Document:

exv10w3

Exhibit 10.3

***Text Omitted and Filed Separately

with the Securities and Exchange Commission.

Confidential Treatment Requested

Under 17 C.F.R. Sections 200.80(b)(4)

and 240.24b-2

PRODUCT DEVELOPMENT ADDENDUM

FOR THE PANTHER INSTRUMENT

AND ULTRIO ELITE ASSAY

This Addendum for the Development of the Panther Instrument and the Ultrio Elite Assay (“Panther
Addendum”) is entered into, effective as of July 24, 2009 (“Addendum Effective Date”) and signed
March 11, 2011 (“Addendum Signature Date”), pursuant to and amending that certain Restated
Agreement entered into as of July 24, 2009 (“Agreement”) by and between Gen-Probe Incorporated, a
Delaware corporation (“Gen-Probe”) with a principal place of business at 10210 Genetic Center
Drive, San Diego, CA 92121, and Novartis Vaccines and Diagnostics, Inc., a Delaware corporation
(“Novartis”) with a place of business at 4560 Horton Street, Emeryville, CA 94608 (Novartis and
Gen-Probe each is individually referred to as a “Party” and together are referred to as the
“Parties”).

RECITALS

     A. Prior to the date of this Panther Addendum, Gen-Probe has expended significant effort and
resources in the development of a molecular diagnostic analyzer known as the Panther Instrument for
use in the Clinical Diagnostic Field.

     B. By this Panther Addendum, the Parties desire to set forth terms and conditions for the
adaptation and development of the Panther Instrument, related software and the Ultrio Elite Assay
(as hereinafter defined) for use in the Blood Screening Field pursuant to the Agreement, as
clarified and amended by the terms and conditions more particularly described herein.

AGREEMENT

     NOW, THEREFORE, for and in consideration of the mutual covenants and agreements set forth in
this Panther Addendum, the Parties agree as follows:

1. Definitions. All capitalized terms used but not defined in this Panther
Addendum shall have the meanings set forth in the Agreement.

     1.1 Addendum Effective Date shall mean July 24, 2009.

     1.2 Addendum Signature Date shall mean March 11, 2011.

     1.3 Addendum Term is defined in Section 7.1.

     1.4 Agreement shall mean the July 24, 2009 Restated Agreement between the
Parties, as amended or supplemented in writing by the Parties before or after the Addendum
Effective Date.

     1.5 Budget means the budgeted Panther Development Costs as of the Addendum
Effective Date. The Budget shall include the estimated cost of the Panther Development Program on
a monthly basis through the end of the Panther Development Program. The approved Budget as of the
Addendum Effective Date is as established within the Panther

 

 

Program Documents. The Budget may be amended from time to time in accordance with the provisions
of Section 3 below.

     1.6 Development Completion Date means the first date on which all of the
following events have occurred: (i) validation and verification of the Panther Instrument against
the then current PRD has been completed by Gen-Probe and Novartis following assay integration
activities for the Ultrio Elite Assay to be offered for use with the instrument, with Novartis’
Final Acceptance; (ii) the manufacturer has released the instrument design for manufacturing; (iii)
all activities to obtain the CE mark, which will permit sale of the Panther Instrument within the
European Union, have been completed, and (iv) all activities to obtain the CE mark, which will
permit sale of the Ultrio Elite Assay within the European Union, have been completed.

     1.7 Final Acceptance. After completion of verification and validation
testing and documentation thereof for the Panther Instrument and the Ultrio Elite Assay (the
“Primary Verification Documentation and Validation Reports”), Gen-Probe’s Vice President,
Instrument Systems shall provide Novartis with written certification (the “Initial Certification”)
that Gen-Probe has satisfactorily completed such verification and validation and that the Primary
Verification Documentation and Validation Reports, including testing trace matrix between the
instrument PRD, SRS and other relevant testing activities, are available for inspection by Novartis
at Gen-Probe. The certification by Gen-Probe shall be delivered to Novartis by separate delivery
to (a) the Head, Development and (b) the Alliance Manager.

          1.7.1 Novartis shall promptly review the Primary Verification Documentation and
Validation Report at Gen-Probe. Gen-Probe will make the necessary facilities and staff available
without delay to accommodate Novartis’ timely review of the Primary Verification Documentation and
Validation Report. The Primary Verification Documentation and Validation Report shall be
Confidential pursuant to the terms of the Agreement. Following Novartis’ review, Novartis shall be
entitled to copy upon request the Validation Report and shall be entitled to copy upon request and
with reasonable justification designated portions of the Verification Documentation. Novartis shall
notify Gen-Probe in writing within seventy-five (75) days of its receipt of the Initial
Certification (“the Initial Review Period”) of any material non-conformance between the Panther
Instrument as submitted to validation by Gen-Probe and the specifications of the Product
Requirements Documents for the Panther Instrument.

          1.7.2 Any disagreement by Gen-Probe with Novartis’ identification of an alleged
material nonconformance shall be resolved in accordance with Article 11 of the Agreement.

          1.7.3 Upon Gen-Probe’s receipt and acceptance without dispute of Novartis’ written
notice of non-acceptance, Gen-Probe shall promptly work to rectify any material non-conformities
and shall thereafter provide Novartis such further verification and validation certification with
respect to correction of the material non-conformities. Gen-Probe shall also make available to
Novartis the Verification Documentation and Validation Report with respect to correction of each
material non-conformity (the “Secondary Verification Documentation and Validation Report”) for
further review in accordance with the provisions of this section.

2

 

          1.7.4 Novartis shall promptly review the Secondary Verification Documentation and
Validation Report with respect to correction of each non-conformity and shall notify Gen-Probe in
writing within twenty (20) days of its receipt of the verification and validation certification
(“the Secondary Review Period”) of any failure to correct the material non-conformance(s)
previously identified by Novartis. Novartis shall not assert non-conformities in the course of the
Secondary Review Period which could have been identified in the Initial Review Period.

          1.7.5 Novartis shall be deemed to have finally accepted the Panther Instrument
and/or assay upon the earlier of: 1) Novartis’ receipt and written acceptance of all initial
Panther Instrument deliverables pursuant to this Panther Addendum; or (ii) the expiration of the
Initial Review Period and any Secondary Review Periods, absent notification by Novartis to
Gen-Probe within the applicable period of any material non-conformance between the Panther
Instrument as submitted to validation by Gen-Probe and the specifications of the Product
Requirements Documents for the Panther Instrument. Notwithstanding the foregoing, Novartis shall
also be conclusively deemed to have finally accepted the Panther Instrument design upon Novartis’
sale or placement of either (i) any one Panther instrument to a Third Party for use as a full
production instrument to process blood screening assays that become the test of record on which
blood is released to the general public or (ii) more than ten (10) Panther instruments to Third
Parties for any use whatsoever.

     1.8 FTE Labor Rate is defined in Section 4.5 below.

     1.9 Material Modification means a change or amendment to the then current
PRD that materially affects the requirements set forth in any of the then-current Panther Program
Documents, including, without limitation, any modification to the PRD that materially affects assay
sensitivity or specificity or materially affects the Timeline or the costs set forth in the Budget,
as further defined in Section 3.3 below.

     1.10 Non-material Modification means a change or amendment to the then
current PRD other than a Material Modification. Written agreement between the Parties that a
modification is a “Non-material Modification” hereunder as described in Section 3.2 below shall be
conclusive.

     1.11 Panther Development Costs means the fully-burdened cost of conducting
the Panther Development Program, subject to Section 4.1.3 of this Panther Addendum. Costs will be
calculated in accordance with United States generally accepted accounting principles, consistently
applied (“U.S. GAAP”), or as otherwise mutually agreed in writing between the Parties.

     1.12 Panther Development Program means the general ongoing systematic
process of modifying and validating the Panther Instrument, developing the related software,
developing the Ultrio Elite Assay, and integration of the Ultrio Elite assay for use on the Panther
Instrument for the Blood Screening Field under the terms of this Panther Addendum, as such
development program is detailed in the Panther Program Documents, through the Development
Completion Dates. [ *** ]

***Confidential Treatment Requested.

3

 

[ *** ]

     1.13 Panther Program Document(s) means the written project detail(s) for the
development of the Panther Instrument, related software, and Ultrio Elite Assay for the Blood
Screening Field pursuant to this Panther Addendum, consisting of (i) the Product Requirements
Documents (“PRDs”), including the Software Requirements Specifications (“SRS”), (ii) the Project
Plans, (iii) the Resource Plans, (iv) the Budgets and (v) the Timelines, each of which is contained
in a secure file accessible by the Parties. The Panther Program Documents may be modified from
time to time as agreed by the Parties. The Panther Program Documents shall be kept in a secure
electronic file at the offices of Gen-Probe, copies of which shall be accessible by the Novartis
upon request.

     1.14 Panther Instrument means the integrated, fully automated laboratory
instrument for use in the Blood Screening Field and related software for DNA/RNA amplified assay
processing incorporating all systems required to support TMA assay processes and associated reagent
product lines for NAT testing in the Blood Screening Field for low to mid-volume laboratories, as
further defined by the Panther Program Documents.

     1.15 Post Development Enhancements means all additional enhancements agreed
to by the Parties in accordance with this Agreement to be implemented after the Development
Completion Date to improve functionality, reliability, and/or performance of the Panther Instrument
and/or related software. The agreed Post Development Enhancements as of the Addendum Signature
Date are set forth in Section 2.5.5, below. Depending on timeline and resource considerations,
certain of such agreed Post Development Enhancements may be accomplished prior to the Development
Completion Date.

     1.16 Product Requirements Documents (or “PRDs”) means (a) the requirement
specifications for the Panther Instrument for use in the Blood Screening Field and, as used in this
Panther Addendum (including the Software Requirements Specifications (or “SRS”) document and
specifications related to the integration of WNV assay in accordance with the pre-existing WNV
assay PRD), and (b) the requirement specifications for the Ultrio Elite Assay. The operative
Product Requirements Document for the Panther Instrument and the operative Product Requirements
Document for the Ultrio Elite Assay in each case as of the Addendum Signature Date, are attached
hereto as Exhibit A and Exhibit B, respectively. The PRDs may be amended from time to time in
accordance with the provisions of Section 3 below.

     1.17 Program Completion Date means six (6) months after the later to occur
of (i) the date the CE mark has been obtained for the Panther Instrument for use with the Ultrio
Elite Assay, and (ii) completion of the agreed Post Development Enhancements identified in Section
2.5.5, but in no event later than the expiration of the Blood Screening Term.

     1.18 Project Plans means the plans for technical aspects and equipment
requirements pursuant to and as further described within the Panther Program Documents, and quality
assurance regarding the Panther Development Program. The Project Plans identify the business
organization and a generalized scheme for development and validation of the Panther Instrument
(including software), the Ultrio Elite Assay and validation of the WNV assay on the Panther

***Confidential Treatment Requested.

4

 

Instrument (as an agreed Post Development Enhancement). The Project Plans may be amended from time
to time in accordance with the provisions of Section 3 below.

     1.19 Resource Plans means the description of (i) a Party’s personnel to be
allocated to the Panther Development Program, including the name of the specific personnel or the
qualification or grade of unidentified personnel, and dedicated amount of time and periods for the
commitment of such personnel required for the Panther Development Program, and (ii) equipment,
tools, software, or other special items, the purchase, license or leasing of which is specifically
required for use by such personnel to support the Panther Development Program. The Resource Plans
may be amended from time to time in accordance with the provisions of Section 3 below. The
Resource Plans, as they may be amended from time to time, shall be retained in a secure electronic
folder accessible by both Parties.

     1.20 Software Requirements Specifications (or “SRS”) means the
specifications for the software for the Panther Instrument for use in the Blood Screening Field.
The SRS may be amended from time to time in accordance with the provisions of Section 3 below. For
purposes of this Panther Addendum, the operative Software Requirements Specifications at any time
shall be the version of the Software Requirements Specifications which at that time has been most
recently generated by Gen-Probe.

     1.21 Timelines means the overall timelines for the Panther Development
Program. The operative Timeline for Panther Instrument, Ultrio Elite Assay development, and WNV
product testing and certification update as of the Addendum Signature Date is attached hereto as
Exhibit D.

     1.22 Ultrio Elite Assay means the in vitro nucleic acid test for the
qualitative detection of human immunodeficiency virus Type 1 (HIV-1) RNA, human immunodeficiency
virus Type 2 (HIV-2) RNA, hepatitis B virus (HBV) DNA, and hepatitis C virus (HCV) RNA in human
plasma for use in the Blood Screening Field, as well as the companion HIV, HBV and HCV
discriminatory probe reagents for the qualitative detection of the specified virus following a
positive, undifferentiated result from the Ultrio Elite assay. The Ultrio Elite HIV discriminatory
probe reagents will not discriminate between HIV-1 and HIV-2.

     1.23 Validation Report means, as the context requires, any and all of the
written reports to be prepared by Gen-Probe detailing the validation for the Ultrio Elite Assay and
the validation of the Panther Instrument (including the validation of integration of the WNV assay
on the Panther Instrument, as a Post Development Enhancement), including a testing trace matrix
between the then current PRD and other relevant testing activities of the Panther Instrument as
further defined in Section 2.5.3 below.

     1.24 Verification Documentation means any and all documentation created and
maintained by Gen-Probe in connection with Gen-Probe’s verification of the Panther Instrument,
verification of the Ultrio Elite Assay, and verification of the integration of the WNV assay on the
Panther Instrument, as a Post Development Enhancement.

5

 

2. Panther Development Program.

     2.1 Objective. Subject to the terms of the Agreement, as amended by this
Panther Addendum, the Parties shall use Commercially Reasonable Efforts to conduct their respective
obligations under the Panther Development Program as established in accordance with the terms
hereof, and, subject to Section 2.5.7 hereof, shall apply for and endeavor to obtain such
regulatory approvals as necessary or appropriate to provide for the use and sale in the Blood
Screening Field of the Panther Instrument and Ultrio Elite Assay in the European Economic
Community, in accordance with Section 2.5.7, below. Novartis acknowledges and agrees that
Gen-Probe will continue its pre-existing development program for the Panther Instrument in the
Clinical Diagnostic Field.

          2.1.1 Interpretation of Agreement. Recognizing the time interval between
the Addendum Effective Date and the Addendum Signature Date, the parties agree that this Panther
Addendum should be interpreted reasonably and practically to give effect to its provisions in
consideration of such time interval and the provisions hereof should therefore generally be given
limited effect prior to the Addendum Signature Date, such that they should apply only where
reasonably necessary to achieve their fundamental purpose.

     2.2 General Conduct of Development. The Parties, using Commercially
Reasonable Efforts, shall conduct their respective obligations under the Panther Development
Program in compliance in all material respects with all applicable laws and regulations and all
applicable good laboratory, clinical and manufacturing practices. In addition, each Party shall
proceed diligently with its respective obligations under the Panther Development Program and shall
use its respective Commercially Reasonable Efforts to achieve the objectives of the Panther
Development Program efficiently and expeditiously. The Parties shall allocate such personnel,
equipment, facilities and other resources to the Panther Development Program to carry out its
respective obligations and to accomplish the objectives thereof, all as is more particularly
described in the Panther Program Documents, as amended from time to time during the term of this
Panther Addendum, in accordance with the provisions of Section 3. Novartis shall retain the right
to consult with Gen-Probe regarding the Panther Program Documents and Gen-Probe shall reasonably
consider Novartis’ advice.

     2.3 No Liability if Commercially Reasonable Efforts Are Expended. The
Parties acknowledge that the Panther Development Program is subject to the risks inherent in all
new product development programs. Subject to all terms and conditions of this Addendum, neither
Party will be in breach of its obligations to the other hereunder and such Party shall be deemed to
have exercised Commercially Reasonable Efforts, so long as such Party shall have committed the
resources described in the Project Plan and the Resource Plan. By way of example and not
limitation, failure to achieve the Timeline shall not be considered a breach of this Addendum if
the responsible party has exercised Commercially Reasonable Efforts by committing the agreed
resources as defined in the Panther Program Documents. The payment of Panther Development Costs
between the Parties shall be due and payable without regard to any specified deliverable set forth
in the Project Plan.

6

 

     2.4 Project Management.

          2.4.1 Project Manager. The Panther Development Program and Ultrio Elite
Assay Development Program will be managed by a Project Manager appointed by Gen-Probe, whose
responsibilities are described in Section 2.4.2. Any change by Gen-Probe of the Project Manager
must be approved by the Supervisory Board, which approval shall not be unreasonably withheld.

          2.4.2 Gen-Probe Project Manager’s Responsibilities. The Gen-Probe Project
Manager shall be responsible for the following activities, together with such other activities as
the parties may agree:

               (a) Fostering and assuring regular and complete communication between Gen-Probe and
Novartis concerning the status of the development programs.

               (b) The Gen-Probe Project Manager shall notify Novartis’ Alliance Manager promptly
of any actual or expected problems, delays, or budget overruns that may be material to the Panther
Development Program. Without limiting the foregoing, the Gen-Probe Project Manager shall notify
Novartis’ Alliance Manager of any expected variances from the then-current budget of greater than
(i) fifteen percent (15%) or $250,000 for any calendar month, whichever is the lesser, and/or (ii)
ten percent (10%) or $250,000 for any calendar quarter, whichever is the lesser.

               (c) Managing all matters relating to the Panther Development Program and Ultrio
Elite Assay Development Program under this Addendum, including each party’s respective
responsibilities and contributions and receiving reports from each party;

               (d) Providing written monthly progress reports to the parties and presenting status
reports to the Supervisory Board;

               (e) Submitting and receiving the reports, materials and documents required to be
delivered under this Addendum;

               (f) Overseeing the process of proposing, and submitting to the parties, any proposed
modifications to Panther Program Documents, and in the event the parties cannot agree, presenting
the same to the Supervisory Board in an objective and neutral manner. The Gen-Probe Project Manager
will have responsibility for documenting changes to scope — all requests to Supervisory Board must
include impact to latest business case, as well as impact to current timeline and budget.

               (g) Arranging any meetings to be held between the parties (other than Operating
Committee and Supervisory Board meetings) and participating, to the extent appropriate, in such
meetings; and

               (h) Maintaining a record of all material communications and deliveries between the
parties of which the Gen-Probe Project Manager is aware, consistent with the parties’ protocol for
such sharing of confidential information.

7

 

     2.4.3 Meetings of the Operating Committee. In addition to their
responsibilities set forth under Section 4.2 of the Agreement, the Novartis/Gen-Probe Operating
Committee shall implement monthly Panther Development Program budget sessions to discuss the
forecasts of the financial aspects of the Panther Development Program for the following month. The
Gen-Probe Project Manager shall notify the Operating Committee of any expected variances from the
then-current budget of greater than (i) fifteen percent (15%) or $250,000 for any calendar month,
whichever is the lesser and/or (ii) ten percent (10%) or $250,000 for any calendar quarter,
whichever is the lesser, and the Operating Committee shall notify the Supervisory Board of any such
expected variances.

     2.4.4 Meetings of the Supervisory Board. The Supervisory Board shall meet from time to
time during the term of this Panther Addendum, but not less frequently than once each calendar
quarter during the term hereof. Not less frequently than quarterly, a regular agenda item at the
regularly scheduled Supervisory Board meeting shall be to receive a report from the Project Manager
and conduct a review of the Panther Development Program to assess progress of the programs and
provide guidance as appropriate.

     2.4.5 Disagreements. Disagreements that cannot be resolved by mutual agreement of the
Parties (including by resolution reached at the Operating Committee) may be brought to the
Supervisory Board for review and resolution. However, work will proceed in accordance with the
principally responsible Party’s method of choice, while the issue in contention is reviewed by the
Supervisory Board. If a disagreement arises in a functional area for which responsibility is
shared and resolution cannot be achieved at the Supervisory Board level, except as to
Regulatory/Licensure Strategy that shall be governed by Section 2.5.7, work shall be suspended in
such functional area until a resolution is reached pursuant to Article 11 of the Agreement,
including arbitration if the disagreement is subject to arbitration.

     2.5 Development Responsibilities

          2.5.1 Principal Responsibility; General Statement. The Parties intend that
the Panther Development Program (including the development of the related software) will be
coordinated by Gen-Probe. Gen-Probe will continue to allow Novartis delegates to review and
comment on the current PRD and risk assessment related design control documentation and will allow
Novartis delegates to review and comment on proposed revisions to such documentation. Subject to
the terms of this Addendum, the Parties shall continue to cooperate with respect to possible
changes to the Panther Program Documents. Gen-Probe shall have the power to make day-to-day
decisions regarding instrument development, consistent with the overall Panther Development Program
and the terms of this Addendum.

               (a) Notwithstanding the above, the Operating Committee shall be notified pursuant
to Section 2.4.3, above, of any planned variances to the then-current mutually approved budget that
is greater than (i) fifteen percent (15%) or $250,000 for any calendar month, whichever is the
lesser, or (ii) ten percent (10%) or $250,000 for any calendar quarter, whichever is the lesser or
(iii) a variance of greater than or equal to sixty (60) calendar days from the then-current
mutually approved launch date as identified in Exhibit D (Timeline). Additionally, in the case of
(ii) and (iii) above, the Supervisory Board shall be notified pursuant to Section 2.4.3., above, of
any such variances and such variances shall be considered by the Supervisory Board at

8

 

the earliest convenient opportunity. All development work will proceed until any such variance can
be considered by the Supervisory Board. Unless such variance is approved by the Supervisory Board
after consideration, development work giving rise to the variance shall be suspended and the
parties shall proceed pursuant to and in accordance with section 2.4.5 or as otherwise directed by
the Supervisory Board.

          2.5.2 Deliverables. Gen-Probe shall use its Commercially Reasonable Efforts
to develop and deliver or otherwise make available to Novartis, in accordance with the Panther
Program Documents: (i) the validation and verification plans for the Panther Instrument and the
Ultrio Elite Assay, (ii) completed Validation Reports for the Panther Instrument and the Ultrio
Elite Assay; (iii) the Verification Documentation; (iv) the testing trace matrix between the PRD,
SRS and testing documentation; (v) risk assessment related to design control documentation; (vi)
the manufacturer’s release of the instrument design for manufacturing; (vii) documentation allowing
the Panther Instrument and Ultrio Elite Assay to bear the “CE” mark; and (viii) the manufacturers’
declarations according to 2004/108/EC for the Panther Instrument and Ultrio Elite Assay, each
signed by an authorized representative(s) of such manufacturer (collectively, the “Deliverables”).

          2.5.3 Testing, Verification, Validation. Upon its completion of development
of the Panther Instrument, Gen-Probe will perform verification, validation, and assay integration
testing for the Ultrio Elite Assay and the Panther Instrument according to current Good
Manufacturing Practices (“cGMP”) pursuant to the Parties’ Quality Agreement for Alliance
Partnership, dated May 28, 2009 (“Quality Agreement”), and in accordance with In Vitro Diagnostic
Directive 98-79-EC governing In Vitro Diagnostic Devices of the European Union and the current
United States Food and Drug Administration Quality System Regulations (“QSR”) under Part 820 of
Title 21 of the Code of Federal Regulations, and will promptly thereafter provide Novartis
reasonable access to the details and results of such testing as set forth in written Validation
Reports and in the Verification Documentation. The Validation Report for the Panther Instrument
will include a testing trace matrix between the then current PRD and SRS and other relevant testing
activities. Gen-Probe shall also be responsible, on the terms of this Addendum, to perform
validation and verification activities for pooling hardware and software for the Panther Instrument
and for integration of the WNV assay on the Panther Instrument. Novartis shall be responsible to
perform validation and verification activities for NAT Manager software for use in conjunction with
the Panther Instrument. Any disagreement about whether the final design of the Panther Instrument
conforms to the PRD and SRS shall be resolved in accordance with Article 11 of the Agreement,
including arbitration.

          2.5.4 Shared Responsibilities; General Statement. The parties have agreed
to share responsibility for certain functions pursuant to the terms of the Agreement (including but
not limited to Section 3.1.6 of the Agreement and pursuant to their May 28, 2009 Quality Agreement
for Alliance Management. The Parties hereby expressly incorporate the provisions of the Agreement
and the Quality Agreement concerning the shared functions into this Panther Addendum and agree to
conduct the Panther Development Program in accordance with the prior agreements, except to the
extent specifically otherwise stated herein.

9

 

          2.5.5 Principal and Shared Responsibilities. Without limiting the general
statements set forth above, the Parties agree to allocate specific responsibility as follows:

	 	 	 	 	 
	 	 	Principal	 	Shared
	Function	 	Responsibility	 	Responsibility
	DEVELOPMENT ACTIVITIES

	 
	 	 	 	 
	Coordination of Panther Development Program

	 	Gen-Probe	 	 
	 
	 	 	 	 
	Supervise and coordinate instrument
development in accordance with PRD,
including SRS

	 	Gen-Probe	 	 
	 
	 	 	 	 
	Develop assay software product labeling

	 	 	 	Gen-Probe/Novartis
	 
	 	 	 	 
	Prepare Labeling translations

	 	 	 	Gen-Probe/Novartis
	 
	 	 	 	 
	Develop validation strategy for, and
validate instrument and software

	 	Gen-Probe	 	 
	 
	 	 	 	 
	Develop verification strategy for, and
verify instrument and software

	 	Gen-Probe	 	 
	 
	 	 	 	 
	Develop, Validate, and Verify Panther
instrument interface for NAT Manager
1/

	 	Gen-Probe	 	 
	 
	 	 	 	 
	Develop training materials, operator
manuals, and Instructions for Use (“IFU”)
for Panther Instrument and Ultrio Elite
Assay [ *** ]

	 	 	 	Gen-Probe/Novartis
	 
	 	 	 	 
	Develop regulatory licensure/strategy for
Panther Instrument and related software

	 	 	 	Gen-Probe/Novartis
	 
	 	 	 	 
	Obtain CE Mark for Panther Instrument and
Ultrio Elite Assay

	 	Gen-Probe	 	 
	 
	Develop Ultrio Elite Assay and 250 test
kit configuration; integrate Ultrio Elite

Assay on Panther Instrument; obtain CE
mark for Ultrio Elite Assay

	 	Gen-Probe	 	 
	 
	AGREED POST DEVELOPMENT ENHANCEMENTS2

	 
	[ *** ]

	 	[ *** ]	 	 
	 
	[ *** ]

	 	[ *** ]	 	 
	 
	[ *** ]

	 	[ *** ]	 	 
	 
	[ *** ]

	 	[ *** ]	 	 
	 
	ADDITIONAL POST DEVELOPMENT ENHANCEMENTS

	 
	Identify additional potential instrument
enhancements

	 	 	 	Gen-Probe/Novartis

 

			
	1/	 	[ *** ]
	 
	2/	 	The parties shall use Commercially Reasonable Efforts to accomplish the Agreed
Post-Development Enhancements as agreed upon in the Timeline attached herein as Exhibit D.

***Confidential Treatment Requested.

10

 

          2.5.6 Out-Sourced Development. Gen-Probe has previously retained STRATEC
Biomedical Systems AG (“Stratec”) to design, develop and manufacture the Panther Instrument and has
entered into binding agreements with Stratec in connection with such activities. Novartis has been
provided with the “Development Agreement for Panther Instrument System” and the “Supply Agreement
for Panther Instrument System” entered into between Gen-Probe and Stratec in November 2006.
Gen-Probe has previously retained other contractors, including the RND Group, to contribute to
various aspects of Panther design and development. Novartis acknowledges and agrees to Gen-Probe’s
continued use of such contractors in connection with the Panther Development Program. Stratec’s
facilities are currently located at Birkenfeld, Germany, or Beringen, Switzerland, and in
recognition of Stratec’s role as contract manufacturer of the Instruments and the location of its
facilities, Gen-Probe will use its best commercial efforts to assure that the “country of origin”
for Panther Instruments is a country within the European Economic Community or that, when
CE-marked, the Instruments otherwise satisfy “country of origin” requirements for regulatory
purposes, if and where applicable, based upon the location of Stratec’s manufacturing facilities.

          2.5.7 Regulatory/Licensure. [ *** ] pursuant to the Agreement
(including but not limited to Section 3.1.6 of the Agreement) and pursuant to the May 28, 2009
Quality Agreement for Alliance Management, with respect to the Panther Development Program,
Gen-Probe agrees to use its best efforts to: (i) regularly review blood screening
regulatory/licensure strategy and management of regulatory submissions with Novartis, (ii) provide
draft copies of all written regulatory submissions to Novartis at least five working days prior to
the proposed date of their submission, (iii) make available the appropriate personnel for a
discussion of any advice or recommendations of Novartis on any regulatory submissions, and (iv)
reasonably consider such advice or recommendations, but Gen-Probe is not required to accept such
advice and/or recommendations. All disagreements on regulatory/licensure issues shall be addressed
by the Supervisory Board and, if necessary, by implementation of the escalation procedure described
in Article 11 of the Agreement, excluding arbitration. For issues that cannot be resolved through
such procedures, Gen-Probe’s Chief Executive Officer shall have the right to make the final
decision. Gen-Probe shall have no obligation under this Panther Addendum to apply for or endeavor
to obtain regulatory approval for any Panther Instrument that fails to meet the criteria set forth
in the applicable Panther Program Documents. Gen-Probe shall be considered the legal manufacturer
of any finished medical devices developed under this Panther Development Addendum. Following the
Development Completion Date, the parties will share the cost of clinical trials and regulatory and
licensing activities that are approved by the Supervisory Board for the Panther Instrument and for
Blood Screening Assays (including the Ultrio Elite Assay).

***Confidential Treatment Requested.

11

 

3. Panther Enhancement Program.

     3.1 Request for Modifications. Either Party may propose Material or
Non-material Modifications to the then current PRD. The process for approval and implementation of
any such proposed modifications shall be governed by this Section 3. The Gen-Probe Project Manager
will review any proposed modification to the then current PRD. The Gen-Probe Project Manager shall
review requested changes and make a determination whether such requested modifications are Material
or Non-material Modifications prior to submission to the Supervisory Board.

     3.2 Non-Material Modifications. Unless the changes to the Panther
Development Program described in Section 3.1 constitute a Material Modification, any Non-Material
Modification shall be reported in the applicable monthly summary progress report to the Supervisory
Board and shall not be subject to the approval process described in Section 3.3 below.

     3.3 Material Modifications.

          3.3.1 Request for Material Modifications. In the event that one Party
desires to request a Material Modification to the then current PRD during the term hereof, such
Party (the “requesting Party”) shall submit to the other Party such request in writing and in
sufficient detail to enable the other Party (the “receiving Party”) to evaluate the request.
Without limiting the foregoing, the requesting Party shall prepare a revised draft version of the
applicable Panther Program Documents, reflecting any changes necessary to fully implement the
requested Material Modification. Promptly upon receipt of a request for Material Modification, but
no more than thirty (30) days thereafter, the Parties shall conduct a preliminary analysis of the
impact that the proposed Material Modification would have, including, without limitation, the
impact on the potential profitability of the Panther Instrument. Should either Party conclude, in
its reasonable discretion, that the potential for later profits is materially and adversely
affected by failure to implement any proposed change to the then current PRD as requested in
accordance with this Section 3, such Requesting Party may elect not to fund the development work
required for the Material Modification, subject to the rights granted to the Parties under Section
3.3.2(c), below [ *** ]. If a proposed Material Modification is not
reasonably expected to have a material adverse impact on the Budget, neither party shall
unreasonably withhold consent thereto.

          3.3.2 Acceptance of Modified Instrument Requirements.

               (a) The Supervisory Board shall promptly, but no later than thirty (30) days after
the preparation of the modified PRD, meet and confer about the proposed modifications. No modified
PRD shall be effective unless approved by the Supervisory Board.

               (b) At such time as the Supervisory Board shall have accepted the modified PRD
incorporating a Material Modification, or any portion thereof, the Parties shall evidence such
agreement by initialing and dating a summary of the revised PRD. The PRD as so modified and
approved shall automatically be incorporated by reference into this Panther

***Confidential Treatment Requested. 

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Addendum. In order to evidence their agreement to the revised PRD, the Parties shall include
it in a separately stored file in which all amendments and modifications to Panther Program
Documents will be kept. Such file shall be accessible by the Novartis Alliance Manager at any time
upon reasonable notice to Gen-Probe.

               (c) If a Party elects, in its reasonable discretion, not to fund the development
work required for any proposed Material Modification, then if the other Party elects to solely fund
such development work, the additional development work shall be deemed to be conducted pursuant to
Section 3.1.2(c) of the Agreement and the funding party shall be entitled to recover the cost of
such additional development work in accordance with Section 3.1.4(b) of the Agreement; [ *** ].

     3.4 Notice of Significant Changes. Each Party will provide three (3)
calendar months notice, unless otherwise agreed by the Parties, to the other Party prior to any
proposal of a significant reduction or increase in resources from the then-current Resource Plan in
order to allow the affected Party time to divert resources either to or from the Panther
Development Program. Subject to Sections 3.2 and 3.3 above, any significant changes to the Budget
or the Resource Plan shall be effective only upon the expiration of three (3) months from the
delivery of such notice, unless the Parties both agree to a shorter period of time in writing.

     3.5 Changes to Panther Instrument or Related Software After Development
Completion Date. The Parties recognize that after the Development Completion Date the market
may demand or regulatory changes may require that special enhancements or modifications be made to
the then current PRD, and that either Party may desire to adopt such changes. From and after the
Development Completion Date but no later than the Program Completion Date, each Party will notify
the Supervisory Board promptly upon receipt of a request from a customer, or upon identification of
regulatory changes that may require the Parties to implement any enhancement, modification or other
change to the Panther Instrument or related software. The Supervisory Board shall promptly, but
not later than the earlier of (i) thirty (30) days after receipt from a Party of such request for
changes, or (ii) the next regularly scheduled Supervisory Board meeting, meet and confer regarding
such requested change. The Supervisory Board shall decide (i) whether the requested changes should
be implemented and (ii) whether the requested changes can be implemented under the terms of this
Panther Addendum or are significant enough to warrant a new development program under the terms of
Article 3 of the Agreement, in which case the Parties shall use the process more particularly
described in Section 3.2 of the Agreement. Notwithstanding the foregoing, nothing herein shall
obligate either Party to conduct development work after the Development Completion Date with
respect to the Panther Instrument or related software, without regard to whether the other Party
indicates a willingness to pay some portion or the entire costs of such development.

     3.6 Performance Upgrades After Program Completion Date. The Supervisory Board
shall seek to agree upon a budget for a continuing reliability improvement program for the Panther
Instrument following the Development Completion Date. Outside of such an approved program, the
Supervisory Board shall decide whether upgrades (including improvements to

***Confidential Treatment Requested. 

13

 

instrument reliability) to the Panther Instrument should be implemented; provided,
however, that Gen-Probe may reasonably and in good faith undertake the development of reliability
improvements at its sole discretion so long as Gen-Probe alone bears the cost of development of
such improvements. If the Supervisory Board decides to implement such upgrades to the Panther
Instrument, a new development program may be implemented under the terms of Article 3 of the
Agreement, in which case the Parties shall use the process more particularly described in Section
3.2 of the Agreement.

4. Panther Development Costs.

     4.1  Novartis Initial Funding Obligations. [ *** ]

          4.1.1 [ *** ]

          4.1.2 [ *** ]

          4.1.3 Purchase of Panther Instruments. [ *** ]

***Confidential Treatment Requested. 

14

 

[ *** ]

     4.2 Cost Sharing Details re Certain Activities. [ *** ]

     4.3 Additional Post Development Activities and Costs. [ *** ]

     4.4 Milestone Payment. [ *** ]

***Confidential Treatment Requested.

15

 

[ *** ]

     4.5 Calculation of Panther Development Costs; FTE Labor Rate.

          4.5.1 The Parties have agreed to include certain categories of the Panther Development
Costs within an agreed-upon labor rate for full time equivalent personnel (the “FTE Labor Rate”).
Those categories of Panther Development Costs included within the FTE Labor Rate are those costs
more particularly described in Schedule 4.5.

          4.5.2 The FTE Labor Rate in effect as of the Addendum Effective Date is set forth in
paragraph 1 on the attached Schedule 4.5. Each year the Parties will evaluate
and re-set a FTE Labor Rate for the budget for the new calendar year based on the Parties’ budgets
for the then-current calendar year and consistent with the requirements below. In the event the
Parties shall not have agreed upon a new FTE Labor Rate before commencement of a calendar year, the
Parties shall use the rate in effect during the immediately preceding calendar year for billing
purposes, subject to “true-up” calculations at such time as the FTE Labor Rate for the then-current
calendar year has been agreed.

          4.5.3 In addition to the annual reset described above, either Party shall have the
right to request a change in the FTE Labor Rate reflected on the attached Schedule 4.5 to
be applied on a prospective basis under the approval process set forth in Section 3. Acceptance of
such request for modification shall be governed by Section 3.3 of this Panther Addendum.

          4.5.4 In addition to the foregoing, throughout the term of this Panther Addendum:

               (a) each Party shall have the same FTE Labor Rate applicable to it as is applied to
the other Party, subject to any agreed modifications; and

               (b) in the event either Party requests a modification to the FTE Labor Rate
hereunder, the modified FTE Labor Rate shall be calculated using the same methodology as that used
to calculate the FTE Labor Rate in effect as of the Addendum Effective Date.

          4.5.5 Monthly Notices; Payments. At the end of each month, Gen-Probe shall
calculate its actual expenditures and FTE Labor amounts for Panther Development Costs it incurred
during such month and shall promptly provide to Novartis a reasonably detailed written breakdown of
such costs and all invoices will be due and payable thirty (30) days from the date of receipt of
the invoice.

          4.5.6 Right to Audit and Verify. Each Party is entitled to review,
evaluate, and in its discretion independently verify the basis of and actual expenditures incurred
by the other Party for which such Party requests reimbursement as Panther Development Costs
hereunder, in accordance with the provisions of Section 7.3 of the Agreement, including, without
limitation, actual expenditures after the Addendum Effective Date but prior to the execution of
this Panther Addendum.

***Confidential Treatment Requested. 

16

 

     4.6 Payment of Panther Development Costs.

          4.6.1 Panther Development Costs. [ *** ]

          4.6.2 Monthly Invoices; Payments for Panther Development Costs. At the end
of each month or as agreed to by the Parties, Gen-Probe shall calculate its actual expenditures for
Panther Development Costs it incurred during such month and shall promptly provide to Novartis a
reasonably detailed written breakdown of such costs. All approved invoices will be due and payable
thirty (30) days from the date of receipt of the invoice.

          4.6.3 Comparison with Resource Plan and Original Budget. Thirty days prior
to the beginning of each year of the Panther Development Program, Gen-Probe shall present to
Novartis for Novartis’ approval a quarterly aggregated Budget forecast. The planned resources, and
the associated costs, will be broken out on a monthly basis and analyzed against the Resource Plan,
the Project Plan, and reflected in the Budget.

     4.7 Payments Regarding Shared Responsibilities. [ *** ]

5. Rights to Manufacture and Sell. The Parties’ respective rights to
manufacture, have manufactured, distribute and sell the Panther Instrument shall be governed by
Section 3.1.8 of the Agreement.

6. Ownership; License Grant.

     6.1 Ownership. Ownership of any Inventions made in the course of the
Panther Development Program shall be determined in accordance with Article 8 of the Agreement.

     6.2 License Grant. During the Blood Screening Term, Gen-Probe hereby grants
to Novartis a license under all intellectual property rights of Gen-Probe now-owned or hereafter
acquired to the extent reasonably necessary for Novartis to perform its obligations under the
Panther Development Program and for the use and sale of the Panther Instruments and related
software in the Blood Screening Field in accordance with the terms of the Agreement, but only to
the extent that Gen-Probe has or hereafter acquires an ownership or other licensable interest in

***Confidential Treatment Requested. 

17

 

such intellectual property rights and has the right to grant licenses, immunities or other
rights thereunder. During the Blood Screening Term, Novartis hereby grants to Gen-Probe a license
under all intellectual property rights of Novartis now-owned or hereafter acquired to the extent
reasonably necessary for Gen-Probe to perform its obligations under the Panther Development
Program and for the manufacture, use or sale of the Panther Instruments and related software in the
Clinical Diagnostic Field, but only to the extent that Novartis has or hereafter acquires an
ownership or other licensable interest in such intellectual property rights and has the right to
grant licenses, immunities or other rights thereunder. The licenses hereby granted shall extend
only to the extent of the design and development of the Panther Instruments as of the date of this
Panther Addendum and to any future modifications approved and adopted in accordance with the terms
hereof. The licenses hereby granted shall be royalty-free except to the extent the licensing Party
has an obligation to pay royalties to a Third Party pursuant to the Agreement. The license granted
by Gen-Probe in Section 3.1.10(c) of the Agreement shall apply to the manufacture of Panther
Instruments by or for Novartis for use in the Blood Screening Field. Except as expressly provided
herein, neither Party grants to the other Party any license or other interest in and to such
Party’s intellectual property rights or other rights.

     6.3 Commercialization. Section 5.4 of the Agreement established the terms
for forecasting, ordering, supplying and shipping Blood Screening Instruments. Except as otherwise
expressly provided herein, the provisions of Section 5.4 of the Agreement pertaining to Tigris
Instruments shall apply, mutatis mutandis, to Panther Instruments.

     6.4 Panther Instruments will be manufactured and supplied by Stratec Biomedical
Systems AG pursuant to the November 2006 Supply Agreement for Panther Instrument between Gen-Probe
and Stratec (the “Supply Agreement”). On the terms of the Agreement and this Panther Addendum,
Gen-Probe will combine its own forecasts and orders for Panther Instruments for use in the Clinical
Diagnostics Field with Novartis’ orders for Panther Instruments in the Blood Screening Field.
Novartis or its Affiliates shall order Spare Parts for Panther Instruments directly from Stratec.

          6.4.1 Novartis Forecasts. The Parties recognize that forecasting the first
year for Panther Instruments will be difficult. The Parties agree to work together to address the
first year supply of Panther Instruments and to use Commercially Reasonable Efforts to satisfy the
market need.

               (a) Initial Forecast. Not less than six months prior to the date of the
first anticipated delivery of Panther Instruments for use in the Blood Screening Field by Gen-Probe
to Novartis, Novartis shall prepare and provide Gen-Probe with a written forecast of the estimated
requirements of Novartis and its Affiliates for Panther Instruments for each of the twelve (12)
calendar months beginning with the month of the first anticipated delivery of any Panther
Instrument (the “Initial Forecast”). Gen-Probe shall respond to Novartis’ forecast in writing
within thirty (30) days and shall have no obligation with respect to such forecast unless it has
approved such forecast in writing. The number of Panther Instruments included in the first quarter
of the Initial Forecast shall be deemed to have been ordered by Novartis on a binding basis (firm
purchase order).

18

 

               (b) Supplemental Initial Forecast. Not less than three months prior to the
date of the first anticipated delivery of any Panther Instrument, Novartis shall prepare and
provide Gen-Probe with a more current written forecast for Panther Instruments covering the same
period. Gen-Probe shall respond to Novartis’ updated forecast in writing within ten (10) days.
Gen-Probe shall have no obligation with respect to such updated forecast unless it has approved
such forecast in writing.

               (c) Regular Rolling Forecasts. Not later than the first day of the last
month of each calendar quarter following the submission of the initial forecast, Novartis shall
deliver to Gen-Probe with a regular rolling forecast for the twelve (12) month period commencing
with the quarter that will begin approximately 120 days after such regular rolling forecast is due.
Each forecast shall include the anticipated number of Panther Instruments and the desired delivery
dates. Novartis agrees that such forecasts shall be prepared in good faith in order to facilitate
STRATEC’s timely supply according to the terms of this Addendum and the Supply Agreement.

               (d) Binding Effect. Notwithstanding any other provision of the Agreement or
this Addendum, Novartis’ regular rolling forecasts shall be binding upon Novartis only as set forth
in this section. The number of Panther Instruments included in the first quarter of each regular
rolling forecast shall be deemed to have been ordered by Novartis on a binding basis (firm purchase
order). The number of Products included in the second quarter of each regular rolling forecast
shall be deemed to be a binding commitment to order at -50%/+50% of those Products (by including
them in the first quarter of the next rolling forecast). The number of Products included in the
third and fourth quarter of each regular rolling forecast shall be non-binding on either party and
will be provided for planning purposes only.

               (e) Purchase Orders. Contemporaneous with the delivery of each forecast,
Novartis shall provide Gen-Probe with a purchase order reflecting its binding commitment,
consistent with its forecasts under Section 6.3.1(c) above, for delivery of Panther Instruments in
the first quarter of such forecast. Such orders shall indicate the quantity of Panther Instruments
to be delivered and the requested delivery. Gen-Probe shall confirm, in a writing delivered by
facsimile transmission or electronic mail to Novartis, receipt of each purchase order within five
(5) business days of receipt. [ *** ]

***Confidential Treatment Requested. 

19

 

               (f) Additional Purchase Orders. If Novartis desires to enter a bid to a
potential customer that Novartis cannot fill with Panther Instruments that it has already ordered
hereunder, Novartis shall consult with Gen-Probe regarding such bid, and Gen-Probe shall notify
Novartis as to whether Stratec will be able to deliver such Panther Instruments within the
prescribed time.

               (g) Forecasts In Excess of Supply.
[ *** ]

          6.4.2 Transfer Price. [ *** ]

          6.4.3 Compensation to Gen-Probe for Panther Instruments. [ *** ]

***Confidential Treatment Requested. 

20

 

          6.4.4 Novartis Remedy for Reliability Deficiencies. Gen-Probe and Stratec
have entered into a Reliability Agreement with respect to the Panther Instrument. Prior to be
Addendum Effective Date, Gen-Probe has provided a copy of the Reliability Agreement to Novartis.
Following the Addendum Effective Date, Gen-Probe and Novartis shall use their best efforts to
modify the Reliability Agreement so as to adopt a three-way Reliability Agreement between Stratec,
Gen-Probe, and Novartis with respect to Panther Instruments for use in the Blood Screening Field,
maintaining the warranty terms and conditions previously negotiated between Gen-Probe and Stratec.
Following the Development Completion Date and the effective date of the three-way Agreement,
Novartis’ sole remedy for instruments that fail to meet the requirements of the Reliability
Agreement criteria will be through a claim against Stratec pursuant to the Reliability Agreement,
and Gen-Probe shall not have any liability to Novartis in connection with the failure of any
Panther Instrument to meet the requirements of the Reliability Agreement. If for any reason the
three-way Reliability Agreement is not adopted prior to the Development Completion Date, Gen-Probe
shall indemnify Novartis against the cost of repair or replacement, as necessary and in accordance
with the Reliability Agreement, of any Panther Instrument due to the failure of such Panther
Instrument to meet the requirements of the Reliability Agreement, and Gen-Probe shall have no other
liability to Novartis regarding the failure of Panther Instruments to meet such requirements.

7. Addendum Effective Date; Term; Termination.

     7.1 Term of Panther Addendum. This Panther Addendum shall become effective
on the Addendum Effective Date and shall continue in effect through the Blood Screening Term, as it
may be amended or extended from time to time, unless sooner terminated in accordance with the
provisions of the Agreement.

     7.2 Termination for Breach. Termination for breach shall be in accordance
with Article 10 of the Agreement.

8. Dispute Resolution/Escalation.

     8.1 Escalation Process. Prior to implementing the arbitration process more
particularly described in Article 11 of the Agreement, the Parties agree to escalate any dispute
first to a discussion between the Novartis Alliance Manager and the Gen-Probe Project Manager, and
if they cannot agree, then to the Supervisory Board. However the Parties explicitly acknowledge
that in the event of the need for an urgent decision the Party with primary responsibility will
proceed to make the decision, and implement accordingly, but will follow the procedures set forth
under Section 2.4.5 above should there be a disagreement between the Parties regarding the decision
made. It is agreed that the Party with primary responsibility will make all reasonable and timely
efforts to inform the other Party of the issue requiring such urgent decision, particularly where
the issue is one of some consequence.

     8.2 Remedies in Event of Default. Neither Party shall be entitled to
exercise any remedy otherwise available to it at law or in equity unless and until such Party shall
have provided the other Party with notice of such event of default, reasonably specifying the
nature of the default, and any applicable period of time for cure thereof shall have expired
without cure, and the procedures defined in Article 11 of the Agreement shall have been first
exhausted.

21

 

     8.3 Survival. Any provision of this Panther Addendum that imposes or
contemplates continuing obligations by virtue of the nature of the provision will survive the
expiration or termination of the Panther Addendum, but under no circumstances shall either Party
call for arbitration of any claim or dispute arising out of this Panther Addendum after such period
of time as would normally bar the initiation of legal proceedings to litigate such claim or dispute
under the laws of the State of California.

9. No Other Amendment. Except as expressly set forth in this Panther Addendum,
all other terms and conditions of the Agreement, are hereby ratified and shall continue in full
force and effect. In the event of a conflict between the terms of this Panther Addendum and the
Agreement, or any attachments herein, the terms of this Panther Addendum shall control.

10. Counterparts. This Panther Addendum may be executed in counterparts, each of
which shall be deemed an original, and all of which together shall constitute one and the same
instrument.

[SIGNATURE PAGE IMMEDIATELY FOLLOWS]

22

 

IN WITNESS WHEREOF, the Parties have caused this Panther Addendum to be executed and the persons
signing below warrant that they are duly authorized to sign for and on behalf of the respective
Parties.

	 	 	 	 	 	 	 	 	 	 	 

	GEN-PROBE INCORPORATED, 

a Delaware corporation	 	 	 	NOVARTIS VACCINES AND
 DIAGNOSTICS,
INC., a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Carl W. Hull
 

Carl W. Hull
	 	 	 	By:
	 	/s/ Peter Maag
 

Peter Maag
	 	 
	 

	 	President and Chief Executive
Officer
	 	 	 	 	 	President, Diagnostics	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:

	 	March 11, 2011
	 	 	 	Date:
	 	March 21, 2011	 	 

23

 

Schedule 4.5

FTE Labor Rate

     1. FTE Labor Rate. $[ *** ] per FTE per calendar year

     2. Panther Development Costs included within FTE Labor Rate. Panther Development
Costs included within FTE Labor Rate consist of all attributable costs associated with the
development of the Panther Instrument and related software incurred prior to the Development
Completion Date and includes pilot development; validation studies necessary for product and
process licensure; and the manufacture and ultimate disposition of conformance lots of material,
calculated as follows:

               (a) Development costs include: research and development associated with the Panther
Development Program; validation exclusively associated with the Panther Instrument and related
software; development lots; document preparation specific to the development;

               (b) The planned resources, and the associated costs, will be broken out on a monthly basis and
analyzed against the Resource Plan included within the Project Plan, and reflected in the Budget;

               (c) Salaried staff costs included within the Budget will be adjusted to reflect actual staff
costs. Salary information may be aggregated to protect the identity of individuals. This salary
information will be verifiable on a need to know basis to a select number of personnel from each
company;

               (d) Cost for wage laborers plus the applicable overhead charge for such labor paid to
personnel described in the Resource Plan, including the Panther Development Program project manager
and/or development director and personnel engaged to perform QA testing for the Panther Development
Program;

               (e) Costs for engineering prototypes and developing pilot modules required for the Panther
Development Program;

               (f) Costs of inventory consumed in the Panther Development Program, including raw material,
intermediates and finished goods, Prototypes and conformance lots, whether reject or not, that
arise from the Panther Development Program or are necessary to support the Panther Development
Program, and waste material, including raw materials and development materials that arise from the
Panther Development Program but excluding scrap materials used strictly for internal research
purposes or consumed in development programs other than the Panther Development Program;

               (g) Costs for conformance product documentation;

               (h) Costs for courier and mail service fees for delivery of items between Gen-Probe and
Novartis;

               (i) Costs of travel, lodging and reasonable per diem expenses for employee and consultants of
Gen-Probe or Novartis incurred in furtherance of their activities hereunder, providing training or
participating on the Supervisory Board or designee to the extent such costs are not included within
the overhead charge applicable to labor costs;

               (j) Costs of foreign regulatory submissions or registrations for the Panther Instrument and
related software for use in the Blood Screening Field.

               (k) Such other categories as the Parties may agree in writing from time to time;

(l) All budgeted expenses of departments directly involved with the Panther
Development Program; and

***Confidential Treatment Requested.

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               (m) Appropriate portions of budgeted costs of departments indirectly involved in the Panther
Development Program.

     3. Panther Development Costs not included within FTE Labor Rate.

               (a) Significant Third Party consultant charges (i.e. CRO, regulatory expertise, etc.) to the
extent not captured within the FTE rates in Item 2 above;

               (b) Third Party development and hardware acquisition costs (other than the reasonable
amortized cost of all instruments utilized that are necessary for the research and development of
such quantities of the Panther Instrument during the Panther Development Program which shall be
included in the FTE Rate.

25

 

EXHIBIT A

Panther Instrument Product Requirements Document

[ *** ]

***Confidential Treatment Requested.

 

 

EXHIBIT B

Ultrio Elite Assay Product Requirements Document

[ *** ]

***Confidential Treatment Requested.

 

 

EXHIBIT C

Panther Instrument and Ultrio Elite Assay Development Timeline

[ *** ]

***Confidential Treatment Requested.exv10w1

Exhibit 10.1

 

 

 

EQUITY ONE, INC.

AMENDED AND RESTATED

2000 EXECUTIVE INCENTIVE COMPENSATION PLAN

 

 

 

 

 

EQUITY ONE, INC.

AMENDED AND RESTATED

2000 EXECUTIVE INCENTIVE COMPENSATION PLAN

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	1.	 	Purpose	 	 	1	 
	 
	2.	 	Definitions	 	 	1	 
	 
	3.	 	Administration	 	 	5	 
	 
	 	 	(a)	 	Authority of the Committee
	 	 	5	 
	 	 	(b)	 	Manner of Exercise of Committee Authority
	 	 	5	 
	 	 	(c)	 	Limitation of Liability
	 	 	5	 
	 
	4.	 	Stock Subject to Plan	 	 	6	 
	 
	 	 	(a)	 	Limitation on Overall Number of Shares Subject to Awards
	 	 	6	 
	 	 	(b)	 	Application of Limitations
	 	 	6	 
	 	 	(c)	 	Limitation on Incentive Stock Options
	 	 	6	 
	 
	5.	 	Eligibility; Per-Person Award Limitations	 	 	6	 
	 
	6.	 	Specific Terms of Awards	 	 	7	 
	 
	 	 	(a)	 	General
	 	 	7	 
	 	 	(b)	 	Options
	 	 	7	 
	 	 	(c)	 	Stock Appreciation Rights
	 	 	9	 
	 	 	(d)	 	Restricted Stock
	 	 	9	 
	 	 	(e)	 	Deferred Stock
	 	 	11	 
	 	 	(f)	 	Bonus Stock and Awards in Lieu of Obligations
	 	 	12	 
	 	 	(g)	 	Dividend Equivalents
	 	 	12	 
	 	 	(h)	 	Other Stock-Based Awards
	 	 	12	 
	 
	7.	 	Certain Provisions Applicable to Awards	 	 	13	 
	 
	 	 	(a)	 	Stand-Alone, Additional, Tandem, and Substitute Awards
	 	 	13	 
	 	 	(b)	 	Term of Awards
	 	 	13	 
	 	 	(c)	 	Form and Timing of Payment Under Awards; Deferrals
	 	 	14	 
	 	 	(d)	 	Exemptions from Section 16(b) Liability
	 	 	14	 
	 
	8.	 	Performance and Annual Incentive Awards	 	 	14	 
	 
	 	 	(a)	 	Performance Conditions
	 	 	14	 
	 	 	(b)	 	Performance Awards Granted to Designated Covered Employees
	 	 	14	 
	 	 	(c)	 	Settlement of Performance Awards; Other Terms
	 	 	16	 
	 	 	(d)	 	Annual Incentive Awards Granted to Designated Covered Employees
	 	 	16	 
	 	 	(e)	 	Written Determinations
	 	 	17	 
	 	 	(f)	 	Status of Section 8(b) and Section 8(d) Awards Under Code Section 162(m)
	 	 	18	 

     i     

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	9.	 	Change in Control	 	 	18	 
	 
	 	 	(a)	 	Effect of “Change in Control.”
	 	 	18	 
	 	 	(b)	 	Definition of “Change in Control.”
	 	 	19	 
	 	 	(c)	 	Definition of “Change in Control Price.”
	 	 	19	 
	 
	10.	 	General Provisions	 	 	20	 
	 
	 	 	(a)	 	Compliance With Legal and Other Requirements
	 	 	20	 
	 	 	(b)	 	Limits on Transferability; Beneficiaries
	 	 	20	 
	 	 	(c)	 	Adjustments
	 	 	21	 
	 	 	(d)	 	Taxes
	 	 	21	 
	 	 	(e)	 	Changes to the Plan and Awards
	 	 	22	 
	 	 	(f)	 	Limitation on Rights Conferred Under Plan
	 	 	22	 
	 	 	(g)	 	Unfunded Status of Awards; Creation of Trusts
	 	 	22	 
	 	 	(h)	 	Nonexclusivity of the Plan
	 	 	23	 
	 	 	(i)	 	Payments in the Event of Forfeitures; Fractional Shares
	 	 	23	 
	 	 	(j)	 	Governing Law
	 	 	23	 
	 	 	(k)	 	Plan Effective Date and Stockholder Approval; Termination of Plan
	 	 	23	 
	 	 	(l)	 	Section 409A Compliance
	 	 	23	 

 ii 

 

1.     Purpose. The purpose of this AMENDED AND RESTATED 2000 EXECUTIVE INCENTIVE COMPENSATION PLAN (the “Plan”)
is to assist EQUITY ONE, INC., a Maryland corporation (the “Company”) and its subsidiaries in
attracting, motivating, retaining and rewarding high-quality executives and other employees,
officers, directors and independent contractors by enabling such persons to acquire or increase a
proprietary interest in the Company in order to strengthen the mutuality of interests between such
persons and the Company’s stockholders, and providing such persons with annual and long term
performance incentives to expend their maximum efforts in the creation of shareholder value. In the
event that the Company is or becomes a Publicly Held Corporation (as hereinafter defined), the Plan
is intended to qualify certain compensation awarded under the Plan for tax deductibility under
Section 162(m) of the Code (as hereafter defined) to the extent deemed appropriate by the Committee
(or any successor committee) of the Board of Directors of the Company.

2.     Definitions. For purposes of the Plan, the following terms shall be defined as set forth below, in addition to
such terms defined in Section 1 hereof.

     (a) “Annual Incentive Award” means a conditional right granted to a Participant under
Section 8(c) hereof to receive a cash payment, Stock or other Award, unless
otherwise determined by the Committee, for all or a portion of a specified fiscal year.

     (b) “Award” means any Option, SAR (including Limited SAR), Restricted Stock, Deferred
Stock, Stock granted as a bonus or in lieu of another award, Dividend Equivalent, Other
Stock-Based Award, Performance Award or Annual Incentive Award, together with any other
right or interest, granted to a Participant under the Plan.

     (c) “Beneficiary” means the person, persons, trust or trusts which have been designated
by a Participant in his or her most recent written beneficiary designation filed with the
Committee to receive the benefits specified under the Plan upon such Participant’s death or
to which Awards or other rights are transferred if and to the extent permitted under
Section 10(b) hereof. If, upon a Participant’s death, there is no designated
Beneficiary or surviving designated Beneficiary, then the term Beneficiary means the person,
persons, trust or trusts entitled by will or the laws of descent and distribution to receive
such benefits.

     (d) “Beneficial Owner”, “Beneficially Owning” and “Beneficial Ownership” shall have the
meanings ascribed to such terms in Rule 13d-3 under the Exchange Act and any successor to
such Rule.

     (e) “Board” means the Company’s Board of Directors.

 

 

     (f) “Cause” shall, with respect to any Participant, have the equivalent meaning (or the
same meaning as “cause” or “for cause”) set forth in any employment agreement between the
Participant and the Company or Parent Corporation or Subsidiary or, in the absence of any
such agreement, such term shall mean (i) the failure by the Participant to perform his or
her duties as assigned by the Company (or Parent Corporation or Subsidiary) in a reasonable
manner, (ii) any violation or breach by the
Participant of his or her employment agreement with the Company (or Parent Corporation
or Subsidiary), if any, (iii) any violation or breach by the Participant of his or her
non-competition and/or non-disclosure agreement with the Company (or Parent Corporation or
Subsidiary), if any, (iv) any act by the Participant of dishonesty or bad faith with respect
to the Company (or Parent Corporation or Subsidiary), (v) chronic addition to alcohol, drugs
or other similar substances affecting the Participant’s work performance, or (vi) the
commission by the Participant of any act, misdemeanor, or crime reflecting unfavorably upon
the Participant or the Company. The good faith determination by the Committee of whether the
Participant’s employment was terminated by the Company for “Cause” shall be final and
binding for all purposes hereunder.

     (g) “Change in Control” means a Change in Control as defined with related terms in
Section 9 of the Plan.

     (h) “Change in Control Price” means the amount calculated in accordance with
Section 9(c) of the Plan.

     (i) “Code” means the Internal Revenue Code of 1986, as amended from time to time,
including regulations thereunder and successor provisions and regulations thereto.

     (j) “Committee” means a committee designated by the Board to administer the Plan;
provided, however, that the Committee shall consist of at least two directors, and, in the
event the Company is or becomes a Publicly Held Corporation (as hereinafter defined), each
member of which shall be (i) a “non-employee director” within the meaning of Rule 16b-3
under the Exchange Act, unless administration of the Plan by “non-employee directors” is not
then required in order for exemptions under Rule 16b-3 to apply to transactions under the
Plan, and (ii) an “outside director” within the meaning of Section 162(m) of the Code,
unless administration of the Plan by “outside directors” is not then required in order to
qualify for tax deductibility under Section 162(m) of the Code.

     (k) “Corporate Transaction” means a Corporate Transaction as defined in Section
9(b)(i) of the Plan.

     (l) “Covered Employee” means an Eligible Person who is a Covered Employee as specified
in Section 8(e) of the Plan.

     (m) “Deferred Stock” means a right, granted to a Participant under Section
6(d)(v) hereof, to receive Stock, cash or a combination thereof at the end of a
specified deferral period.

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

     (o) “Disability” means a permanent and total disability (within the meaning of Section
22(e) of the Code), as determined by a medical doctor satisfactory to the Committee.

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     (p) “Dividend Equivalent” means a right, granted to a Participant under Section
6(f) hereof, to receive cash, Stock, other Awards or other property equal in value to
dividends paid with respect to a specified number of shares of Stock, or other periodic
payments.

     (q) “Effective Date” means the effective date of the Plan, which shall be April 24,
2000.

     (r) “Eligible Person” means each Executive Officer of the Company (as defined under the
Exchange Act) and other officers, Directors and employees of the Company or of any
Subsidiary, and independent contractors with the Company or any Subsidiary. The foregoing
notwithstanding, only employees of the Company or any Subsidiary shall be Eligible Persons
for purposes of receiving any Incentive Stock Options. An employee on leave of absence may
be considered as still in the employ of the Company or a Subsidiary for purposes of
eligibility for participation in the Plan.

     (s) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time, including rules thereunder and successor provisions and rules thereto.

     (t) “Executive Officer” means an executive officer of the Company as defined under the
Exchange Act.

     (u) “Fair Market Value” means the fair market value of Stock, Awards or other property
as determined by the Committee or the Board, or under procedures established by the
Committee or the Board. Unless otherwise determined by the Committee or the Board, the Fair
Market Value of Stock as of any given date shall be the closing sale price per share
reported on a consolidated basis for stock listed on the principal stock exchange or market
on which Stock is traded on the date as of which such value is being determined or, if there
is no sale on that date, then on the last previous day on which a sale was reported.

     (v) “Incentive Stock Option” or “ISO” means any Option intended to be designated as an
incentive stock option within the meaning of Section 422 of the Code or any successor
provision thereto.

     (w) “Incumbent Board” means the Incumbent Board as defined in Section 9(b)(ii)
of the Plan.

     (x) “Limited SAR” means a right granted to a Participant under Section 6(c)
hereof.

     (y) “Option” means a right granted to a Participant under Section 6(b) hereof,
to purchase Stock or other Awards at a specified price during specified time periods.

     (z) “Other Stock-Based Awards” means Awards granted to a Participant under Section
6(g) hereof.

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     (aa) “Parent Corporation” means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company, if each of the corporations in the chain
(other than the Company) owns stock possessing 50% or more of the combined voting power of
all classes of stock in one of the other corporations in the chain.

     (bb) “Participant” means a person who has been granted an Award under the Plan which
remains outstanding, including a person who is no longer an Eligible Person.

     (cc) “Performance Award” means a right, granted to an Eligible Person under Section
8(b) hereof, to receive Awards based upon performance criteria specified by the
Committee or the Board for a performance period that is longer than one fiscal years of the
Company.

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

     (ee) “Publicly Held Corporation” shall mean a publicly held corporation as that term is
used under Section 162(m)(2) of the Code.

     (ff) “Restricted Stock” means Stock granted to a Participant under Section
6(d) hereof, that is subject to certain restrictions and to a risk of forfeiture.

     (gg) “Rule 16b-3” and “Rule 16a-1(c)(3)” means Rule 16b-3 and Rule 16a-1(c)(3), as from
time to time in effect and applicable to the Plan and Participants, promulgated by the
Securities and Exchange Commission under Section 16 of the Exchange Act.

     (hh) “Stock” means the Company’s Common Stock, and such other securities as may be
substituted (or resubstituted) for Stock pursuant to Section 10(c) hereof.

     (ii) “Stock Appreciation Rights” or “SAR” means a right granted to a Participant under
Section 6(c) hereof.

     (jj) “Subsidiary” means any corporation or other entity in which the Company has a
direct or indirect ownership interest of 50% or more of the total combined voting power of
the then outstanding securities or interests of such corporation or other entity entitled to
vote generally in the election of directors or in which the Company has the right to receive
50% or more of the distribution of profits or 50% or more of the assets on liquidation or
dissolution.

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3.     Administration.

     (a) Authority of the Committee. The Plan shall be administered by the Committee; provided, however, that except as
otherwise expressly provided in this Plan or, during the period that the Company is a
Publicly Held Corporation, in order to comply with Code Section 162(m) or Rule 16b-3 under
the Exchange Act, the Board may exercise any power or authority granted to the Committee under this Plan. The Committee
or the Board shall have full and final authority, in each case subject to and consistent
with the provisions of the Plan, to select Eligible Persons to become Participants, grant
Awards, determine the type, number and other terms and conditions of, and all other matters
relating to, Awards, prescribe Award agreements (which need not be identical for each
Participant) and rules and regulations for the administration of the Plan, construe and
interpret the Plan and Award agreements and correct defects, supply omissions or reconcile
inconsistencies therein, and to make all other decisions and determinations as the Committee
or the Board may deem necessary or advisable for the administration of the Plan. In
exercising any discretion granted to the Committee or the Board under the Plan or pursuant
to any Award, the Committee or the Board shall not be required to follow past practices, act
in a manner consistent with past practices, or treat any Eligible Person in a manner
consistent with the treatment of other Eligible Persons.

     (b) Manner of Exercise of Committee Authority. In the event that the Company is or becomes a Publicly Held Corporation, the
Committee, and not the Board, shall exercise sole and exclusive discretion on any matter
relating to a Participant then subject to Section 16 of the Exchange Act with respect to the
Company to the extent necessary in order that transactions by such Participant shall be
exempt under Rule 16b-3 under the Exchange Act. Any action of the Committee or the Board
shall be final, conclusive and binding on all persons, including the Company, its
subsidiaries, Participants, Beneficiaries, transferees under Section 10(b) hereof
or other persons claiming rights from or through a Participant, and stockholders. The
express grant of any specific power to the Committee or the Board, and the taking of any
action by the Committee or the Board, shall not be construed as limiting any power or
authority of the Committee or the Board. The Committee or the Board may delegate to officers
or managers of the Company or any subsidiary, or committees thereof, the authority, subject
to such terms as the Committee or the Board shall determine, (i) to perform administrative
functions, (ii) with respect to Participants not subject to Section 16 of the Exchange Act,
to perform such other functions as the Committee or the Board may determine, and (iii) with
respect to Participants subject to Section 16, to perform such other functions of the
Committee or the Board as the Committee or the Board may determine to the extent performance
of such functions will not result in the loss of an exemption under Rule 16b-3 otherwise
available for transactions by such persons, in each case to the extent permitted under
applicable law and subject to the requirements set forth in Section 8(e). The
Committee or the Board may appoint agents to assist it in administering the Plan.

     (c) Limitation of Liability. The Committee and the Board, and each member thereof, shall be entitled to, in good
faith, rely or act upon any report or other information furnished to him or her by any
executive officer, other officer or employee of the Company or a Subsidiary, the Company’s
independent auditors, consultants or any other agents assisting in the administration of the
Plan. Members of the Committee and the Board, and any officer or employee of the Company or
a subsidiary acting at the direction or on behalf of the Committee or the Board, shall not
be personally liable for any action or determination taken or made in good faith with
respect to the Plan, and shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect
to any such action or determination.

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4.     Stock Subject to Plan.

     (a) Limitation on Overall Number of Shares Subject to Awards. Subject to adjustment as provided in Section 10(c) hereof, the total number
of shares of Stock reserved and available for delivery in connection with Awards under the
Plan shall be the sum of (i) 13,500,000, plus (ii) the number of shares with respect to
Awards previously granted under the Plan that terminate without being exercised, expire, are
forfeited or canceled, and the number of shares of Stock that are surrendered in payment of
any Awards or any tax withholding with regard thereto. Any shares of Stock delivered under
the Plan may consist, in whole or in part, of authorized and unissued shares or treasury shares.

     (b) Application of Limitations. The limitation contained in Section 4(a) shall apply not only to Awards that
are settleable by the delivery of shares of Stock but also to Awards relating to shares of
Stock but settleable only in cash (such as cash-only SARs). The Committee or the Board may
adopt reasonable counting procedures to ensure appropriate counting, avoid double counting
(as, for example, in the case of tandem or substitute awards) and make adjustments if the
number of shares of Stock actually delivered differs from the number of shares previously
counted in connection with an Award.

     (c) Limitation on Incentive Stock Options. Subject to adjustment as provided in Section 10(c) hereof, the maximum
aggregate number of shares of Stock that may be issued under the Plan as a result of the
exercise of Incentive Stock Options is 13,500,000 shares.

5.     Eligibility; Per-Person Award Limitations. Awards may be granted under the Plan only to Eligible Persons. In each fiscal year during any
part of which the Plan is in effect, an Eligible Person may not be granted Awards relating to more
than 700,000 shares of Stock, subject to adjustment as provided in Section 10(c), under
each of Sections 6(b), 6(c), 6(d), 6(d)(v), 6(e),
6(f), 6(g), and, to the extent the Award is valued by reference to a designated
number of shares of Stock, under Section 8(d). In each fiscal year during any part of
which the Plan is in effect, an Eligible Person may not be granted Performance Awards under
Section 8(b) valued by reference to a designated number of shares of Stock in respect of a
performance period exceeding one year of more than the product of (i) 700,000 shares, subject to
adjustment as provided in Section 10(c), multiplied by (ii) the number of fiscal years (or
a portion thereof) in the performance periods for the Awards. The maximum dollar amount that may
be earned as an Annual Incentive Award valued by reference to a designated amount of property
(including cash) other than Shares in any fiscal year by any one Participant shall be $2,800,000,
and the maximum dollar amount that may be earned as a Performance Award valued by reference to a
designated amount of property (including cash) other than Shares in respect of a performance period
exceeding one year by any one Participant shall be the product of (i) $2,800,000 multiplied by (ii)
the number of fiscal years (or a portion thereof) in the performance period for the Award.

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6.     Specific Terms of Awards.

     (a) General. Awards may be granted on the terms and conditions set forth in this Section
6. In addition, the Committee or the Board may impose on any Award or the exercise
thereof, at the date of grant or thereafter (subject to Section 10(e)), such
additional terms and conditions, not inconsistent with the provisions of the Plan, as the
Committee or the Board shall determine, including terms requiring forfeiture of Awards in
the event of termination of employment by the Participant and terms permitting a Participant
to make elections relating to his or her Award. The Committee or the Board shall retain full
power and discretion to accelerate, waive or modify, at any time, any term or condition of
an Award that is not mandatory under the Plan. Except in cases in which the Committee or the
Board is authorized to require other forms of consideration under the Plan, or to the extent
other forms of consideration must be paid to satisfy the requirements of Maryland law, no
consideration other than services may be required for the grant (but not the exercise) of
any Award.

     (b) Options. The Committee and the Board each is authorized to grant Options to Participants on
the following terms and conditions:

     (i) Exercise Price. The exercise price per share of Stock purchasable under an Option shall be
determined by the Committee or the Board, provided that such exercise price shall
not, in the case of Incentive Stock Options, be less than 100% of the Fair Market
Value of the Stock on the date of grant of the Option and shall not, in any event,
be less than the par value of a share of Stock on the date of grant of such Option.
If an employee owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) more than 10% of the combined voting
power of all classes of stock of the Company or any Parent Corporation or Subsidiary
and an Incentive Stock Option is granted to such employee, the option price of such
Incentive Stock Option (to the extent required by the Code at the time of grant)
shall be no less than 110% of the Fair Market Value of the Stock on the date such
Incentive Stock Option is granted.

     (ii) Time and Method of Exercise. The Committee or the Board shall determine the time or times at which or the
circumstances under which an Option may be exercised in whole or in part (including
based on achievement of performance goals and/or future service requirements), the
time or times at which Options shall cease to be or become exercisable following
termination of employment or upon other conditions, the methods by which such
exercise price may be paid or deemed to be paid (including in the discretion of the
Committee or the Board a cashless exercise procedure), the form of such payment,
including, without limitation, cash, Stock, other Awards or awards granted under
other plans of the Company or any subsidiary, or other property (including notes or
other contractual obligations of Participants to make payment on a deferred basis),
and the methods by or forms in which Stock will be delivered or deemed to be
delivered to Participants.

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     (iii) ISOs. The terms of any ISO granted under the Plan shall comply in all respects with
the provisions of Section 422 of the Code. Anything in the Plan to the contrary
notwithstanding, no term of the Plan relating to ISOs (including any SAR in tandem
therewith) shall be interpreted, amended or altered, nor shall any discretion or
authority granted under the Plan be exercised, so as to disqualify either the Plan
or any ISO under Section 422 of the Code, unless the Participant has first requested
the change that will result in such disqualification. Thus, if and to the extent
required to comply with Section 422 of the Code, Options granted as Incentive Stock
Options shall be subject to the following special terms and conditions:

	 	(A)	 	the Option shall not be
exercisable more than ten years after the date such Incentive
Stock Option is granted; provided, however, that if a
Participant owns or is deemed to own (by reason of the
attribution rules of Section 424(d) of the Code) more than 10%
of the combined voting power of all classes of stock of the
Company or any Parent Corporation and the Incentive Stock Option
is granted to such Participant, the term of the Incentive Stock
Option shall be (to the extent required by the Code at the time
of the grant) for no more than five years from the date of
grant; and
	 
	 	(B)	 	The aggregate Fair Market Value
(determined as of the date the Incentive Stock Option is
granted) of the shares of stock with respect to which Incentive
Stock Options granted under the Plan and all other option plans
of the Company or its Parent Corporation during any calendar
year exercisable for the first time by the Participant during
any calendar year shall not (to the extent required by the Code
at the time of the grant) exceed $100,000.

     (iv) Repurchase Rights. The Committee and the Board shall have the discretion to grant Options which
are exercisable for unvested shares of Common Stock. Should the Optionee cease to be
employed with or perform services to the Company (or a Parent Corporation or
Subsidiary) while holding such unvested shares, the Company shall have the right to
repurchase, at the exercise price paid per share, any or all of those unvested shares. The terms upon which such repurchase right shall be exercisable (including
the period and procedure for exercise and the appropriate vesting schedule for the
purchased shares) shall be established by the Committee or the Board and set forth
in the document evidencing such repurchase right.

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     (c) Stock Appreciation Rights. The Committee and the Board each is authorized to grant SAR’s to Participants on the
following terms and conditions:

     (i) Right to Payment. A SAR shall confer on the Participant to whom it is granted a right to
receive, upon exercise thereof, the excess of (A) the Fair Market Value of one share
of stock on the date of exercise (or, in the case of a “Limited SAR” that may be
exercised only in the event of a Change in Control, the Fair Market Value determined
by reference to the Change in Control Price, as defined under Section 9(c)
hereof), over (B) the grant price of the SAR as determined by the Committee or the
Board. The grant price of an SAR shall not be less than the Fair Market Value of a
share of Stock on the date of grant except as provided under Section 7(a)
hereof.

     (ii) Other Terms. The Committee or the Board shall determine at the date of grant or
thereafter, the time or times at which and the circumstances under which a SAR may
be exercised in whole or in part (including based on achievement of performance
goals and/or future service requirements), the time or times at which SARs shall
cease to be or become exercisable following termination of employment or upon other
conditions, the method of exercise, method of settlement, form of consideration
payable in settlement, method by or forms in which Stock will be delivered or deemed
to be delivered to Participants, whether or not a SAR shall be in tandem or in
combination with any other Award, and any other terms and conditions of any SAR.
Limited SARs that may only be exercised in connection with a Change in Control or
other event as specified by the Committee or the Board, may be granted on such
terms, not inconsistent with this Section 6(c), as the Committee or the
Board may determine. SARs and Limited SARs may be either freestanding or in tandem
with other Awards.

     (d) Restricted Stock. The Committee and the Board each is authorized to grant Restricted Stock to
Participants on the following terms and conditions:

     (i) Grant and Restrictions. Restricted Stock shall be subject to such restrictions on transferability,
risk of forfeiture and other restrictions, if any, as the Committee or the Board may
impose, which restrictions may lapse separately or in combination at such times,
under such circumstances (including based on achievement of performance goals and/or
future service requirements), in such installments or otherwise, as the Committee or
the Board may determine at the date of grant or thereafter. Except to the extent
restricted under the terms of the Plan and any Award agreement relating to the
Restricted Stock, a Participant granted Restricted Stock shall have all of the
rights of a stockholder, including the right to vote the Restricted Stock and the
right to receive dividends thereon (subject to any mandatory reinvestment or other
requirement imposed by the Committee or the Board). During the restricted period
applicable to the Restricted Stock, subject to Section 10(b) below, the
Restricted Stock may not be sold, transferred, pledged, hypothecated, margined or
otherwise encumbered by the Participant.

     (ii) Forfeiture. Except as otherwise determined by the Committee or the Board at the time of
the Award, upon termination of a Participant’s employment during the applicable
restriction period, the Participant’s Restricted
Stock that is at that time subject to restrictions shall be forfeited and
reacquired by the Company; provided that the Committee or the Board may provide, by
rule or regulation or in any Award agreement, or may determine in any individual
case, that restrictions or forfeiture conditions relating to Restricted Stock shall
be waived in whole or in part in the event of terminations resulting from specified
causes, and the Committee or the Board may in other cases waive in whole or in part
the forfeiture of Restricted Stock.

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     (iii) Certificates for Stock. Restricted Stock granted under the Plan may be evidenced in such manner as
the Committee or the Board shall determine. If certificates representing Restricted
Stock are registered in the name of the Participant, the Committee or the Board may
require that such certificates bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Restricted Stock, that the Company
retain physical possession of the certificates, and that the Participant deliver a
stock power to the Company, endorsed in blank, relating to the Restricted Stock.

     (iv) Dividends and Splits. As a condition to the grant of an Award of Restricted Stock, the Committee or
the Board may require that any cash dividends paid on a share of Restricted Stock be
automatically reinvested in additional shares of Restricted Stock or applied to the
purchase of additional Awards under the Plan. Unless otherwise determined by the
Committee or the Board, Stock distributed in connection with a Stock split or Stock
dividend, and other property distributed as a dividend, shall be subject to
restrictions and a risk of forfeiture to the same extent as the Restricted Stock
with respect to which such Stock or other property has been distributed.

     (v) Automatic Restricted Stock Grants to Non-Employee Directors. Non-Employee Directors shall be eligible to receive Restricted Stock Awards
under this Section 6(d)(v).

     (vi) Automatic Restricted Stock Grants to Non-Employee Directors. Non-Employee Directors shall be eligible to receive Restricted Stock Awards
under this Section 6(d)(vi).

	 	(A)	 	Initial Grants. On the date that
an eligible Non-Employee Director is first elected to the Board,
such Non-Employee Director shall receive 2,000 shares of
Restricted Stock (an “Initial Grant”); provided that any
Non-Employee Director who is a member of the Board as of the
Effective Date of this Plan shall be entitled to received an
Initial Grant. The Initial Grant shall be subject to the
availability and adjustment of shares of Stock issuable under
the Plan pursuant to Section 4 and shall not be subject
to the discretion of any person or persons.

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	 	(B)	 	Service Grants. On each January 1
while the Plan remains in effect, each then Non-Employee
Director shall be granted an additional 2,000 shares of
Restricted Stock (a “Service Grant”), subject to the
availability and adjustment of shares of Stock issuable under
the Plan pursuant to Section 4 and shall not be subject
to the discretion of any person or persons. In addition, on each
January 1 while the Plan remains in effect, the lead director of
the Company, if any, shall be granted an additional 1,000 shares of Restricted Stock, as an additional Service Grant, subject to
the availability and adjustment of shares of Stock issuable
under the Plan pursuant to Section 4 and shall not be
subject to the discretion of any person or persons.
	 
	 	(C)	 	Terms of Initial Grants and
Service Grants. Unless otherwise determined by the Committee or
in any Restricted Stock Agreement, each Restricted Stock Award
granted pursuant to this Section 6(d)(vi) shall vest in
two (2) equal installments on the first and second December 31
subsequent to the date on which the shares of Restricted Stock
are granted.

     (e) Deferred Stock. The Committee and the Board each is authorized to grant Deferred Stock to
Participants, which are rights to receive Stock, cash, or a combination thereof at the end
of a specified deferral period, subject to the following terms and conditions:

     (i) Award and Restrictions. Satisfaction of an Award of Deferred Stock shall occur upon expiration of the
deferral period specified for such Deferred Stock by the Committee or the Board (or,
if permitted by the Committee or the Board, as elected by the Participant). In
addition, Deferred Stock shall be subject to such restrictions (which may include a
risk of forfeiture) as the Committee or the Board may impose, if any, which
restrictions may lapse at the expiration of the deferral period or at earlier
specified times (including based on achievement of performance goals and/or future
service requirements), separately or in combination, in installments or otherwise,
as the Committee or the Board may determine. Deferred Stock may be satisfied by
delivery of Stock, cash equal to the Fair Market Value of the specified number of shares of Stock covered by the Deferred Stock, or a combination thereof, as
determined by the Committee or the Board at the date of grant or thereafter. Prior
to satisfaction of an Award of Deferred Stock, an Award of Deferred Stock carries no
voting or dividend or other rights associated with share ownership.

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     (ii) Forfeiture. Except as otherwise determined by the Committee or the Board, upon
termination of a Participant’s employment during the applicable deferral period
thereof to which forfeiture conditions apply (as provided in the Award agreement
evidencing the Deferred Stock), the Participant’s Deferred
Stock that is at that time subject to deferral (other than a deferral at the
election of the Participant) shall be forfeited; provided that the Committee or the
Board may provide, by rule or regulation or in any Award agreement, or may determine
in any individual case, that restrictions or forfeiture conditions relating to
Deferred Stock shall be waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee or the Board may in other cases
waive in whole or in part the forfeiture of Deferred Stock.

     (iii) Dividend Equivalents. Unless otherwise determined by the Committee or the Board at date of grant,
Dividend Equivalents on the specified number of shares of Stock covered by an Award
of Deferred Stock shall be either (A) paid with respect to such Deferred Stock at
the dividend payment date in cash or in shares of unrestricted Stock having a Fair
Market Value equal to the amount of such dividends, or (B) deferred with respect to
such Deferred Stock and the amount or value thereof automatically deemed reinvested
in additional Deferred Stock, other Awards or other investment vehicles, as the
Committee or the Board shall determine or permit the Participant to elect.

     (f) Bonus Stock and Awards in Lieu of Obligations. The Committee and the Board each is authorized to grant Stock as a bonus, or to grant
Stock or other Awards in lieu of Company obligations to pay cash or deliver other property
under the Plan or under other plans or compensatory arrangements, provided that, in the case
of Participants subject to Section 16 of the Exchange Act, the amount of such grants remains
within the discretion of the Committee to the extent necessary to ensure that acquisitions
of Stock or other Awards are exempt from liability under Section 16(b) of the Exchange Act.
Stock or Awards granted hereunder shall be subject to such other terms as shall be
determined by the Committee or the Board.

     (g) Dividend Equivalents. The Committee and the Board each is authorized to grant Dividend Equivalents to a
Participant entitling the Participant to receive cash, Stock, other Awards, or other
property equal in value to dividends paid with respect to a specified number of shares of
Stock, or other periodic payments. Dividend Equivalents may be awarded on a free-standing
basis or in connection with another Award. The Committee or the Board may provide that
Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have
been reinvested in additional Stock, Awards, or other investment vehicles, and subject to
such restrictions on transferability and risks of forfeiture, as the Committee or the Board
may specify.

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     (h) Other Stock-Based Awards. The Committee and the Board each is authorized, subject to limitations under
applicable law, to grant to Participants such other Awards that may be denominated or
payable in, valued in whole or in part by reference to, or otherwise based on, or related
to, Stock, as deemed by the Committee or the Board to be consistent with the purposes of the
Plan, including, without limitation, convertible or exchangeable debt securities, other
rights convertible or exchangeable into Stock, purchase rights for Stock, Awards with value
and payment contingent upon performance of the Company or any other factors designated by
the Committee or the Board, and Awards valued by reference to the book value of Stock or the
value of securities of or the
performance of specified subsidiaries or business units. The Committee or the Board
shall determine the terms and conditions of such Awards. Stock delivered pursuant to an
Award in the nature of a purchase right granted under this Section 6(h) shall be
purchased for such consideration (including without limitation loans from the Company or a
Parent Corporation or a Subsidiary), paid for at such times, by such methods, and in such
forms, including, without limitation, cash, Stock, other Awards or other property, as the
Committee or the Board shall determine. The Committee and the Board shall have the
discretion to grant such other Awards which are exercisable for unvested shares of Common
Stock. Should the Optionee cease to be employed with or perform services to the Company (or
a Parent Corporation or Subsidiary) while holding such unvested shares, the Company shall
have the right to repurchase, at the exercise price paid per share, any or all of those
unvested shares. The terms upon which such repurchase right shall be exercisable (including
the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Committee or the Board and set forth in the document
evidencing such repurchase right. Cash awards, as an element of or supplement to any other
Award under the Plan, may also be granted pursuant to this Section 6(h).

7.     Certain Provisions Applicable to Awards.

     (a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted under the Plan may, in the discretion of the Committee or the Board,
be granted either alone or in addition to, in tandem with, or in substitution or exchange
for, any other Award or any award granted under another plan of the Company, any subsidiary,
or any business entity to be acquired by the Company or a subsidiary, or any other right of
a Participant to receive payment from the Company or any subsidiary. Such additional,
tandem, and substitute or exchange Awards may be granted at any time. If an Award is granted
in substitution or exchange for another Award or award, the Committee or the Board shall
require the surrender of such other Award or award in consideration for the grant of the new
Award. In addition, Awards may be granted in lieu of cash compensation, including in lieu of
cash amounts payable under other plans of the Company or any subsidiary, in which the value
of Stock subject to the Award is equivalent in value to the cash compensation (for example,
Deferred Stock or Restricted Stock), or in which the exercise price, grant price or purchase
price of the Award in the nature of a right that may be exercised is equal to the Fair
Market Value of the underlying Stock minus the value of the cash compensation surrendered
(for example, Options granted with an exercise price “discounted” by the amount of the cash
compensation surrendered).

     (b) Term of Awards. The term of each Award shall be for such period as may be determined by the Committee
or the Board; provided that in no event shall the term of any Option or SAR exceed a period
of ten years (or such shorter term as may be required in respect of an ISO under Section 422
of the Code).

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     (c) Form and Timing of Payment Under Awards; Deferrals. Subject to the terms of the Plan and any applicable Award agreement, payments to be
made by the Company or a subsidiary upon the exercise of an Option or other Award or
settlement of
an Award may be made in such forms as the Committee or the Board shall determine,
including, without limitation, cash, other Awards or other property, and may be made in a
single payment or transfer, in installments, or on a deferred basis. The settlement of any
Award may be accelerated, and cash paid in lieu of Stock in connection with such settlement,
in the discretion of the Committee or the Board or upon occurrence of one or more specified
events (in addition to a Change in Control). Installment or deferred payments may be
required by the Committee or the Board (subject to Section 10(e) of the Plan) or
permitted at the election of the Participant on terms and conditions established by the
Committee or the Board. Payments may include, without limitation, provisions for the payment
or crediting of a reasonable interest rate on installment or deferred payments or the grant
or crediting of Dividend Equivalents or other amounts in respect of installment or deferred
payments denominated in Stock.

     (d) Exemptions from Section 16(b) Liability. If and to the extent that the Company is or becomes a Publicly Held Corporation, it
is the intent of the Company that this Plan comply in all respects with applicable
provisions of Rule 16b-3 or Rule 16a-1(c)(3) to the extent necessary to ensure that neither
the grant of any Awards to nor other transaction by a Participant who is subject to Section
16 of the Exchange Act is subject to liability under Section 16(b) thereof (except for
transactions acknowledged in writing to be non-exempt by such Participant). Accordingly, if
any provision of this Plan or any Award agreement does not comply with the requirements of
Rule 16b-3 or Rule 16a-1(c)(3) as then applicable to any such transaction, such provision
will be construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such Participant shall avoid
liability under Section 16(b). In addition, the purchase price of any Award conferring a
right to purchase Stock shall be not less than any specified percentage of the Fair Market
Value of Stock at the date of grant of the Award then required in order to comply with Rule
16b-3.

8.     Performance and Annual Incentive Awards.

     (a) Performance Conditions. The right of a Participant to exercise or receive a grant or settlement of any Award,
and the timing thereof, may be subject to such performance conditions as may be specified by
the Committee or the Board. The Committee or the Board may use such business criteria and
other measures of performance as it may deem appropriate in establishing any performance
conditions, and may exercise its discretion to reduce the amounts payable under any Award
subject to performance conditions, except as limited under Sections 8(b) and
8(d) hereof in the case of a Performance Award or Annual Incentive Award intended
to qualify under Code Section 162(m). At such times as the Company is a Publicly Held
Corporation, if and to the extent required under Code Section 162(m), any power or authority
relating to a Performance Award or Annual Incentive Award intended to qualify under Code
Section 162(m), shall be exercised by the Committee and not the Board.

     (b) Performance Awards Granted to Designated Covered Employees. If and to the extent that the Committee determines that a Performance Award to be
granted to an Eligible Person who is designated by the Committee as likely to be a Covered
Employee should qualify as “performance-based compensation” for purposes of Code Section
162(m), the grant, exercise and/or settlement of such Performance Award shall be
contingent upon achievement of preestablished performance goals and other terms set forth in
this Section 8(b).

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     (i) Performance Goals Generally. The performance goals for such Performance Awards shall consist of one or
more business criteria and a targeted level or levels of performance with respect to
each of such criteria, as specified by the Committee consistent with this
Section 8(b). Performance goals shall be objective and shall otherwise meet
the requirements of Code Section 162(m) and regulations thereunder including the
requirement that the level or levels of performance targeted by the Committee result
in the achievement of performance goals being “substantially uncertain.” The
Committee may determine that such Performance Awards shall be granted, exercised
and/or settled upon achievement of any one performance goal or that two or more of
the performance goals must be achieved as a condition to grant, exercise and/or
settlement of such Performance Awards. Performance goals may differ for Performance
Awards granted to any one Participant or to different Participants.

     (ii) Business Criteria. The following business criterion for the Company, on a consolidated basis,
and/or with regard to specified subsidiaries, geographic regions or business units
of the Company (except with respect to the total stockholder return and earnings per
share criteria), shall be used exclusively by the Committee in establishing
performance goals for such Performance Awards: (1) earnings per share, (2) revenues
or margins; (3) increase in cash flow; (4) operating margin; (5) return on net
assets, return on investment, return on capital, return on equity; (6) economic
value added; (7) direct contribution; (8) net income; pretax earnings; earnings
before interest, taxes, depreciation and amortization; earnings after interest
expense and before extraordinary or special items; operating income; income before
interest income or expense, unusual items and income taxes, local, state or federal
and excluding budgeted and actual bonuses which might be paid under any ongoing
bonus plans of ours; (9) working capital; (10) management of fixed costs or variable
costs; (11) identification or consummation of investment opportunities or completion
of specified projects in accordance with corporate business plans, including
strategic mergers, acquisitions or divestitures and development and redevelopment
projects; (12) total stockholder return; (13) debt reduction; (14) funds from
operations on an absolute or per share basis; (15) financial measures and ratios,
including debt service coverage, dividend coverage, debt to assets, debt to
stockholders’ equity or other similar measures; (16) share price; (17) dividends;
(18) market share or market penetration; (19) attainment of financing, refinancing,
or capitalization goals; (20) value creation in the form of an increase in the net
asset value of a real estate development or redevelopment project; (21) attainment
of leasing goals; (22) operating or property related criteria (on a same property
basis or otherwise), including occupancy, net operating income, leasing spreads,
improvements in net effective rent, or other similar measures; and (23) any of the
above goals determined on an absolute or relative basis and/or as compared to the
performance of a published or special index deemed applicable by the compensation committee
including, but not limited to, the Standard & Poor’s 500 Stock Index or peer group
of industry competitors selected by the compensation committee. The foregoing
business criterion shall also be exclusively used in establishing performance goals
for Annual Incentive Awards granted to a Covered Employee under Section
8(c) hereof that are intended to qualify as “performance-based compensation”
under Code Section 162(m).

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     (iii) Performance Period; Timing For Establishing Performance Goals. Achievement of performance goals in respect of such Performance Awards shall
be measured over a performance period of up to ten years, as specified by the
Committee. Performance goals shall be established not later than 90 days after the
beginning of any performance period applicable to such Performance Awards, or at
such other date as may be required or permitted for “performance-based compensation”
under Code Section 162(m).

     (iv) Performance Award Pool. The Committee may establish a Performance Award pool, which shall be an
unfunded pool, for purposes of measuring Company performance in connection with
Performance Awards. The amount of such Performance Award pool shall be based upon
the achievement of a performance goal or goals based on one or more of the business
criteria set forth in Section 8(b)(ii) hereof during the given performance
period, as specified by the Committee in accordance with Section 8(b)(iii)
hereof. The Committee may specify the amount of the Performance Award pool as a
percentage of any of such business criteria, a percentage thereof in excess of a
threshold amount, or as another amount which need not bear a strictly mathematical
relationship to such business criteria.

     (c) Settlement of Performance Awards; Other Terms. Settlement of such Performance Awards shall be in cash, Stock, other Awards or other
property, in the discretion of the Committee. The Committee may, in its discretion, reduce
the amount of a settlement otherwise to be made in connection with such Performance Awards.
The Committee shall specify the circumstances in which such Performance Awards shall be paid
or forfeited in the event of termination of employment by the Participant prior to the end
of a performance period or settlement of Performance Awards.

     (d) Annual Incentive Awards Granted to Designated Covered Employees. The Committee may, within its discretion, grant one or more Annual Incentive Awards
to any Eligible Person, subject to the terms and conditions set forth in this Section
8(d).

     (i) Annual Incentive Award Pool. The Committee may establish an Annual Incentive Award pool, which shall be an
unfunded pool, for purposes of measuring Company performance in connection with
Annual Incentive Awards. In the case of Annual Incentive Awards intended to qualify
as “performance-based compensation” for purposes of Code Section 162(m), the amount
of such Annual Incentive Award pool shall be based upon the achievement of a
performance goal or goals based on one or more of the business criteria set forth
in Section 8(b)(ii) hereof during the given performance period, as
specified by the Committee in accordance with Section 8(b)(iii) hereof. The
Committee may specify the amount of the Annual Incentive Award pool as a percentage
of any such business criteria, a percentage thereof in excess of a threshold amount,
or as another amount which need not bear a strictly mathematical relationship to
such business criteria.

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     (ii) Potential Annual Incentive Awards. Not later than the end of the 90th day of each fiscal year, or at such other
date as may be required or permitted in the case of Awards intended to be
“performance-based compensation” under Code Section 162(m), the Committee shall
determine the Eligible Persons who will potentially receive Annual Incentive Awards,
and the amounts potentially payable thereunder, for that fiscal year, either out of
an Annual Incentive Award pool established by such date under Section
8(d)(i) hereof or as individual Annual Incentive Awards. In the case of
individual Annual Incentive Awards intended to qualify under Code Section 162(m),
the amount potentially payable shall be based upon the achievement of a performance
goal or goals based on one or more of the business criteria set forth in Section
8(b)(ii) hereof in the given performance year, as specified by the Committee;
in other cases, such amount shall be based on such criteria as shall be established
by the Committee. In all cases, the maximum Annual Incentive Award of any
Participant shall be subject to the limitation set forth in Section 5
hereof.

     (iii) Payout of Annual Incentive Awards. After the end of each fiscal year, the Committee shall determine the amount,
if any, of (A) the Annual Incentive Award pool, and the maximum amount of potential
Annual Incentive Award payable to each Participant in the Annual Incentive Award
pool, or (B) the amount of potential Annual Incentive Award otherwise payable to
each Participant. The Committee may, in its discretion, determine that the amount
payable to any Participant as an Annual Incentive Award shall be reduced from the
amount of his or her potential Annual Incentive Award, including a determination to
make no Award whatsoever. The Committee shall specify the circumstances in which an
Annual Incentive Award shall be paid or forfeited in the event of termination of
employment by the Participant prior to the end of a fiscal year or settlement of
such Annual Incentive Award.

     (e) Written Determinations. All determinations by the Committee as to the establishment of performance goals, the
amount of any Performance Award pool or potential individual Performance Awards and as to
the achievement of performance goals relating to Performance Awards under Section
8(b), and the amount of any Annual Incentive Award pool or potential individual Annual
Incentive Awards and the amount of final Annual Incentive Awards under Section
8(d), shall be made in writing in the case of any Award intended to qualify under Code
Section 162(m). The Committee may not delegate any responsibility relating to such
Performance Awards or Annual Incentive Awards if and to the extent required to comply with
Code Section 162(m).

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     (f) Status of Section 8(b) and Section 8(d) Awards Under Code Section
162(m). It is the intent of the Company that Performance Awards and Annual Incentive Awards
under Section 8(b) and 8(d) hereof granted to persons who are designated
by the Committee as likely to be Covered Employees within the meaning of Code Section 162(m)
and regulations thereunder shall, if so designated by the Committee, constitute “qualified
performance-based compensation” within the meaning of Code Section 162(m) and regulations
thereunder. Accordingly, the terms of Sections 8(b), (c), (d) and
(e), including the definitions of Covered Employee and other terms used therein,
shall be interpreted in a manner consistent with Code Section 162(m) and regulations
thereunder. The foregoing notwithstanding, because the Committee cannot determine with
certainty whether a given Participant will be a Covered Employee with respect to a fiscal
year that has not yet been completed, the term Covered Employee as used herein shall mean
only a person designated by the Committee, at the time of grant of Performance Awards or an
Annual Incentive Award, as likely to be a Covered Employee with respect to that fiscal year.
If any provision of the Plan or any agreement relating to such Performance Awards or Annual
Incentive Awards does not comply or is inconsistent with the requirements of Code Section
162(m) or regulations thereunder, such provision shall be construed or deemed amended to the
extent necessary to conform to such requirements.

9.     Change in Control.

     (a) Effect of “Change in Control.”If and to the extent provided in the Award, in the event of a “Change in Control,” as
defined in Section 9(b):

     (i) The Committee may, within its discretion, accelerate the vesting and
exercisability of any Award carrying a right to exercise that was not previously
vested and exercisable as of the time of the Change in Control, subject to
applicable restrictions set forth in Section 10(a) hereof;

     (ii) The Committee may, within its discretion, accelerate the exercisability of
any limited SARs (and other SARs if so provided by their terms) and provide for the
settlement of such SARs for amounts, in cash, determined by reference to the Change
in Control Price;

     (iii) The Committee may, within its discretion, lapse the restrictions,
deferral of settlement, and forfeiture conditions applicable to any other Award
granted under the Plan and such Awards may be deemed fully vested as of the time of
the Change in Control, except to the extent of any waiver by the Participant and
subject to applicable restrictions set forth in Section 10(a) hereof; and

     (iv) With respect to any such outstanding Award subject to achievement of
performance goals and conditions under the Plan, the Committee may, within its
discretion, deem such performance goals and other conditions as having been met as
of the date of the Change in Control.

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     (b) Definition of “Change in Control.” A “Change in Control” shall be deemed to have occurred upon:

     (i) Approval by the stockholders of the Company of (x) a reorganization,
merger, consolidation or other form of corporate transaction or series of
transactions, in each case, with respect to which persons who were the stockholders
of the Company immediately prior to such reorganization, merger or consolidation or
other transaction do not, immediately thereafter, own more than 50% of the combined
voting power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated company’s then outstanding voting securities, in
substantially the same proportions as their ownership immediately prior to such
reorganization, merger, consolidation or other transaction, or (y) a liquidation or
dissolution of the Company or (z) the sale of all or substantially all of the assets
of the Company (unless such reorganization, merger, consolidation or other corporate
transaction, liquidation, dissolution or sale is subsequently abandoned);

     (ii) Individuals who, as of the Effective Date, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board, provided (i) that any person becoming a director subsequent to the Effective
Date whose election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board (other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened election contest
relating to the election of the Directors of the Company, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act) or (ii)
any individual appointed to the Board by the Incumbent Board shall be, for purposes
of this Agreement, considered as though such person were a member of the Incumbent
Board; or

     (iii) the acquisition (other than from the Company) by any person, entity or
“group”, within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act, of more than 35% of either the then outstanding shares of the
Company’s Common Stock or the combined voting power of the Company’s then
outstanding voting securities entitled to vote generally in the election of
directors (hereinafter referred to as the ownership of a “Controlling Interest”)
excluding, for this purpose, any acquisitions by (1) the Company or its
Subsidiaries, or (2) any person, entity or “group” that as of the Effective Date
owns beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act) of a Controlling Interest or any affiliate of such person,
entity or “group.”

     (c) Definition of “Change in Control Price.” The “Change in Control Price” means an amount in cash equal to the higher of (i) the
amount of cash and fair market value of property that is the highest price per share paid
(including extraordinary dividends) in any Corporate Transaction triggering the Change in
Control under Section 9(b)(i) hereof or any liquidation of shares following a sale
of substantially all of the
assets of the Company, or (ii) the highest Fair Market Value per share at any time
during the 60-day period preceding and the 60-day period following the Change in Control.

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10.     General Provisions.

     (a) Compliance With Legal and Other Requirements. The Company may, to the extent deemed necessary or advisable by the Committee or the
Board, postpone the issuance or delivery of Stock or payment of other benefits under any
Award until completion of such registration or qualification of such Stock or other required
action under any federal or state law, rule or regulation, listing or other required action
with respect to any stock exchange or automated quotation system upon which the Stock or
other Company securities are listed or quoted, or compliance with any other obligation of
the Company, as the Committee or the Board, may consider appropriate, and may require any
Participant to make such representations, furnish such information and comply with or be
subject to such other conditions as it may consider appropriate in connection with the
issuance or delivery of Stock or payment of other benefits in compliance with applicable
laws, rules, and regulations, listing requirements, or other obligations. The foregoing
notwithstanding, in connection with a Change in Control, the Company shall take or cause to
be taken no action, and shall undertake or permit to arise no legal or contractual
obligation, that results or would result in any postponement of the issuance or delivery of
Stock or payment of benefits under any Award or the imposition of any other conditions on
such issuance, delivery or payment, to the extent that such postponement or other condition
would represent a greater burden on a Participant than existed on the 90th day preceding the
Change in Control.

     (b) Limits on Transferability; Beneficiaries. No Award or other right or interest of a Participant under the Plan, including any
Award or right which constitutes a derivative security as generally defined in Rule 16a-1(c)
under the Exchange Act, shall be pledged, hypothecated or otherwise encumbered or subject to
any lien, obligation or liability of such Participant to any party (other than the Company
or a Subsidiary), or assigned or transferred by such Participant otherwise than by will or
the laws of descent and distribution or to a Beneficiary upon the death of a Participant,
and such Awards or rights that may be exercisable shall be exercised during the lifetime of
the Participant only by the Participant or his or her guardian or legal representative,
except that Awards and other rights (other than ISOs and SARs in tandem therewith) may be
transferred to one or more Beneficiaries or other transferees during the lifetime of the
Participant, and may be exercised by such transferees in accordance with the terms of such
Award, but only if and to the extent such transfers and exercises are permitted by the
Committee or the Board pursuant to the express terms of an Award agreement (subject to any
terms and conditions which the Committee or the Board may impose thereon, and further
subject to any prohibitions or restrictions on such transfers pursuant to Rule 16b-3). A
Beneficiary, transferee, or other person claiming any rights under the Plan from or through
any Participant shall be subject to all terms and conditions of the Plan and any Award
agreement applicable to such Participant, except as otherwise determined by the Committee or
the Board, and to any additional terms and conditions deemed necessary or appropriate by the
Committee or the Board.

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     (c) Adjustments. In the event that any dividend or other distribution (whether in the form of cash,
Stock, or other property), recapitalization, forward or reverse split, reorganization,
merger, consolidation, spin-off, combination, repurchase, share exchange, liquidation,
dissolution or other similar corporate transaction or event affects the Stock such that a
substitution or adjustment is determined by the Committee or the Board to be appropriate in
order to prevent dilution or enlargement of the rights of Participants under the Plan, then
the Committee or the Board shall, in such manner as it may deem equitable, substitute or
adjust any or all of (i) the number and kind of shares of Stock which may be delivered in
connection with Awards granted thereafter, (ii) the number and kind of shares of Stock by
which annual per-person Award limitations are measured under Section 5 hereof,
(iii) the number and kind of shares of Stock subject to or deliverable in respect of
outstanding Awards and (iv) the exercise price, grant price or purchase price relating to
any Award and/or make provision for payment of cash or other property in respect of any
outstanding Award. In addition, the Committee (and the Board if and only to the extent such
authority is not required to be exercised by the Committee to comply with Code Section
162(m)) is authorized to make adjustments in the terms and conditions of, and the criteria
included in, Awards (including Performance Awards and performance goals, and Annual
Incentive Awards and any Annual Incentive Award pool or performance goals relating thereto)
in recognition of unusual or nonrecurring events (including, without limitation, events
described in the preceding sentence, as well as acquisitions and dispositions of businesses
and assets) affecting the Company, any Subsidiary or any business unit, or the financial
statements of the Company or any Subsidiary, or in response to changes in applicable laws,
regulations, accounting principles, tax rates and regulations or business conditions or in
view of the Committee’s assessment of the business strategy of the Company, any Subsidiary
or business unit thereof, performance of comparable organizations, economic and business
conditions, personal performance of a Participant, and any other circumstances deemed
relevant; provided that no such adjustment shall be authorized or made if and to the extent
that such authority or the making of such adjustment would cause Options, SARs, Performance
Awards granted under Section 8(b) hereof or Annual Incentive Awards granted under
Section 8(d) hereof to Participants designated by the Committee as Covered
Employees and intended to qualify as “performance-based compensation” under Code Section
162(m) and the regulations thereunder to otherwise fail to qualify as “performance-based
compensation” under Code Section 162(m) and regulations thereunder.

     (d) Taxes. The Company and any Subsidiary is authorized to withhold from any Award granted, any
payment relating to an Award under the Plan, including from a distribution of Stock, or any
payroll or other payment to a Participant, amounts of withholding and other taxes due or
potentially payable in connection with any transaction involving an Award, and to take such
other action as the Committee or the Board may deem advisable to enable the Company and
Participants to satisfy obligations for the payment of withholding taxes and other tax
obligations relating to any Award. This authority shall include authority to withhold or
receive Stock or other property and to make cash payments in respect thereof in satisfaction
of a Participant’s tax obligations, either on a mandatory or elective basis in the
discretion of the Committee.

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     (e) Changes to the Plan and Awards. The Board may amend, alter, suspend, discontinue or terminate the Plan, or the
Committee’s authority to grant Awards under the Plan, without the consent of stockholders or
Participants, except that any amendment or alteration to the Plan shall be subject to the
approval of the Company’s stockholders not later than the annual meeting next following such
Board action if such stockholder approval is required by any federal or state law or
regulation (including, without limitation, Rule 16b-3 or Code Section 162(m)) or the rules
of any stock exchange or automated quotation system on which the Stock may then be listed or
quoted, and the Board may otherwise, in its discretion, determine to submit other such
changes to the Plan to stockholders for approval; provided that, without the consent of an
affected Participant, no such Board action may materially and adversely affect the rights of
such Participant under any previously granted and outstanding Award. The Committee or the
Board may waive any conditions or rights under, or amend, alter, suspend, discontinue or
terminate any Award theretofore granted and any Award agreement relating thereto, except as
otherwise provided in the Plan; provided that, without the consent of an affected
Participant, no such Committee or the Board action may materially and adversely affect the
rights of such Participant under such Award. Notwithstanding anything in the Plan to the
contrary, if any right under this Plan would cause a transaction to be ineligible for
pooling of interest accounting that would, but for the right hereunder, be eligible for such
accounting treatment, the Committee or the Board may modify or adjust the right so that
pooling of interest accounting shall be available, including the substitution of Stock
having a Fair Market Value equal to the cash otherwise payable hereunder for the right which
caused the transaction to be ineligible for pooling of interest accounting.

     (f) Limitation on Rights Conferred Under Plan. Neither the Plan nor any action taken hereunder shall be construed as (i) giving any
Eligible Person or Participant the right to continue as an Eligible Person or Participant or
in the employ of the Company or a Subsidiary; (ii) interfering in any way with the right of
the Company or a Subsidiary to terminate any Eligible Person’s or Participant’s employment
at any time, (iii) giving an Eligible Person or Participant any claim to be granted any
Award under the Plan or to be treated uniformly with other Participants and employees, or
(iv) conferring on a Participant any of the rights of a stockholder of the Company unless
and until the Participant is duly issued or transferred shares of Stock in accordance with
the terms of an Award.

     (g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to constitute an “unfunded” plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant or obligation to
deliver Stock pursuant to an Award, nothing contained in the Plan or any Award shall give
any such Participant any rights that are greater than those of a general creditor of the
Company; provided that the Committee may authorize the creation of trusts and deposit
therein cash, Stock, other Awards or other property, or make other arrangements to meet the
Company’s obligations under the Plan. Such trusts or other arrangements shall be consistent
with the “unfunded” status of the Plan unless the Committee otherwise determines with the
consent of each affected Participant. The trustee of such trusts may be authorized to
dispose of trust assets and reinvest the proceeds in alternative investments, subject
to such terms and conditions as the Committee or the Board may specify and in accordance
with applicable law.

22

 

     (h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor its submission to the stockholders
of the Company for approval shall be construed as creating any limitations on the power of
the Board or a committee thereof to adopt such other incentive arrangements as it may deem
desirable including incentive arrangements and awards which do not qualify under Code
Section 162(m).

     (i) Payments in the Event of Forfeitures; Fractional Shares. Unless otherwise determined by the Committee or the Board, in the event of a
forfeiture of an Award with respect to which a Participant paid cash or other consideration,
the Participant shall be repaid the amount of such cash or other consideration. No
fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award.
The Committee or the Board shall determine whether cash, other Awards or other property
shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

     (j) Governing Law. The validity, construction and effect of the Plan, any rules and regulations under
the Plan, and any Award agreement shall be determined in accordance with the laws of the
State of Maryland without giving effect to principles of conflicts of laws, and applicable
federal law.

     (k) Plan Effective Date and Stockholder Approval; Termination of Plan. The Plan shall become effective on the Effective Date, subject to subsequent approval
within 12 months of its adoption by the Board by stockholders of the Company eligible to
vote in the election of directors, by a vote sufficient to meet the requirements of Code
Sections 162(m) (if applicable) and 422, Rule 16b-3 under the Exchange Act (if applicable),
applicable New York Stock Exchange requirements, and other laws, regulations, and
obligations of the Company applicable to the Plan. Awards may be granted subject to
stockholder approval, but may not be exercised or otherwise settled in the event stockholder
approval is not obtained. The Plan shall terminate on the earliest to occur of (i) the day
immediately prior to the tenth anniversary of the date the stockholders’ of the Company
approved to limit the terms hereof (such date being May 2, 2021), or (ii) the date on which
no shares of Common Stock remain available for issuance under the Plan and the Company has
no further rights or obligations with respect to outstanding Awards under the Plan.

     (l) Section 409A Compliance.

     (i) The Award agreement for any Award that the Committee reasonably determines
to constitute a Section 409A Plan, as defined in Section 10(l)(ii) hereof,
and the provisions of the Plan applicable to that Award, shall be construed in a
manner consistent with the applicable requirements of Section 409A, and the
Committee, in its sole discretion and without the consent of any Participant, may
amend any Award agreement (and the provisions of the Plan
applicable thereto) if and to the extent that the Committee determines that
such amendment is necessary or appropriate to comply with the requirements of
Section 409A of the Code.

23

 

     (ii) If any Award constitutes a “nonqualified deferred compensation plan” under
Section 409A of the Code (a “Section 409A Plan”), then the Award shall be subject to
the following additional requirements, if and to the extent required to comply with
Section 409A of the Code:

	 	(A)	 	Payments under the Section 409A
Plan may not be made earlier than the first to occur of (u) the
Participant’s “separation from service”, (v) the date the
Participant becomes “disabled”, (w) the Participant’s death, (x)
a “specified time (or pursuant to a fixed schedule)” specified
in the Award agreement for the Award at the date of the deferral
of such compensation, (y) a “change in the ownership or
effective control of the corporation, or in the ownership of a
substantial portion of the assets” of the Company, or (z) the
occurrence of an “unforeseeble emergency”;
	 
	 	(B)	 	The time or schedule for any
payment of the deferred compensation may not be accelerated,
except to the extent provided in applicable Treasury Regulations
or other applicable guidance issued by the Internal Revenue
Service;
	 
	 	(C)	 	Any elections with respect to the
deferral of such compensation or the time and form of
distribution of such deferred compensation shall comply with the
requirements of Section 409A(a)(4) of the Code; and
	 
	 	(D)	 	In the case of any Participant
who is “specified employee”, a distribution on account of a
“separation from service” may not be made before the date which
is six months after the date of the Participant’s “separation
from service” (or, if earlier, the date of the Participant’s
death).

     For purposes of the foregoing, the terms in quotations shall have the same
meanings as those terms have for purposes of Section 409A of the Code, and the
limitations set forth herein shall be applied in such manner (and only to the
extent) as shall be necessary to comply with any requirements of Section 409A of the
Code that are applicable to the Award.

     (iii) Notwithstanding the foregoing, or any provision of this Plan or any Award
agreement for an Award, the Company does not make any representation to any
Participant or Beneficiary that any Awards made pursuant to this Plan are
exempt from, or satisfy, the requirements of, Section 409A, and the Company
shall have no liability or other obligation to indemnify or hold harmless the
Participant or any Beneficiary for any tax, additional tax, interest or penalties
that the Participant or any Beneficiary may incur in the event that any provision of
this Plan, or any Award agreement for an Award, or any amendment or modification
thereof, or any other action taken with respect thereto, is deemed to violate any of
the requirements of Section 409A.

24

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