Document:

Exhibit
10.1

 

CONCEPTUS, INC.

 

2010 EQUITY INCENTIVE AWARD PLAN

 

ARTICLE 1.

 

PURPOSE

 

The
purpose of the Conceptus, Inc. 2010 Equity Incentive Award Plan (as
amended from time to time, the “Plan”) is to promote the success and
enhance the value of Conceptus, Inc. (the “Company”) by linking the
personal interests of the members of the Board, Employees, and Consultants 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 members of the Board, Employees, and
Consultants upon whose judgment, interest, and special effort the successful
conduct of the Company’s operation is largely dependent.

 

ARTICLE 2.

 

DEFINITIONS
AND CONSTRUCTION

 

Wherever
the following terms are used in the Plan they shall have the meanings specified
below, unless the context clearly indicates otherwise.  The singular pronoun shall include the plural
where the context so indicates.

 

2.1           “Award” means an Option, a Restricted Stock award, a Stock
Appreciation Right award, a Performance Share award, a Performance Stock Unit
award, a Dividend Equivalents award, a Stock Payment award, a Deferred Stock
award, a Restricted Stock Unit award, a Performance Bonus Award or a
Performance-Based Award granted to a Participant pursuant to the Plan.

 

2.2           “Award Agreement” means any written agreement, contract, or other
instrument or document evidencing an Award, including through electronic
medium.

 

2.3           “Board” means the Board of Directors of the Company.

 

2.4           “Change in Control” means and includes each of the following:

 

(a)           A
transaction or series of transactions (other than an offering of Stock to the
general public through a registration statement filed with the Securities and
Exchange Commission) whereby any “person” or related “group” of “persons” (as
such terms are used in Sections 13(d) and 14(d)(2) of the Exchange
Act) (other than the Company, any of its subsidiaries, an employee benefit plan
maintained by the Company or any of its subsidiaries or a “person” that, prior
to such transaction, directly or indirectly controls, is controlled by, or is
under common control with, the Company) directly or indirectly acquires
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange
Act) of securities of the Company

 

 

possessing more than 50% of the total combined
voting power of the Company’s securities outstanding immediately after such
acquisition; or

 

(b)           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 Section 2.4(a) or Section 2.4(c))
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

 

(c)           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
in any single transaction or series of related transactions or (z) the
acquisition of assets or stock of another entity, in each case other than a
transaction:

 

(i)            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

 

(ii)           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 Section 2.4(c)(ii) 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

 

(d)           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 in Control of the
Company has occurred pursuant to the above definition, and the date of the
occurrence of such Change in Control and any incidental matters relating
thereto. In addition, if a Change in Control constitutes a payment event with
respect to any Award which provides for the deferral of compensation and is
subject to Section 409A of the Code, the transaction or event described in
this Section 2.5 with respect to such Award must also constitute a “change
in control event,” as defined in Treasury Regulation §1.409A-3(i)(5) to
the extent required by Section 409A of the Code.

 

2.5           “Code” means the Internal Revenue Code of 1986, as amended.

 

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2.6           “Committee” means the committee of the Board described in Article 13.

 

2.7           “Company” has the meaning given in Article 1.

 

2.8           “Consultant” means any consultant or adviser if: (a) the
consultant or adviser renders bona fide services to the Company or any
Subsidiary; (b) the services rendered by the consultant or adviser are not
in connection with the offer or sale of securities in a capital-raising
transaction and do not directly or indirectly promote or maintain a market for
the Company’s securities; and (c) the consultant or adviser is a natural
person.

 

2.9           “Covered Employee” means an Employee who is, or could be, a “covered
employee” within the meaning of Section 162(m) of the Code.

 

2.10         “Deferred Stock” means a right to receive a specified number of
shares of Stock during specified time periods pursuant to Section 8.5.

 

2.11         “Director” means a member of the Board, or as applicable, a
member of the board of directors of a Subsidiary.

 

2.12         “Disability”  means
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.

 

2.13         “Dividend Equivalents” means a right granted to a Participant
pursuant to Section 8.3 to receive the equivalent value (in cash or Stock)
of dividends paid on Stock.

 

2.14         “DRO” means a domestic relations order as defined by the Code or
Title I of the Employee Retirement Income Security Act of 1974, as amended from
time to time, or the rules thereunder.

 

2.15         “Effective Date” has the meaning set forth in Section 14.1.

 

2.16         “Eligible Individual” means any person who is an Employee, a
Consultant or an Independent Director, as determined by the Committee.

 

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

 

2.18         “Equity
Restructuring” means a nonreciprocal transaction between the Company and
its stockholders, such as a stock dividend, stock split, spin-off, or
recapitalization through a large, nonrecurring cash dividend, that affects the
shares of Stock (or other securities of the Company) or the share price of
Stock (or other securities) and causes a change in the per share value of the
Stock underlying outstanding Awards.

 

2.19         “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

2.20         “Fair Market Value” means, as of any given date, (a) if
Stock is traded on any established stock exchange, the closing price of a share
of Stock as reported in the Wall Street 

 

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Journal (or such other source as the Company may deem reliable for such
purposes) for such date, or if no sale occurred on such date, the first trading
date immediately prior to such date during which a sale occurred; or (b) if
Stock is not traded on an exchange but is quoted on a national market or other
quotation system, the last sales price on such date, or if no sales occurred on
such date, then on the date immediately prior to such date on which sales
prices are reported; or (c) if Stock is not publicly traded, the fair market
value established by the Committee acting in good faith.

 

2.21         “Full Value Award” means a Restricted Stock award, a Performance
Share award, a Performance Stock Unit award, a Stock Payment award, a Dividend
Equivalents award, a Deferred Stock award, a Restricted Stock Unit award, a
Performance Bonus Award or a Performance-Based Award.

 

2.22         “Incentive Stock Option” means an Option that is intended to meet
the requirements of Section 422 of the Code or any successor provision
thereto.

 

2.23         “Independent Director” means a Director of the Company who is not
an Employee.

 

2.24         “Independent Director Equity Compensation Policy” shall have the
meaning set forth in Article 12.

 

2.25         “Non-Employee Director” means a Director of the Company who
qualifies as a “Non-Employee Director” as defined in Rule 16b-3(b)(3) under
the Exchange Act, or any successor rule.

 

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

 

2.27         “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 may be either an Incentive Stock Option or a Non-Qualified Stock Option.

 

2.28         “Participant” means any Eligible Individual who, as a Director,
Consultant or Employee, has been granted an Award pursuant to the Plan.

 

2.29         “Performance-Based Award” means an Award granted to selected
Covered Employees pursuant to Section 8.7, but which is subject to the
terms and conditions set forth in Article 9. All Performance-Based Awards
are intended to qualify as Qualified Performance-Based Compensation.

 

2.30         “Performance Bonus Award” has the meaning set forth in Section 8.7.

 

2.31         “Performance Criteria” means the criteria that the Committee
selects for purposes of establishing the Performance Goal or Performance Goals
for a Participant for a Performance Period. 
The Performance Criteria that will be used to establish Performance
Goals are limited to the following: net earnings (either before or after
interest, taxes, depreciation and amortization), economic value-added, sales or
revenue, net income (either

 

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before or after taxes), operating earnings,
cash flow (including, but not limited to, operating cash flow and free cash
flow), cash flow return on capital, return on net assets, return on
stockholders’ equity, return on assets, return on capital, stockholder returns,
return on sales, gross or net profit margin, productivity, expense, margins,
operating efficiency, customer satisfaction, working capital, earnings per
share, price per share of Stock, and market share, any of which may be measured
either in absolute terms or as compared to any incremental increase or as
compared to results of a peer group.  The
Committee shall define in an objective fashion the manner of calculating the
Performance Criteria it selects to use for such Performance Period for such
Participant.

 

2.32         “Performance Goals” means, for a Performance Period, the goals
established in writing by the Committee for the Performance Period based upon
the Performance Criteria.  Depending on
the Performance Criteria used to establish such Performance Goals, the
Performance Goals may be expressed in terms of overall Company performance or
the performance of a division, network, business unit, or an individual.  The Committee, in its discretion, may, within
the time prescribed by Section 162(m) of the Code, adjust or modify
the calculation of Performance Goals for such Performance Period in order to
prevent the dilution or enlargement of the rights of Participants (a) in
the event of, or in anticipation of, any unusual or extraordinary corporate
item, transaction, event, or development, or (b) in recognition of, or in anticipation
of, any other unusual or nonrecurring events affecting the Company, or the
financial statements of the Company, or in response to, or in anticipation of,
changes in applicable laws, regulations, accounting principles, or business
conditions.

 

2.33         “Performance Period” means the one or more periods of time, which
may be of varying and overlapping durations, as the Committee may select, over
which the attainment of one or more Performance Goals will be measured for the
purpose of determining a Participant’s right to, and the payment of, an Award.

 

2.34         “Performance Share” means a right granted to a Participant
pursuant to Section 8.1, to receive Stock, the payment of which is
contingent upon achieving certain Performance Goals or other performance-based
targets established by the Committee.

 

2.35         “Performance Stock Unit” means a right granted to a Participant
pursuant to Section 8.2, to receive Stock, the payment of which is
contingent upon achieving certain Performance Goals or other performance-based
targets established by the Committee.

 

2.36         “Permitted Transferee” shall mean, with respect to a Participant,
any “family member” of the Participant, as defined under the instructions to
use of the Form S-8 Registration Statement under the Securities Act, after
taking into account any state, federal, local or foreign tax and securities
laws applicable to transferable Awards.

 

2.37         “Plan” has the meaning set forth in Article 1.

 

2.38         “Prior Plans” means, collectively, the following plans of the
Company: the Conceptus, Inc. Equity Incentive Plan, the Conceptus, Inc.
Twelfth Amended and Restated 2001 Equity Incentive Plan and the Conceptus, Inc.
Amended and Restated 2002 Non-Qualified Stock Option Plan, in each case as such
plan may be amended from time to time.

 

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2.39         “Qualified Performance-Based Compensation” means any compensation
that is intended to qualify as “qualified performance-based compensation” as
described in Section 162(m)(4)(C) of the Code and which is subject to
the terms and conditions set forth in Article 9.

 

2.40         “Restricted Stock” means Stock awarded to a Participant pursuant
to Article 6 that is subject to certain restrictions and may be subject to
risk of forfeiture.

 

2.41         “Restricted Stock Unit” means an Award granted pursuant to Section 8.6.

 

2.42         “Securities Act” means the Securities Act of 1933, as amended.

 

2.43         “Stock” means the common stock of the Company, par value $0.003
per share, and such other securities of the Company that may be substituted for
Stock pursuant to Article 11.

 

2.44         “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.

 

2.45         “Stock Payment” means a payment in the form of shares of Stock
granted pursuant to Section 8.4 as part of any bonus, deferred
compensation or other arrangement.

 

2.46         “Subsidiary” means any “subsidiary corporation” as defined in Section 424(f) of
the Code and any applicable regulations promulgated thereunder or any other
entity of which a majority of the outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Company.

 

2.47         “Substitute Awards” means Awards granted or shares of Stock
issued by the Company in assumption of, or in substitution or exchange for,
awards previously granted, or the right or obligation to make future awards, in
each case by a company acquired by the Company or any Subsidiary or with which
the Company or any Subsidiary combined.

 

2.48         “Successor Entity” has the meaning given in Section 2.4(c)(i).

 

ARTICLE 3.

 

SHARES SUBJECT
TO THE PLAN

 

3.1           Number of Shares.

 

(a)           Subject
to Article 11 and Sections 3.1(b), (c) and (d), the maximum aggregate
number of shares of Stock that may be issued or delivered under the Plan is (i) 3,000,000
shares of Stock plus (ii) that number of shares of Stock that as of March 31,
2010 are available for issuance under the Prior Plans plus (iii) that
number of shares of Stock that are subject to equity awards granted under the
Prior Plans which were outstanding as of March 31, 2010 and thereafter terminate,
expire, lapse or are forfeited for any reason and which following

 

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the termination, expiration, lapse or forfeiture of
such awards do not again become available for issuance under the Prior Plans; provided, however,
that such aggregate number of shares of Stock available for issuance under the
Plan shall be reduced by two (2) shares for each share of Stock delivered in
settlement of any Full Value Award.  The
aggregate number of shares of Stock available for issuance under the Prior
Plans as of March 31, 2010 was 152,259, the aggregate number of shares of
Stock subject to outstanding awards under the Prior Plans as of March 31,
2010 was 10,128,105, and, accordingly, the total number of shares of Stock in
the preceding sentence shall not exceed 13,280,634.

 

(b)           If
an award granted under a Prior Plan or an Award is forfeited (including a
repurchase of an unvested Award upon a Participant’s termination of service at
a price equal to the par value of the Stock subject to the Award) or expires,
the shares of Stock subject to such Award or award under the Prior Plan shall,
to the extent of such forfeiture or expiration, again be available for Awards
under the Plan, subject to Section 3.1(d) below.  Notwithstanding anything to the contrary
contained herein, the following shares of Stock shall not be added to the
shares of Stock authorized for grant under paragraph (a) of this Section: (i) shares
of Stock tendered by the Participant or withheld by the Company in payment of
the purchase price of an Option or an option granted under a Prior Plan, (ii) shares
of Stock tendered by the Participant or withheld by the Company to satisfy any
tax withholding obligation with respect to an Award or an award granted under a
Prior Plan, and (iii) shares of Stock subject to a Stock Appreciation
Right (or a stock appreciation right from a Prior Plan) that are not issued in
connection with the stock settlement of the Stock Appreciation Right (or a
stock appreciation right from a Prior Plan) on exercise thereof.  Notwithstanding the provisions of this Section 3.1(b),
no shares of Stock may again be optioned, granted or awarded if such action
would cause an Incentive Stock Option to fail to qualify as an incentive stock
option under Section 422 of the Code.

 

(c)           Substitute
Awards shall not reduce the shares of Stock authorized for grant under the Plan
or authorized for grant to a Participant in any calendar year.  Additionally, in the event that a company
acquired by the Company or any Subsidiary or with which the Company or any
Subsidiary combines has shares available under a pre-existing plan approved by
shareholders and not adopted in contemplation of such acquisition or
combination, the shares available for grant pursuant to the terms of such
pre-existing plan (as adjusted, to the extent appropriate, using the exchange
ratio or other adjustment or valuation ratio or formula used in such
acquisition or combination to determine the consideration payable to the
holders of common stock of the entities party to such acquisition or
combination) may be used for Awards under the Plan and shall not reduce the
shares of Stock authorized for grant under the Plan; provided that Awards using such available shares shall not
be made after the date awards or grants could have been made under the terms of
the pre-existing plan, absent the acquisition or combination, and shall only be
made to individuals who were not Employees, Consultants or Directors prior to
such acquisition or combination.

 

(d)           Any
shares of Stock that again become available for grant pursuant to this Section 3
shall be added back as (i) one (1) share of stock if such shares of
Stock were subject to Options or Stock Appreciation Rights granted under the
Plan or options or stock appreciation rights granted under the Prior Plans and (ii) as
two (2) shares of Stock if such shares of Stock were subject to Full Value
Awards or awards other than options or stock appreciation rights granted under
the Prior Plans.

 

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(e)           Notwithstanding
anything to the contrary in this Section 3, or elsewhere in this Plan, but
subject to adjustment pursuant to Article 11 of the Plan, the aggregate
number of shares of Stock actually issued or transferred by the Company upon
the exercise of Incentive Stock Options shall not exceed 13,280,634 shares of
Stock.

 

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.

 

3.3           Limitation on Number of Shares Subject to Awards.  Notwithstanding any provision
in the Plan to the contrary, and subject to Article 11, the maximum number
of shares of Stock with respect to one or more Awards that may be granted to
any one Participant during any calendar year shall be 800,000 shares of
Stock.  The maximum amount that may be
paid in cash to any one Participant during any calendar year with respect to
any Performance-Based Award (including, without limitation, any Performance
Bonus Award) shall be $2,000,000.

 

ARTICLE 4.

 

ELIGIBILITY
AND PARTICIPATION

 

4.1           Eligibility.  Each Eligible Individual shall be eligible to
be granted one or more Awards pursuant to the Plan.

 

4.2           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 Eligible Individual
shall have any right to be granted an Award pursuant to this Plan.

 

4.3           Foreign Participants.  Notwithstanding any provision of the Plan to
the contrary, in order to comply with the laws in other countries in which the
Company and its Subsidiaries operate or have Eligible Individuals, the
Committee, in its sole discretion, shall have the power and authority to: (i) determine
which Subsidiaries shall be covered by the Plan; (ii) determine which
Eligible Individuals outside the United States are eligible to participate in
the Plan; (iii) modify the terms and conditions of any Award granted to
Eligible Individuals outside the United States to comply with applicable
foreign laws; (iv) establish subplans and modify exercise procedures and
other terms and procedures, to the extent such actions may be necessary or
advisable (any such subplans and/or modifications shall be attached to this
Plan as appendices); provided, however,
that no such subplans and/or modifications shall increase the share limitations
contained in Sections 3.1 and 3.3 of the Plan; and (v) take any action,
before or after an Award is made, that it deems advisable to obtain approval or
comply with any necessary local governmental regulatory exemptions or
approvals.  Notwithstanding the
foregoing, the Committee may not take any actions hereunder, and no Awards
shall be granted, that would violate the Exchange Act, the Code, any securities
law or governing statute or any other applicable law.

 

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ARTICLE 5.

 

STOCK
OPTIONS

 

5.1           General.  The Committee is authorized to grant Options
to Eligible Individuals 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, subject to Section 5.2(c), the exercise
price for any Option shall not be less than 100% of the Fair Market Value of a
share of Stock on the date of grant. 
Notwithstanding the foregoing, Options that are Substitute Awards may be
granted with a per share exercise price other than as required in the preceding
sentence.

 

(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 seven
(7) years.  The Committee
shall also determine the Performance Criteria, other specific performance
criteria 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 and the form
of payment, including, without limitation: (i) cash, (ii) shares of
Stock held for such period of time as may be required by the Committee and
having a Fair Market Value on the date of delivery equal to the aggregate
exercise price of the Option or exercised portion thereof, or (iii) 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).  Notwithstanding any other provision of the
Plan to the contrary, no Participant who is a Director 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, or continue any
extension of credit with respect to the exercise price of an Option with a loan
from the Company or a loan arranged by the Company in violation of Section 13(k) of
the Exchange Act.

 

(e)           Evidence
of Grant.  All Options shall be evidenced by an Award
Agreement between the Company and the Participant.  The Award Agreement shall include such
additional provisions as may be specified by the Committee.

 

5.2           Incentive Stock Options.  Incentive Stock Options shall be granted only
to Employees and the terms of any Incentive Stock Options granted pursuant to
the Plan, in addition to the requirements of Section 5.1, must comply with
the provisions of this Section 5.2.

 

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(a)           Expiration.  Subject to Section 5.2(c),
an Incentive Stock Option shall expire and may not be exercised to any extent
by anyone after the date seven (7) years from the date it is granted,
unless an earlier time is set in the Award Agreement.

 

(b)           Dollar
Limitation.  The aggregate Fair Market Value (determined
as of the time the Option is granted) of all shares of Stock with respect to
which Incentive Stock Options are first exercisable by a Participant in any
calendar year may not exceed $100,000 or such other limitation as imposed by Section 422(d) of
the Code, or any successor provision.  To
the extent that Incentive Stock Options are first exercisable by a Participant
in excess of such limitation, the excess shall be considered Non-Qualified
Stock Options.

 

(c)           Ten
Percent Owners.  An Incentive Stock Option shall be granted to
any individual who, at the date of grant, owns stock possessing more than ten
percent of the total combined voting power of all classes of Stock of the
Company only if such Option is granted at a price that is not less than 110% of
Fair Market Value on the date of grant and the Option is exercisable for no
more than five years from the date of grant.

 

(d)           Notice
of Disposition.  The Participant shall give the Company prompt
notice of any disposition of shares of Stock acquired by exercise of an
Incentive Stock Option within (i) two years from the date of grant of such
Incentive Stock Option or (ii) one year after the transfer of such shares
of Stock to the Participant.

 

(e)           Right
to Exercise.  During a Participant’s lifetime, an Incentive
Stock Option may be exercised only by the Participant.

 

(f)            Failure
to Meet Requirements.  Any Option (or portion thereof) purported to
be an Incentive Stock Option, which, for any reason, fails to meet the
requirements of Section 422 of the Code shall be considered a
Non-Qualified Stock Option.

 

ARTICLE 6.

 

RESTRICTED
STOCK AWARDS

 

6.1           Grant of Restricted Stock.  The Committee is authorized to make Awards of
Restricted Stock to any Eligible Individual selected by the Committee in such
amounts and subject to such terms and conditions as determined by the
Committee.  All Awards of Restricted Stock
shall be evidenced by an Award Agreement and shall be subject to Article 10.

 

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) and
may be linked to any one or more of the Performance Criteria or other specific
performance criteria determined appropriate by the Committee.  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.

 

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ARTICLE 7.

 

STOCK
APPRECIATION RIGHTS

 

7.1           Grant of Stock Appreciation Rights.

 

(a)           A
Stock Appreciation Right may be granted to any Eligible Individual selected by
the Committee.  The exercise price per
share of Stock subject to each Stock Appreciation Right shall be set by the
Committee, but shall not be less than 100% of the per share Fair Market Value
on the date the Stock Appreciation Right is granted.  A Stock Appreciation Right shall be subject
to such terms and conditions not inconsistent with the Plan as the Committee
shall impose (including any Performance Criteria or other specific performance
criteria that must be satisfied before all or part of a Stock Appreciation
Right may be exercised) and shall be evidenced by an Award Agreement.  The Committee shall determine the time or
times at which a SAR may be exercised in whole or in part; provided that the term of any SAR granted
under the Plan shall not exceed seven (7) years.

 

(b)           A
Stock Appreciation Right shall entitle the Participant (or other person
entitled to exercise the Stock Appreciation Right pursuant to the Plan) to
exercise all or a specified portion of the Stock Appreciation Right (to the
extent then exercisable pursuant to its terms) and to receive from the Company
an amount equal to the product of (i) the excess of (A) the Fair
Market Value of the Stock on the date the Stock Appreciation Right is exercised
over (B) the Fair Market Value of the Stock on the date the Stock
Appreciation Right was granted (which may be the original date of grant for a
Substitute Award) and (ii) the number of shares of Stock with respect to
which the Stock Appreciation Right is exercised, subject to any limitations the
Committee may impose.

 

7.2           Payment and Limitations on Exercise.

 

(a)           Subject
to Section 7.2(b), payment of the amounts determined under Section 7.1(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 and set forth in the Award Agreement.

 

(b)           To
the extent any payment under this Section 7 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 Individual selected by the
Committee may be granted one or more Performance Share awards which shall be
denominated in a number of shares of Stock and which may be linked to any one
or more of the Performance Criteria or other 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

 

11

 

factors as it deems relevant in light of the
specific type of award) the contributions, responsibilities and other
compensation of the particular Participant.

 

8.2           Performance Stock Units.  Any
Eligible Individual selected by the Committee may be granted one or more
Performance Stock Unit awards which shall be denominated in unit equivalent of
shares of Stock and/or units of value including dollar value of shares of Stock
and which may be linked to any one or more of the Performance Criteria or other
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.

 

8.3           Dividend Equivalents.  Any Eligible Individual 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 other than an Option or
Stock Appreciation Right, to be credited as of dividend payment dates, during
the period between the date such Award is granted and the date such 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.
Notwithstanding the foregoing, any Dividend Equivalents granted with respect to
Performance Shares, Performance Stock Units, Performance Bonus Awards or
Performance-Based Awards shall only be paid as such Awards vest based upon the
achievement of the applicable Performance Goals or other performance-based
objectives.  For the avoidance of doubt,
Dividend Equivalents shall not be granted with respect to Options or Stock
Appreciation Rights.

 

8.4           Stock Payments.  Any Eligible Individual 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 the Performance
Criteria or other specific performance criteria determined appropriate by the
Committee, determined on the date such Stock Payment is made or on any date
thereafter.

 

8.5           Deferred Stock.  Any Eligible Individual selected by the
Committee may be granted an award of Deferred Stock in the manner determined
from time to time by the Committee.  The
number of shares of Deferred Stock 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 subject to Section 10.6.  Stock underlying a Deferred Stock award will
not be issued until the Deferred Stock award has vested, pursuant to a vesting
schedule or performance criteria set by the Committee.  Unless otherwise provided by the Committee, a
Participant awarded Deferred Stock shall have no rights as a Company
stockholder with respect to such Deferred Stock until such time as the Deferred
Stock award has vested and the Stock underlying the Deferred Stock award has
been issued.

 

12

 

8.6           Restricted Stock Units.  The Committee is authorized to make Awards of
Restricted Stock Units to any Eligible Individual selected by the Committee in
such amounts and subject to such terms and conditions as determined by the
Committee.  At the time of grant, the
Committee shall specify the date or dates on which the Restricted Stock Units
shall become fully vested and nonforfeitable, and may specify such conditions
to vesting as it deems appropriate subject to Section 10.6.  At the time of grant, the Committee shall
specify the maturity date applicable to each grant of Restricted Stock Units
which shall be no earlier than the vesting date or dates of the Award and may
be determined at the election of the grantee. 
On the maturity date, the Company shall, subject to Section 10.5(b),
transfer to the Participant one unrestricted, fully transferable share of Stock
for each Restricted Stock Unit scheduled to be paid out on such date and not
previously forfeited.

 

8.7           Performance Bonus Awards.
Any Eligible Individual selected by the Committee may be granted one or more
Performance-Based Awards in the form of a cash bonus (a “Performance Bonus
Award”) payable upon the attainment of Performance Goals that are
established by the Committee and relate to one or more of the Performance
Criteria, in each case on a specified date or dates or over any period or
periods determined by the Committee subject to Section 10.6.  Any such Performance Bonus Award paid to a
Covered Employee shall be based upon objectively determinable bonus formulas
established in accordance with Article 9.

 

ARTICLE 9.

 

PERFORMANCE-BASED
AWARDS

 

9.1           Purpose.  The purpose of this Article 9 is to
provide the Committee the ability to qualify Awards other than Options and SARs
and that are granted pursuant to Articles 6 
and 8 as Qualified Performance-Based Compensation.  If the Committee, in its discretion, decides
to grant a Performance-Based Award to a Covered Employee, the provisions of
this Article 9 shall control over any contrary provision contained in
Articles 6, 8 or 10; provided, however,
that the Committee may in its discretion grant Awards to Eligible Individuals
(including Covered Employees) that are based on Performance Criteria or
Performance Goals but that do not satisfy the requirements of this Article 9.

 

9.2           Applicability.  This Article 9 shall apply only to those
Covered Employees selected by the Committee to receive Performance-Based
Awards.  The designation of a Covered
Employee as a Participant for a Performance Period shall not in any manner
entitle the Participant to receive an Award for the period.  Moreover, designation of a Covered Employee
as a Participant for a particular Performance Period shall not require
designation of such Covered Employee as a Participant in any subsequent
Performance Period and designation of one Covered Employee as a Participant
shall not require designation of any other Covered Employees as a Participant
in such period or in any other period.

 

9.3           Procedures with Respect to Performance-Based Awards.  To the extent necessary to
comply with the Qualified Performance-Based Compensation requirements of Section 162(m)(4)(C) of
the Code, with respect to any Award granted under Articles 6 or 8 which may be
granted to one or more Covered Employees, no later than ninety (90) days 

 

13

 

following the commencement of any fiscal
year in question or any other designated fiscal period or period of service (or
such other time as may be required or permitted by Section 162(m) of
the Code), the Committee shall, in writing, (a) designate one or more
Covered Employees, (b) select the Performance Criteria applicable to the
Performance Period, (c) establish the Performance Goals, and amounts of
such Awards, as applicable, which may be earned for such Performance Period,
and (d) specify the relationship between Performance Criteria and the
Performance Goals and the amounts of such Awards, as applicable, to be earned
by each Covered Employee for such Performance Period.  Following the completion of each Performance
Period, the Committee shall certify in writing whether the applicable
Performance Goals have been achieved for such Performance Period.  In determining the amount earned by a Covered
Employee, the Committee shall have the right to reduce or eliminate (but not to
increase) the amount payable at a given level of performance to take into
account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the Performance Period.

 

9.4           Payment of Performance-Based Awards.  Unless otherwise provided in the applicable
Award Agreement, a Participant must be employed by the Company or a Subsidiary
on the day a Performance-Based Award for such Performance Period is paid to the
Participant.  Furthermore, a Participant
shall be eligible to receive a payment pursuant to a Performance-Based Award
for a Performance Period only if the Performance Goals for such period are
achieved.  In determining the amount
earned under a Performance-Based Award, the Committee may reduce or eliminate
the amount of the Performance-Based Award earned for the Performance Period, if
in its sole and absolute discretion, such reduction or elimination is
appropriate.

 

9.5           Additional Limitations.  Notwithstanding any other provision of the
Plan, any Award which is granted to a Covered Employee and is intended to
constitute Qualified Performance-Based Compensation shall be subject to any
additional limitations set forth in Section 162(m) of the Code
(including any amendment to Section 162(m) of the Code) or any
regulations or rulings issued thereunder that are requirements for
qualification as qualified performance-based compensation as described in Section 162(m)(4)(C) of
the Code, and the Plan shall be deemed amended to the extent necessary to
conform to such requirements.

 

ARTICLE 10.

 

PROVISIONS
APPLICABLE TO AWARDS

 

10.1         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.

 

10.2         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 

 

14

 

employment or service terminates, and the
Company’s authority to unilaterally or bilaterally amend, modify, suspend,
cancel or rescind an Award.

 

10.3         Limits on Transfer.

 

(a)           Except
as otherwise provided in Section 10.3(b):

 

(i)            No
Award under the Plan may be sold, pledged, assigned or transferred in any
manner other than by will or the laws of descent and distribution or, subject
to the consent of the Administrator, pursuant to a DRO, unless and until such
Award has been exercised, or the shares underlying such Award have been issued,
and all restrictions applicable to such shares have lapsed;

 

(ii)           No
Award or interest or right therein shall be liable for the debts, contracts or
engagements of the Participant or his successors in interest or shall be
subject to disposition by transfer, alienation, anticipation, pledge, hypothecation,
encumbrance, assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy),
and any attempted disposition thereof shall be null and void and of no effect,
except to the extent that such disposition is permitted by the preceding
sentence; and

 

(iii)          During
the lifetime of the Participant, only the Participant may exercise an Award (or
any portion thereof) granted to him under the Plan, unless it has been disposed
of pursuant to a DRO; after the death of the Participant, any exercisable
portion of an Award may, prior to the time when such portion becomes
unexercisable under the Plan or the applicable Award Agreement, be exercised by
his personal representative or by any person empowered to do so under the
deceased Participant’s will or under the then applicable laws of descent and
distribution.

 

(b)           Notwithstanding
Section 10.3(a), the Administrator, in its sole discretion, may determine
to permit a Participant to transfer an Award other than an Incentive Stock
Option to any one or more Permitted Transferees, subject to the following terms
and conditions:  (i) an Award
transferred to a Permitted Transferee shall not be assignable or transferable
by the Permitted Transferee other than by will or the laws of descent and
distribution; (ii) an Award transferred to a Permitted Transferee shall
continue to be subject to all the terms and conditions of the Award as
applicable to the original Participant (other than the ability to further
transfer the Award); and (iii) the Participant and the Permitted
Transferee shall execute any and all documents requested by the Administrator,
including, without limitation documents to (A) confirm the status of the
transferee as a Permitted Transferee, (B) satisfy any requirements for an
exemption for the transfer under applicable federal, state and foreign
securities laws and (C) evidence the transfer.

 

10.4         Beneficiaries.  Notwithstanding Section 10.3, 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 

 

15

 

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 or her 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.

 

10.5         Stock Certificates; Book Entry Procedures.

 

(a)           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.

 

(b)           Notwithstanding
any other provision of the Plan, unless otherwise determined by the Committee
or required by any applicable law, rule or regulation, the Company shall
not deliver to any Participant certificates evidencing shares of Stock issued
in connection with any Award and instead such shares of Stock shall be recorded
in the books of the Company (or, as applicable, its transfer agent or stock
plan administrator).

 

10.6         Full Value Award Vesting Limitations.  Subject to Section 11 and except as may
be determined by the Committee in the event of the Participant’s death,
Disability or retirement, notwithstanding any other provision of this Plan to
the contrary, Full Value Awards made to Employees shall become vested over a
period of not less than three years (or, in the case of vesting based upon the
attainment of Performance Goals or other performance-based objectives, over a
period of not less than one year, which shall include fully-vested Awards
granted in lieu of cash awards that have been earned based on a performance
period of at least one year); provided,
however, that notwithstanding the foregoing, (i) Full Value
Awards that result in the issuance of an aggregate of up to 5% of the shares of
Stock available pursuant to Section 3.1(a) may be granted to any one
or more Participants without respect to such 

 

16

 

minimum vesting provisions and (ii) the
Company may grant Full Value Awards to employees newly hired by the Company or
any of its Subsidiaries without respect to such minimum vesting provisions.

 

10.7         Paperless Administration.  In the event that the Company establishes,
for itself or using the services of a third party, an automated system for the
documentation, granting or exercise of Awards, such as a system using an
internet website or interactive voice response, then the paperless
documentation, granting or exercise of Awards by a Participant may be permitted
through the use of such an automated system.

 

10.8         Term.  Except as otherwise provided herein, the term
of any Award shall be set by the Committee in its discretion.

 

10.9         Exercise or Purchase Price.  Except as set forth in Sections 5.1(a) and
7.1(b), the Committee may establish the exercise or purchase price, if any, of
any Award; provided, however,
that such price shall not be less than the par value of a share of Stock on the
date of grant, unless otherwise permitted by applicable state law.

 

10.10       Treatment upon Termination of Employment or Service.  An Award shall only be
exercisable or payable while the Participant is an Employee, Consultant or
Director, as applicable; provided, however,
that the Committee in its sole and absolute discretion may provide that an
Award may be exercised or paid subsequent to a termination of employment or
service, as applicable, or following a Change in Control of the Company, or
because of the Participant’s retirement, death or Disability, or otherwise.

 

10.11       Form of Payment.  Payments with respect to any Awards granted
under this Plan shall be made in cash, in Stock or a combination of both, as
determined by the Committee and set forth in the Award Agreement.

 

10.12       Award Agreement.  All Awards granted under this Plan shall be
subject to such additional terms and conditions as determined by the Committee
and shall be evidenced by an Award Agreement.

 

ARTICLE 11.

 

CHANGES
IN CAPITAL STRUCTURE

 

11.1         Adjustments.

 

(a)           In
connection with the occurrence of any Equity Restructuring, and notwithstanding
anything to the contrary in Sections 11.1(b) and 11.1(c):

 

(i)            The
number and type of securities subject to each outstanding Award and the
exercise price or grant price thereof, if applicable, will be equitably
adjusted.  The adjustments provided under
this Section 11.1(a)(i) shall be nondiscretionary and shall be final
and binding on the affected Participant and the Company.

 

17

 

(ii)           With
respect to the aggregate number and kind of shares that may be issued under the
Plan (including, but not limited to, adjustments of the limitations in Sections
3.1 and 3.3), the Committee shall make such equitable adjustments, if any, as
the Committee in its discretion may deem appropriate to reflect such Equity
Restructuring.

 

(b)           Other than in connection
with an Equity Restructuring, in the event of any combination or exchange of
shares, merger, consolidation 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 may make such
equitable adjustments, if any, as the Committee in its discretion may deem
appropriate to reflect such change with respect to (a) the aggregate
number and kind of shares that may be issued under the Plan (including, but not
limited to, adjustments of the limitations in Sections 3.1 and 3.3); (b) the
terms and conditions of any outstanding Awards (including, without limitation,
any applicable performance targets or criteria with respect thereto); and (c) the
grant or exercise price per share for any outstanding Awards under the Plan.

 

(c)           Other than in connection
with an Equity Restructuring, in the event of any transaction or event
described in Section 11.1 or any unusual or nonrecurring transactions or
events affecting the Company, any affiliate of the Company, or the financial
statements of the Company or any affiliate, or of changes in applicable laws,
regulations or accounting principles, the Committee, in its sole and absolute
discretion, and on such terms and conditions as it deems appropriate, either by
the terms of the Award or by action taken prior to the occurrence of such
transaction or event and either automatically or upon the Participant’s
request, is hereby authorized to take any one or more of the following actions
whenever the Committee determines that such action is appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan or with respect to any Award under the
Plan, to facilitate such transactions or events or to give effect to such
changes in laws, regulations or principles:

 

(i)            To
provide for either (A) termination of any such Award in exchange for an
amount of cash and/or property, if any, equal to the amount that would have
been attained upon the exercise of such Award or realization of the Participant’s
rights (and, for the avoidance of doubt, if as of the date of the occurrence of
the transaction or event described in this Section 11.1 the Committee
determines in good faith that no amount would have been attained upon the
exercise of such Award or realization of the Participant’s rights, then such
Award may be terminated by the Company without payment) or (B) the
replacement of such Award with other rights or property selected by the
Committee in its sole discretion;

 

(ii)           To
provide that such Award be assumed by the successor or survivor corporation, or
a parent or subsidiary thereof, or shall be substituted for by similar options,
rights or awards covering the stock of the successor or survivor corporation,
or a parent or subsidiary thereof, with appropriate adjustments as to the
number and kind of shares and prices;

 

(iii)          To
make adjustments in the number and type of shares of Stock (or other securities
or property) subject to outstanding Awards, and in the number and kind of
outstanding Award and/or in the terms and conditions of (including the grant or
exercise price), 

 

18

 

and the criteria included in, outstanding options,
rights and awards and options, rights and awards which may be granted in the
future;

 

(iv)          To
provide that such Award shall be exercisable or payable or fully vested with
respect to all shares covered thereby, notwithstanding anything to the contrary
in the Plan or the applicable Award Agreement; and

 

(v)           To
provide that the Award cannot vest, be exercised or become payable after such
event.

 

11.2         Change in Control.  If the Company undergoes a Change in Control,
then any surviving corporation or entity or acquiring corporation or entity, or
affiliate of such corporation or entity, may assume any Awards outstanding
under the Plan or may substitute similar stock awards (including an award to
acquire the same consideration paid to the stockholders in the Change in
Control) for those outstanding under the Plan. 
Notwithstanding Section 11.1, and except as may otherwise be provided
in any applicable Award Agreement or other written agreement entered into
between the Company and a Participant, if a Change in Control occurs and a
Participant’s Award is not assumed or an equivalent award substituted by a
successor entity, then immediately prior to the Change in Control such Award
shall become fully exercisable and all forfeiture restrictions on such Awards
shall lapse.  Upon, or in anticipation
of, a Change in Control, the Committee may cause any and all Awards outstanding
hereunder to terminate at a specific time in the future, including but not
limited to the date of such Change in Control, 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.  In the event that the terms of any agreement
between the Company or any Company subsidiary or affiliate and a Participant
contains provisions that conflict with and are more restrictive than the provisions
of this Section 11.2, this Section 11.2 shall prevail and control and
the more restrictive terms of such agreement (and only such terms) shall be of
no force or effect.   Notwithstanding the
assumption or substitution of Awards granted to Participants other than
Independent Directors pursuant to the foregoing provisions, any Award granted
to an Independent Director pursuant to the Independent Director Equity
Compensation Policy which is outstanding immediately prior to the closing of
the Change in Control shall be accelerated and made fully vested and/or
exercisable, as applicable, at least ten (10) days prior to the closing of
the Change in Control.

 

11.3         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.

 

11.4         Restrictions on Exercise.  In the event of any pending stock dividend,
stock split, combination or exchange of shares, merger, consolidation or other
distribution (other than

 

19

 

normal cash dividends) of Company assets to
stockholders, or any other change affecting the shares of Stock or the share
price of the Stock including any Equity Restructuring, for reasons of
administrative convenience, the Company in its sole discretion may refuse to
permit the exercise of any Award during a period of 30 days prior to the
consummation of any such transaction.

 

ARTICLE 12.

 

GRANTS
OF AWARDS TO INDEPENDENT DIRECTORS

 

Notwithstanding
anything herein to the contrary, the grant of any Award to an Independent
Director shall be made by the Board pursuant to a written policy or program
which may be recommended by a committee of the Board and approved by the Board
(the “Independent Director Equity Compensation Policy”) in its
discretion.  The Independent Director
Equity Compensation Policy shall set forth the type of Award(s) to be
granted to Independent Directors, the number of shares of Stock to be subject
to Independent Director Awards, the conditions on which such Awards shall be
granted, become exercisable and/or payable and expire, and such other terms and
conditions as may be set forth in the Independent Director Equity Compensation
Policy and determined by the Board in its discretion.  For the avoidance of doubt, Awards granted to
Independent Directors shall be subject to all of the limitations set forth in
the Plan.

 

ARTICLE 13.

 

ADMINISTRATION

 

13.1         Committee.  Unless and until the Board delegates
administration of the Plan to a Committee as set forth below, the Plan shall be
administered by the full Board, and for such purposes the term “Committee” as
used in this Plan shall be deemed to refer to the Board.  The Board, at its discretion or as otherwise
necessary to comply with the requirements of Section 162(m) of the
Code, Rule 16b-3 promulgated under the Exchange Act or to the extent
required by any other applicable rule or regulation, may delegate
administration of the Plan to a Committee consisting of two or more members of
the Board.  Unless otherwise determined
by the Board, the Committee shall consist solely of two or more members of the
Board each of whom is an “outside director,” within the meaning of Section 162(m) of
the Code, a Non-Employee Director and an “independent director” under the rules of
the NASDAQ Stock Market (or other principal securities market on which shares
of Stock are traded); provided that any action taken by the Committee shall be
valid and effective, whether or not members of the Committee at the time of
such action are later determined not to have satisfied the requirements for
membership set forth in this Section 13.1 or otherwise provided in any
charter of the Committee. 
Notwithstanding the foregoing: (a) the full Board, acting by a
majority of its members in office, shall conduct the general administration of
the Plan with respect to all Awards granted to Independent Directors and for
purposes of such Awards the term “Committee” as used in this Plan shall be deemed
to refer to the Board and (b) the Committee may delegate its authority
hereunder to the extent permitted by Section 13.5.  In its sole discretion, the Board may at any
time and from time to time exercise any and all rights and duties of the
Committee under the Plan except with respect to matters which under Rule 16b-3

 

20

 

under the Exchange Act or Section 162(m) of
the Code, or any regulations or rules issued thereunder, are required to
be determined in the sole discretion of the Committee.  Except as may otherwise be provided in any
charter of the Committee, 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; and vacancies in the Committee may only
be filled by the Board.

 

13.2         Action by the Committee.  Unless otherwise established by the Board or
in any charter of the Committee, a majority of the Committee shall constitute a
quorum and 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.

 

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

 

(a)           Designate
Participants to receive Awards;

 

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

 

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

 

(d)           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; provided, however,
that the Committee shall not have the authority to accelerate the vesting or
waive the forfeiture of any Performance-Based Awards;

 

(e)           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;

 

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

 

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

 

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

 

21

 

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

 

(j)            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.

 

13.4         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.

 

13.5         Delegation of Authority.  To the extent permitted by applicable law,
the Board or the Committee may from time to time delegate to a committee of one
or more members of the Board or one or more officers of the Company the
authority to grant or amend Awards to Participants other than (a) Employees
who are subject to Section 16 of the Exchange Act, (b) Covered
Employees, or (c) officers of the Company (or Directors) to whom authority
to grant or amend Awards has been delegated hereunder.  Any delegation hereunder shall be subject to
the restrictions and limits that the Board or the Committee, as applicable,
specifies at the time of such delegation, and the Board or the Committee, as
applicable, may at any time rescind the authority so delegated or appoint a new
delegatee.  At all times, the delegatee
appointed under this Section 13.5 shall serve in such capacity at the
pleasure of the Board.

 

ARTICLE 14.

 

EFFECTIVE
AND EXPIRATION DATE

 

14.1         Effective Date.  The Plan is effective as of the date the Plan
is approved by the Company’s stockholders (the “Effective Date”).  The Plan will be deemed to be approved by the
stockholders if it is approved either:

 

(a)           By
a majority of the votes cast at a duly held stockholder’s meeting at which a
quorum representing a majority of outstanding voting stock is, either in person
or by proxy, present and voting on the plan; or

 

(b)           By
a method and in a degree that would be treated as adequate under Delaware law
in the case of an action requiring stockholder approval.

 

14.2         Expiration Date.  The Plan will expire on, and no Award may be
granted pursuant to the Plan after the tenth anniversary of the Effective Date,
except that no Incentive Stock Options may be granted under the Plan after the
earlier of the tenth anniversary of (a) the date the Plan is approved by
the Board or (b) the Effective Date. 
Any Awards that are outstanding on the tenth anniversary of the
Effective Date shall remain in force according to the terms of the Plan and the
applicable Award Agreement.

 

22

 

ARTICLE 15.

 

AMENDMENT,
MODIFICATION, AND TERMINATION

 

15.1         Amendment, Modification, and
Termination.  Subject to Section 16.14,
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 (a) 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, and (b) stockholder approval shall be required
for any amendment to the Plan that (i) increases the number of shares
available under the Plan (other than any adjustment as provided by Article 11),
(ii) permits the Committee to grant Options with an exercise price that is
below Fair Market Value on the date of grant, or (iii) permits the
Committee to extend the exercise period for an Option beyond seven (7) years from the date of
grant.  Notwithstanding any provision in
this Plan to the contrary, absent approval of the stockholders of the Company, (i) except
as permitted by Article 11, no Option or SAR may be amended to reduce the
per share exercise price of the shares subject to such Option or SAR below the
per share exercise price as of the date the Option or SAR is granted and (ii) except
as permitted by Article 11, no Award or cash award may be granted in
exchange for the cancellation or surrender of an Option or SAR.  Further notwithstanding any provision in this
Plan to the contrary, except as permitted by Article 11, absent the
approval of the stockholders of the Company, the Committee shall not offer to
buyout for a payment in cash, an Option or Stock Appreciation Right previously
granted.

 

15.2         Awards Previously Granted.  Except with respect to amendments made  pursuant to Section 16.14, 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 16.

 

GENERAL
PROVISIONS

 

16.1         No Rights to Awards.  No Eligible Individual 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 Eligible Individuals,
Participants or any other persons uniformly.

 

16.2         No Stockholders Rights.  Except as otherwise provided herein, a
Participant shall have none of the rights of a stockholder with respect to
shares of Stock covered by any Award until the Participant becomes the record
owner of such shares of Stock.

 

16.3         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 employment tax obligations) required
by law to be withheld with respect to any taxable event concerning a
Participant arising as a result of this 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 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,

 

23

 

vesting, exercise or payment of any Award
(or which may be repurchased from the Participant of such Award within six
months (or such other period as may be determined by the Committee) 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.

 

16.4         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.

 

16.5         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.

 

16.6         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, by contract, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.

 

16.7         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.

 

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

 

16.9         Titles and Headings.  The titles and headings of the 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.

 

24

 

16.10       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.

 

16.11       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
under 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.

 

16.12       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, 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, 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.

 

16.13       Governing Law.  The Plan and all Award Agreements shall be
construed in accordance with and governed by the laws of the State of Delaware
without regard to otherwise governing principles of conflicts of law.

 

16.14       Section 409A.  To the extent that the Committee determines
that any Award granted under the Plan is subject to Section 409A of the
Code, the Award Agreement evidencing such Award shall incorporate the terms and
conditions required by Section 409A of the Code.  To the extent applicable, the Plan and Award
Agreements shall be interpreted in accordance with Section 409A of the
Code and Department of Treasury regulations and other interpretive guidance
issued thereunder, including without limitation any such regulations or other
guidance that may be issued after the Effective Date.  Notwithstanding any provision of the Plan to
the contrary, in the event that following the Effective Date the Committee
determines that any Award may be subject to Section 409A of the Code and
related Department of Treasury guidance (including such Department of Treasury
guidance as may be issued after the Effective Date), the Committee may adopt
such amendments to the Plan and the applicable Award Agreement or adopt other
policies and procedures (including amendments, policies and procedures with
retroactive effect), or take any other actions, that the Committee determines
are necessary or appropriate to (a) exempt the Award from Section 409A
of the Code and/or preserve the intended tax treatment of the benefits provided
with respect to the Award, or (b) comply with the requirements of Section 409A
of the Code and related Department of Treasury guidance and thereby avoid the
application of any penalty taxes under such Section.

 

25Exhibit 10.7

 

Appendix B

 

CONCEPTUS, INC.

 

FIFTH AMENDMENT TO

1995 EMPLOYEE STOCK PURCHASE PLAN

 

1995 Employee
Stock Purchase Plan  

Adopted: November 22, 1995

Approved By Stockholders: January 1996

 

First Amendment
to Employee Stock Purchase Plan

Adopted: March 23, 2004

 

Second Amendment
to Employee Stock Purchase Plan  

Adopted: March 23, 2004

 

Approved by Stockholders:
June 1, 2004

 

Third Amendment
to Employee Stock Purchase Plan  

Adopted: April 3, 2006

Approved by Stockholders: June 7, 2006

 

Fourth Amendment
to Employee Stock Purchase Plan  

Adopted: April 28, 2008

Approved by Stockholders: June 4, 2008

 

Fifth Amendment
to Employee Stock Purchase Plan  

Adopted: April 21, 2010

Approved by Stockholders: June 14, 2010

 

Effective
July 1, 2010, pursuant to Sections 19 and 20 of the 1995 Employee
Stock Purchase Plan (the “ Purchase Plan
”) of Conceptus, Inc. (the “ Company
”), the Company hereby amends the Purchase Plan as follows:

 

1.     The
first sentence of Section 13(a) is hereby amended to read in its
entirety as follows:

 

“The maximum number of shares of the Company’s
Common Stock which shall be made available for sale under the Plan shall be
810,000 shares, subject to adjustment upon changes in capitalization of the
Company as provided in Section 19.”

 

* * * * * * * * * *

 

I
hereby certify that the foregoing Fifth Amendment to the Plan was duly adopted
by the Board of Directors of the Company effective as of April 22, 2010
and by the stockholders of the Company effective as of June 14, 2010.

 

Executed
on this 14th day of June, 2010.

 

 

Julie
A. Brooks, Secretary

 

B-1

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