Exhibit
10.1


 


2005 Omnibus Incentive Plan


 


NPS Pharmaceuticals, Inc.


 


As amended on May 14, 2009


 


Article 1. Establishment, Purpose, and Duration


 


1.1 Establishment. NPS Pharmaceuticals, Inc.,
a Delaware corporation (hereinafter referred to as the “Company”), establishes
an incentive compensation plan to be known as the NPS Pharmaceuticals, Inc.
2005 Omnibus Incentive Plan (hereinafter referred to as the “Plan”), as set
forth in this document.


 


This
Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options,
Stock Appreciation Rights, Restricted Stock, Restricted Stock Units,
Performance Shares, Performance Units, Cash-Based Awards, and Other Stock-Based
Awards.


 


This
Plan shall become effective upon stockholder approval (the “Effective Date”)
and shall remain in effect as provided in Section 1.3 hereof.


 


1.2 Purpose of this Plan. This Plan has
been established by the Company to provide a means by which Employees,
Directors, and Third Party Service Providers of the Company and its Subsidiaries
and Affiliates may be given the opportunity to benefit from increases in the
value of Shares through the granting of Awards under this Plan. The Company
seeks to (a) retain the services of present Employees, Directors, and
Third Party Service Providers; (b) secure and retain the services of new
Employees, Directors, and Third Party Service Providers; and, (c) provide
incentives for such persons to exert maximum efforts for the success of the
Company and thereby promote the long-term interests of the Company, including
the growth in value of the Company’s equity and enhancement of long-term
stockholder return.


 


1.3 Duration of this Plan. Unless sooner
terminated as provided herein, this Plan shall terminate ten (10) years
from the Effective Date. After this Plan is terminated, no Awards may be
granted but Awards previously granted shall remain outstanding in accordance
with their applicable terms and conditions and this Plan’s terms and
conditions. Notwithstanding the foregoing, no Incentive Stock Options may be
granted more than ten (10) years after the earlier of (a) adoption of
this Plan by the Board, or (b) the Effective Date.


 


Article 2. Definitions


 


Whenever
used in this Plan, the following terms shall have the meanings set forth below,
and when the meaning is intended, the initial letter of the word shall be
capitalized.


 


2.1 “Affiliate” shall mean any
corporation or other entity (including, but not limited to, a partnership or a
limited liability company), that is affiliated with the Company through stock
or 


 

















 


equity
ownership or otherwise, and is designated as an Affiliate for purposes of this
Plan by the Committee.


 


2.2 “Annual Award Limit” or “Annual Award Limits” have the meaning set
forth in Section 4.3.


 


2.3 “Award” means,
individually or collectively, a grant under this Plan of Nonqualified Stock
Options, Incentive Stock Options, SARs, Restricted Stock, Restricted Stock
Units, Performance Shares, Performance Units, Cash-Based Awards, or Other
Stock-Based Awards, in each case subject to the terms of this Plan.


 


2.4 “Award Agreement” means either (i) a
written agreement entered into by the Company and a Participant setting forth
the terms and provisions applicable to an Award granted under this Plan, or (ii) a
written or electronic statement issued by the Company to a Participant
describing the terms and provisions of such Award, including any amendment or
modification thereof. The Committee may provide for the use of electronic,
internet or other non-paper Award Agreements, and the use of electronic,
internet or other non-paper means for the acceptance thereof and actions
thereunder by a Participant.


 


2.5 “Beneficial Owner” or “Beneficial Ownership” shall have the
meaning ascribed to such term in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act.


 


2.6 “Board” or “Board of Directors” means the Board of
Directors of the Company.


 


2.7 “Cash-Based Award” means an
Award, denominated in cash, granted to a Participant as described in Article 10.


 


2.8 “Code” means the U.S.
Internal Revenue Code of 1986, as amended from time to time. For purposes of
this Plan, references to sections of the Code shall be deemed to include
references to any applicable regulations thereunder and any successor or
similar provision.


 


2.9 “Committee” means the
Compensation Committee of the Board or a subcommittee thereof, or any other
committee designated by the Board to administer this Plan. If the Committee
does not exist or cannot function for any reason, the Board may take any action
under the Plan that would otherwise be the responsibility of the Committee.


 


2.10 “Company” means NPS
Pharmaceuticals, Inc., a Delaware corporation, and any successor thereto
as provided in Article 19 herein.


 


2.11 “Covered Employee” means any
salaried Employee who is or may become a “Covered Employee,” as defined in Code
Section 162(m), and who is designated, either as an individual Employee or
class of Employees, by the Committee within the shorter of (i) ninety (90)
days after the beginning of the Performance Period, or (ii) twenty-five
percent (25%) of the Performance Period has elapsed, as a “Covered Employee”
under this Plan for such applicable Performance Period.


 


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2.12 “Director” means any
individual who is a member of the Board of Directors of the Company.


 


2.13 “Effective Date” has the
meaning set forth in Section 1.1.


 


2.14 “Employee” means any
person designated as an employee of the Company, its Affiliates, and/or its
Subsidiaries on the payroll records thereof. An Employee shall not include any
individual during any period he or she is classified or treated by the Company,
Affiliate, and/or Subsidiary as an independent contractor, a consultant, or any
employee of an employment, consulting, or temporary agency or any other entity
other than the Company, Affiliate, and/or Subsidiary, without regard to whether
such individual is subsequently determined to have been, or is subsequently
retroactively reclassified as a common-law employee of the Company, Affiliate,
and/or Subsidiary during such period.


 


2.15 “Exchange Act” means the
Securities Exchange Act of 1934, as amended from time to time, or any successor
act thereto.


 


2.16 “Fair Market Value” or “FMV” means a price that is based on the
opening, closing, actual, high, low, or average selling prices of a Share
reported on the National Market System of the National Association of
Securities Dealers, Inc. Automated Quotation System (“Nasdaq”) or other
established stock exchange (or exchanges) on the applicable date, the preceding
trading day, the next succeeding trading day, or an average of trading days, as
determined by the Committee in its discretion. Unless the Committee determines
otherwise, Fair Market Value shall be deemed to be equal to the closing price
of a Share on the most recent date on which Shares were publicly traded. In the
event Shares are not publicly traded at the time a determination of their value
is required to be made hereunder, the determination of their Fair Market Value
shall be made by the Committee in such manner as it deems appropriate. Such
definition(s) of FMV shall be specified in each Award Agreement and may
differ depending on whether FMV is in reference to the grant, exercise,
vesting, settlement, or payout of an Award.


 


2.17 “Freestanding SAR” means an SAR
that is granted independently of any Options, as described in Article 7.


 


2.18 “Full Value Award” means an Award
other than in the form of an ISO, NQSO, or SAR, and which is settled by the
issuance of Shares.


 


2.19 “Grant Price” means the
price established at the time of grant of a SAR pursuant to Article 7,
used to determine whether there is any payment due upon exercise of the SAR.


 


2.20 “Incentive Stock Option” or “ISO” means an Option to purchase Shares
granted under Article 6 to an Employee and that is designated as an
Incentive Stock Option and that is intended to meet the requirements of Code Section 422,
or any successor provision.


 


2.21 “Insider” shall mean an
individual who is, on the relevant date, an officer, or Director of the Company,
or a more than ten percent (10%) Beneficial Owner of any class of the Company’s
equity securities that is registered pursuant to Section 12 of the
Exchange Act, as 


 


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determined
by the Board in accordance with Section 16 of the Exchange Act.


 


2.22 “Nonemployee Director” means a
Director who is not an Employee.


 


2.23 “Nonemployee Director Award” means any
NQSO, SAR, or Full Value Award granted, whether singly, in combination, or in
tandem, to a Participant who is a Nonemployee Director pursuant to such
applicable terms, conditions, and limitations as the Board or Committee may
establish in accordance with this Plan.


 


2.24 “Nonqualified Stock Option” or “NQSO” means an Option that is not
intended to meet the requirements of Code Section 422, or that otherwise
does not meet such requirements.


 


2.25 “Option” means an
Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6.


 


2.26 “Option Price” means the
price at which a Share may be purchased by a Participant pursuant to an Option.


 


2.27 “Other Stock-Based Award” means an
equity-based or equity-related Award not otherwise described by the terms of
this Plan, granted pursuant to Article 10.


 


2.28 “Participant” means any
eligible individual as set forth in Article 5 to whom an Award is granted.


 


2.29 “Performance-Based
Compensation” means compensation under an Award that is intended
to satisfy the requirements of Code Section 162(m) for certain
performance-based compensation paid to Covered Employees. Notwithstanding the
foregoing, nothing in this Plan shall be construed to mean that an Award which
does not satisfy the requirements for performance-based compensation under Code
Section 162(m) does not constitute performance-based compensation for
other purposes, including Code Section 409A.


 


2.30 “Performance Measures” means measures
as described in Article 11 on which the performance goals are based and
which are approved by the Company’s stockholders pursuant to this Plan in order
to qualify Awards as Performance-Based Compensation.


 


2.31 “Performance Period” means the
period of time during which the performance goals must be met in order to
determine the degree of payout and/or vesting with respect to an Award.


 


2.32 “Performance Share” means an Award
under Article 9 herein and subject to the terms of this Plan, denominated
in Shares, the value of which at the time it is payable is determined as a
function of the extent to which corresponding performance criteria have been
achieved.


 


2.33 “Performance Unit” means an Award
under Article 9 herein and subject to the terms of this Plan, denominated
in units, the value of which at the time it is payable is determined as a
function of the extent to which corresponding performance criteria have been
achieved.


 


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2.34 “Period of Restriction” means the
period when Restricted Stock or Restricted Stock Units are subject to a
substantial risk of forfeiture (based on the passage of time, the achievement
of performance goals, or upon the occurrence of other events as determined by
the Committee, in its discretion), as provided in Article 8.


 


2.35 “Person” shall have the
meaning ascribed to such term in Section 3(a)(9) of the Exchange Act
and used in Sections 13(d) and 14(d) thereof, including a “group” as
defined in Section 13(d) thereof.


 


2.36 “Plan” means the NPS
Pharmaceuticals, Inc. 2005 Omnibus Incentive Plan.


 


2.37 “Plan Year” means the
Company’s fiscal year.


 


2.38 “Restricted Stock” means an
Award granted to a Participant pursuant to Article 8.


 


2.39 “Restricted Stock Unit” means an Award
granted to a Participant pursuant to Article 8, except no Shares are
actually awarded to the Participant on the date of grant.


 


2.40 “Share” means a share
of common stock of the Company, par value of $.001 per share.


 


2.41 “Stock Appreciation Right” or “SAR” means an Award, designated as a SAR,
pursuant to the terms of Article 7 herein.


 


2.42 “Subsidiary” means any
corporation or other entity, whether domestic or foreign, in which the Company
has or obtains, directly or indirectly, a proprietary interest of more than
fifty percent (50%) by reason of stock ownership or otherwise.


 


2.43 “Tandem SAR” means an SAR
that is granted in connection with a related Option pursuant to Article 7
herein, the exercise of which shall require forfeiture of the right to purchase
a Share under the related Option (and when a Share is purchased under the
Option, the Tandem SAR shall similarly be canceled).


 


2.44 “Third Party Service Provider” means any
consultant, agent, advisor, or independent contractor who renders services to
the Company, a Subsidiary, or an Affiliate that (a) are not in connection
with the offer and sale of the Company’s securities in a capital raising
transaction, and (b) do not directly or indirectly promote or maintain a
market for the Company’s securities.


 


Article 3. Administration


 


3.1 General. The Plan shall be
administered by or under the direction of the Board unless and until the Board
delegates administration to a Committee. The Board may employ attorneys,
consultants, accountants, agents, and other individuals, any of whom may be an
Employee, and the Board, the Company, and its officers and Directors shall be
entitled to rely upon the advice, 


 


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opinions,
or valuations of any such individuals. All actions taken and all
interpretations and determinations made by the Board shall be final and binding
upon the Participants, the Company, and all other interested individuals.


 


3.2 Authority of the Board. The Board
shall have full and exclusive discretionary power to interpret the terms and
the intent of this Plan and any Award Agreement or other agreement or document
ancillary to or in connection with this Plan, to determine eligibility for
Awards and to adopt such rules, regulations, forms, instruments, and guidelines
for administering this Plan as the Board may deem necessary or proper. Such
authority shall include, but not be limited to, selecting Award recipients, establishing
all Award terms and conditions, including the terms and conditions set forth in
Award Agreements, granting Awards as an alternative to or as the form of
payment for grants or rights earned or due under compensation plans or
arrangements of the Company, construing any ambiguous provision of the Plan or
any Award Agreement, and, subject to Article 16, adopting modifications
and amendments to this Plan or any Award Agreement, including without
limitation, any that are necessary to comply with the laws of the countries and
other jurisdictions in which the Company, its Affiliates, and/or its
Subsidiaries operate.


 


3.3 Delegation.


 


(a) The Board may delegate administration of
the Plan to a Board committee composed of not fewer than two members (the “Committee”).
All members of the Committee shall be Nonemployee Directors, to the extent
necessary to comply with the applicable provisions of Rule 16b-3, Section 162(m) and
the listing requirements of the Nasdaq Stock Market. If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board (and
references in this Plan to the Board shall in such event, be to the Committee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the administration of
the Plan.


 


(b) The Board may delegate to one or more of its
members or to one or more officers of the Company, and/or its Subsidiaries and
Affiliates or to one or more agents or advisors such administrative duties or
powers as it may deem advisable, and the Board or any individuals to whom it
has delegated duties or powers as aforesaid may employ one or more individuals
to render advice with respect to any responsibility the Board or such
individuals may have under this Plan. The Board may, by resolution, authorize
one or more officers of the Company to do one or both of the following on the
same basis as can the Board: (a) designate Employees to be recipients of
Awards; and (b) determine the size of any such Awards; provided, however, (i) the
Board shall not delegate such responsibilities to any such officer for Awards
granted to an Employee who is considered an Insider; (ii) the resolution
providing such authorization sets forth the total number of Awards such officer(s) may
grant; and (iii) the officer(s) shall report periodically to the
Board regarding the nature and scope of the Awards granted pursuant to the
authority delegated.


 


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Article 4. Shares Subject to this Plan and
Maximum Awards


 


4.1 Number of Shares Available for
Awards.


 


(a) Subject to
adjustment as provided in Section 4.4 herein, the maximum number of Shares
available for grant to Participants under this Plan shall be four million five hundred
thousand (4,500,000) Shares (the “Share Authorization”).


 


(b) The maximum number of Shares of the Share
Authorization that may be issued pursuant to ISOs under this Plan shall be four
million five hundred thousand (4,500,000) Shares.


 


4.2 Share Usage. Shares covered by an Award
shall only be counted as used to the extent they are actually issued. Any
Shares related to Awards which terminate by expiration, forfeiture,
cancellation, or otherwise without the issuance of such Shares, are settled in
cash in lieu of Shares, or are exchanged with the Board’s permission, prior to
the issuance of Shares, for Awards not involving Shares, shall be available
again for grant under this Plan. Moreover, if the Option Price of any Option
granted under this Plan or the tax withholding requirements with respect to any
Award granted under this Plan are satisfied by tendering Shares to the Company
(by either actual delivery or by attestation), or if an SAR is exercised, only
the number of Shares issued, net of the Shares tendered, if any, will be deemed
delivered for purposes of determining the maximum number of Shares available for
delivery under this Plan. The Shares available for issuance under this Plan may
be authorized and unissued Shares or treasury Shares.


 


4.3 Annual Award Limits. Unless and
until the Board determines that an Award to a Covered Employee shall not be
designed to qualify as Performance-Based Compensation, the following limits
(each an “Annual Award Limit” and, collectively, “Annual Award Limits”) shall
apply to grants of such Awards under this Plan:


 


(a) Options:
The maximum aggregate number of Shares subject to Options granted in any one
Plan Year to any one Participant shall be one hundred fifty thousand (150,000)
plus the amount of the Participant’s unused applicable Annual Award Limit for
Options as of the close of the previous Plan Year.


 


(b) SARs:
The maximum number of Shares subject to Stock Appreciation Rights granted in
any one Plan Year to any one Participant shall one hundred fifty thousand
(150,000) plus the amount of the Participant’s unused applicable Annual Award
Limit for SARs as of the close of the previous Plan Year.


 


(c) Restricted
Stock or Restricted Stock Units: The maximum aggregate grant with
respect to Awards of Restricted Stock or Restricted Stock Units in any one Plan
Year to any one Participant shall be eighty thousand (80,000) plus the amount
of the Participant’s unused applicable Annual Award Limit for Restricted Stock
or Restricted Stock Units as of the close of the previous Plan Year.


 


(d) Performance
Units or Performance Shares: The maximum aggregate Award of 


 


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Performance
Units or Performance Shares that a Participant may receive in any one Plan Year
shall be eighty thousand (80,000) Shares, or equal to the value of eighty
thousand (80,000) Shares determined as of the date of vesting or payout, as
applicable plus the amount of the Participant’s unused applicable Annual Award
Limit for Performance Units or Performance Shares as of the close of the
previous Plan Year.


 


(e) Cash-Based
Awards: The maximum aggregate amount awarded or credited with
respect to Cash-Based Awards to any one Participant in any one Plan Year may
not exceed the value of one million dollars ($1,000,000), plus the amount of
the Participant’s unused applicable Annual Award Limit as of the close of the
previous Plan Year.


 


(f) Other
Stock-Based Awards. The maximum aggregate grant with respect to
Other Stock-Based Awards pursuant to Section 10.2 in any one Plan Year to
any one Participant shall be eighty thousand (80,000) plus the amount of the
Participant’s unused applicable Annual Award Limit for Other Stock-Based Awards
as of the close of the previous Plan Year.


 


4.4 Adjustments in Authorized Shares. In the event
of any corporate event or transaction (including, but not limited to, a change
in the Shares of the Company or the capitalization of the Company) such as a
merger, consolidation, reorganization, recapitalization, separation, partial or
complete liquidation, stock dividend, stock split, reverse stock split, split
up, spin-off, or other distribution of stock or property of the Company,
combination of Shares, exchange of Shares, dividend in kind, or other like
change in capital structure, number of outstanding Shares or distribution
(other than normal cash dividends) to shareholders of the Company, or any
similar corporate event or transaction, the Board, in its sole discretion, in
order to prevent dilution or enlargement of Participants’ rights under this
Plan, shall substitute or adjust, as applicable, the number and kind of Shares
that may be issued under this Plan or under particular forms of Awards, the
number and kind of Shares subject to outstanding Awards, the Option Price or
Grant Price applicable to outstanding Awards, the Annual Award Limits, and
other value determinations applicable to outstanding Awards. The Board, in its
sole discretion, may also make appropriate adjustments in the terms of any
Awards under this Plan to reflect or related to such changes or distributions
and to modify any other terms of outstanding Awards. The determination of the
Board as to the foregoing adjustments, if any, shall be conclusive and binding
on Participants under this Plan.


 


Subject
to the provisions of Article 16 and notwithstanding anything else herein
to the contrary, without affecting the number of Shares reserved or available
hereunder, the Board may authorize the issuance or assumption of benefits under
this Plan in connection with any merger, consolidation, acquisition of property
or stock, or reorganization upon such terms and conditions as it may deem
appropriate (including, but not limited to, a conversion of equity awards into
Awards under this Plan in a manner consistent with paragraph 53 of FASB
Interpretation No. 44), subject to compliance with the rules under
Code Sections 422 and 424, as and where applicable.


 


Article 5. Eligibility and Participation


 


5.1 Eligibility. Individuals eligible to
participate in this Plan include all Employees, 


 


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Directors,
and Third Party Service Providers.


 


5.2 Actual Participation. Subject to
the provisions of this Plan, the Board may, from time to time, select from all
eligible individuals, those individuals to whom Awards shall be granted and
shall determine, in its sole discretion, the nature of, any and all terms
permissible by law, and the amount of each Award.


 


Article 6. Stock Options


 


6.1 Grant of Options. Subject to the terms and
provisions of this Plan, Options may be granted to Participants in such number,
and upon such terms, and at any time and from time to time as shall be
determined by the Board, in its sole discretion; provided that ISOs may be
granted only to eligible Employees of the Company or of any parent or
subsidiary corporation (as permitted under Code Sections 422 and 424). However,
an Employee who is employed by an Affiliate and/or Subsidiary and is subject to
Code Section 409A, may only be granted Options to the extent the Affiliate
and/or Subsidiary is part of the Company’s consolidated group for United States
federal tax purposes.


 


6.2 Award Agreement. Each Option grant shall be
evidenced by an Award Agreement that shall specify the Option Price, the
maximum duration of the Option, the number of Shares to which the Option
pertains, the conditions upon which an Option shall become vested and
exercisable, and such other provisions as the Board shall determine which are
not inconsistent with the terms of this Plan. The Award Agreement also shall
specify whether the Option is intended to be an ISO or a NQSO.


 


6.3 Option Price. The Option Price for each
grant of an Option under this Plan shall be determined by the Board in its sole
discretion and shall be specified in the Award Agreement; provided, however,
the Option Price on the date of grant must be at least equal to one hundred
percent (100%) of the FMV of the Shares as determined on the date of grant.


 


6.4 Term of Options. Each Option granted to a
Participant shall expire at such time as the Board shall determine at the time
of grant; provided, however, no Option shall be exercisable later than the
tenth (10 th ) anniversary date of its grant.
Notwithstanding the foregoing, for Nonqualified Stock Options granted to
Participants outside the United States, the Board has the authority to grant
Nonqualified Stock Options that have a term greater than ten (10) years.


 


6.5 Exercise of Options. Options granted under this
Article 6 shall be exercisable at such times and be subject to such
restrictions and conditions as the Board shall in each instance approve, which
terms and restrictions need not be the same for each grant or for each
Participant.


 


6.6 Payment. Options granted under this
Article 6 shall be exercised by the delivery of a notice of exercise to
the Company or an agent designated by the Company in a form specified or
accepted by the Board, or by complying with any alternative procedures which
may be authorized by the Board, setting forth the number of Shares with respect
to which the Option is to be exercised, accompanied by full payment for the
Shares.


 


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A
condition of the issuance of the Shares as to which an Option shall be
exercised shall be the payment of the Option Price. The Option Price of any
Option shall be payable to the Company in full either: (a) in cash or its
equivalent; (b) by tendering (either by actual delivery or attestation)
previously acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the Option Price (provided that except as otherwise
determined by the Board, the Shares that are tendered must have been held by
the Participant for at least six (6) months (or such other period, if any,
as the Board may permit) prior to their tender to satisfy the Option Price if
acquired under this Plan or any other compensation plan maintained by the
Company or have been purchased on the open market); (c) pursuant to a
broker-assisted exercise same-day sales program; (d) by a combination of (a) (b),
and (c); or (e) any other method approved or accepted by the Board in its
sole discretion.


 


Subject
to any governing rules or regulations, as soon as practicable after
receipt of written notification of exercise and full payment (including
satisfaction of any applicable tax withholding), the Company shall deliver to
the Participant evidence of book entry Shares, or upon the Participant’s
request, Share certificates in an appropriate amount based upon the number of
Shares purchased under the Option(s).


 


Unless
otherwise determined by the Board, all payments under all of the methods
indicated above shall be paid in United States dollars.


 


6.7 Restrictions on Share Transferability. The Board may impose such restrictions on
any Shares acquired pursuant to the exercise of an Option granted under this Article 6
as it may deem advisable, including, without limitation, minimum holding period
requirements, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, or under any blue sky or state securities laws applicable
to such Shares.


 


6.8 Termination of Employment. Each Participant’s Award Agreement shall
set forth the extent to which the Participant shall have the right to exercise
the Option following termination of the Participant’s employment or provision
of services to the Company, its Affiliates, and/or its Subsidiaries, as the
case may be. Such provisions shall be determined in the sole discretion of the
Board, shall be included in the Award Agreement entered into with each
Participant, need not be uniform among all Options issued pursuant to this Article 6,
and may reflect distinctions based on the reasons for termination.


 


6.9 Notification of Disqualifying Disposition. If any Participant shall make any
disposition of Shares issued pursuant to the exercise of an ISO under the circumstances
described in Code Section 421(b) (relating to certain disqualifying
dispositions), such Participant shall notify the Company of such disposition
prior to the end of the calendar year in which such disposition occurred.


 


6.10 Retirement of Participant. Notwithstanding any contrary provision in
this Plan, in the event a Participant’s employment as an Employee, or service
as a Director or Third Party Service Provider terminates due to a Participant’s
Retirement, the Participant shall vest in that number of Shares subject to the
Option that would have vested had the Participant remained an Employee, 


 


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Director,
or Third Party Service Provider for an additional two (2) years from the
date of Retirement. In addition, the Option shall remain exercisable until the
expiration of its term. For purposes of this paragraph, “Retirement” shall mean
the termination of service of a Participant with the Company, a Subsidiary, or
an Affiliate on or after the date on which the Participant’s number of
completed years of service with the Company, a Subsidiary, or Affiliate and age
equal or exceed seventy (70) (including termination due to death or Disability
after such time).


 


Article 7. Stock Appreciation Rights


 


7.1 Grant of SARs. Subject to the terms and conditions of this
Plan, SARs may be granted to Participants at any time and from time to time as
shall be determined by the Board. The Board may grant Freestanding SARs, Tandem
SARs, or any combination of these forms of SARs. However, an Employee who is
employed by an Affiliate and/or Subsidiary and is subject to Code Section 409A,
may only be granted SARs to the extent the Affiliate and/or Subsidiary is part
of the Company’s consolidated group for United States federal tax purposes.


 


Subject
to the terms and conditions of this Plan, the Board shall have complete
discretion in determining the number of SARs granted to each Participant and,
consistent with the provisions of this Plan, in determining the terms and
conditions pertaining to such SARs.


 


The
Grant Price for each grant of a Freestanding SAR shall be determined by the
Board and shall be specified in the Award Agreement; provided, however, the
Grant Price on the date of grant must be at least equal to one hundred percent
(100%) of the FMV of the Shares as determined on the date of grant. The Grant
Price of Tandem SARs shall be equal to the Option Price of the related Option.


 


7.2 SAR Agreement. Each SAR Award shall be evidenced by an
Award Agreement that shall specify the Grant Price, the term of the SAR, and
such other provisions as the Board shall determine.


 


7.3 Term of SAR. The term of an SAR granted under this Plan
shall be determined by the Board, in its sole discretion, and except as
determined otherwise by the Board and specified in the SAR Award Agreement, no
SAR shall be exercisable later than the tenth (10 th ) anniversary date of its grant.
Notwithstanding the foregoing, for SARs granted to Participants outside the
United States, the Board has the authority to grant SARs that have a term
greater than ten (10) years.


 


7.4 Exercise of Freestanding SARs. Freestanding SARs may be exercised upon
whatever terms and conditions the Board, in its sole discretion, imposes.


 


7.5. Exercise of Tandem SARs. Tandem SARs may be exercised for all or
part of the Shares subject to the related Option upon the surrender of the
right to exercise the equivalent portion of the related Option. A Tandem SAR
may be exercised only with respect to the Shares for which its related Option
is then exercisable.


 


Notwithstanding
any other provision of this Plan to the contrary, with respect to a Tandem 


 


11

















 


SAR
granted in connection with an ISO: (a) the Tandem SAR will expire no later
than the expiration of the underlying ISO; (b) the value of the payout
with respect to the Tandem SAR may be for no more than one hundred percent
(100%) of the excess of the Fair Market Value of the Shares subject to the
underlying ISO at the time the Tandem SAR is exercised over the Option Price of
the underlying ISO; and (c) the Tandem SAR may be exercised only when the
Fair Market Value of the Shares subject to the ISO exceeds the Option Price of
the ISO.


 


7.6 Settlement of SAR Amount. Upon the exercise of an SAR, a Participant
shall be entitled to receive payment from the Company in an amount determined
by multiplying:


 


(a) The
excess of the Fair Market Value of a Share on the date of exercise over the
Grant Price; by


 


(b) The
number of Shares with respect to which the SAR is exercised.


 


At
the discretion of the Board, the payment upon SAR exercise may be in cash,
Shares, or any combination thereof, or in any other manner approved by the
Board in its sole discretion. The Board’s determination regarding the form of
SAR payout shall be set forth in the Award Agreement pertaining to the grant of
the SAR.


 


7.7 Termination of Employment. Each Award Agreement shall set forth the
extent to which the Participant shall have the right to exercise the SAR
following termination of the Participant’s employment with or provision of
services to the Company, its Affiliates, and/or its Subsidiaries, as the case
may be. Such provisions shall be determined in the sole discretion of the
Board, shall be included in the Award Agreement entered into with Participants,
need not be uniform among all SARs issued pursuant to this Plan, and may
reflect distinctions based on the reasons for termination.


 


7.8 Other Restrictions. The Board shall impose such other conditions
and/or restrictions on any Shares received upon exercise of a SAR granted
pursuant to this Plan as it may deem advisable or desirable. These restrictions
may include, but shall not be limited to, a requirement that the Participant
hold the Shares received upon exercise of a SAR for a specified period of time.


 


Article 8. Restricted Stock and Restricted Stock Units


 


8.1 Grant of Restricted Stock or Restricted Stock
Units. Subject to the
terms and provisions of this Plan, the Board, at any time and from time to
time, may grant Shares of Restricted Stock and/or Restricted Stock Units to
Participants in such amounts as the Board shall determine. Restricted Stock
Units shall be similar to Restricted Stock except that no Shares are actually
awarded to the Participant on the date of grant.


 


8.2 Restricted Stock or Restricted Stock Unit
Agreement. Each
Restricted Stock and/or Restricted Stock Unit grant shall be evidenced by an
Award Agreement that shall specify the Period(s) of Restriction, if any,
the number of Shares of Restricted Stock or the number of Restricted Stock
Units granted, and such other provisions as the Board shall determine.


 


12

















 


8.3 Other Restrictions. The Board shall impose such other
conditions and/or restrictions, if any, on any Shares of Restricted Stock or
Restricted Stock Units granted pursuant to this Plan as it may deem advisable
including, without limitation, a requirement that Participants pay a stipulated
purchase price for each Share of Restricted Stock or each Restricted Stock
Unit, restrictions based upon the achievement of specific performance goals,
time-based restrictions on vesting following the attainment of the performance
goals, time-based restrictions, and/or restrictions under applicable laws or
under the requirements of any stock exchange or market upon which such Shares
are listed or traded, or holding requirements or sale restrictions placed on
the Shares by the Company upon vesting of such Restricted Stock or Restricted
Stock Units.


 


To
the extent deemed appropriate by the Board, the Company may retain the
certificates representing Shares of Restricted Stock in the Company’s
possession until such time as all conditions and/or restrictions applicable to
such Shares have been satisfied or lapse.


 


Except
as otherwise provided in this Article 8, Shares of Restricted Stock
covered by each Restricted Stock Award shall become freely transferable by the
Participant after all conditions and restrictions applicable to such Shares
have been satisfied or lapse (including satisfaction of any applicable tax
withholding obligations), and Restricted Stock Units shall be paid in cash,
Shares, or a combination of cash and Shares as the Board, in its sole
discretion shall determine.


 


8.4 Certificate Legend. In addition to any legends placed on
certificates pursuant to Section 8.3, each certificate representing Shares
of Restricted Stock granted pursuant to this Plan may bear a legend such as the
following or as otherwise determined by the Board in its sole discretion:


 


THE SALE OR TRANSFER OF SHARES OF STOCK REPRESENTED BY THIS
CERTIFICATE, WHETHER VOLUNTARY, INVOLUNTARY, OR BY OPERATION OF LAW, IS SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN THE NPS PHARMACEUTICALS,
INC. 2005 OMNIBUS INCENTIVE PLAN, AND IN THE ASSOCIATED AWARD AGREEMENT. A COPY
OF THIS PLAN AND SUCH AWARD AGREEMENT MAY BE OBTAINED FROM NPS
PHARMACEUTICALS, INC.


 


8.5 Voting Rights. Unless otherwise determined by the Board
and set forth in a Participant’s Award Agreement, to the extent permitted or
required by law, as determined by the Board, Participants holding Shares of
Restricted Stock granted hereunder may be granted the right to exercise full
voting rights with respect to those Shares during the Period of Restriction. A
Participant shall have no voting rights with respect to any Restricted Stock
Units granted hereunder.


 


8.6 Termination of Employment. Each Award Agreement shall set forth the
extent to which the Participant shall have the right to retain Restricted Stock
and/or Restricted Stock Units following termination of the Participant’s
employment with or provision of services to the Company, its Affiliates, and/or
its Subsidiaries, as the case may be. Such provisions shall be determined in
the sole discretion of the Board, shall be included in the Award Agreement
entered 


 


13

















 


into
with each Participant, need not be uniform among all Shares of Restricted Stock
or Restricted Stock Units issued pursuant to this Plan, and may reflect
distinctions based on the reasons for termination.


 


8.7 Section 83(b) Election. The Board may provide in an Award Agreement
that the Award of Restricted Stock is conditioned upon the Participant making
or refraining from making an election with respect to the Award under Code Section 83(b).
If a Participant makes an election pursuant to Code Section 83(b) concerning
a Restricted Stock Award, the Participant shall be required to file promptly a
copy of such election with the Company.


 


Article 9. Performance Units/Performance Shares


 


9.1 Grant of Performance Units/Performance Shares. Subject to the terms and provisions of this
Plan, the Board, at any time and from time to time, may grant Performance Units
and/or Performance Shares to Participants in such amounts and upon such terms
as the Board shall determine.


 


9.2 Value of Performance Units/Performance Shares. Each Performance Unit shall have an initial
value that is established by the Board at the time of grant. Each Performance
Share shall have an initial value equal to the Fair Market Value of a Share on
the date of grant. The Board shall set performance goals in its discretion
which, depending on the extent to which they are met, will determine the value
and/or number of Performance Units/Performance Shares that will be paid out to
the Participant.


 


9.3 Earning of Performance Units/Performance Shares. Subject to the terms of this Plan, after
the applicable Performance Period has ended, the holder of Performance
Units/Performance Shares shall be entitled to receive payout on the value and
number of Performance Units/Performance Shares earned by the Participant over
the Performance Period, to be determined as a function of the extent to which
the corresponding performance goals have been achieved.


 


9.4 Form and Timing of Payment of Performance
Units/Performance Shares.
Payment of earned Performance Units/Performance Shares shall be as determined
by the Board and as evidenced in the Award Agreement. Subject to the terms of
this Plan, the Board, in its sole discretion, may pay earned Performance
Units/Performance Shares in the form of cash or in Shares (or in a combination
thereof) equal to the value of the earned Performance Units/Performance Shares
at the close of the applicable Performance Period, or as soon as practicable
after the end of the Performance Period. Any Shares may be granted subject to
any restrictions deemed appropriate by the Board. The determination of the
Board with respect to the form of payout of such Awards shall be set forth in
the Award Agreement pertaining to the grant of the Award.


 


9.5 Termination of Employment. Each Award Agreement shall set forth the
extent to which the Participant shall have the right to retain Performance
Units and/or Performance Shares following termination of the Participant’s
employment with or provision of services to the Company, its Affiliates, and/or
its Subsidiaries, as the case may be. Such provisions shall be 


 


14

















 


determined
in the sole discretion of the Board, shall be included in the Award Agreement
entered into with each Participant, need not be uniform among all Awards of
Performance Units or Performance Shares issued pursuant to this Plan, and may
reflect distinctions based on the reasons for termination.


 


Article 10. Cash-Based Awards and Other Stock-Based
Awards


 


10.1 Grant of Cash-Based Awards. Subject to the terms and provisions of the
Plan, the Board, at any time and from time to time, may grant Cash-Based Awards
to Participants in such amounts and upon such terms as the Board may determine.


 


10.2 Other Stock-Based Awards. The Board may grant other types of
equity-based or equity-related Awards not otherwise described by the terms of
this Plan (including the grant or offer for sale of unrestricted Shares) in
such amounts and subject to such terms and conditions, as the Board shall
determine. Such Awards may involve the transfer of actual Shares to
Participants, or payment in cash or otherwise of amounts based on the value of
Shares and may include, without limitation, Awards designed to comply with or
take advantage of the applicable local laws of jurisdictions other than the
United States.


 


10.3 Value of Cash-Based and Other Stock-Based Awards. Each Cash-Based Award shall specify a
payment amount or payment range as determined by the Board. Each Other
Stock-Based Award shall be expressed in terms of Shares or units based on
Shares, as determined by the Board. The Board may establish performance goals
in its discretion. If the Board exercises its discretion to establish
performance goals, the number and/or value of Cash-Based Awards or Other
Stock-Based Awards that will be paid out to the Participant will depend on the
extent to which the performance goals are met.


 


10.4 Payment of Cash-Based Awards and Other
Stock-Based Awards.
Payment, if any, with respect to a Cash-Based Award or an Other Stock-Based
Award shall be made in accordance with the terms of the Award, in cash or
Shares as the Board determines.


 


10.5 Termination of Employment. The Board shall determine the extent to
which the Participant shall have the right to receive Cash-Based Awards or
Other Stock-Based Awards following termination of the Participant’s employment
with or provision of services to the Company, its Affiliates, and/or its Subsidiaries,
as the case may be. Such provisions shall be determined in the sole discretion
of the Board, such provisions may be included in an agreement entered into with
each Participant, but need not be uniform among all Awards of Cash-Based Awards
or Other Stock-Based Awards issued pursuant to the Plan, and may reflect
distinctions based on the reasons for termination.


 


Article 11. Transferability of Awards


 


11.1 Transferability. Except as provided in Section 11.2
below, during a Participant’s lifetime, his or her Awards shall be exercisable
only by the Participant. Awards shall not be transferable other than by will or
the laws of descent and distribution; no Awards shall be subject, in whole or
in part, to attachment, execution, or levy of any kind; and any purported 


 


15

















 


transfer
in violation hereof shall be null and void. The Board may establish such
procedures as it deems appropriate for a Participant to designate a beneficiary
to whom any amounts payable or Shares deliverable in the event of, or
following, the Participant’s death, may be provided.


 


11.2 Board Action. The Board may, in its discretion, determine
that notwithstanding Section 11.1, any or all Awards (other than ISOs)
shall be transferable to and exercisable by such transferees, and subject to
such terms and conditions, as the Board may deem appropriate; provided,
however, no Award may be transferred for value (as defined in the General
Instructions to Form S-8 under the Securities Act of 1933, as amended).


 


11.3 Domestic Relations Orders. Without limiting the generality of Section 11.1,
and notwithstanding Section 11.2, no domestic relations order purporting
to authorize a transfer of an Award shall be recognized as valid.


 


Article 12. Performance Measures


 


12.1 Performance Measures. The performance goals upon which the payment
or vesting of an Award to a Covered Employee that is intended to qualify as
Performance-Based Compensation shall be limited to the following Performance
Measures:


 


(a) Net
earnings or net income (before or after taxes);


 


(b) Earnings
per share;


 


(c) Net
sales or revenue growth;


 


(d) Net
operating profit;


 


(e) Return
measures (including, but not limited to, return on assets, capital, invested
capital, equity, sales, or revenue);


 


(f) Cash
flow (including, but not limited to, operating cash flow, free cash flow, cash
flow return on equity, and cash flow return on investment);


 


(g) Earnings
before or after taxes, interest, depreciation, and/or amortization;


 


(h) Gross
or operating margins;


 


(i) Productivity
ratios;


 


(j) Share
price (including, but not limited to, growth measures and total shareholder
return);


 


(k) Expense
targets;


 


(l) Margins;


 


16
















 


(m) Operating
efficiency;


 


(n) Market
share;


 


(o) Customer
satisfaction;


 


(p) Working
capital targets;


 


(q) Economic
value added or EVA® (net
operating profit after tax minus the sum of capital multiplied by the cost of
capital); and


 


(r) Product
development.


 


Any
Performance Measure(s) may be used to measure the performance of the
Company, Subsidiary, and/or Affiliate as a whole or any business unit of the
Company, Subsidiary, and/or Affiliate or any combination thereof, as the Board
may deem appropriate, or any of the above Performance Measures as compared to
the performance of a group of comparator companies, or published or special
index that the Board, in its sole discretion, deems appropriate, or the Company
may select Performance Measure (j) above as compared to various stock
market indices. The Board also has the authority to provide for accelerated
vesting of any Award based on the achievement of performance goals pursuant to
the Performance Measures specified in this Article 12.


 


12.2 Evaluation of Performance. The Board may provide in any such Award that
any evaluation of performance may include or exclude any of the following
events that occurs during a Performance Period: (a) asset write-downs, (b) litigation
or claim judgments or settlements, (c) the effect of changes in tax laws,
accounting principles, or other laws or provisions affecting reported results, (d) any
reorganization and restructuring programs, (e) extraordinary nonrecurring
items as described in Accounting Principles Board Opinion No. 30 and/or in
management’s discussion and analysis of financial condition and results of
operations appearing in the Company’s annual report to shareholders for the
applicable year, (f) acquisitions or divestitures, and (g) foreign
exchange gains and losses. To the extent such inclusions or exclusions affect
Awards to Covered Employees, they shall be prescribed in a form that meets the
requirements of Code Section 162(m) for deductibility.


 


12.3 Adjustment of Performance-Based Compensation. Awards that are intended to qualify as
Performance-Based Compensation may not be adjusted upward. The Board shall
retain the discretion to adjust such Awards downward, either on a formula or
discretionary basis or any combination, as the Board determines.


 


12.4 Board Discretion. In the event that applicable tax and/or
securities laws change to permit Board discretion to alter the governing
Performance Measures without obtaining shareholder approval of such changes,
the Board shall have sole discretion to make such changes without obtaining
shareholder approval. In addition, in the event that the Board determines that
it is advisable to grant Awards that shall not qualify as Performance-Based
Compensation, the Board may make such grants without satisfying the requirements
of Code Section 162(m) and 


 


17

















 


base
vesting on Performance Measures other than those set forth in Section 12.1.


 


Article 13. Dividend Equivalents


 


Any
Participant selected by the Board may be granted dividend equivalents based on
the dividends declared on Shares that are subject to any Award, to be credited
as of dividend payment dates, during the period between the date the Award is
granted and the date the Award is exercised, vests or expires, as determined by
the Board. Such dividend equivalents shall be converted to cash or additional
Shares by such formula and at such time and subject to such limitations as may
be determined by the Board.


 


Article 14. Beneficiary Designation


 


Each
Participant under this Plan may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under this Plan is to be paid in case of his death before he receives
any or all of such benefit. Each such designation shall revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Board, and will be effective only when filed by the Participant in writing with
the Company during the Participant’s lifetime. In the absence of any such beneficiary
designation, benefits remaining unpaid or rights remaining unexercised at the
Participant’s death shall be paid or exercised by the Participant’s executor,
administrator, or legal representative.


 


Article 15. Rights of Participants


 


15.1 Employment. Nothing in this Plan or an Award Agreement
shall interfere with or limit in any way the right of the Company, its
Affiliates, and/or its Subsidiaries, to terminate any Participant’s employment
or service on the Board or to the Company at any time or for any reason not
prohibited by law, nor confer upon any Participant any right to continue his
employment or service as a Director or Third Party Service Provider for any
specified period of time.


 


Neither
an Award nor any benefits arising under this Plan shall constitute an
employment contract with the Company, its Affiliates, and/or its Subsidiaries
and, accordingly, subject to Articles 3 and 16, this Plan and the benefits
hereunder may be terminated at any time in the sole and exclusive discretion of
the Board without giving rise to any liability on the part of the Company, its
Affiliates, and/or its Subsidiaries.


 


15.2 Participation. No individual shall have the right to be
selected to receive an Award under this Plan, or, having been so selected, to
be selected to receive a future Award.


 


15.3 Rights as a Stockholder. Except as otherwise provided herein, a
Participant shall have none of the rights of a stockholder with respect to
Shares covered by any Award until the Participant becomes the record holder of
such Shares.


 


Article 16. Amendment, Modification, Suspension, and
Termination


 


18

















 


16.1 Amendment, Modification, Suspension, and
Termination. Subject
to Section 16.3, the Board may, at any time and from time to time, alter,
amend, modify, suspend, or terminate this Plan and any Award Agreement in whole
or in part; provided, however, that, without the prior approval of the Company’s
stockholders and except as provided in Section 4.4, Options or SARs issued
under this Plan will not be repriced, replaced, or regranted through
cancellation, or by lowering the Option Price of a previously granted Option or
the Grant Price of a previously granted SAR, and no material amendment of this
Plan shall be made without stockholder approval if shareholder approval is
required by law, regulation, or stock exchange rule.


 


16.2 Adjustment of Awards Upon the Occurrence of
Certain Unusual or Nonrecurring Events. The Board may make adjustments in the terms and conditions of, and
the criteria included in, Awards in recognition of unusual or nonrecurring
events (including, without limitation, the events described in Section 4.4
hereof) affecting the Company or the financial statements of the Company or of
changes in applicable laws, regulations, or accounting principles, whenever the
Board determines that such adjustments are appropriate in order to prevent
unintended dilution or enlargement of the benefits or potential benefits
intended to be made available under this Plan. The determination of the Board
as to the foregoing adjustments, if any, shall be conclusive and binding on
Participants under this Plan.


 


16.3 Awards Previously Granted. Notwithstanding any other provision of this
Plan to the contrary (other than Section 16.4), no termination, amendment,
suspension, or modification of this Plan or an Award Agreement shall adversely
affect in any material way any Award previously granted under this Plan,
without the written consent of the Participant holding such Award.


 


16.4 Amendment to Conform to Law. Notwithstanding any other provision of this
Plan to the contrary, the Board of Directors may amend the Plan or an Award
Agreement, to take effect retroactively or otherwise, as deemed necessary or
advisable for the purpose of conforming the Plan or an Award Agreement to any
present or future law relating to plans of this or similar nature (including,
but not limited to, Code Section 409A), and to the administrative
regulations and rulings promulgated thereunder.


 


Article 17. Withholding


 


17.1 Withholding Generally. The Company shall have the power and the
right to deduct or withhold, or require a Participant to remit to the Company,
the minimum statutory amount to satisfy federal, state, and local taxes,
domestic or foreign, required by law or regulation to be withheld with respect
to any taxable event arising as a result of this Plan.


 


17.2  Stock Withholding.  When, under applicable tax laws,
a Participant incurs tax liability in connection with the vesting of any Award
that is subject to tax withholding and the Participant is obligated to pay the
Company the amount required to be withheld, the Board shall, subject to
compliance with all applicable laws and regulations, allow the Participant to
satisfy the minimum withholding tax obligation by electing to have the Company
withhold from the Shares to be issued upon vesting of the Award that number of
Shares having a Fair Market Value equal to the minimum amount required to be
withheld, determined on the date that the amount of tax to 


 


19

















 


be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Board and be in writing in a form acceptable to the Board.


 


Article 18. Corporate Transactions


 


In
the event of (a) a merger or consolidation in which the Company is not the
surviving corporation; (b) a reverse merger in which the Company is the
surviving corporation but the shares of the Company’s common stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash, or otherwise; (c) a
strategic corporate event, such as a merger or acquisition, where the Company
is technically the surviving entity, but where other elements of a change of
control are present, i.e., change in management team or Board composition; (d) a
transaction which the Board determines in its sole discretion to constitute a
change in control of the Company; or (e) any capital reorganization in
which fifty percent (50%) of the Shares of the Company entitled to vote are
exchanged, then, the time during which Awards outstanding under the Plan become
vested shall be accelerated and all outstanding Awards shall become immediately
exercisable upon such event and such Awards shall continue to be exercisable
until the later of (i) twenty-four (24) months from the effective date of
such event, or (ii) the time specified in the Award Agreement during which
the Award is exercisable following a Participant’s termination of service;
provided, however, that in no event shall the Award be exercisable after the
expiration of its term.


 


Article 19. Successors


 


All
obligations of the Company under this Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the
business and/or assets of the Company.


 


Article 20. General Provisions


 


20.1 Forfeiture Events.


 


(a) The
Board may specify in an Award Agreement that the Participant’s rights,
payments, and benefits with respect to an Award shall be subject to reduction,
cancellation, forfeiture, or recoupment upon the occurrence of certain
specified events, in addition to any otherwise applicable vesting or
performance conditions of an Award. Such events may include, but shall not be
limited to, termination of employment for cause, termination of the Participant’s
provision of services to the Company, Affiliate, and/or Subsidiary, violation
of material Company, Affiliate, and/or Subsidiary policies, breach of
noncompetition, confidentiality, or other restrictive covenants that may apply
to the Participant, or other conduct by the Participant that is detrimental to
the business or reputation of the Company, its Affiliates, and/or its
Subsidiaries.


 


(b) If
the Company is required to prepare an accounting restatement due to the
material noncompliance of the Company, as a result of misconduct, with any
financial reporting 


 


20

















 


requirement
under the securities laws, if the Participant knowingly or grossly negligently
engaged in the misconduct, or knowingly or grossly negligently failed to
prevent the misconduct, or if the Participant is one of the individuals subject
to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of
2002, the Participant shall reimburse the Company the amount of any payment in
settlement of an Award earned or accrued during the twelve (12) month period
following the first public issuance or filing with the United States Securities
and Exchange Commission (whichever just occurred) of the financial document
embodying such financial reporting requirement.


 


20.2 Legend. The certificates for Shares may include any legend which the Board
deems appropriate to reflect any restrictions on transfer of such Shares.


 


20.3 Gender and Number. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine, the
plural shall include the singular, and the singular shall include the plural.


 


20.4 Severability. In the event any provision of this Plan
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of this Plan, and this Plan shall be
construed and enforced as if the illegal or invalid provision had not been
included.


 


20.5 Requirements of Law. The granting of Awards and the issuance of
Shares under this Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.


 


20.6 Delivery of Title. The Company shall have no obligation to
issue or deliver evidence of title for Shares issued under this Plan prior to:


 


(a) Obtaining
any approvals from governmental agencies that the Company determines are
necessary or advisable; and


 


(b) Completion
of any registration or other qualification of the Shares under any applicable
national or foreign law or ruling of any governmental body that the Company
determines to be necessary or advisable.


 


20.7 Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company’s counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.


 


20.8 Investment Representations. The Board may require any individual
receiving Shares pursuant to an Award under this Plan to represent and warrant
in writing that the individual is acquiring the Shares for investment and
without any present intention to sell or distribute such Shares.


 


20.9 Employees Based Outside of the United States. Notwithstanding any provision of 


 


21

















 


this
Plan to the contrary, in order to comply with the laws in other countries in
which the Company, its Affiliates, and/or its Subsidiaries operate or have
Employees, Directors, or Third Party Service Providers, the Board, in its sole
discretion, shall have the power and authority to:


 


(a) Determine
which Affiliates and Subsidiaries shall be covered by this Plan;


 


(b) Determine
which Employees and/or Directors or Third Party Service Providers outside the
United States are eligible to participate in this Plan;


 


(c) Modify
the terms and conditions of any Award granted to Employees \and/or Directors or
Third Party Service Providers outside the United States to comply with
applicable foreign laws;


 


(d) Establish
subplans and modify exercise procedures and other terms and procedures, to the
extent such actions may be necessary or advisable. Any subplans and
modifications to Plan terms and procedures established under this Section 20.9
by the Board shall be attached to this Plan document as appendices; and


 


(e) Take
any action, before or after an Award is made, that it deems advisable to obtain
approval or comply with any necessary local government regulatory exemptions or
approvals.


 


Notwithstanding
the above, the Board may not take any actions hereunder, and no Awards shall be
granted, that would violate applicable law.


 


20.10 Uncertificated Shares. To the extent that this Plan provides for
issuance of certificates to reflect the transfer of Shares, the transfer of
such Shares may be effected on a noncertificated basis, to the extent not
prohibited by applicable law or the rules of any stock exchange.


 


20.11 Unfunded Plan. Participants shall have no right, title, or
interest whatsoever in or to any investments that the Company, and/or its
Subsidiaries, and/or its Affiliates may make to aid it in meeting its
obligations under this Plan. Nothing contained in this Plan, and no action
taken pursuant to its provisions, shall create or be construed to create a
trust of any kind, or a fiduciary relationship between the Company and any
Participant, beneficiary, legal representative, or any other individual. To the
extent that any person acquires a right to receive payments from the Company,
its Subsidiaries, and/or its Affiliates under this Plan, such right shall be no
greater than the right of an unsecured general creditor of the Company, a
Subsidiary, or an Affiliate, as the case may be. All payments to be made
hereunder shall be paid from the general funds of the Company, a Subsidiary, or
an Affiliate, as the case may be and no special or separate fund shall be
established and no segregation of assets shall be made to assure payment of
such amounts except as expressly set forth in this Plan.


 


20.12 No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to this Plan or any Award. The Board shall determine whether
cash, Awards, or other property shall be issued or paid in lieu of fractional
Shares or whether such fractional Shares or any rights thereto shall be
forfeited or otherwise eliminated.


 


22

















 


20.13 Retirement and Welfare Plans. Neither Awards made under this Plan nor
Shares or cash paid pursuant to such Awards, except pursuant to Covered
Employee Annual Incentive Awards, may be included as “compensation” for
purposes of computing the benefits payable to any Participant under the Company’s
or any Subsidiary’s or Affiliate’s retirement plans (both qualified and
non-qualified) or welfare benefit plans unless such other plan expressly
provides that such compensation shall be taken into account in computing a
Participant’s benefit.


 


20.14 Deferred Compensation. No deferral of compensation (as defined
under Code Section 409A or guidance thereto) is intended under this Plan.
Notwithstanding this intent, if any Award would be considered deferred
compensation as defined under Code Section 409A and if the Plan fails to
meet the requirements of Code Section 409A with respect to such Award,
then such Award shall be null and void. However, the Board may permit deferrals
of compensation pursuant to the terms of a Participant’s Award Agreement, a
separate plan or a subplan which meets the requirements of Code Section 409A
and any related guidance. Additionally, to the extent any Award is subject to
Code Section 409A, notwithstanding any provision herein to the contrary,
the Plan does not permit the acceleration of the time or schedule of any
distribution related to such Award, except as permitted by Code Section 409A,
the regulations thereunder, and/or the Secretary of the United States Treasury.


 


20.15 Nonexclusivity of this Plan. The adoption of this Plan shall not be
construed as creating any limitations on the power of the Board or Board to
adopt such other compensation arrangements as it may deem desirable for any
Participant.


 


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


 


20.17 Governing Law. The Plan and each Award Agreement shall be
governed by the laws of the State of Delaware, excluding any conflicts or
choice of law rule or principle that might otherwise refer construction or
interpretation of this Plan to the substantive law of another jurisdiction.
Unless otherwise provided in the Award Agreement, recipients of an Award under
this Plan are deemed to submit to the exclusive jurisdiction and venue of the
federal or state courts of Delaware, to resolve any and all issues that may
arise out of or relate to this Plan or any related Award Agreement.


 


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