**Exhibit 10.1**

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**AMENDED AND RESTATED**PHARMACOPEIA DRUG DISCOVERY, INC.2004 STOCK INCENTIVE PLAN

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**Originally Effective April 6,2004**Amendment and Restatement Effective May 3,2007

 

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**TABLE OF CONTENTS**

 
| ARTICLE 1  PURPOSE AND TERM OF PLAN | 3      |
|--------------------------------------------------------------|--------|
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| ARTICLE 2 DEFINITIONS                                        | 3      |
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| ARTICLE 3 ELIGIBILITY                                        | 7      |
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| ARTICLE 4 PLAN  ADMINISTRATION                               | 8      |
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| ARTICLE 5 FORM OF  AWARDS                               | 9      |
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| ARTICLE 6 SHARES SUBJECT  TO PLAN                            | 9      |
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| ARTICLE 7 PERFORMANCE  AWARDS                                | 10     |
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| ARTICLE 8 STOCK OPTIONS                                      | 11     |
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| ARTICLE 9 STOCK  APPRECIATION RIGHTS                         | 13     |
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| ARTICLE 10 STOCK AWARDS                                      | 14     |
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| ARTICLE 11 PERFORMANCE  UNITS                                | 14     |
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| ARTICLE 12 PERFORMANCE  SHARES                               | 14     |
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| ARTICLE 13 VESTING AND  PAYMENT OF AWARDS                    | 15     |
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| ARTICLE 14 DIVIDEND AND  DIVIDEND EQUIVALENTS                | 17     |
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| ARTICLE 15 DEFERRAL OF  AWARDS                               | 17     |
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| ARTICLE 16 CHANGE IN  CONTROL                                | 18     |
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| ARTICLE 17 MISCELLANEOUS                                     | 19     |

 

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**PHARMACOPEIA DRUG DISCOVERY, INC.AMENDED AND RESTATED 2004 STOCK INCENTIVE PLAN**

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Effective April 6, 2004

 

Effective as Amended and Restated May 3, 2007

 

**ARTICLE 1 PURPOSE AND TERM OF PLAN**

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1.1.                 *Purpose*. The purpose of the Plan is to provide motivation toselected Employees, Directors and Consultants to put forth maximum effortstoward the continued growth, profitability, and success of the Company byproviding incentives to such Employees, Directors and Consultants through theownership and performance of Common Stock.

 

1.2.                 *Term*. The Plan was originally approved by the Board on March 16,2004, and became effective upon the date of the approval by Pharmacopeia’sstockholders. This amendment and restatement was approved by the Boardeffective March 15, 2007 and becomes effective on the date of the approvalby the Company’s stockholders.  The Planand any Awards granted thereunder shall be null and void if stockholderapproval is not obtained.

 

**ARTICLE 2 DEFINITIONS**

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In any necessaryconstruction of a provision of this Plan, the masculine gender may include thefeminine, and the singular may include the plural, and vice versa.

 

2.1.                 “*Affiliate*” means any entity other than the Subsidiaries inwhich the Company has a substantial direct or indirect equity interest, asdetermined by the Board.

 

2.2.                 “*Approved Reason*” means a reason for terminating employmentwith the Company, which, in the opinion of the Committee, is in the bestinterests of the Company. The Committee must specifically designate that aParticipant has been terminated for an Approved Reason. Absent suchdetermination by the Committee, a Participant cannot be found to haveterminated for an Approved Reason.

 

2.3.                 “*Award*” means any form of Option, SAR, Stock Award,performance unit, performance share, or Performance Award, whether singly, incombination, or in tandem, to a Participant by the Committee pursuant to suchterms, conditions, restrictions and/or limitations, if any, as the Committeemay establish by the Award Notice or otherwise.

 

2.4.                 “*Award Notice*” means the written document establishing theterms, conditions, restrictions, and/or limitations of an Award in addition tothose established by this Plan and by the Committee’s exercise of itsadministrative powers. The Committee will establish the form of the writtendocument in the exercise of its sole and absolute discretion.

 

2.5.                 “*Board*” means the Board of Directors of the Company.

 

2.6.                 “*Calendar Year Subaccount*” means a notional bookkeepingaccount to which all of a Participant’s deferred Awards are credited.

 

2.7.                 “*Cause*” means, unless otherwise provided in an employment,change in control, severance or similar agreement between a Participant and theCompany or in an Award Notice: (a) any gross failure by the Participant(other than by reason of Disability) to faithfully and professionally carry outhis or her duties or to comply with any other material provision of his or heremployment agreement, if any, which continues for thirty days after writtennotice by the Company; provided, that the Company does not have to providenotice in the event that the failure is not susceptible to remedy or relates tothe same type of acts or omissions as to which notice has been given on a prioroccasion; (b) the Participant’s dishonesty or other willfulmisconduct;  (c) the Participant’sconviction of any felony or of any other crime involving moral turpitude,whether or not relating to his or her employment; (d) the Participant’sinsobriety or use of drugs, chemicals or controlled substances either in thecourse of performing his or her duties and responsibilities under his or heremployment agreement or otherwise affecting the ability of Participant toperform those duties and responsibilities; (e) the Participant’s failureto 

 

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comply with a lawful written direction of the Company; (f) anywanton or willful dereliction of duties by the Participant; or (g) breachof the Company’s Code of Ethics or insider trading policies.

 

2.8.                 “*CEO*” means the Chief Executive Officer of the Company.

 

2.9.                 “*Change In Control*” means: (i) any “person” (within themeaning of Section 13(d) or 14(d) of the Exchange Act, includinga “group” within the meaning of Section 13(d) but excluding theCompany and any of its Subsidiaries or Affiliates and any employee benefit plansponsored or maintained by the Company or any subsidiary thereof), shall becomethe “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),directly or indirectly, of securities of the Company representing thirtypercent (30%) or more of the combined voting power of the then outstandingsecurities entitled to vote generally in the election of directors (“VotingSecurities”) of the Company (the “Company Voting Securities”); or (ii) theconsummation of a merger, consolidation, reorganization or any other businesscombination (any of the foregoing, a “Business Combination”) of or involvingthe Company and another person or persons where the persons who were thebeneficial owners of Company Voting Securities outstanding immediately prior tosuch Business Combination do not beneficially own, directly or indirectly,immediately after such transaction, securities representing fifty percent (50%)or more of the combined voting power of the then outstanding Company VotingSecurities or Voting Securities of the entity acquiring the Company in suchBusiness Combination; (iii) shareholder approval of a complete liquidationor dissolution of the Company; or (iv) a sale, lease, exchange or otherdisposition or transfer (in one transaction or a series of relatedtransactions) of all or substantially all of the assets or business of theCompany; provided, that a change in control under this clause shall not bedeemed to have occurred where (x) the Company sells, exchanges orotherwise disposes of or transfers all or substantially all of its assets orbusiness to another corporation which is beneficially owned, directly orindirectly, immediately following such transaction by the holders of CompanyVoting Securities in substantially the same proportions as their ownership ofCompany Voting Securities immediately prior to such transaction and (y) suchcorporation assumes the Plan; or (v) during any period of two consecutiveyears, the Continuing Directors (as defined below) cease for any reason toconstitute at least a majority of the Board (or, if applicable, of a successorto the Company), where the term “Continuing Director” means at any date adirector of the Company who was (x) a director at the beginning of suchperiod or (y) nominated or elected subsequent to such date by at least amajority of the directors who were Continuing Directors at the time of such nominationor election or whose election to the board was recommended or endorsed by atleast a majority of the directors who were Continuing Directors at the time ofsuch nomination or election (it being understood that no individual whoseinitial assumption of office occurred as a result of an actual or threatenedelection contest with respect to the election or removal of directors or otheractual or threatened solicitation of proxies or consents by or on behalf of aperson other than the board shall be a Continuing Director).

 

2.10.               “*Code*” means the Internal Revenue Code of 1986, as amendedfrom time to time, including regulations thereunder and successor provisionsand regulations thereto.

 

2.11.               “*Committe*” means the Board or the committee designated by theBoard to administer the Plan under Article 4. The Committee shall have atleast two members, each of whom shall be a “non-employee director” as definedin Rule 16b-3 under the Exchange Act and an “outside director” as definedin Section 162(m) of the Code and the regulations thereunder, and, ifapplicable meet the independence requirements of the applicable stock exchange,quotation system or other self-regulatory organization on which the CommonStock is traded. Notwithstanding the foregoing, the Board may designate one ormore of its members to serve as a Secondary Committee and delegate to theSecondary Committee authority to grant Awards to eligible individuals who arenot subject to the requirements of Rule 16b-3 under the Exchange Act or Section 162(m) ofthe Code and the regulations thereunder. The Secondary Committee shall have thesame authority with respect to selecting the individuals to whom such Awardsare granted and establishing the terms and conditions of such Awards as theCommittee has under the terms of the Plan.

 

2.12.               “*Common Stock*” means the common stock, $0.01 par value pershare, of the Company that may be newly issued or treasury stock.

 

2.13.               “*Company*” means with respect to Employees and consultants,Pharmacopeia and its Subsidiaries and Affiliates provided, however, that withrespect to Directors, Company shall only mean Pharmacopeia.

 

2.14.               “*Consultants*” means the consultants, advisors and independentcontractors retained by the Company.

 

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2.15.               “*Covered Employee*” means an Employee who is a “CoveredEmployee” within the meaning of Section 162(m) of the Code.

 

2.16.               “*Director*” means a non-Employee member of the Board.

 

2.17.               “*Disability*” means a physical or mental impairment that satisfiesthe definition of disability under Section 22(e)(3) of the Code.

 

2.18.               “*Effective Date*” means the date an Award is determined to beeffective by the Committee upon its grant of such Award, which date shall beset forth in the applicable Award Notice.

 

2.19.               “*Employee*” means any person employed by the Company on a fullor part-time basis.

 

2.20.               “*Exchange Act*” means the Securities Exchange Act of 1934, asamended from time to time, including rules thereunder and successorprovisions and rules thereto.

 

2.21.               “*Fair Market Value*” means on any given date:

 

(a)           if the Common Stock is listed on anestablished stock exchange or exchanges, the closing price of Common Stock onthe principal exchange on which it is traded on such date, or if no sale wasmade on such date on such principal exchange, on the last preceding day onwhich the Common Stock was traded;

 

(b)           if the Common Stock is not thenlisted on an exchange, but is quoted on NASDAQ or a similar quotation system,the closing price per share for the Common Stock as quoted on NASDAQ or similarquotation system on such date;

 

(c)           if the Common Stock is not thenlisted on an exchange or quoted on NASDAQ or a similar quotation system, thevalue, as determined in good faith by the Committee and in accordance withapplicable provisions of the Code or regulations and rulings thereunder.

 

2.22.               “*Incentive Stock Option*” means an Option which meets therequirements of Section 422 of the Code and which is designated as anIncentive Stock Option by the Committee.

 

2.23.               “*Negative Discretion*” means the discretion authorized by thePlan to be applied by the Committee in determining the size of an Award for aPerformance Period if, in the Committee’s sole judgment, such application isappropriate. Negative Discretion may only be used by the Committee to eliminateor reduce the size of an Award. In no event shall any discretionary authoritygranted to the Committee by the Plan, including, but not limited to NegativeDiscretion, be used to: (a) grant Awards for a Performance Period if thePerformance Goals for such Performance Period have not been attained under theapplicable Performance Formula; or (b) increase an Award above the maximumamount payable under Section 6.3 of the Plan.

 

2.24.               “*Non-Qualified Stock Option*” means an Option not intended tobe an Incentive Stock Option, and designated as a Non-Qualified Stock Option bythe Committee.

 

2.25.               “*Option*” means the right, granted from time to time under thePlan, to purchase Common Stock for a specified period of time at a statedprice. An Option may be an Incentive Stock Option or a Non-Qualified StockOption.

 

2.26.               “*Participant*” means either an Employee, Director orConsultant to whom an Award has been granted by the Committee under the Plan.

 

2.27.               “*Performance Awards*” means the Stock Awards, performanceunits and performance shares granted to Covered Employees pursuant to Article 7.All Performance Awards are intended to qualify as “performance-basedcompensation” under Section 162(m) of the Code.

 

2.28.               “*Performance Criteria*” means the one or more criteria thatthe Committee shall select for purposes of establishing the Performance Goal(s) fora Performance Period. The Performance Criteria that will be used to establishsuch Performance Goal(s) shall be limited to the following:  revenue growth; earnings before interest,taxes, depreciation and amortization (EBITDA); operating income; net operatingincome after tax; pre- or after-tax income; cash flow; cash flow per share; netearnings; earnings per share; return on equity; return on capital employed;return on assets; economic value added (or an equivalent metric); share priceperformance; total shareholder return; improvement in or attainment of expenselevels; 

 

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improvement in or attainment of working capital levels; or debtreduction. To the extent required by Section 162(m) of the Code, theCommittee shall, within the time period required by Section 162(m) ofthe Code (generally, the first 90 days of a Performance Period), define in anobjective fashion the manner of calculating the Performance Criteria it selectsto use for such Performance Period.

 

2.29.               “*Performance Formula*” means, for a Performance Period, theone or more objective formulas (expressed as a percentage or otherwise) appliedagainst the relevant Performance Goal(s) to determine, with regards to theAward of a particular Participant, whether all, some portion but less than all,or none of the Award has been earned for the Performance Period.

 

2.30.               “*Performance Goals*” means, for a Performance Period, the oneor more goals established by the Committee for the Performance Period basedupon the Performance Criteria. Performance Goals may be based on theperformance of the Company, any Subsidiary or any division or business unitwithin the Company or any Subsidiary, and if so desired by the Committee, bycomparison with a peer group of companies. Unless otherwise stated, suchPerformance Goals, need not be based upon an increase or positive result and couldinclude, for example, maintaining the status quo or limiting economic loss(measured, in each case, by reference to specific Performance Criteria.) TheCommittee is authorized at any time during the time period permitted by Section 162(m) ofthe Code (generally, the first 90 days of a Performance Period), or at any timethereafter, in its sole and absolute discretion, to adjust or modify thecalculation of a Performance Goal for such Performance Period in order toprevent the dilution or enlargement of the rights of Participants, (a) inthe event of, or in anticipation of, any unusual or extraordinary corporateitem, transaction, event or development; (b) in recognition of, or inanticipation of, any other unusual or nonrecurring events affecting the Company,or the financial statements of the Company, or in response to, or inanticipation of, changes in applicable laws, regulations, accountingprinciples, or business conditions; and (c) in view of the Committee’sassessment of the business strategy of the Company, performance of comparableorganizations, economic and business conditions, and any other circumstancesdeemed relevant.

 

2.31.               “*Performance Period*” means the one or more periods of time(of at least 12 months), which may be of varying and overlapping durations, asthe Committee may select, over which the attainment of one or more PerformanceGoals will be measured for the purpose of determining a Participant’s right toand the payment of a Performance Award.

 

2.32.               “*Pharmacopeia*” means Pharmacopeia, Inc., a Delawarecorporation, formerly known as Pharmacopeia Drug Discovery, Inc.

 

2.33.               “*Plan*” means this Pharmacopeia, Inc. 2004 StockIncentive Plan, as amended from time to time.

 

2.34.               “*Restricted Stock*” means a Stock Award granted pursuant to Article 11subject to the restrictions provided in the applicable Award Notice.

 

2.35.               “*Retirement*” means, unless otherwise provided, a terminationfor other than Cause after attaining at least age 55 and completing at least 5years of service with the Company.

 

2.36.               “*SAR*”, or stock appreciation right, means the right toreceive, in cash or in Common Stock, as determined by the Committee, theincrease in the Fair Market Value of the Common Stock underlying the SAR fromthe date of grant to the date of exercise.

 

2.37.               “*Stock Award*” means an award granted pursuant to Article 10in the form of shares of Common Stock, Restricted Stock, and/or Units of CommonStock.

 

2.38.               “*Subsidiary*” means any corporation (other than Pharmacopeia)in an unbroken chain of corporations beginning with Pharmacopeia (or anysubsequent parent of Pharmacopeia) if each of the corporations other than thelast corporation in the unbroken chain owns stock possessing 50 percent or moreof the total combined voting power of all classes of stock in one of the othercorporations in such chain.

 

2.39.               “*Ten Percent Stockholder*” means a person who on any givendate owns, either directly or indirectly (taking into account the attribution rules containedin Section 424(d) of the Code), stock possessing more than 10 percentof the total combined voting power of all classes of stock of the Company orany Subsidiary.

 

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2.40.               “*Unit*” means a bookkeeping entry used by Company to recordand account for the grant of the following Awards until such time as the Awardis paid, canceled, forfeited or terminated, as the case may be: Units of CommonStock, performance units, and performance shares which are expressed in termsof Units of Common Stock.

 

**ARTICLE 3 ELIGIBILITY**

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3.1.                 *In General*. Subject to Section 3.2, all Employees,Directors and Consultants are eligible to participate in the Plan. TheCommittee may select, from time to time, Participants from those Employees andwho, in the opinion of the Committee, can further the Plan’s purposes. Inaddition, the Committee may select, from time to time, Participants from thoseDirectors and Consultants (who may or may not be Committee members) who, in theopinion of the Committee, can further the Plan’s purposes. Once a Participantis so selected, the Committee shall determine the type(s) of Awards to bemade to the Participant and shall establish in the related Award Notice(s) theterms, conditions, restrictions and/or limitations, if any, applicable to theAward(s) in addition to those set forth in this Plan and theadministrative rules and regulations issued by the Committee.

 

3.2.                 *Incentive Stock Options*. Only Employees shall be eligible toreceive “incentive stock options” (within the meaning of Section 422 ofthe Code).

 

**ARTICLE 4 PLAN ADMINISTRATION**

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4.1.                 *Members*. Members of the Committee shall be appointed by andhold office at the pleasure of the Board. Committee members may resign at anytime by delivering written notice to the Board. Vacancies in the Committee maybe filled by the Board.

 

4.2.                 *Responsibility*. The Committee shall have total and exclusiveresponsibility to control, operate, manage and administer the Plan, inaccordance with its terms.

 

4.3.                 *Authority of the Committee*. The Committee shall have all theauthority that may be necessary or helpful to enable it to discharge itsresponsibilities with respect to the Plan. Without limiting the generality ofthe preceding sentence, the Committee shall have the exclusive right to: (a) selectthe Participants and determine the type of Awards to be made to Participants,the number of shares subject to Awards and the terms, conditions, restrictionsand limitations of the Awards; (b) interpret the Plan; (c) determineeligibility for participation in the Plan; (d) decide all questionsconcerning eligibility for and the amount of Awards payable under the Plan; (e) construeany ambiguous provision of the Plan; (f) correct any default; (g) supplyany omission; (h) reconcile any inconsistency; (i) issueadministrative guidelines as an aid to administer the Plan and make changes insuch guidelines as it from time to time deems proper; (j) make regulationsfor carrying out the Plan and make changes in such regulations as it from timeto time deems proper; (k) determine whether Awards should be grantedsingly, in combination or in tandem; (l) to the extent permitted under thePlan, grant waivers of Plan terms, conditions, restrictions, and limitations, (m) acceleratethe vesting, exercise, or payment of an Award or the performance period of anAward when such action or actions would be in the best interest of the Company;(n) subject to Section 17.3, grant Awards in replacement of Awardspreviously granted under this Plan or any other executive compensation plan ofthe Company; (o) establish; and administer the-Performance Goals andcertify whether, and to what extent, they have been attained; (p) determinethe terms and provisions of any agreements entered into hereunder; (q) takeany and all other action it deems necessary or advisable for the properoperation or administration of the Plan; and (r) make all otherdeterminations it deems necessary or advisable for the administration of thePlan, including factual determinations. Notwithstanding anything herein to thecontrary and except as expressly provided by the adjustment provisions of Section 6.2,Options and SARs granted under the Plan shall not be directly or indirectlyrepriced, replaced or regranted through cancellation without shareholderapproval, including, but not limited to, an exchange of an Option or SAR withan exercise price or base price less than Fair Market Value for cash,restricted stock, stock options or other stock awards.

 

4.4.                 *Discretionary Authority*. The Committee shall have fulldiscretionary authority in all matters related to the discharge of itsresponsibilities and the exercise of its authority under the Plan including,without limitation, its construction of the terms of the Plan and itsdetermination of eligibility for participation and Awards under the Plan. It isthe 

 

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intent of Plan that thedecisions of the Committee and its actions with respect to the Plan shall befinal, binding and conclusive upon all persons having or claiming to have anyright or interest in or under the Plan.

 

4.5.                 *Section 162(m) of the Code*. Withregards to all Covered Employees, the Plan shall, for all purposes, beinterpreted and construed in accordance with Section 162(m) of theCode.

 

4.6.                 *Action by the Committee*. The Committee may act at a meeting onlyby a majority of its members. Any determination of the Committee may be made,without a meeting, by a writing or writings signed by all of the members of theCommittee. In addition, the Committee may authorize any one or more of itsnumber to execute and deliver documents on behalf of the Committee.

 

4.7.                 *Allocation and Delegation of**Authority*. The Committee may allocate all or any portion ofits responsibilities and powers under the Plan to any one or more of its members,the CEO or the Secondary Committee as the Committee deems appropriate and maydelegate all or any part of its responsibilities and powers to any such personor persons, provided that any such allocation or delegation be in writing;provided, however, that only the Committee may select and grant Awards toParticipants who are subject to Section 16 of the Exchange Act or areCovered Employees. The Committee may revoke any such allocation or delegationat any time for any reason with or without prior notice.

 

**ARTICLE 5 FORM OF AWARDS**

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5.1.                 *In General*. Awards may, at the Committee’s solediscretion, be granted in the form of Performance Awards pursuant to Article 7,Options pursuant to Article 8, SARs pursuant to Article 9, StockAwards pursuant to Article 10, performance units pursuant to Article 11,performance shares pursuant to Article 12, or a combination thereof. AllAwards shall be subject to the terms, conditions, restrictions and limitationsof the Plan. The Committee may, in its sole judgment, subject an Award at anytime to such other terms, conditions, restrictions and/or limitations,(including, but not limited to, the time and conditions of exercise andrestrictions on transferability and vesting), provided they are notinconsistent with the terms of the Plan. Awards under a particular Article ofthe Plan need not be uniform and Awards under two or more Articles may becombined into a single Award Notice. Any combination of Awards may be grantedat one time and on more than one occasion to the same Participant.

 

5.2.                 *Foreign Jurisdictions*.

 

(a)           *Special Terms.*In order to facilitate the making of any Award to Participants who are employedor retained by the Company outside the United States as Employees, Directors orConsultants (or who are foreign nationals temporarily within the UnitedStates), the Committee may provide for such modifications and additional termsand conditions (“special terms”) in Awards as the Committee may considernecessary or appropriate to accommodate differences in local law, policy orcustom or to facilitate administration of the Plan. The special terms mayprovide that the grant of an Award is subject to (1) applicablegovernmental or, regulatory approval or other compliance with local legalrequirements and/or (2) the execution by the Participant of a writteninstrument in the form specified by the Committee, and that in the event suchconditions are not satisfied, the grant shall be void. The special terms mayalso provide that an Award shall become exercisable or redeemable, as the casemay be, if an Employee’s employment or Director or Consultant’s relationshipwith the Company ends as a result of workforce reduction, realignment orsimilar measure and the Committee may designate a person or persons to makesuch determination for a location. The Committee may adopt or approvesub-plans, appendices or supplements to, or amendments, restatements, oralternative versions of, the Plan as it may consider necessary or appropriatefor purposes of implementing any special terms, without thereby affecting theterms of the Plan as in effect for any other purpose; provided, however, nosuch sub-plans, appendices or supplements to, or amendments, restatements, oralternative versions of, the Plan shall: (a) increase the limitations containedin Section 6.3; (b) increase the number of available shares under Section 6.1;(c) cause the Plan to cease to satisfy any conditions of Rule 16b-3under the Exchange Act or, with respect to Covered Employees whose compensationis subject to Section 162(m) of the Code, Section 162(m) ofthe Code; or (d) revoke, remove or reduce any vested right of aParticipant without the prior written consent of such Participant.

 

(b)           *Currency Effects.*Unless otherwise specifically determined by the Committee, all Awards andpayments pursuant to such Awards shall be determined in U.S. currency. TheCommittee shall determine, in its 

 

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discretion, whether and to the extent anypayments made pursuant to an Award shall be made in local currency, as opposedto U.S. dollars. In the event payments are made in local currency, theCommittee may determine, in its discretion and without liability to anyParticipant, the method and rate of converting the payment into local currency.

 

(c)           *Modifications to Awards.*The Committee shall have the right at any time and from time to time andwithout prior notice to modify outstanding Awards to comply with or satisfylocal laws and regulations or to avoid costly governmental filings. By means ofillustration, but not limitation, the Committee may restrict the method ofexercise of an Award to facilitate compliance with applicable securities lawsor exchange control filings, laws or regulations.

 

(d)           *No Acquired Rights.*No Employee in any country shall have any right to receive an Award, except asexpressly provided for under the Plan. All Awards made at any time are subjectto the prior approval of the Committee.

 

**ARTICLE 6 SHARES SUBJECT TO PLAN**

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6.1.                 *Available Shares*. The maximum number of shares of CommonStock which shall be available for grant of Awards under the Plan (includingIncentive Stock Options) during its term shall not exceed 3,400,000. All of theshares of Common Stock reserved hereunder may be issuable as Incentive Stock Options.****Such amount shall be subject to adjustment as provided in Section 6.2.Any shares of Common Stock related to Awards which terminate by expiration,forfeiture, cancellation or otherwise without the issuance of such shares, aresettled in cash in lieu of Common Stock, or are exchanged with the Committee’spermission for Awards not involving Common Stock, shall be available again forgrant under the Plan. Moreover, if the exercise price of any Option or the taxwithholding requirements with respect to any Option, Stock Award or performanceshare or performance unit award are satisfied by tendering shares of CommonStock to the Company (by either actual delivery or by attestation), only thenumber of shares of Common Stock issued net of the shares of Common Stocktendered or withheld will be deemed delivered for purposes of determining themaximum number of shares of Common Stock available for delivery under the Plan.The maximum number of shares available for issuance under the Plan shall not bereduced to reflect any dividends or dividend equivalents that are reinvestedinto additional shares, of Common Stock or credited as additional performanceshares. The maximum number of shares of Common Stock shall not be reduced bythe issuance of shares of Common Stock hereunder due to the assumption,conversion or substitution of awards made by an entity acquired by the Company.The shares of Common Stock available for issuance under the Plan may beauthorized and unissued shares or treasury shares. For the purpose of computingthe total number of shares of Common Stock granted under the Plan, where one ormore types of Awards, both of which are payable in shares of Common Stock, aregranted in tandem with each other, such that the exercise of one type of Award withrespect to a number of shares cancels an equal number of shares of the other,the number of shares granted under both Awards shall be deemed to be equivalentto the number of shares under one of the Awards.

 

6.2.                 *Adjustment to Shares*. The provisions of this Section 6.2(a) aresubject to the limitation contained in Section 6.2(b). If there is anychange in the number of outstanding shares of Common Stock through thedeclaration of stock dividends, stock splits or the like, the number of sharesavailable for Awards, the shares subject to any Award and the exercise pricesof Awards shall be automatically adjusted. If there is any change in the numberof outstanding shares of Common Stock through any change in the capital accountof the Company, or through a merger, consolidation, separation (including aspin off or other distribution of stock or property), reorganization (whetheror not such reorganization comes within the meaning of such term in Section 368(a) ofthe Code) or partial or complete liquidation, the Committee shall makeappropriate adjustments in the maximum number of shares of Common Stock whichmay be issued under the Plan and any adjustments and/or modifications tooutstanding Awards. In the event of any other change in the capital structure orin the Common Stock of the Company, the Committee shall also make suchappropriate adjustments in the maximum number of shares of Common Stockavailable for issuance under the Plan and any adjustments and/or modificationsto outstanding Awards as it, in its sole discretion, deems appropriate. Themaximum number of shares available for issuance under the Plan shall beautomatically adjusted to the extent necessary to reflect any dividendequivalents paid in the form of Common Stock. Subject to Section 6.2(b),if the maximum number of shares of Common Stock available for issuance underthe Plan are adjusted pursuant to this Section 6.2(a), correspondingadjustments shall be made to the limitations set forth in Section 6.3.

 

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6.3.                 *Maximum Award Payable*. Notwithstanding any provision containedin the Plan to the contrary, the maximum Award payable (or granted, ifapplicable) to any one Participant under the Plan for a calendar year is: (a) forPerformance Awards, 200,000 shares of Common Stock or, in the event thePerformance Award is paid in cash, $500,000; (b) for Options and SARs,500,000 shares of Common Stock; (c) for Stock Awards (including RestrictedStock and those issued in the form of Performance Awards under Article 7),200,000 shares of Common Stock.

 

**ARTICLE 7 PERFORMANCE AWARDS**

** **

7.1.                 *Purpose*. For purposes of grants issued toCovered Employees, the provisions of this Article 7 shall apply inaddition to and, where necessary, in lieu of the provisions of Article 10,Article 11 and Article 12. The purpose of this Article is toprovide the Committee the ability to qualify the Stock Awards authorized under Article 10,the performance units under Article 11, and the performance shares under Article 12as “Performance-Based Compensation” under Section 162(m) of the Code.To the extent applicable, the provisions of this Article 7 shall controlover any contrary provision contained in Article 10, Article 11 or Article 12.

 

7.2.                 *Eligibility*. Only Covered Employees and Participantsthat are expected to become Covered Employees during an applicable PerformancePeriod shall be eligible to receive Performance Awards. The Committee will, inits sole discretion, designate within the earlier of the (1) first 90 daysof a Performance Period  and (2) thelapse of 25% of the period of service to which the Performance Goals relate,which Covered Employees will be Participants for such period. However,designation of a Covered Employee as a Participant for a Performance Periodshall not in any manner entitle the Participant to receive an Award for theperiod. The determination as to whether or not such Participant becomesentitled to an Award for such Performance Period shall be decided solely inaccordance with the provisions of this Article 7. Moreover, designation ofa Covered Employee as a Participant for a particular Performance Period shallnot require designation of such Covered Employee as a Participant in anysubsequent Performance Period and designation of one Covered Employee as aParticipant shall not require designation of any other Covered Employee as aParticipant in such period or in any other period.

 

7.3.                 *Discretion of Committee with Respect to Performance Awards*. Withregards to a particular Performance Period, the Committee shall have fulldiscretion to select the length of such Performance Period, the types ofPerformance Awards to be issued, the Performance Criteria that will be used toestablish the Performance Goals, the kinds and/or levels of the PerformanceGoals, whether the Performance Goals are to apply to the Company or any one ormore subunits thereof, and the Performance Formula. Within the earlier of (1) thefirst 90 days of a Performance Period and (2) the lapse of 25% of theperiod of service, and in any event while the outcome is substantiallyuncertain, the Committee shall, with regards to the Performance Awards to beissued for such Performance Period, exercise its discretion with respect toeach of the matters enumerated in the immediately preceding sentence of this Section andrecord the same in writing.

 

7.4.                 *Payment of Performance Awards.*

 

(a)           *Condition to Receipt ofPerformance Award.* Unless otherwise provided in the relevant AwardNotice, a Participant must be employed by the Company on the last day of aPerformance Period to be eligible for a Performance Award for such PerformancePeriod.

 

(b)           *Limitation.* AParticipant shall be eligible to receive a Performance Award for a PerformancePeriod only to the extent that: (1) the Performance Goals for such periodare achieved; and (2) and the Performance Formula as applied against suchPerformance Goals determines that all or some portion of such Participant’sPerformance Award has been earned for the Performance Period.

 

(c)           *Certification.*Following the completion of a Performance Period, the Committee shall meet toreview and certify in writing whether, and to what extent, the PerformanceGoals for the Performance Period have been achieved and, if so, to alsocalculate and certify in writing the amount of the Performance Awards earnedfor the period based upon the Performance Formula. The Committee shall thendetermine the actual size of each Participant’s Performance Award for thePerformance Period and, in so doing, shall apply Negative Discretion, if andwhen it deems appropriate.

 

(d)           *Negative Discretion.*In determining the actual size of an individual Performance Award for aPerformance Period, the Committee may reduce or eliminate the amount of thePerformance Award earned under the 

 

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Performance Formula forthe Performance Period through the use of Negative Discretion, if in its solejudgment, such reduction or elimination is appropriate.

 

(e)          *Timing of Award Payments.*  TheAwards granted for a Performance Period shall be paid to Participants as soonas administratively practicable following completion of the certificationsrequired by Section 7.4(c).

 

**ARTICLE 8 STOCK OPTIONS**

 

8.1.                 *In General*.  Awards may be granted in the form ofOptions. These Options may be Incentive Stock Options, Non-Qualified StockOptions or a combination of both. All Awards under the Plan issued to CoveredEmployees in the form of Non-Qualified Stock Options shall qualify as “Performance-BasedCompensation” under Section 162(m) of the Code.

 

8.2.                 *Exercise Price*.  The price at which Common Stockmay be purchased upon exercise of a Non-Qualified Stock Option shall be notless than 100% of the Fair Market Value of the Common Stock, as determined bythe Committee, on the Effective Date of the option’s grant. Notwithstanding theforgoing, the exercise price of any Incentive Stock Option shall not be lessthan (i) 110% of the Fair Market Value on the Effective Date in the caseof a grant to a Ten Percent Stockholder, or (ii) 100% of the Fair MarketValue on the Effective Date in the case of a grant to any other Participant.Notwithstanding the two immediately preceding sentences, if the Companyacquires another entity, the Company may substitute Options with exerciseprices below the Fair Market Value requirements stated above for any optionspreviously issued by such acquired company, to the extent permitted by Section 409Aof the Code and/or Section 424 of the Code.

 

8.3.                 *Restrictions Relating to Incentive Stock Options*.  IncentiveStock Options shall, in addition to being subject to the terms and conditionsof Section 8.2, comply with Section 422 of the Code. Accordingly, theaggregate Fair Market Value (determined at the time the option was granted) ofthe Common Stock with respect to which Incentive Stock Options are exercisablefor the first time by a Participant during any calendar year (under this Planor any other plan of the Company) shall not exceed $100,000 (or such otherlimit as may be required by the Code). Incentive Stock Options must be issuedwithin ten years from the effective date of the Plan, and the term of suchIncentive Stock Options may not exceed ten years (or any shorter periodrequired by Section 422 of the Code); provided, that the term of IncentiveStock Options issued to Ten Percent Stockholders may not exceed five years.Incentive Stock Options shall not be transferable other than by will or thelaws of descent and distribution.

 

8.4.                 *Additional Terms and Conditions*.  An Option shallbe exercisable in accordance with such terms and conditions and at such timesand during such periods as may be determined by the Committee; provided, thatNon-Qualified Stock Options must be issued within ten years from the effectivedate of the Plan, and the term of such Non-Qualified Options may not exceed tenyears. The Committee may, by way of the Award Notice or otherwise, establishsuch other terms, conditions, restrictions and/or limitations, includingvesting and post-termination exercise period if any, of any Option, providedthey are not inconsistent with the Plan.

 

8.5.                 *Exercise of Option and Payment of Option Price*.  AnOption may be exercised only for a whole number of shares of Common Stock. TheCommittee shall establish the time and the manner in which an Option may beexercised. The exercise price of the shares of Common Stock received upon theexercise of an Option shall be paid in a manner that will not result in animpermissible extension of credit under the Sarbanes-Oxley Act of 2002:  (i) in cash, (ii) with the consentof the Committee in whole or in part in shares of Common Stock held by theParticipant (or to the extent permitted by the Committee, in Common Stock whichthe Participant would otherwise receive upon the exercise of such Option) andvalued at their Fair Market Value on the date of exercise, (iii) in cashreceived from a broker-dealer whom the Participant has authorized to sell allor a portion of the Common Stock covered by the Option, or (iv) in suchother manner deemed appropriate by the Committee.

 

**ARTICLE 9 STOCK APPRECIATION RIGHTS**

 

9.1.                 *In General*.  Awards may be granted in the form ofSARs. The “exercise price” for a particular SAR shall be defined in the AwardNotice for that SAR An SAR may be granted in tandem with all or a portion of arelated Option 

 

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under the Plan (“Tandem SARs”), or may be granted separately (“FreestandingSARs”). A Tandem SAR may be granted either at the time of the grant of therelated Option or at any time thereafter during the term of the Option. AllAwards under the Plan issued to Covered Employees in the form of an SAR shallqualify as “Performance-Based Compensation” under Section 162(m) ofthe Code.

 

9.2.                 *Terms and Conditions of Tandem SARs*.  A Tandem SARshall be exercisable to the extent, and only to the extent, that the relatedOption is exercisable, and the “exercise price” of such an SAR (the base fromwhich the value of the SAR is measured at its exercise) shall be the exerciseprice under the related Option. However, at no time shall a Tandem SAR beissued if the exercise price of its related Option is less than the Fair MarketValue of the Common Stock, as determined by the Committee, on the EffectiveDate of the Tandem SAR’s grant. If an Option is exercised as to some or all ofthe shares covered by the Award, the related Tandem SAR, if any, shall becanceled automatically to the extent of the number of shares covered by theOption exercise. Upon exercise of a Tandem SAR as to some or all of the sharescovered by the Award, the related Option shall be canceled automatically to theextent of the number of shares covered by such exercise. Moreover, all TandemSARs shall expire not later than 10 years from the Effective Date of the SAR’sgrant.

 

9.3.                 *Terms and Conditions of Freestanding SARs*.  FreestandingSARS shall be exercisable or automatically mature in accordance with such termsand conditions and at such times and during such periods as may be determinedby the Committee. The exercise price of a Freestanding SAR shall be not lessthan 100% of the Fair Market Value of the Common Stock, as determined by theCommittee, on the Effective Date of the Freestanding SAR’s grant.Notwithstanding the foregoing, if the Company acquires another entity, theCompany may substitute Freestanding SARs with exercise prices below the FairMarket Value requirement stated above for any freestanding stock appreciationright previously issued by such acquired company, to the extent permitted by Section 409Aof the Code and/or Section 424 of the Code. Moreover, all FreestandingSARs shall expire not later than 10 years from the Effective Date of theFreestanding SAR’s grant.

 

9.4.                 *Deemed Exercise*.  The Committee may provide thatan SAR shall be deemed to be exercised at the close of business on thescheduled expiration date of such SAR if at such time the SAR by its termsremains exercisable and, if so exercised, would result in a payment to theholder of such SAR.

 

9.5.                 *Additional Terms and Conditions*.  The Committeemay, by way of the Award Notice or otherwise, determine such other terms,conditions, restrictions and/or limitations, if any, including vesting andpost-termination exercise periods of any SAR Award, provided they are notinconsistent with the Plan.

 

**ARTICLE 10STOCK AWARDS**

 

10.1.               *Grants*.  Awards may be granted in the form ofStock Awards. Stock Awards shall be awarded in such numbers and at such timesduring the term of the Plan as the Committee shall determine.

 

10.2.               *Stock Award Restrictions*.  Stock Awards shall besubject to such terms, conditions, restrictions, and/or limitations, if any, asthe Committee deems appropriate including, but not by way of limitation,restrictions on transferability and continued employment, provided, however,they are not inconsistent with the Plan. The Committee may modify or acceleratethe delivery of a Stock Award under such circumstances as it deems appropriate.

 

10.3.               *Performance Criteria*.  Stock Awards may becontingent on the attainment during a Performance Period of certain performanceobjectives. The length of the Performance Period, the Performance Goals to beachieved during the Performance Period, and the measure of whether and to whatdegree such goals have been attained shall be conclusively determined by theCommittee in the exercise of its absolute discretion. Performance Goals may berevised by the Committee, at such times as it deems appropriate during thePerformance Period, in order to take into consideration any unforeseen eventsor changes in circumstances.

 

10.4.               *Rights as Stockholders*.  During the period inwhich any Restricted Stock are subject to any restrictions imposed under Section 10.2,the Committee may, in its sole discretion, grant to the Participant to whomsuch Restricted Stock have been awarded all or any of the rights of astockholder with respect to such shares, including, but not by way oflimitation, the right to vote such shares and, pursuant to Article 15, theright to receive dividends.

 

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10.5.               *Evidence of Award*.  Any Stock Award granted underthe Plan may be evidenced in such manner as the Committee deems appropriate,including, without limitation, book-entry, registration or issuance of a stockcertificate or certificates.

 

**ARTICLE 11PERFORMANCE UNITS**

 

11.1.               *Grants*.  Awards may be granted in the form ofperformance units. Performance units, as that term is used in this Plan, shallrefer to Units valued by reference to designated criteria established by theCommittee, other than Common Stock.

 

11.2.               *Performance Criteria*.  Performance units shall becontingent on the attainment during a Performance Period of certain performanceobjectives. The length of the Performance Period, the performance objectives tobe achieved during the Performance Period, and the measure of whether and towhat degree such objectives have been attained shall be conclusively determinedby the Committee in the exercise of its absolute discretion. Performanceobjectives may be revised by the Committee, at such times as it deemsappropriate during the Performance Period, in order to take into considerationany unforeseen events or changes in circumstances.

 

11.3.               *Additional Terms and Conditions*.  The Committeemay, by way of the Award Notice or otherwise, determine such other terms,conditions, restrictions, and/or limitations, if any, of any Award ofperformance units, provided they are not inconsistent with the Plan.

 

**ARTICLE 12PERFORMANCE SHARES**

 

12.1.               *Grants*.  Awards may be granted in the form ofperformance shares. Performance shares, as that term is used in this Plan,shall refer to shares of Common Stock or Units that are expressed in terms ofCommon Stock.

 

12.2.               *Performance Criteria*.  Performance shares shall becontingent upon the attainment during a Performance Period of certainperformance objectives. The length of the Performance Period, the performanceobjectives to be achieved during the Performance Period, and the measure ofwhether and to what degree such objectives have been attained shall beconclusively determined by the Committee in the exercise of its absolutediscretion. Performance objectives may be revised by the Committee, at suchtimes as it deems appropriate during the Performance Period, in order to takeinto consideration any unforeseen events or changes in circumstances.

 

12.3.               *Additional Terms and Conditions*.  The Committeemay, by way of the Award Notice or otherwise, determine such other terms,conditions, restrictions and/or limitations, if any, of any Award ofperformance shares, provided they are not inconsistent with the Plan.

 

**ARTICLE 13VESTING AND PAYMENT OF AWARDS**

 

13.1.               *Vesting*.  The time when an Option or SAR shallvest and become exercisable shall be stated in the Award Notice. Therestrictions, if any, on Restricted Stock shall expire at the times designatedin the Award Notice. Notwithstanding the foregoing, (i) no Option shallvest before the one-year anniversary of the Effective Date of such Option,unless such vesting is accelerated in accordance with the other provisions ofthis Article 13 (not including this Section 13.1) or Article 16,(ii) the Committee may determine an appropriate vesting schedule for anyAward granted by the Company in substitution of an equity award previouslygranted by an entity acquired by the Company, to the extent permitted by Section 409Aof the Code and Section 424 of the Code, and (iii) no RestrictedStock shall vest faster than pro rata over a three-year period from theEffective Date, unless such Restricted Stock was issued to a Director, as aform of payment of earned performance awards or other incentive compensation,to replace a deferred Stock Award, to replace awards that a new Employee hasforfeited from his or her previous employer, or the restrictions lapse earlierdue to the other provisions of this Article 13 (not including this Section 13.1)or Article 16.

 

13.2.               *Payment*.  Absent a Plan provision to the contrary,payment of Awards may, at the discretion of the Committee, be made in cash,Common Stock, a combination of cash and Common Stock, or any other form ofproperty as 

 

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the Committee shall determine. In addition, payment ofAwards may include such terms, conditions, restrictions and/or limitations, ifany, as the Committee deems appropriate, including, in the case of Awards paidin the form of Common Stock, restrictions on transfer and forfeitureprovisions; provided, however, such terms, conditions, restrictions and/orlimitations are not inconsistent with the Plan. Further, payment of Awards maybe made in the form of a lump sum or installments, as determined ,by theCommittee.

 

13.3.               *Death*.  The Committee shall have the authority topromulgate rules and regulations to determine the treatment of aParticipant under the Plan in the event of such Participant’s death. Unless otherwiseprovided in an Award Notice, in the event that a Participant shall die while heor she is an Employee, Director or Consultant and prior to the completeexercise of Options or complete maturity of SARs granted to him or her underthe Plan, any such remaining Options or SARs shall be fully vested and may beexercised in whole or in part within one year after the date of the Participant’sdeath and then only: (i) by the beneficiary designated by the Participantin a writing submitted to the Company prior to the Participant’s death, or inthe absence of same, by the Participant’s estate or by or on behalf of suchperson or persons to whom the Participant’s rights pass under his or her willor the laws of descent and distribution, (ii) to the extent that theParticipant would have been entitled to exercise the Option or SAR at the dateof his or her death had it been fully vested, and subject to all of theconditions on exercise imposed by the Plan and the Award Notice, and (iii) priorto the expiration of the term of the Option or SAR. Notwithstanding this Section orthe terms of an Award Notice, the Committee shall have the right to extend theperiod for exercise of an Option or SAR****to the extentthat such exercise period extension will not result in an additional tax to theParticipant under Section 409A of the Code, even if such extension exceedsthe original term of such Option or SAR.

 

13.4.               *Disability*.  The Committee shall have theauthority to promulgate rules and regulations to determine the treatmentof a Participant under the Plan in the event of such Participant’s Disability.Unless otherwise provided in an Award Notice, in the event that a Participant’sstatus as an Employee, Director or Consultant terminates due to the Participant’sDisability prior to the complete exercise of Options or complete maturity ofSARs granted to him or her under the Plan, any such remaining Options or SARsshall be fully vested and may be exercised in whole or in part up to threeyears after the Participant’s termination of status due to Disability as anEmployee, Director or Consultant, as the case may be. Notwithstanding this Section orthe terms of an Award Notice, the Committee shall have the right to extend theperiod for exercise of an Option or SAR to the extent that such exercise periodextension will not result in an additional tax to the Participant under Section 409Aof the Code, even if such extension exceeds the original term of such Option orSAR.

 

13.5.               *Retirement*.  The Committee shall have theauthority to promulgate rules and regulations to determine the treatmentof a Participant under the Plan in the event of such Participant’s Retirement.Unless otherwise provided in an Award Notice, in the event that a Participant’sstatus as an Employee, Director or Consultant terminates due to Retirementprior to the complete exercise of Options or complete maturity of SARs grantedto him or her under the Plan, any such remaining Options or SARs that werevested as of the date of Retirement may be exercised in whole or in part up tothree years after the Participant’s Retirement. During such period, theParticipant shall also continue to vest in any unvested Options or SARs as ifsuch Participant were still an Employee, Director or Consultant hereunder, asapplicable; provided that the such Participant does not violate any applicablenon-competition, non-disparagement, non-solicitation, confidentiality or othersimilar requirement. At the end of the three-year period, any remainingunvested Options or SARs shall terminate, unless the Committee providesotherwise. Notwithstanding this Section or the terms of an Award Notice,the Committee shall have the right to extend the period for exercise of aOption or SAR to the extent that such exercise period extension will not resultin an additional tax to the Participant under Section 409A of the Code,provided such extension does not exceed the term of such Option or SAR and thatthe Participant does not violate any applicable non-competition,non-disparagement, non-solicitation, confidentiality or other similarrequirement.

 

13.6.               *Approved Reason*.  The Committee shall have theauthority to promulgate rules and regulations to determine the treatmentof a Participant under the Plan in the event of a Participant’s termination foran Approved Reason, to the extent such rules and regulations are notinconsistent with the Plan.

 

13.7.               *Termination for Cause*.  A Participant who isterminated for Cause shall, unless otherwise determined by the Committee,immediately: forfeit, effective as of the date the Participant engages in suchconduct, all unexercised, unearned, and/or unpaid Awards, including, but not byway of limitation, Awards earned but not yet paid, all unpaid dividends anddividend equivalents, and all interest, if any, accrued on the foregoing.

 

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13.8.               *Other Terminations*.  Subject to the terms of anyemployment or other agreement a Participant has with the Company, if aParticipant’s employment with the Company terminates for a reason other thandeath, Disability, Retirement, Cause or an Approved Reason, and, unlessotherwise provided in an Award Notice, any Option or SAR shall be exercisableon termination of a Participant’s status as an Employee, Director or Consultantonly to the extent such Option or SAR is vested and exercisable at the time ofthe termination of such relationship; and further, no Option or SAR shall beexercisable or mature after the later of 90 days or the expiration of the termthereof. The Committee, in its absolute discretion, may: (i) acceleratethe vesting and exercisability of an Option or SAR in order to allow itsexercise by a terminating Participant; (ii) extend the period for exerciseof an Option or SAR to the extent that such exercise period extension will notresult in an additional tax to the Participant under Section 409A of theCode, provided such extension does not exceed the term of such Option or SAR.

 

13.9.               *Incentive Stock Options*.  Unless otherwiseprovided in an Award Notice, an Incentive Stock Option shall be exercisable,during the lifetime of the Participant, only while he or she is an Employee andhas been an Employee continuously since the grant of the Incentive Stock Optionor, subject to the Award Notice, within three (3) months after terminationof his or her employment. In its sole discretion, the Committee may provide inthe Award Notice such further limitations on the survival of Incentive StockOptions, and such limitations on the survival of Non-Qualified Stock Options andSARs, as it may determine; provided, however that all Options and SARs shall beexercisable for a minimum of sixty (60) days after termination of a Participant’semployment, except in the case of termination for Cause, in which case theexercise period shall lapse at termination.

 

13.10.             *Other Awards.*

 

(a)              The Committee shall have theauthority to promulgate rules and regulations to determine the treatmentof the Stock Awards of a Participant under the Plan in the event of suchParticipant’s death, Disability, Retirement, or termination from the Companyfor an Approved Reason or Cause. Unless otherwise provided in an Award Notice,upon a Participant’s death, Disability, or Retirement, or termination from theCompany for an Approved Reason, any Stock Awards held by such Participant shallaccelerate and become fully vested.

 

(b)             If a Participant’s employment withthe Company terminates for any reason other than death, Disability orRetirement, or an Approved Reason, and except as otherwise provided by Section 13.7,all unexercised, unearned, and/or unpaid Awards, including without limitation,Awards earned but not yet paid, all unpaid dividends and dividend equivalents,and all interest accrued on the foregoing shall be canceled or forfeited, asthe case may be, unless the Participant’s Award Notice or the Committeeprovides otherwise.

 

13.11.             *Set-Off*.  By accepting an Award under this Plan, aParticipant consents to a deduction from any amounts the Company owes theParticipant from time to time (including, but not limited to, amounts owed tothe Participant as wages or other compensation, fringe benefits, or vacationpay), to the extent of the amounts the Participant owes the Company under Section 13.11(a).Whether or not the Company elects to make any set-off in whole or in part, ifthe Company does not recover by means of set-off the full amount theParticipant owes the Company, the Participant shall immediately pay the unpaidbalance to the Company.

 

**ARTICLE 14 DIVIDEND AND DIVIDEND EQUIVALENTS**

 

If an Award is granted inthe form of a Stock Award, Option, SAR or performance share, the Committee maychoose, at the time of the grant of the Award or any time thereafter up to thetime of the Award’s payment, to include as part of such Award an entitlement toreceive dividends or dividend equivalents, subject to such terms, conditions,restrictions and/or limitations, if any, as the Committee may establish.Dividends and dividend equivalents shall be paid in such form and manner (i.e.,lump sum or installments), and at such time(s) as the Committee shalldetermine. All dividends or dividend equivalents which are not paid currentlymay, at the Committee’s discretion, accrue interest, be reinvested intoadditional shares of Common Stock of, in the case of dividends or dividendequivalents, credited in connection with Stock Awards or performance shares, becredited as additional Stock Awards or performance shares and paid to theParticipant if and when, and to the extent that, payment is made pursuant tosuch Award. The total number of shares available for grant under shall not bereduced to reflect any dividends or dividend equivalents that are reinvestedinto additional shares of Common Stock or credited as additional Stock Awardsor performance shares.

 

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**ARTICLE 15DEFERRAL OF AWARDS**

 

15.1.               Atthe discretion of the Committee, payment of any Award, dividend, or dividendequivalent, or any portion thereof, may be deferred by a Participant until suchtime as the Committee may establish. All such deferrals shall be accomplishedby the delivery of a written, irrevocable election by the Participant prior tothe time established by the Committee for such purpose, on a form provided bythe Company. Further, all deferrals shall be made in accordance withadministrative guidelines established by the Committee to ensure that suchdeferrals comply with all applicable requirements of the Code. Deferredpayments shall be paid in a lump sum or installments, as determined by theCommittee. Deferred Awards may also be credited with interest, at such rates tobe determined by the Committee, and, with respect to those deferred Awardsdenominated in the form of Common Stock, with dividends or dividendequivalents.

 

15.2.               *Elections to Defer.*  Notwithstanding any provisionof the Plan to the contrary, any Participant may, at the discretion of theCommittee, elect to defer to a specified date the receipt of unrestrictedCommon Stock or cash, or any portion thereof, that the Participant would otherwisebe entitled to receive pursuant to an Award by completing such form required bythe Committee and returning it to the Committee on or before the December 31preceding the calendar year during which such Award is granted to theParticipant.

 

15.3.               *New Participant Elections to Defer*.  Eachindividual who becomes a Participant during a calendar year may, at thediscretion of the Committee, elect to defer to a specified date the receipt ofunrestricted Common Stock or cash payment, as applicable, that the Participantwould otherwise be entitled to receive pursuant to an Award granted to theParticipant after such date such individual became a Participant by completingsuch form required by the Committee and returning it to the Committee on orbefore the date that is 30 days after the date on which the individual became aParticipant.

 

15.4.               *Elections Irrevocable*.  An election to defer anAward shall become irrevocable on the first day of the calendar year to whichsuch election applies or, solely in the case of a new Participant, 30 daysafter the date on which the individual became a Participant.

 

15.5.               *Individual Elections*.  A Participant must completea deferral election form in accordance with Section 15.1 or Section 15.2,as applicable, for each calendar year in which such Participant desires todefer Awards and a Participant’s elections with respect to Awards deferred in aparticular calendar year shall expire as of the last day of such calendar year.

 

15.6.               *Establishment of Calendar Year Subaccounts*.  TheCompany may establish on its books for each Participant and for each calendaryear a Calendar Year Subaccount to which a Participant’s Awards deferred in aparticular calendar year are credited. A separate Calendar Year Subaccountshall be created within each Participant’s Account for each calendar year inwhich the Participant makes an Award deferral under the Plan.

 

15.7.               *Effect on Vesting*.  Notwithstanding anythingherein to the contrary, this Section 15 shall not effect the vesting orvested percentage of a Participant’s Award. Any unvested Award will not bedistributed pursuant to this Section 15 or otherwise.

 

15.8.               *Effect of Death, Disability and Change in Control*.  Subjectto the provisions of this Section 15.8, the Participant’s Awards credited toa particular Calendar Year Subaccount shall be distributed to him or her at thetime specified in his or her deferral election form related to the particularcalendar year. Notwithstanding any election made by a Participant to thecontrary, any deferred Awards that have not been distributed to the Participantas of the date (i) of his or her death, (ii) on which he or she isdetermined to be Disabled, or (iii) of a Change in Control shall be paidto the Participant’s Beneficiary in a lump sum upon such Participant’s death,date of Disability determination or Change in Control, as applicable.

 

**ARTICLE 16CHANGE IN CONTROL**

 

16.1.               *Background*.  Except as provided in an employment,change in control, severance or similar agreement between the Participant and theCompany, notwithstanding any provision contained in the Plan, including, butnot limited to, Section 4.5, the provisions of this Article 16 shallcontrol over any contrary provision.

 

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16.2.               *Options and SARs*.  With respect to all Options andSARs that are unexercised and outstanding, upon a Change In Control, suchOptions and/or SARs shall become immediately and fully vested and exercisable;unless such Options and/or SARs are assumed by the successor corporation, andshall be substituted with options or SARs involving the common stock of thesuccessor corporation with equivalent value and with the terms and conditionsof the substituted options or SARs being no less favorable than the Options orSARs granted hereunder. Substituted awards shall vest in full if employment isterminated for any reason other than Cause or voluntary termination withineighteen (18) months of the Change In Control.

 

16.3.               *Stock Awards*.  With respect to all Stock Awardsthat are outstanding, upon a Change In Control, such Stock Awards shall becomeimmediately and fully vested; unless such Stock Awards are assumed by thesuccessor corporation, and are substituted with stock awards involving thecommon stock of the successor corporation with equivalent value and with theterms and conditions of the substituted restricted stock awards being no lessfavorable than the Stock Awards granted hereunder. Substituted awards shallvest in full if employment is terminated for any reason other than Cause orvoluntary termination within eighteen (18) months of the Change In Control.

 

16.4.               *Treatment of Performance Units and Performance Shares*.  Ifa Change In Control occurs during the term of one or more performance periodsfor which the Committee has granted performance units and/or performance shares(including those issued as Performance Awards under Article 7), the termof each such performance period (hereinafter a “current performance period”)shall immediately terminate upon the occurrence of such event. Upon a Change InControl, for each “current performance period” and each completed performanceperiod for which the Committee has not on or before such date made adetermination as to whether and to what degree the performance objectives forsuch period have been attained (hereinafter a “completed performance period”),it shall be assumed that the performance objectives have been attained at alevel of one hundred percent (100%) or the equivalent thereof. A Participant inone or more “current performance periods” shall be considered to have earnedand, therefore, be entitled to receive, a prorated portion of the Awardspreviously granted to him for each such “current performance period.” Suchprorated portion shall be determined by multiplying the number of performanceshares or performance units, as the case may be, granted to the Participant bya fraction, the numerator of which is the total number of days that haveelapsed since the beginning of the “current performance period,” and the denominatorof which is the total number of days in such “current performance period.”  A Participant in one or more “completedperformance periods” shall be considered to have earned and, therefore, beentitled to receive all the performance shares or performance units, as thecase may be, previously granted to him during each ‘such “completed performanceperiod.”

 

16.5.               *Deferred Awards*.  Unless otherwise provided by theCommittee, at any time, upon a Change In Control, any Awards deferred by aParticipant under Article 16 hereof, but for which he or she has notreceived payment as of such date, shall be paid as soon as practicable, but inno event later than 90 days after the Change In Ownership or the event givingrise to rights under Article 17.

 

**ARTICLE 17MISCELLANEOUS**

 

17.1.               *Nonassignability.*

 

(a)          *In General.*  Exceptas otherwise determined by the Committee or as otherwise provided in Section 17.1(b),no Awards or any other payment under the Plan shall be subject in any manner toalienation, anticipation, sale, transfer (except by will or the laws of descentand distribution), assignment, pledge, or encumbrance, nor shall any Award bepayable to or exercisable by anyone other than the Participant to whom it wasgranted.

 

(b)          *Non-Qualified StockOptions.*  The Committee shall have the discretionaryauthority to grant Non-Qualified Stock Options or amend outstandingNon-Qualified Stock Options to provide that they be transferable, subject tosuch terms and conditions as the Committee shall establish. In addition to anysuch terms and conditions, the following terms and conditions shall apply toall transfers of Non-Qualified Stock Options:

 

(1)           Permissible Transferees. Transfersshall only be permitted to: (i) the Participant’s “Immediate FamilyMembers,” as that term is defined in Section 17.1(b)(8); (ii) a trustor trusts for the exclusive benefit of such Immediate Family Members; or (iii) afamily partnership or family limited partnership in which 

 

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each partner is, at the time of transfer and all timessubsequent thereto, either an Immediate Family Member or a trust for theexclusive benefit of one or more Immediate Family Members.

 

(2)              No Consideration. All transfersshall be made for no consideration.

 

(3)              Subsequent Transfers. Once aParticipant transfers a Non-Qualified Stock Option, any subsequent transfer ofsuch transferred Option shall, notwithstanding Section 17.1(b)(1) tothe contrary, be permitted provided, however, such subsequent transfer complieswith all of the terms and conditions of this Section 17.1, with theexception of Section 17.1(b)(1).

 

(4)              Transfer Agent. In order for atransfer to be effective, the Committee’s designated transfer agent must beused to effectuate the transfer. The costs of such transfer agent shall beborne solely by the transferor.

 

(5)              Withholding. In order for atransfer to be effective, a Participant must agree in writing prior to thetransfer on a form provided by the Company to pay any and all payroll andwithholding taxes due upon exercise of the transferred option. In addition,prior to the exercise of a transferred option by a transferee, arrangementsmust be made by the Participant with the Company for the payment of all payrolland withholding taxes.

 

(6)              Terms and Conditions ofTransferred Option. Upon transfer, a Non-Qualified Stock Option continues to begoverned by and subject to the terms and conditions of the Plan and the option’sapplicable administrative guide and Award Notice. A transferee of a Non-QualifiedStock Option is entitled to the same rights as the Participant to whom suchNon-Qualified Stock Options was awarded, as if no transfer had taken place.Accordingly, the rights of the transferee are subject to the terms andconditions of the original grant to the Participant, including provisionsrelating to expiration date, exercisability, exercise price and forfeiture.

 

(7)              Notice to Transferees. The Companyshall be under no obligation to provide a transferee with any notice regardingthe transferred Options held by the transferee upon forfeiture or any othercircumstance.

 

(8)              Immediate Family Member. Forpurposes of this Section 17.1, the term “Immediate Family Member” shallmean the Participant and his or her spouse, children or grandchildren, whethernatural, step- or adopted children or grandchildren.

 

17.2.               *Withholding Taxes*.  The Company shall be entitledto deduct from any payment under the Plan, regardless of the form of suchpayment, the amount of all applicable income and employment taxes required bylaw to be withheld with respect to such payment or may require the Participantto pay to it such tax prior to and as a condition of the making of suchpayment. In accordance with any applicable administrative guidelines itestablishes, the Committee may allow a Participant to pay the amount of taxesrequired by law to be withheld from an Award by withholding from any payment ofCommon Stock due as a result of such Award, or by permitting the Participant todeliver to the Company, shares of Common Stock having a Fair Market Value, asdetermined by the Committee.

 

17.3.               *Section 409A.*  Tothe extent determined necessary or advisable by the Committee in its solediscretion, Awards hereunder, and Award deferrals hereunder, shall beinterpreted to the extent possible to comply with the provisions of section409A of the Code (or avoid application of such Code section), to the extentapplicable. Participants shall be deemed to consent to any changes to Awards,or any Award deferral, that the Board determines are necessary or advisable tocomply with the provisions of section 409A of the Code. Adjustments madepursuant to Section 16 shall, to the extent determined necessary oradvisable in the sole discretion of the Committee, be made in compliance withthe requirements of section 409A of the Code or, if applicable, to avoidapplication of section 409A of the Code.

 

17.4.               *Amendments to Awards*.  The Committee may at anytime unilaterally amend any unexercised, unearned, or unpaid Award, including,but not by way of limitation, Awards earned but not yet paid, to the extent itdeems appropriate; provided, however, (i) no Award may be repriced,replaced with cash or another award, regranted through cancellation, ormodified without shareholder approval if the effect would be to reduce theexercise price for the shares underlying the Award, and (ii) that any suchamendment which, in the opinion of the Committee, is adverse to the Participantshall require the Participant’s consent.

 

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17.5.               *Regulatory Approvals and Listings*.  Notwithstandinganything contained in this Plan to the contrary, the Company shall have noobligation to issue or deliver certificates of Common Stock evidencing StockAwards or any other Award resulting in the payment of Common Stock prior to (i) theobtaining of any approval from any governmental agency which the Company shall,in its sole discretion, determine to be necessary or advisable, (ii) theadmission of such shares to listing on the stock exchange on which the CommonStock may be listed, and (iii) the completion of any registration or otherqualification of said shares under any state or federal law or ruling of anygovernmental body which the Company shall, in its sole discretion, determine tobe necessary or advisable.

 

17.6.               *No Right to Continued Employment, Service or Grants*.  Participationin the Plan shall not give any Employee, Consultant or Director any right toremain in the employ or service of the Company. Further, the adoption of thisPlan shall not be deemed to give any Employee, Consultant or Director or anyother individual any right to be selected as a Participant or to be granted anAward. In addition, no Employee, Consultant or Director having been selectedfor an Award, shall have at any time the right to receive any additionalAwards.

 

17.7.               *Amendment/Termination*.  The Board may suspend orterminate the Plan at any time for any reason with or without prior notice. Inaddition, the Board may, from time to time for any reason and with or withoutprior notice, amend the Plan in any manner, but may not, without stockholderapproval, adopt any amendment which would increase the number of sharesavailable under the Plan, which would alter the provisions of Section 4.3or 17.4 as they relate to Option repricing, or which would require the vote ofthe stockholders of the Company pursuant to Section 162(m) of theCode or any applicable rule of the exchange or quotation system on whichthe Common Stock is traded, but only insofar as such amendment affects CoveredEmployees, or if such approval is necessary or deemed advisable with respect totax, securities, or other applicable laws, policies, or regulations.Notwithstanding the foregoing, the Committee may not revoke, remove or reduceany vested right of a Participant without the prior written consent of suchParticipant.

 

17.8.               *Governing Law*.  The Plan shall be governed by andconstrued in accordance with the laws of the State of Delaware, except assuperseded by applicable federal law, without giving effect to its conflicts oflaw provisions.

 

17.9.               *No Right, Title, or Interest in Company Assets*.  NoParticipant shall have any rights as a stockholder of the Company as a resultof participation in the Plan until the date of issuance of a stock certificatein his or her name, and, in the case of Restricted Stock, such rights aregranted to the Participant under the Plan. To the extent any person acquires aright, to receive payments from the Company under the Plan, such rights shall beno greater than the rights of an unsecured creditor of the Company and theParticipant shall not have any rights in or against any specific assets of theCompany. All of the Awards granted under the Plan shall be unfunded.

 

17.10.             *Section 16 of the Exchange Act*.  In order toavoid any Exchange Act violations, the Committee may, from time to time, imposeadditional restrictions upon an Award, including but not limited to,restrictions regarding tax withholdings and restrictions regarding theParticipant’s ability to exercise Awards under the Company’s broker-assistedstock option exercise program.

 

17.11.             *No Guarantee of Tax Consequences*.  No personconnected with the Plan in any capacity, including, but not limited to, theCompany and its directors, officers, agents and employees, makes anyrepresentation, commitment, or guarantee that any tax treatment, including, butnot limited to, federal, state and local income, estate and gift tax treatment,will be applicable with respect to the tax treatment of any Award, any amountsdeferred under the Plan, or paid to or for the benefit of a Participant underthe Plan, or that such tax treatment will apply to or be available to aParticipant on account of participation in the Plan.

 

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