an option, the terms
of such option may provide for a grant of additional options, or the Committee
may grant additional options, to purchase a number of shares of Common Stock
equal to the number of whole shares used to exercise the option and the number
of whole shares, if any, withheld in payment of any taxes.  Such options shall be granted with an exercise
price not less than the Fair Market Value of the Common Stock at the date of
grant of such additional options for a term not longer than the unexpired term
of the exercised option and on such other terms as the Board shall determine.


6.1.8 RESTRICTION ON
REPRICING PROGRAMS. The Board shall not (i) implement any cancellation/regrant
program pursuant to which outstanding options under the Plan are cancelled and
new options are granted in replacement with a lower exercise price per share,
(ii) cancel outstanding options under the Plan with exercise prices per share
in excess of the then current fair market value per share of common stock for
consideration payable in cash or equity securities of the Company or (iii)
otherwise directly reduce the exercise price in effect for outstanding options
under the Plan, without in each such instance obtaining Stockholder approval.


6.2   RESTRICTED AND UNRESTRICTED STOCK


An Award of restricted
stock entitles the recipient thereof to acquire shares of Common Stock upon payment
of the purchase price subject to restrictions specified in the instrument
evidencing the Award.


6.2.1 RESTRICTED STOCK
AWARDS. Awards of restricted stock shall be evidenced by restricted stock
agreements. Such agreements shall conform to the requirements of the Plan, and
may contain such other provisions (including, without limitation, restriction
and forfeiture provisions, change of control, protection in the event of
mergers, consolidations, dissolutions and liquidations) as the Board shall deem
advisable.


6.2.2 RESTRICTIONS. Until
the restrictions specified in a restricted stock agreement shall lapse,
restricted stock may not be sold, assigned, transferred, pledged or otherwise
encumbered or disposed of, and upon certain conditions specified in the restricted
stock agreement, must be resold to the Company for the price, if any, specified
in such agreement. The restrictions shall lapse at such time or times, and on
such conditions, as the Board may specify. The Board may at any time accelerate
the time at which the restrictions on all or any part of the shares shall
lapse.


6.2.3 RIGHTS AS A
STOCKHOLDER. A Participant who acquires shares of restricted stock will have
all of the rights of a Stockholder with respect to such shares including,
without limitation, the right to receive dividends and to vote such
shares.  Unless the Board otherwise
determines, certificates evidencing shares of restricted stock will remain in
the possession of the Company until such shares are free of all restrictions
under the Plan.


6.2.4 PURCHASE PRICE. The
purchase price of shares of restricted stock shall be determined by the Board,
in its sole discretion, but such price may not be less than the par value of
such shares.


 


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6.2.5 OTHER AWARDS
SETTLED WITH RESTRICTED STOCK. The Board may provide that any or all the Common
Stock delivered pursuant to an Award will be restricted stock.


                6.2.6 UNRESTRICTED STOCK. The Board may, in its sole
discretion, sell to any Participant shares of Common Stock free of restrictions
under the Plan for a price determined by the Board, but which may not be less
than the par value per share of the Common Stock.


6.3           STOCK UNIT AWARDS


                6.3.1  STOCK
UNIT AWARDS.  A Stock Unit Award shall
represent the right of the recipient to receive a share of Common Stock subject
to restrictions specified in the instrument evidencing the Award.  All Stock Unit Awards shall be credited to
accounts on the Company’s records for purposes of the Plan.


                6.3.2  TERMS OF
STOCK UNIT AWARDS.  The Board may grant
Stock Unit Awards that are deliverable if specified performance goals or other
conditions are met, or under other circumstances, including, without
limitation, those terms and conditions described in Section 6.2 above.  Stock Unit Awards may be delivered at the end
of a specified period, or delivery may be deferred to a date authorized by the
Board.  The Board shall determine the
number of Stock Unit Awards to be granted and the requirements applicable to
such Stock Unit Awards.  The Board shall
establish rules and procedures for any deferrals, consistent with applicable
requirements of Section 409A of the Code.


                6.3.3  DELIVERY
WITH RESPECT TO STOCK UNIT AWARDS. 
Delivery with respect to Stock Unit Awards shall be made in Common
Stock.


                6.3.4 
REQUIREMENT OF EMPLOYMENT, SERVICE OR OTHER ACTION.  If a recipient ceases to provide Service to
the Company, or if other conditions established by the Board are not met, the
recipient’s unvested or contingent Stock Unit Awards shall be forfeited.  The Board may grant Stock Unit Awards
contingent upon the recipient’s taking certain specified actions as the Board
sees fit.  The Board may provide for
complete or partial exceptions to this requirement as it deems appropriate.


6.4   DEFERRED STOCK


                6.4.1 DEFERRED STOCK AWARD. A deferred stock Award
entitles the recipient to receive shares of deferred stock, which is Common
Stock to be delivered in the future. Delivery of the Common Stock will take
place at such time or times, and on such conditions, as the Board may specify.
The Board may at any time accelerate the time at which delivery of all or any
part of the Common Stock will take place.


6.4.2 OTHER AWARDS
SETTLED WITH DEFERRED STOCK. The Board may, at the time any Award described in
this Section 6 is granted, provide that, at the time Common Stock would
otherwise be delivered pursuant to the Award, the Participant will instead
receive an instrument evidencing the right to future delivery of deferred
stock.


 


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6.4.3 SECTION 409A.  The Board shall establish rules and
procedures for any deferrals, consistent with applicable requirements of
Section 409A of the Code.


6.5           PERFORMANCE AWARDS


6.5.1 PERFORMANCE AWARDS.
A performance Award entitles the recipient to receive, without payment, an
amount, in cash or Common Stock or a combination thereof (such form to be
determined by the Board), following the attainment of performance goals.
Performance goals may be related to personal performance, corporate
performance, departmental performance or any other category of performance
deemed by the Board to be important to the success of the Company.  The Board will determine the performance
goals, the period or periods during which performance is to be measured and all
other terms and conditions applicable to the Award.


6.5.2 OTHER AWARDS
SUBJECT TO PERFORMANCE CONDITIONS. The Board may, at the time any Award
described in this Section 6 is granted, impose a condition or conditions (in
addition to any conditions specified or authorized in this Section 6 of the
Plan) that performance goals be met prior to the Participant’s realization of
any payment or benefit under the Award.


7.               PURCHASE PRICE AND PAYMENT


Except as otherwise
provided in the Plan, the purchase price of Common Stock to be acquired
pursuant to an Award shall be the price determined by the Board, provided that
such price shall not be less than the par value of the Common Stock. Except as
otherwise provided in the Plan, the Board may determine the method of payment
of the exercise price or purchase price of an Award granted under the Plan and
the form of payment. The Board may determine that all or any part of the
purchase price of Common Stock pursuant to an Award other than an option has
been satisfied by past services rendered by the Participant. The Board may
agree at any time, upon request of the Participant, to defer the date on which
any payment under an Award will be made.


8.               LOANS


The Company may make a
loan to a Participant, either on or after the grant to the Participant of any
Award, in connection with the purchase of Common Stock under the Award or with
the payment of any obligation incurred or recognized as a result of the Award.
The Board will have full authority to decide whether the loan is to be secured
or unsecured or with or without recourse against the borrower, the terms on
which the loan is to be repaid and the conditions, if any, under which it may
be forgiven.


9.               CHANGE IN CONTROL


                9.1           IMPACT OF EVENT.  Subject to Section 9.3 below, in the event of
a “Change in Control” as defined in Section 9.2, the following provisions shall
apply, unless the agreement evidencing the Award otherwise provides (by
specific explicit reference to Section 9.2 below).  If a Change in Control occurs while any
Awards are outstanding, then, upon termination by the Company of the
Participant’s employment without cause within one-year after the Change in
Control:  (i) each outstanding stock
option or other stock-based Award awarded under the Plan 


 


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that was not previously exercisable and vested shall become immediately
exercisable in full and will no longer be subject to a right of repurchase by
the Company, (ii) each outstanding restricted stock award or other stock-based
Award subject to restrictions and to the extent not fully vested, shall be
deemed to be fully vested, free of restrictions and conditions and no longer
subject to a right of repurchase by the Company, and (iii) deferral limitations
and conditions that relate solely to the passage of time, continued employment
or affiliation will be waived and removed as to deferred stock Awards and
performance Awards; provided, however, that performance of other conditions
(other than conditions relating solely to the passage of time, continued
employment or affiliation) will continue to apply unless otherwise provided in
the agreement evidencing the Award or in any other agreement between the
Participant and the Company or unless otherwise agreed by the Board.


 


9.2   DEFINITION OF “CHANGE IN CONTROL” means an
event or occurrence set forth in any one or more of subsections (a) through (d)
below (including an event or occurrence that constitutes a Change in Control
under one of such subsections but is specifically exempted from another such
subsection):


 (a)          the
acquisition by an individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) of beneficial ownership of any capital stock of the Company
if, after such acquisition, such Person beneficially owns (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) forty percent (40%) or more
of either (i) the then-outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”), or (ii) the combined voting power of the
then-outstanding securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”); provided,
however, that for purposes of this subsection (a), the following acquisitions
shall not constitute a Change in Control:


 (i)           any
acquisition by the Company,


 (ii)          any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or


 (iii)         any
acquisition by any corporation pursuant to a transaction that complies with
clauses (i) and (ii) of subsection (c) of this Section 9.2;


 (b)          the
Continuing Directors (as defined below) do not constitute a majority of the
Board (or, if applicable, the Board of Directors of a successor corporation to
the Company), where the term “Continuing Director” means at any date a member
of the Board (i) who was a member of the Board on the date of the amendment of
this Plan by the Board or (ii) who was nominated or elected subsequent to such
date by at least a majority of the directors who were Continuing Directors at
the time of such nomination or election or whose election to the Board was
recommended or endorsed by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election; provided,
however, that there shall be excluded from this clause (ii) any individual
whose initial assumption of office occurred as a result of an actual or
threatened election contest with respect to the election or removal of 


 


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directors or other actual
or threatened solicitation of proxies or consents, by or on behalf of a person
other than the Board;


 (c)          the
consummation of a merger, consolidation, reorganization, recapitalization or
statutory share exchange involving the Company or a sale or other disposition
of all or substantially all of the assets of the Company in one or a series of
transactions (a “Business Combination”), unless, immediately following such
Business Combination, each of the following two conditions is satisfied: (i)
all or substantially all of the individuals and entities who were the
beneficial owners of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than fifty percent (50%) of the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding securities entitled to vote generally in the election of
directors, respectively, of the resulting or acquiring corporation in such
Business Combination (which shall include, without limitation, a corporation
which as a result of such transaction owns the Company or substantially all of
the Company’s assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation is referred to herein as the “Acquiring
Corporation”) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, respectively; and (ii)
no Person (excluding the Acquiring Corporation or any employee benefit plan (or
related trust) maintained or sponsored by the Company or by the Acquiring
Corporation) beneficially owns, directly or indirectly, forty percent (40%) or
more of the then outstanding shares of common stock of the Acquiring Corporation,
or of the combined voting power of the then-outstanding securities of such
corporation entitled to vote generally in the election of directors; or


 (d)          approval
by the stockholders of the Company of a complete liquidation or dissolution of
the Company.


                9.3  BOARD ACTION. 
Notwithstanding Section 9.1 above, in the event of a Change in Control,
the Board may take any one or more of the following actions with respect to any
or all outstanding Awards, without the consent of any Participant: (i) the Board
may determine that outstanding stock options or other stock-based Awards shall
be fully exercisable, and restrictions on outstanding restricted stock Awards
or other stock-based Awards shall lapse, as of the date of the Change in
Control or at such other time as the Board determines, (ii) the Board may
require that Participants surrender their outstanding stock options or stock
appreciation rights in exchange for one or more payments by the Company, in
cash or Common Stock as determined by the Board, in an amount equal to the
amount by which the then Fair Market Value of the shares of Common Stock
subject to the Participant’s unexercised stock options or stock appreciation
rights exceeds the exercise price, if any, and on such terms as the Board
determines, (iii) after giving Participants an opportunity to exercise their
outstanding stock options or stock appreciation rights, the Board may terminate
any or all unexercised stock options or stock appreciation rights at such time
as the Board deems appropriate, (iv) with respect to Participants holding Stock
Unit Awards or other stock-based Awards, the Board may determine that such
Participants shall receive one or more payments in settlement of such Stock
Unit Awards or other stock-based Awards in such amount and form and on such
terms as may be determined by the Board, or (v) the Board may determine that Awards
that remain outstanding after the Change in Control shall be converted to
similar grants of the surviving corporation (or a parent or 


 


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subsidiary of the surviving corporation).  Such acceleration, surrender, termination,
settlement or conversion shall take place as of the date of the Change in
Control or such other date as the Board may specify.


 


10.         GENERAL PROVISIONS


10.1  DOCUMENTATION OF AWARDS


Awards will be evidenced
by written instruments (an “Award Agreement”), which may differ among
Participants, prescribed by the Board from time to time. Such Award Agreements
may be in the form of agreements to be executed by both the Participant and the
Company or certificates, letters or similar instruments which need not be
executed by the participant but acceptance of which will evidence agreement to
the terms thereof.  Such Award Agreements
shall conform to the requirements of the Plan and may contain such other
provisions (including, without limitation, provisions relating to events of
merger, consolidation, dissolution and liquidations, change of control and
restrictions affecting either the agreement or the Common Stock issued
thereunder), as the Board deems advisable.


10.2  RIGHTS AS A STOCKHOLDER


Except as specifically
provided by the Plan or the Award Agreement, the receipt of an Award will not
give a Participant rights as a Stockholder with respect to any shares covered
by an Award until the date of issue of a stock certificate to the participant
for such shares.


10.3  CONDITIONS ON DELIVERY OF STOCK


The Company will not be
obligated to deliver any shares of Common Stock pursuant to the Plan or to
remove any restriction from shares previously delivered under the Plan (a)
until all conditions of the Award have been satisfied or removed, (b) until, in
the opinion of the Company’s counsel, all applicable laws and regulations have
been complied with, (c) if the outstanding Common Stock is at the time listed
on any stock exchange, until the shares have been listed or authorized to be
listed on such exchange upon official notice of issuance, and (d) until all
other legal matters in connection with the issuance and delivery of such shares
have been approved by the Company’s counsel. If the sale of Common Stock has
not been registered under the Securities Act of 1933, as amended, the Company
may require, as a condition to exercise of the Award, such representations or agreements
as counsel for the Company may consider appropriate to avoid violation of such
act and may require that the certificates evidencing such Common Stock bear an
appropriate legend restricting transfer.


If an Award is exercised
by the participant’s legal representative, the Company will be under no
obligation to deliver Common Stock pursuant to such exercise until the Company
is satisfied as to the authority of such representative.


10.4  TAX WITHHOLDING


The Company will withhold
from any cash payment made pursuant to an Award the minimum amount sufficient
to satisfy all federal, state, local and other applicable withholding
requirements (the “withholding requirements”).


 


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In the case of an Award
pursuant to which Common Stock may be delivered, the Board will have the right
to require that the participant or other appropriate person remit to the
Company an amount sufficient to satisfy the withholding requirements, or make
other arrangements satisfactory to the Board with regard to such requirements,
prior to the delivery of any Common Stock.  If and to the extent that such withholding is
required, the Board may hold back (or permit the participant or such other
person to elect at such time and in such manner as the Board provides to have
the Company hold back) from the shares to be delivered Common Stock having a
value calculated to satisfy the withholding requirement.


10.5  TRANSFERABILITY OF AWARDS


Except as may be
authorized by the Board, in its sole discretion, no Award (other than an Award
in the form of an outright transfer of cash or Common Stock not subject to any
restrictions) may be sold, assigned, transferred, pledged or otherwise
encumbered other than by will or the laws of descent and distribution, and
during a Participant’s lifetime an Award requiring exercise may be exercised
only by him or her (or in the event of incapacity, the person or persons
properly appointed to act on his or her behalf).  The Board may, in its discretion, determine
the extent to which Awards granted to a Participant shall be transferable to a
Participant’s family members or to a trust or other entities established for or
owned by such family members without receipt of any consideration by the
Participant, and such provisions permitting or acknowledging transfer shall be
set forth in the written agreement evidencing the Award executed and delivered
by or on behalf of the Company and the Participant.


10.6  ADJUSTMENTS IN THE EVENT OF CERTAIN
TRANSACTIONS


  If
there is any change in the number or kind of shares of Common Stock outstanding
(i) by reason of a stock dividend, spinoff, recapitalization, stock split, or
combination or exchange of shares, (ii) by reason of a merger, reorganization
or consolidation, (iii) by reason of a reclassification or change in par value,
or (iv) by reason of any other extraordinary or unusual event affecting the
outstanding Common Stock as a class without the Company’s receipt of
consideration, or if the value of outstanding shares of Common Stock is
substantially reduced as a result of a spinoff or the Company’s payment of an
extraordinary dividend or distribution, the maximum number of shares of Common
Stock available for issuance under the Plan, the maximum number of shares of Common
Stock for which any individual may receive Awards in any year, the number of
shares covered by outstanding Awards, the kind of shares issued and to be
issued under the Plan, and the price per share or the applicable market value
of such Awards may be appropriately adjusted by the Board to reflect any
increase or decrease in the number of, or change in the kind or value of,
issued shares of Common Stock to preclude, to the extent practicable, the
enlargement or dilution of rights and benefits under such Awards; provided,
however, that any fractional shares resulting from such adjustment shall be
eliminated.  Any adjustments determined
by the Board shall be final, binding and conclusive.


10.7  EMPLOYMENT RIGHTS


Neither the adoption of
the Plan nor the grant of Awards will confer upon any person any right to
continued employment with the Company or any subsidiary or interfere in any way
with the right of the Company or subsidiary to terminate any employment
relationship at any time or 


 


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to increase or decrease
the compensation of such person. Except as specifically provided by the Board
in any particular case, the loss of existing or potential profit in Awards
granted under the Plan will not constitute an element of damages in the event
of termination of an employment relationship even if the termination is in
violation of an obligation of the Company to the employee.


Whether an authorized
leave of absence, or absence in military or government service, shall
constitute termination of employment shall be determined by the Board at the
time. For purposes of this Plan, transfer of employment between the Company and
its subsidiaries shall not be deemed termination of employment.


10.8  OTHER EMPLOYEE BENEFITS


The value of an Award
granted to a Participant who is an employee, and the amount of any compensation
deemed to be received by an employee as a result of any exercise or purchase of
Common Stock pursuant to an Award or sale of shares received under the Plan,
will not constitute “earnings” or “compensation” with respect to which any
other employee benefits of such employee are determined, including without
limitation benefits under any pension, stock ownership, stock purchase, life
insurance, medical, health, disability or salary continuation plan.


10.9  LEGAL HOLIDAYS


If any day on or
before which action under the Plan must be taken falls on a Saturday, Sunday or
legal holiday, such action may be taken on the next succeeding day not a
Saturday, Sunday or legal holiday.


10.10  FOREIGN NATIONALS


Without amending the
Plan, Awards may be granted to persons who are foreign nationals or employed
outside the United States or both, on such terms and conditions different from
those specified in the Plan, as may, in the judgment of the Board, be necessary
or desirable to further the purpose of the Plan.


10.11  GOVERNING LAW


The provisions of the
Plan and all Awards made hereunder shall be governed by and interpreted in
accordance with the laws of the State of Delaware, without regard to any
applicable conflicts of law.


11.         TERMINATION AND AMENDMENT


The Plan shall terminate
upon the earlier of (i) the close of business on the day next preceding the
tenth anniversary of the date of its adoption by the Board (or approval by the
Corporation’s Stockholders if earlier), or (ii) the date on which all shares
available for issuance under the Plan shall have been issued pursuant to the
exercise or cancellation of options granted under the Plan. If the date of
termination is determined under (i) above, then the options outstanding on such
date shall continue to have full force and effect in accordance with the
provisions of the option agreements evidencing such options.  Subject to the last sentence of this Section
11, the Board 


 


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may at any time or times
amend the Plan or any outstanding Award for any purpose that may at the time be
permitted by law, or may at any time terminate the Plan as to any further
grants of Awards. No amendment of the Plan or any agreement evidencing Awards
under the Plan may adversely affect the rights of any participant under any
Award previously granted without such participant’s consent.


12.         CANCELLATION AND RESCISSION OF AWARDS


 (a) Unless the Award Agreement specifies otherwise,
the Board may cancel, rescind, suspend, withhold or otherwise limit or restrict
any unexpired, unpaid, or deferred Awards at any time if the Participant is not
in compliance with all applicable provisions of the Award Agreement and the
Plan, or if the Participant engages in any “Detrimental Activity.” For purposes
of this Section 12, “Detrimental Activity” shall include: (i) the rendering of
services for any organization or engaging directly or indirectly in any
business which is or becomes competitive with the Company, or which
organization or business, or the rendering of services to such organization or
business, is or becomes otherwise prejudicial to or in conflict with the
interests of the Company; (ii) the disclosure to anyone outside the Company, or
the use in other than the Company’s business, without prior written
authorization from the Company, of any confidential information or material, as
defined in the Company’s applicable agreements or policies relating to
Confidentiality and nondisclosure, relating to the business of the Company,
acquired by the Participant either during or after employment with the Company;
(iii) the failure or refusal to disclose promptly and to assign to the Company,
pursuant to the Company’s applicable agreements or policies relating to
ownership of intellectual property, all right, title and interest in any
invention or idea, patentable or not, made or conceived by the Participant
during employment by the Company, relating in any manner to the actual or
anticipated business, research or development work of the Company or the
failure or refusal to do anything reasonably necessary to enable the Company to
secure a patent where appropriate in the United States and in other countries;
(iv) activity that results or, had such activity been discovered prior to the
Participant’s termination, would have constituted grounds for termination of
the Participant’s employment for cause; (v) a violation of any rules, policies,
procedures or guidelines of the Company, including, without limitation, the
Company’s business conduct guidelines; (vi) any attempt directly or indirectly
to induce any employee of the Company to be employed or perform services
elsewhere or any attempt directly or indirectly to solicit the trade or
business of any current or prospective customer, supplier or partner of the
Company; (vii) the Participant being convicted of, or entering a guilty plea
with respect to, a crime, whether or not connected with the Company; or (viii)
any other conduct or act determined by the Board to be injurious, detrimental
or prejudicial to any interest of the Company.


 (b) Upon exercise, payment or delivery
pursuant to an Award, the Participant shall certify in a manner acceptable to
the Company that he or she is in compliance with the terms and conditions of
the Plan.  In the event a Participant engages
in any Detrimental Activity prior to, or during the six months after, any
exercise, payment or delivery pursuant to an Award, such exercise, payment or
delivery may be rescinded within two years thereafter.  In the event of any such rescission, the
Participant shall return to the Company any shares of Common Stock or other
payment received under such rescinded exercise, payment or delivery or, in the
event the Participant has sold or otherwise transferred the shares, pay to the
Company the fair market value of the shares on the date of such sale or
transfer, in such manner and on such terms and 


 


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conditions as may be
required by the Company.  The Company
shall be entitled to set-off against any such shares or payment any amount owed
to the Participant by the Company.


 


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