Unassociated Document


     

    
      Exhibit
10.43

       

    

    SUNESIS
PHARMACEUTICALS, INC.

    2006
EMPLOYMENT COMMENCEMENT INCENTIVE PLAN

     

    ADOPTED
BY THE BOARD OF DIRECTORS ON NOVEMBER 29, 2005

     

    EFFECTIVE
AS OF JANUARY 1, 2006

     

    (AMENDED
AND RESTATED ON SEPTEMBER 13, 2006,

    DECEMBER
6, 2006, DECEMBER 5, 2007 AND DECEMBER 18, 2008)

     

    ARTICLE
1

     

    PURPOSE

     

    1.1          General.

     

    (a)           Eligible Stock Award
Recipients. Only Eligible Participants may receive Awards under the
Plan.

     

    (b)           General Purpose. The purpose
of the Plan is to promote the success and enhance the value of Sunesis
Pharmaceuticals, Inc. (the “Company”)
by linking the personal interests of Eligible Participants to those of Company
stockholders and by providing such individuals with an incentive for outstanding
performance to generate superior returns to Company stockholders. The Plan is
further intended to provide flexibility to the Company in its ability to
motivate, attract, and retain the services of Eligible Participants upon whose
judgment, interest, and special effort the successful conduct of the Company’s
operation will be largely dependent.

     

    ARTICLE
2

     

    DEFINITIONS
AND CONSTRUCTION

     

    2.1          Definitions.  The
following words and phrases shall have the following meanings:

     

    (a)           “Award”
means an Option, a Restricted Stock award, a Stock Appreciation Right award, a
Performance Share award, a Dividend Equivalents award, a Stock Payment award, or
a Restricted Stock Unit award granted to an Eligible Participant pursuant to the
Plan.

     

    (b)           “Award
Agreement”
means any written agreement, contract, or other instrument or document
evidencing an Award.

     

    (c)           “Board”
means the Board of Directors of the Company.

     

    (d)           “Cause”
includes one or more of the following: (i) the commission of an act of fraud,
embezzlement or dishonesty by a Participant that has a material adverse impact
on the Company or any successor or parent or Subsidiary thereof; (ii) a
conviction of, or plea of “guilty” or “no contest” to, a felony by a
Participant; (iii) any unauthorized use or disclosure by a Participant of
confidential information or trade secrets of the Company or any successor or
parent or Subsidiary thereof that has a material adverse impact on any such
entity or (iv) any other intentional misconduct by a Participant that has a
material adverse impact on the Company or any successor or parent or Subsidiary
thereof. However, if the term or concept of “Cause” has been defined in an
agreement between a Participant and the Company or any successor or parent or
Subsidiary thereof, then “Cause” shall have the definition set forth in such
agreement. The foregoing definition shall not in any way preclude or restrict
the right of the Company or any successor or parent or Subsidiary thereof to
discharge or dismiss any Participant in the service of such entity for any other
acts or omissions, but such other acts or omissions shall not be deemed, for
purposes of this Plan, to constitute grounds for termination for
Cause.

     

    
      
        
        

      

      
        1.

        
          

        

      

      
        
        

      

    

     

    (e)           “Change of
Control” means and includes each of the following:

     

    (1)           the
acquisition, directly or indirectly, by any “person” or “group” (as those terms
are defined in Sections 3(a)(9), 13(d) and 14(d) of the Exchange Act and the
rules thereunder) of “beneficial ownership” (as determined pursuant to Rule
13d-3 under the Exchange Act) of securities entitled to vote generally in the
election of directors (“voting securities”) of the Company that represent 50% or
more of the combined voting power of the Company’s then outstanding voting
securities, other than:

     

    (A)           an
acquisition by a trustee or other fiduciary holding securities under any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any person controlled by the Company or by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any person controlled
by the Company, or

     

    (B)           an
acquisition of voting securities by the Company or a corporation owned, directly
or indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of the stock of the Company;

     

    Notwithstanding
the foregoing, the following event shall not constitute an “acquisition” by any
person or group for purposes of this subsection (e): an acquisition of the
Company’s securities by the Company that causes the Company’s voting securities
beneficially owned by a person or group to represent 50% or more of the combined
voting power of the Company’s then outstanding voting securities; provided, however, that if a
person or group shall become the beneficial owner of 50% or more of the combined
voting power of the Company’s then outstanding voting securities by reason of
share acquisitions by the Company as described above and shall, after such share
acquisitions by the Company, become the beneficial owner of any additional
voting securities of the Company, then such acquisition shall constitute a
Change of Control; or

     

    (2)           during
any period of two consecutive years, individuals who, at the beginning of such
period, constitute the Board together with any new director(s) (other than a
director designated by a person who shall have entered into an agreement with
the Company to effect a transaction described in clauses (1) or (3) of this
subsection (e)) whose election by the Board or nomination for election by the
Company’s stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of the
two year period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; or

     

    
      
        
        

      

      
        2.

        
          

        

      

      
        
        

      

    

     

    (3)           the
consummation by the Company (whether directly involving the Company or
indirectly involving the Company through one or more intermediaries) of (x) a
merger, consolidation, reorganization, or business combination or (y) a sale or
other disposition of all or substantially all of the Company’s assets or (z) the
acquisition of assets or stock of another entity, in each case other than a
transaction:

     

    (A)           which
results in the Company’s voting securities outstanding immediately before the
transaction continuing to represent (either by remaining outstanding or by being
converted into voting securities of the Company or the person that, as a result
of the transaction, controls, directly or indirectly, the Company or owns,
directly or indirectly, all or substantially all of the Company’s assets or
otherwise succeeds to the business of the Company (the Company or such person,
the “Successor
Entity”)) directly or indirectly, at least a majority of the combined
voting power of the Successor Entity’s outstanding voting securities immediately
after the transaction, and

     

    (B)           after
which no person or group beneficially owns voting securities representing 50% or
more of the combined voting power of the Successor Entity; provided, however, that no
person or group shall be treated for purposes of this clause (B) as beneficially
owning 50% or more of combined voting power of the Successor Entity solely as a
result of the voting power held in the Company prior to the consummation of the
transaction; or

     

    (4)           the
Company’s stockholders approve a liquidation or dissolution of the
Company.

     

    The
Committee shall have full and final authority, which shall be exercised in its
discretion, to determine conclusively whether a Change of Control of the Company
has occurred pursuant to the above definition, and the date of the occurrence of
such Change of Control and any incidental matters relating thereto.

     

    (f)        
   “Code”
means the Internal Revenue Code of 1986, as amended.

     

    (g)           “Committee”
means the Board or a committee of the Board described in Article
11.

     

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

     

    (i)       
    “Disability”
means, for purposes of the Plan, that the Participant qualifies to receive
long-term disability payments under the Company’s long-term disability insurance
program, as it may be amended from time to time.

     

    (j)   
        “Dividend
Equivalents” means a right granted to a Participant pursuant to Article 8
to receive the equivalent value (in cash or Stock) of dividends paid on
Stock.

     

    (k)           “Eligible
Participant” means any Employee who has not previously been an Employee
or Director of the Company or a Subsidiary, or is commencing employment with the
Company or a Subsidiary following a bona fide period of non-employment by the
Company or a Subsidiary, if he or she is granted an Award in connection with his
or her commencement of employment with the Company or a Subsidiary and such
grant is an inducement material to his or her entering into employment with the
Company or a Subsidiary. The Board may in its discretion adopt procedures from
time to time to ensure that an Employee is eligible to participate in the Plan
prior to the granting of any Awards to such Employee under the Plan (including,
without limitation, a requirement, that each such Employee certify to the
Company prior to the receipt of an Award under the Plan that he or she has not
been previously employed by the Company or a Subsidiary, or if previously
employed, has had a bona fide period of non-employment, and that the grant of
Awards under the Plan is an inducement material to his or her agreement to enter
into employment with the Company or a Subsidiary).

     

    
      
        
        

      

      
        3.

        
          

        

      

      
        
        

      

    

     

    (l)      
     “Employee”
means any officer or other employee (as defined in accordance with Section
3401(c) of the Code) of the Company or any Subsidiary.

     

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

     

    (n)           “Fair Market
Value” means, as of any date, the value of Stock determined as
follows:

     

    (1)           If
the Stock is listed on any established stock exchange or a national market
system, its Fair Market Value shall be the closing sales price for such stock
(or the closing bid, if no sales were reported) as quoted on such exchange or
system for such date, or if no bids or sales were reported for such date, then
the closing sales price (or the closing bid, if no sales were reported) on the
trading date immediately prior to such date during which a bid or sale occurred,
in each case, as reported in The Wall Street Journal or such other source as the
Committee deems reliable;

     

    (2)           If
the Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, its Fair Market Value shall be the mean of the closing
bid and asked prices for the Stock on such date, or if no closing bid and asked
prices were reported for such date, the date immediately prior to such date
during which closing bid and asked prices were quoted for the Stock, in each
case, as reported in The Wall Street Journal or such other source as the
Committee deems reliable; or

     

    (3)           In
the absence of an established market for the Stock, the Fair Market Value
thereof shall be determined in good faith by the Committee.

     

    (o)           “Good
Reason” means a Participant’s voluntary resignation following any one or
more of the following that is effected without the Participant’s written
consent: (i) a change in his or her position following the Change of Control
that materially reduces his or her duties or responsibilities, (ii) a reduction
in his or her base salary following a Change of Control, unless the base
salaries of all similarly situated individuals are similarly reduced, or (iii) a
relocation of such Participant’s place of employment following a Change of
Control by more than fifty (50) miles from such Participant’s place of
employment prior to a Change of Control. However, if the term or concept of
“Good Reason” has been defined in an agreement between a Participant and the
Company or any successor or parent or Subsidiary thereof, then “Good Reason”
shall have the definition set forth in such agreement.

     

    
      
        
        

      

      
        4.

        
          

        

      

      
        
        

      

    

     

    (p)           “Incentive Stock
Option” means an Option that is intended to meet the requirements of
Section 422 of the Code or any successor provision thereto. Incentive Stock
Options may not be granted under the Plan.

     

    (q)           “Independent
Director” means a Director who is not an Employee of the Company and who
qualifies as “independent” within the meaning of NASD Rule 4200(a)(15), if the
Company’s securities are traded on the Nasdaq National Market, or the
requirements of any other established stock exchange on which the Company’s
securities are traded, as such rules or requirements may be amended from time to
time.

     

    (r)           “NASD”
means the National Association of Securities Dealers, Inc.

     

    (s)           “Non-Qualified
Stock Option” means an Option that is not intended to be an Incentive
Stock Option.

     

    (t)           “Option”
means a right granted to a Participant pursuant to Article 5 of the Plan to
purchase a specified number of shares of Stock at a specified price during
specified time periods. An Option must be a Non-Qualified Stock
Option.

     

    (u)           “Participant”
means an Eligible Participant who has been granted an Award pursuant to the
Plan.

     

    (v)           “Performance
Share” means a right granted to a Participant pursuant to Article 8, to
receive cash, Stock, or other Awards, the payment of which is contingent upon
achieving certain performance goals established by the Committee.

     

    (w)          “Plan”
means this Sunesis Pharmaceuticals, Inc. 2006 Employment Commencement Incentive
Plan, as it may be amended from time to time.

     

    (x)           “Restricted
Stock” means Stock awarded to a Participant pursuant to Article 6 that is
subject to certain restrictions and to risk of forfeiture.

     

    (y)           “Restricted Stock
Unit” means a right to receive a specified number of shares of Stock
during specified time periods pursuant to Article 8.

     

    (z)           “Stock”
means the common stock of the Company and such other securities of the Company
that may be substituted for Stock pursuant to Article 10.

     

    (aa)         “Stock
Appreciation Right” or “SAR” means
a right granted pursuant to Article 7 to receive a payment equal to the excess
of the Fair Market Value of a specified number of shares of Stock on the date
the SAR is exercised over the Fair Market Value on the date the SAR was granted
as set forth in the applicable Award Agreement.

     

    (bb)         “Stock
Payment” means (a) a payment in the form of shares of Stock, or
(b) an option or other right to purchase shares of Stock, as part of any bonus,
deferred compensation or other arrangement, made in lieu of all or any portion
of the compensation, granted pursuant to Article 8.

     

    
      
        
        

      

      
        5.

        
          

        

      

      
        
        

      

    

     

    (cc)         “Subsidiary”
means any corporation or other entity of which a majority of the outstanding
voting stock or voting power is beneficially owned directly or indirectly by the
Company.

     

    ARTICLE
3

     

    SHARES
SUBJECT TO THE PLAN

     

    3.1          Number
of Shares.

     

    (a)           Subject
to Article 10, the aggregate number of shares of Stock which may be issued or
transferred pursuant to Awards under the Plan shall be 625,000
shares.

     

    The
payment of Dividend Equivalents in conjunction with any outstanding Awards shall
not be counted against the shares available for issuance under the
Plan.

     

    (b)           To
the extent that an Award terminates, expires, or lapses for any reason, any
shares of Stock subject to the Award shall again be available for the grant of
an Award pursuant to the Plan. Additionally, any shares of Stock tendered or
withheld to satisfy the grant or exercise price or tax withholding obligation
pursuant to any Award shall again be available for the grant of an Award
pursuant to the Plan. To the extent permitted by applicable law or any exchange
rule, shares of Stock issued in assumption of, or in substitution for, any
outstanding awards of any entity acquired in any form of combination by the
Company or any Subsidiary shall not be counted against shares of Stock available
for grant pursuant to the Plan.

     

    3.2          Stock Distributed. Any Stock
distributed pursuant to an Award may consist, in whole or in part, of authorized
and unissued Stock, treasury Stock or Stock purchased on the open
market.

     

    ARTICLE
4


     

    ELIGIBILITY
AND PARTICIPATION

     

    4.1          Eligibility.

     

    (a)           General. Awards may be granted
only to Eligible Participants. All Options granted under the Plan shall be
Non-Qualified Stock Options.

     

    (b)           Foreign Participants. In order
to assure the viability of Awards granted to Participants employed in foreign
countries, the Committee may provide for such special terms as it may consider
necessary or appropriate to accommodate differences in local law, tax policy, or
custom. Moreover, the Committee may approve such supplements to, or amendments,
restatements, or alternative versions of, the Plan as it may consider necessary
or appropriate for such purposes without thereby affecting the terms of the Plan
as in effect for any other purpose; provided, however, that no such supplements,
amendments, restatements, or alternative versions shall increase the share
limitations contained in Sections 3.1 of the Plan.

     

    
      
        
        

      

      
        6.

        
          

        

      

      
        
        

      

    

     

    4.2          Actual Participation. Subject
to the provisions of the Plan, the Committee may, from time to time, select from
among all eligible individuals, those to whom Awards shall be granted and shall
determine the nature and amount of each Award. No individual shall have any
right to be granted an Award pursuant to the Plan.

     

    ARTICLE
5

     

    STOCK
OPTIONS

     

    5.1          General. Options may be
granted to Eligible Participants on the following terms and
conditions:

     

    (a)           Exercise Price. The exercise
price per share of Stock subject to an Option shall be determined by the
Committee and set forth in the Award Agreement; provided that the exercise
price for any Option shall not be less than Fair Market Value of a share of
Stock on the date of grant.

     

    (b)           Time And Conditions Of
Exercise. The Committee shall determine the time or times at which an
Option may be exercised in whole or in part; provided, that the term of
any Option granted under the Plan shall not exceed ten years; and provided, further, that such
Option shall be exercisable for not less than one year after the date of the
Participant’s death. The Committee shall also determine the performance or other
conditions, if any, that must be satisfied before all or part of an Option may
be exercised.

     

    (c)           Payment. The Committee shall
determine the methods by which the exercise price of an Option may be paid, the
form of payment, including, without limitation, cash, promissory note bearing
interest at no less than such rate as shall then preclude the imputation of
interest under the Code, shares of Stock held for longer than six months having
a Fair Market Value on the date of delivery equal to the aggregate exercise
price of the Option or exercised portion thereof, or other property acceptable
to the Committee (including through the delivery of a notice that the
Participant has placed a market sell order with a broker with respect to shares
of Stock then issuable upon exercise of the Option, and that the broker has been
directed to pay a sufficient portion of the net proceeds of the sale to the
Company in satisfaction of the Option exercise price; provided, that payment of
such proceeds is then made to the Company upon settlement of such sale), and the
methods by which shares of Stock shall be delivered or deemed to be delivered to
Participants. Notwithstanding any other provision of the Plan to the contrary,
no Participant who is a member of the Board or an “executive officer” of the
Company within the meaning of Section 13(k) of the Exchange Act shall be
permitted to pay the exercise price of an Option in any method which would
violate Section 13(k).

     

    (d)           Evidence Of Grant. All Options
shall be evidenced by a written Award Agreement between the Company and the
Participant. The Award Agreement shall include such additional provisions as may
be specified by the Committee.

     

    
      
        
        

      

      
        7.

        
          

        

      

      
        
        

      

    

     

    ARTICLE
6

     

    RESTRICTED
STOCK AWARDS

     

    6.1          Grant of Restricted Stock.
Restricted Stock may be awarded to any Eligible Participant in such
amounts and subject to such terms and conditions as determined by the Committee.
All Awards of Restricted Stock shall be evidenced by a written Restricted Stock
Award Agreement.

     

    6.2          Issuance and Restrictions.
Restricted Stock shall be subject to such restrictions on transferability
and other restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote Restricted Stock or the right to
receive dividends on the Restricted Stock). These restrictions may lapse
separately or in combination at such times, pursuant to such circumstances, in
such installments, or otherwise, as the Committee determines at the time of the
grant of the Award or thereafter.

     

    6.3          Forfeiture. Except as
otherwise determined by the Committee at the time of the grant of the Award or
thereafter, upon termination of employment or service during the applicable
restriction period, Restricted Stock that is at that time subject to
restrictions shall be forfeited; provided, however, that the
Committee may provide in any Restricted Stock Award Agreement that restrictions
or forfeiture conditions relating to Restricted Stock will be waived in whole or
in part in the event of terminations resulting from specified causes, and the
Committee may in other cases waive in whole or in part restrictions or
forfeiture conditions relating to Restricted Stock.

     

    6.4          Certificates For Restricted Stock.
Restricted Stock granted pursuant to the Plan may be evidenced in such
manner as the Committee shall determine. If certificates representing shares of
Restricted Stock are registered in the name of the Participant, certificates
must bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock, and the Company may, at its
discretion, retain physical possession of the certificate until such time as all
applicable restrictions lapse.

     

    ARTICLE
7

     

    STOCK
APPRECIATION RIGHTS

     

    7.1          Grant of Stock Appreciation Rights.
A Stock Appreciation Right may be granted to any Eligible Participant
selected by the Committee. A Stock Appreciation Right may be granted (a) in
connection and simultaneously with the grant of an Option, (b) with respect to a
previously granted Option, or (c) independent of an Option. A Stock Appreciation
Right shall be subject to such terms and conditions not inconsistent with the
Plan as the Committee shall impose and shall be evidenced by an Award
Agreement.

     

    7.2          Coupled Stock Appreciation
Rights.

     

    (a)           A
Coupled Stock Appreciation Right (“CSAR”)
shall be related to a particular Option and shall be exercisable only when and
to the extent the related Option is exercisable.

     

    
      
        
        

      

      
        8.

        
          

        

      

      
        
        

      

    

     

    (b)           A
CSAR may be granted to a Participant for no more than the number of shares
subject to the simultaneously or previously granted Option to which it is
coupled.

     

    (c)           A
CSAR shall entitle the Participant (or other person entitled to exercise the
Option pursuant to the Plan) to surrender to the Company unexercised a portion
of the Option to which the CSAR relates (to the extent then exercisable pursuant
to its terms) and to receive from the Company in exchange therefor an amount
determined by multiplying the difference obtained by subtracting the Option
exercise price from the Fair Market Value of a share of Stock on the date of
exercise of the CSAR by the number of shares of Stock with respect to which the
CSAR shall have been exercised, subject to any limitations the Committee may
impose.

     

    7.3          Independent Stock Appreciation
Rights.

     

    (a)           An
Independent Stock Appreciation Right (“ISAR”) shall be unrelated to any Option
and shall have a term set by the Committee. An ISAR shall be exercisable in such
installments as the Committee may determine. An ISAR shall cover such number of
shares of Stock as the Committee may determine. The exercise price per share of
Stock subject to each ISAR shall be set by the Committee; provided, however, that, the
Committee in its sole and absolute discretion may provide that the ISAR may be
exercised subsequent to a termination of employment or service, as applicable,
or following a Change of Control, or because of the Participant’s retirement,
death or Disability, or otherwise.

     

    (b)           An
ISAR shall entitle the Participant (or other person entitled to exercise the
ISAR pursuant to the Plan) to exercise all or a specified portion of the ISAR
(to the extent then exercisable pursuant to its terms) and to receive from the
Company an amount determined by multiplying the difference obtained by
subtracting the exercise price per share of the ISAR from the Fair Market Value
of a share of Stock on the date of exercise of the ISAR by the number of shares
of Stock with respect to which the ISAR shall have been exercised, subject to
any limitations the Committee may impose.

     

    7.4          Payment and Limitations on
Exercise.

     

    (a)           Payment
of the amounts determined under Section 7.2(c) and 7.3(b) above shall be in
cash, in Stock (based on its Fair Market Value as of the date the Stock
Appreciation Right is exercised) or a combination of both, as determined by the
Committee.

     

    (b)           To
the extent any payment under Section 7.2(c) or 7.3(b) is effected in Stock it
shall be made subject to satisfaction of all provisions of Article 5 above
pertaining to Options.

     

    ARTICLE
8

     

    OTHER
TYPES OF AWARDS

     

    8.1          Performance Share Awards. Any
Eligible Participant selected by the Committee may be granted one or more
Performance Share awards which may be denominated in a number of shares of Stock
or in a dollar value of shares of Stock and which may be linked to any one or
more specific performance criteria determined appropriate by the Committee, in
each case on a specified date or dates or over any period or periods determined
by the Committee. In making such determinations, the Committee shall consider
(among such other factors as it deems relevant in light of the specific type of
award) the contributions, responsibilities and other compensation of the
particular Participant.

     

    
      
        
        

      

      
        9.

        
          

        

      

      
        
        

      

    

     

    8.2          Dividend Equivalents. Any
Eligible Participant selected by the Committee may be granted Dividend
Equivalents based on the dividends declared on the shares of Stock 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 Committee. Such Dividend
Equivalents shall be converted to cash or additional shares of Stock by such
formula and at such time and subject to such limitations as may be determined by
the Committee.

     

    8.3          Stock Payments. Any Eligible
Participant selected by the Committee may receive Stock Payments in the manner
determined from time to time by the Committee. The number of shares shall be
determined by the Committee and may be based upon specific performance criteria
determined appropriate by the Committee, determined on the date such Stock
Payment is made or on any date thereafter.

     

    8.4          Restricted Stock Units. Any
Eligible Participant selected by the Committee may be granted an award of
Restricted Stock Units in the manner determined from time to time by the
Committee. The number of Restricted Stock Units shall be determined by the
Committee and may be linked to the Performance Criteria or other specific
performance criteria determined to be appropriate by the Committee, in each case
on a specified date or dates or over any period or periods determined by the
Committee. Stock underlying a Restricted Stock Unit award will not be issued
until the Restricted Stock Unit award has vested, pursuant to a vesting schedule
or performance criteria set by the Committee. Unless otherwise provided by the
Committee, a Participant awarded Restricted Stock Units shall have no rights as
a Company stockholder with respect to such Restricted Stock Units until such
time as the Restricted Stock Units have vested and the Stock underlying the
Restricted Stock Units has been issued.

     

    8.5          Term.  The term of
any Award of Performance Shares, Dividend Equivalents, Stock Payments or
Restricted Stock Units shall be set by the Committee in its
discretion.

     

    8.6          Exercise or Purchase Price.
The Committee may establish the exercise or purchase price of any Award
of Performance Shares, Restricted Stock Units or Stock Payments; provided,
however, that such price shall not be less than the par value of a share of
Stock, unless otherwise permitted by applicable state law.

     

    8.7          Exercise Upon Termination of
Employment or Service. An Award of Performance Shares, Dividend
Equivalents, Restricted Stock Units and Stock Payments shall only be exercisable
or payable while the Participant is an Employee or Director of the Company or a
Subsidiary; provided, however, that the Committee in its sole and absolute
discretion may provide that an Award of Performance Shares, Dividend
Equivalents, Stock Payments or Restricted Stock Units may be exercised or paid
subsequent to a termination of employment or service, as applicable, or
following a Change of Control, or because of the Participant’s retirement, death
or Disability, or otherwise.

     

    
      
        
        

      

      
        10.

        
          

        

      

      
        
        

      

    

     

    8.8          Form of Payment. Payments with
respect to any Awards granted under this Article 8 shall be made in cash, in
Stock or a combination of both, as determined by the Committee.

     

    8.9          Award Agreement. All Awards
under this Article 8 shall be subject to such additional terms and conditions as
determined by the Committee and shall be evidenced by a written Award
Agreement.

     

    ARTICLE
9

     

    PROVISIONS
APPLICABLE TO AWARDS

     

    9.1          Stand-Alone and Tandem Awards.
Awards granted pursuant to the Plan may, in the discretion of the Committee, be
granted either alone, in addition to, or in tandem with, any other Award granted
pursuant to the Plan. Awards granted in addition to or in tandem with other
Awards may be granted either at the same time as or at a different time from the
grant of such other Awards.

     

    9.2          Award Agreement. Awards under
the Plan shall be evidenced by Award Agreements that set forth the terms,
conditions and limitations for each Award which may include the term of an
Award, the provisions applicable in the event the Participant’s employment or
service terminates, and the Company’s authority to unilaterally or bilaterally
amend, modify, suspend, cancel or rescind an Award.

     

    9.3          Limits on Transfer. No right
or interest of a Participant in any Award may be pledged, encumbered, or
hypothecated to or in favor of any party other than the Company or a Subsidiary,
or shall be subject to any lien, obligation, or liability of such Participant to
any other party other than the Company or a Subsidiary. No Award shall be
assigned, transferred, or otherwise disposed of by a Participant other than by
will or the laws of descent and distribution.

     

    9.4          Beneficiaries. Notwithstanding
Section 9.3, a Participant may, in the manner determined by the Committee,
designate a beneficiary to exercise the rights of the Participant and to receive
any distribution with respect to any Award upon the Participant’s death. A
beneficiary, legal guardian, legal representative, or other person claiming any
rights pursuant to the Plan is subject to all terms and conditions of the Plan
and any Award Agreement applicable to the Participant, except to the extent the
Plan and Award Agreement otherwise provide, and to any additional restrictions
deemed necessary or appropriate by the Committee. If the Participant is married
and resides in a community property state, a designation of a person other than
the Participant’s spouse as his beneficiary with respect to more than 50% of the
Participant’s interest in the Award shall not be effective without the prior
written consent of the Participant’s spouse. If no beneficiary has been
designated or survives the Participant, payment shall be made to the person
entitled thereto pursuant to the Participant’s will or the laws of descent and
distribution. Subject to the foregoing, a beneficiary designation may be changed
or revoked by a Participant at any time provided the change or revocation is
filed with the Committee.

     

    
      
        
        

      

      
        11.

        
          

        

      

      
        
        

      

    

     

    9.5         
Stock Certificates.
Notwithstanding anything herein to the contrary, the Company shall not be
required to issue or deliver any certificates evidencing shares of Stock
pursuant to the exercise of any Award, unless and until the Board has
determined, with advice of counsel, that the issuance and delivery of such
certificates is in compliance with all applicable laws, regulations of
governmental authorities and, if applicable, the requirements of any exchange on
which the shares of Stock are listed or traded. All Stock certificates delivered
pursuant to the Plan are subject to any stop-transfer orders and other
restrictions as the Committee deems necessary or advisable to comply with
federal, state, or foreign jurisdiction, securities or other laws, rules and
regulations and the rules of any national securities exchange or automated
quotation system on which the Stock is listed, quoted, or traded. The Committee
may place legends on any Stock certificate to reference restrictions applicable
to the Stock. In addition to the terms and conditions provided herein, the Board
may require that a Participant make such reasonable covenants, agreements, and
representations as the Board, in its discretion, deems advisable in order to
comply with any such laws, regulations, or requirements. The Committee shall
have the right to require any Participant to comply with any timing or other
restrictions with respect to the settlement or exercise of any Award, including
a window-period limitation, as may be imposed in the discretion of the
Committee.

     

    ARTICLE
10

     

    CHANGES
IN CAPITAL STRUCTURE

     

    10.1        Adjustments. In the event of
any stock dividend, stock split, combination or exchange of shares, merger,
consolidation, spin-off, recapitalization or other distribution (other than
normal cash dividends) of Company assets to stockholders, or any other change
affecting the shares of Stock or the share price of the Stock, the Committee
shall make such proportionate adjustments, if any, as the Committee in its
discretion may deem appropriate to reflect such change with respect to (i) the
aggregate number and type of shares that may be issued under the Plan
(including, but not limited to, adjustments of the limitations in Sections 3.1);
(ii) the terms and conditions of any outstanding Awards (including, without
limitation, any applicable performance targets or criteria with respect
thereto); and (iii) the grant or exercise price per share for any outstanding
Awards under the Plan.

     

    10.2        Effect of a Change of Control When
Awards Are Not Assumed. If a Change of Control occurs and a Participant’s
Awards are not assumed by the surviving or successor entity or its parent or
Subsidiary and such successor does not substitute substantially similar awards
for those outstanding under the Plan, such Awards shall become fully exercisable
and/or payable as applicable, and all forfeiture restrictions on such Awards
shall lapse. Upon, or in anticipation of, a Change of Control, the Committee may
cause any and all Awards outstanding hereunder to terminate at a specific time
in the future and shall give each Participant the right to exercise such Awards
during a period of time as the Committee, in its sole and absolute discretion,
shall determine. The Committee shall have sole discretion to determine whether
an Award has been assumed by the surviving or successor entity or its parent or
Subsidiary or whether such successor has substituted substantially similar
awards for those outstanding under the Plan in connection with a Change of
Control.

     

    
      
        
        

      

      
        12.

        
          

        

      

      
        
        

      

    

     

    10.3        Effect
of Change of Control When Awards Are Assumed; TerminationFollowing Change of
Control.

     

    (a)           In
the event of a Change of Control where a Participant’s Awards are assumed by the
surviving or successor entity or its parent or Subsidiary or such successor
substitutes substantially similar awards for those outstanding under the Plan,
then fifty percent (50%) of such Participant’s unvested Awards shall become
fully exercisable and/or payable as applicable, and all forfeiture restrictions
on such Awards shall lapse, immediately prior to such Change of
Control.

     

    (b)           In
the event of a Change of Control where a Participant’s Awards are assumed by the
surviving or successor entity or its parent or Subsidiary or such successor
substitutes substantially similar awards for those outstanding under the Plan,
if within twelve (12) months following such Change of Control (i) the
Participant’s employment or service with the surviving or successor entity or
its parent or Subsidiary is terminated without Cause or (ii) such Participant
voluntarily terminates such Participant’s employment or service with Good
Reason, then such Participant’s remaining unvested Awards (including any
substituted awards) shall become fully exercisable and/or payable as applicable,
and all forfeiture restrictions on such Awards (including any substituted
awards) shall lapse, on the date of termination. Such Awards (including any
substituted awards) shall remain exercisable, as applicable, until the earlier
of the expiration date of the Award or three (3) months following such
Participant’s cessation of employment or service.

     

    10.4        Outstanding Awards - Certain Mergers.
Subject to any required action by the stockholders of the Company, in the
event that the Company shall be the surviving corporation in any merger or
consolidation (except a merger or consolidation as a result of which the holders
of shares of Stock receive securities of another corporation), each Award
outstanding on the date of such merger or consolidation shall pertain to and
apply to the securities that a holder of the number of shares of Stock subject
to such Award would have received in such merger or consolidation.

     

    10.5        Outstanding Awards - Other Changes.
In the event of any other change in the capitalization of the Company or
corporate change other than those specifically referred to in this Article 10,
the Committee may, in its absolute discretion, make such adjustments in the
number and class of shares subject to Awards outstanding on the date on which
such change occurs and in the per share grant or exercise price of each Award as
the Committee may consider appropriate to prevent dilution or enlargement of
rights.

     

    10.6        No Other Rights. Except as
expressly provided in the Plan, no Participant shall have any rights by reason
of any subdivision or consolidation of shares of stock of any class, the payment
of any dividend, any increase or decrease in the number of shares of stock of
any class or any dissolution, liquidation, merger, or consolidation of the
Company or any other corporation. Except as expressly provided in the Plan or
pursuant to action of the Committee under the Plan, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number of shares of Stock subject to an Award or the grant
or exercise price of any Award.

     

    
      
        
        

      

      
        13.

        
          

        

      

      
        
        

      

    

     

    ARTICLE
11

     

    ADMINISTRATION

     

    11.1        Committee. Unless and until
the Board delegates administration to the Committee as set forth below, the Plan
shall be administered by the Board, which shall, in such event, constitute the
“Committee” for the purposes of the Plan. Any action taken by the Board in
connection with the administration of the Plan shall not be deemed approved by
the Board unless such actions are approved by a majority of the Independent
Directors. The Board may delegate administration of the Plan to the Committee,
and the term “Committee” shall apply to any person or persons to whom such
authority has been delegated; provided, however, that such
Committee be comprised of a majority of or solely two or more Independent
Directors. 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, including the power to delegate to a subcommittee any of
the administrative powers the Committee is authorized to exercise (and
references in the Plan to the Board shall thereafter be to the Committee or
subcommittee), 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. Any action taken by the Board in connection with the administration
of the Plan shall continue to not be deemed approved by the Board unless such
actions are approved by a majority of the Independent Directors. Appointment of
Committee members shall be effective upon acceptance of appointment. Committee
members may resign at any time by delivering written notice to the Board.
Vacancies in the Committee may only be filled by the Board.

     

    11.2        Action by the Committee. A
majority of the Committee shall constitute a quorum. The acts of a majority of
the members present at any meeting at which a quorum is present, and acts
approved in writing by a majority of the Committee in lieu of a meeting, shall
be deemed the acts of the Committee. Each member of the Committee is entitled
to, in good faith, rely or act upon any report or other information furnished to
that member by any officer or other employee of the Company or any Subsidiary,
the Company’s independent certified public accountants, or any executive
compensation consultant or other professional retained by the Company to assist
in the administration of the Plan.

     

    11.3        Authority of Committee.
Subject to any specific designation in the Plan, the Committee has the
exclusive power, authority and discretion to:

     

    (a)           Adopt
procedures from time to time in the Committee’s discretion to ensure that an
Employee is eligible to participate in the Plan prior to the granting of any
Awards to such Employee under the Plan (including, without limitation, a
requirement, if any, that each such Employee certify to the Company prior to the
receipt of an Award under the Plan that he or she has not been previously
employed by the Company or a Subsidiary, or if previously employed, has had a
bona fide period of non-employment, and that the grant of Awards under the Plan
is an inducement material to his or her agreement to enter into employment with
the Company or a Subsidiary);

     

    
      
        
        

      

      
        14.

        
          

        

      

      
        
        

      

    

     

    (b)           Designate
Participants to receive Awards;

     

    (c)           Determine
the type or types of Awards to be granted to each Participant;

     

    (d)           Determine
the number of Awards to be granted and the number of shares of Stock to which an
Award will relate;

     

    (e)           Determine
the terms and conditions of any Award granted pursuant to the Plan, including,
but not limited to, the exercise price, grant price, or purchase price, any
reload provision, any restrictions or limitations on the Award, any schedule for
lapse of forfeiture restrictions or restrictions on the exercisability of an
Award, and accelerations or waivers thereof, any provisions related to
non-competition and recapture of gain on an Award, based in each case on such
considerations as the Committee in its sole discretion determines;

     

    (f)           Determine
whether, to what extent, and pursuant to what circumstances an Award may be
settled in, or the exercise price of an Award may be paid in cash, Stock, other
Awards, or other property, or an Award may be canceled, forfeited, or
surrendered;

     

    (g)          Prescribe
the form of each Award Agreement, which need not be identical for each
Participant;

     

    (h)          Decide
all other matters that must be determined in connection with an
Award;

     

    (i)           Establish,
adopt, or revise any rules and regulations as it may deem necessary or advisable
to administer the Plan;

     

    (j)           Interpret
the terms of, and any matter arising pursuant to, the Plan or any Award
Agreement; and

     

    (k)          Make
all other decisions and determinations that may be required pursuant to the Plan
or as the Committee deems necessary or advisable to administer the
Plan.

     

    12.4       
Decisions Binding. The Committee’s interpretation of the Plan, any Awards
granted pursuant to the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.

     

    ARTICLE
12

     

    EFFECTIVE
AND EXPIRATION DATE

     

    12.1        Effective Date. The Plan is
effective as of the date of its adoption by the Board (the “Effective
Date”).

     

    12.2        Expiration Date. The Plan will
expire on, and no Award may be granted pursuant to the Plan after December 31,
2015 (the “Expiration
Date”). Any Awards that are outstanding on the Expiration Date shall
remain in force according to the terms of the Plan and the applicable Award
Agreement. Each Award Agreement shall provide that it will expire on the tenth
anniversary of the date of grant of the Award to which it relates.

     

    
      
        
        

      

      
        15.

        
          

        

      

      
        
        

      

    

     

    ARTICLE
13

     

    AMENDMENT,
MODIFICATION, AND TERMINATION

     

    13.1        Amendment, Modification, and
Termination. With the approval of the Board, at any time and from time to
time, the Committee may terminate, amend or modify the Plan; provided, however, that to
the extent necessary and desirable to comply with any applicable law,
regulation, or stock exchange rule, the Company shall obtain stockholder
approval of any Plan amendment in such a manner and to such a degree as
required.

     

    13.2        Awards Previously Granted. No
termination, amendment, or modification of the Plan shall adversely affect in
any material way any Award previously granted pursuant to the Plan without the
prior written consent of the Participant.

     

    ARTICLE
14


     

    GENERAL
PROVISIONS

     

    14.1        No Rights to Awards. No
Participant, employee, or other person shall have any claim to be granted any
Award pursuant to the Plan, and neither the Company nor the Committee is
obligated to treat Participants, employees, and other persons
uniformly.

     

    14.2        No Stockholders Rights. No
Award gives the Participant any of the rights of a stockholder of the Company
unless and until shares of Stock are in fact issued to such person in connection
with such Award.

     

    14.3        Withholding. The Company or
any Subsidiary shall have the authority and the right to deduct or withhold, or
require a Participant to remit to the Company, an amount sufficient to satisfy
federal, state, local and foreign taxes (including the Participant’s FICA
obligation) required by law to be withheld with respect to any taxable event
concerning a Participant arising as a result of the Plan. The Committee may in
its discretion and in satisfaction of the foregoing requirement allow a
Participant to elect to have the Company withhold shares of Stock otherwise
issuable under an Award (or allow the return of shares of Stock) having a Fair
Market Value equal to the sums required to be withheld. Notwithstanding any
other provision of the Plan, the number of shares of Stock which may be withheld
with respect to the issuance, vesting, exercise or payment of any Award (or
which may be repurchased from the Participant of such Award within six months
after such shares of Stock were acquired by the Participant from the Company) in
order to satisfy the Participant’s federal, state, local and foreign income and
payroll tax liabilities with respect to the issuance, vesting, exercise or
payment of the Award shall be limited to the number of shares which have a Fair
Market Value on the date of withholding or repurchase equal to the aggregate
amount of such liabilities based on the minimum statutory withholding rates for
federal, state, local and foreign income tax and payroll tax purposes that are
applicable to such supplemental taxable income.

     

    14.4        No Right to Employment or Services.
Nothing in the Plan or any Award Agreement shall interfere with or limit
in any way the right of the Company or any Subsidiary to terminate any
Participant’s employment or services at any time, nor confer upon any
Participant any right to continue in the employ or service of the Company or any
Subsidiary.

     

    
      
        
        

      

      
        16.

        
          

        

      

      
        
        

      

    

     

    14.5        Unfunded Status of Awards. The
Plan is intended to be an “unfunded” plan for incentive compensation. With
respect to any payments not yet made to a Participant pursuant to an Award,
nothing contained in the Plan or any Award Agreement shall give the Participant
any rights that are greater than those of a general creditor of the Company or
any Subsidiary.

     

    14.6        Indemnification. To the extent
allowable pursuant to applicable law, each member of the Committee or of the
Board shall be indemnified and held harmless by the Company from any loss, cost,
liability, or expense that may be imposed upon or reasonably incurred by such
member in connection with or resulting from any claim, action, suit, or
proceeding to which he or she may be a party or in which he or she may be
involved by reason of any action or failure to act pursuant to the Plan and
against and from any and all amounts paid by him or her in satisfaction of
judgment in such action, suit, or proceeding against him or her; provided, he or she gives the
Company an opportunity, at its own expense, to handle and defend the same before
he or she undertakes to handle and defend it on his or her own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled pursuant to the Company’s
Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them
harmless.

     

    14.7        Relationship to Other Benefits.
No payment pursuant to the Plan shall be taken into account in
determining any benefits pursuant to any pension, retirement, savings, profit
sharing, group insurance, welfare or other benefit plan of the Company or any
Subsidiary except to the extent otherwise expressly provided in writing in such
other plan or an agreement thereunder.

     

    14.8        Expenses. The expenses of
administering the Plan shall be borne by the Company and its
Subsidiaries.

     

    14.9        Titles and Headings. The
titles and headings of the Articles and Sections in the Plan are for convenience
of reference only and, in the event of any conflict, the text of the Plan,
rather than such titles or headings, shall control.

     

    14.10     Fractional Shares. No
fractional shares of Stock shall be issued and the Committee shall determine, in
its discretion, whether cash shall be given in lieu of fractional shares or
whether such fractional shares shall be eliminated by rounding up or down as
appropriate.

     

    14.11     Limitations Applicable to Section 16
Persons. Notwithstanding any other provision of the Plan, the Plan, and
any Award granted or awarded to any Participant who is then subject to Section
16 of the Exchange Act, shall be subject to any additional limitations set forth
in any applicable exemptive rule under Section 16 of the Exchange Act (including
any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule. To the extent permitted by applicable law,
the Plan and Awards granted or awarded hereunder shall be deemed amended to the
extent necessary to conform to such applicable exemptive rule.

     

    
      
        
        

      

      
        17.

        
          

        

      

      
        
        

      

    

     

    14.12     Government And Other Regulations.
The obligation of the Company to make payment of awards in Stock or
otherwise shall be subject to all applicable laws, rules, and regulations, and
to such approvals by government agencies as may be required. The Company shall
be under no obligation to register pursuant to the Securities Act of 1933, as
amended, any of the shares of Stock paid pursuant to the Plan. If the shares
paid pursuant to the Plan may in certain circumstances be exempt from
registration pursuant to the Securities Act of 1933, as amended, the Company may
restrict the transfer of such shares in such manner as it deems advisable to
ensure the availability of any such exemption.

     

    14.13     Governing Law. The Plan and
all Award Agreements shall be construed in accordance with and governed by the
laws of the State of Delaware.

     

    14.14     SECTION 409A OF THE CODE. In
the event any provision of the Plan, or the application thereof, is or becomes
inconsistent with Section 409A of the Code and any regulations promulgated
thereunder, such provision shall be void or unenforceable or in the sole
discretion of the Committee shall be deemed amended to comply with Section 409A
and any regulations promulgated thereunder. The other provisions of the Plan
shall remain in full force and effect.

     

    ARTICLE
15

     

    GENERAL
PROVISIONS

     

    15.1       
STOCKHOLDER APPROVAL NOT
REQUIRED. It is expressly intended that approval of the Company’s
stockholders not be required as a condition of the effectiveness of the Plan,
and the Plan’s provisions shall be interpreted in a manner consistent with such
intent for all purposes. Specifically, Rule 4350(i) promulgated by the NASD
generally requires stockholder approval for stock option plans or other equity
compensation arrangements adopted by companies whose securities are listed on
the Nasdaq National Market pursuant to which stock awards or stock may be
acquired by officers, directors, employees, or consultants of such companies.
NASD Rule 4350(i)(1)(A)(iv) provides an exception to this requirement for
issuances of securities to a person not previously an employee or director of
the issuer, or following a bona fide period of non-employment, as an inducement
material to the individual’s entering into employment with the issuer; provided, such issuances are
approved by either the issuer’s compensation committee comprised of a majority
of independent directors or a majority of the issuer’s independent directors.
Awards under the Plan may only be made to Eligible Participants who have not
previously been an Employee or director of the Company or a Subsidiary, or
following a bona fide period of non-employment by the Company or a Subsidiary,
as an inducement material to the Eligible Participant’s entering into employment
with the Company or a Subsidiary. Awards under the Plan will be approved by (i)
the Company’s Compensation Committee comprised of a majority of the Company’s
Independent Directors or (ii) a majority of the Company’s Independent Directors.
Accordingly, pursuant to NASD Rule 4350(i)(1)(A)(iv), the issuance of Awards and
the shares of Common Stock issuable upon exercise or vesting of such Awards
pursuant to the Plan are not subject to the approval of the Company’s
stockholders.

     

    
      
        
        

      

      
        18.