Document:

exv4w4

 

EXHIBIT 4.4

THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE SOLD OR
OFFERED FOR SALE OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE OFFERING OF THIS
SECURITY HAS NOT BEEN REVIEWED OR APPROVED BY ANY STATE SECURITIES
ADMINISTRATOR.

STOCK SUBSCRIPTION WARRANT

To Purchase Common Stock of

ORBIMAGE Inc.

	 	 	 
	Date of Initial Issuance:
	 	 
	Number of Shares:
	 	 
	Initial Warrant Price:

	 	$28.22 per share
	Expiration Date:

	 	December 31, 2007

     THIS CERTIFIES THAT for value received,                    , or its registered
assigns (hereinafter called “Holder”), is entitled to purchase from ORBIMAGE
Inc., a Delaware corporation (“Company”), at any time during the Term of this
Warrant,                                shares of common stock, $0.01 par value, of Company (the
“Common Stock”), at the Warrant Price, payable as provided herein. The
exercise of this Warrant shall be subject to the provisions, limitations and
restrictions herein contained. This Warrant may be exercised in whole or in
part.

SECTION 1. Definitions.

     For all purposes of this Warrant, the following terms shall have the
meanings indicated:

     “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended from time to time.

     “Registration Rights Agreement” shall mean that certain
Registration Rights Agreement dated as of December 31, 2003 among Company and
certain holders of its securities.

     “Securities Act” shall mean the Securities Act of 1933, as amended
from time to time.

     “Term of this Warrant” shall mean the period beginning on the date
of initial issuance hereof and ending on December 31, 2007.

     “Warrant Price” shall mean $28.22 per share, subject to adjustment
in accordance with Section 4 hereof.

     “Warrants” shall mean this Warrant and any other Warrant or
Warrants issued to any transferees, successors or assigns of such original
holder or subsequent holder.

     “Warrant Shares” shall mean shares of Common Stock, subject to
adjustment or change as herein provided, purchased or purchasable by Holder
upon the exercise hereof.

 

 

SECTION 2. Exercise of Warrant.

     2.1 Procedure for Exercise of Warrant. To exercise this Warrant
in whole or in part (but not as to any fractional share of Common Stock),
Holder shall deliver to Company at its office referred to in Section 11 hereof
at any time and from time to time during the Term of this Warrant: (i) the
Notice of Exercise in the form of Exhibit A attached hereto, (ii) cash,
certified or official bank check payable to the order of Company, wire transfer
of funds to Company’s account in the amount of the Warrant Price for each share
being purchased and any amount required to be paid by the Holder on account of
a transfer of a Warrant or Warrant Shares pursuant to Section 3, and (iii) this
Warrant.

     In the event of any exercise of the rights represented by this Warrant, a
certificate or certificates for the shares of Common Stock so purchased,
registered in the name of Holder or, subject to compliance with Section 6.2,
such other name or names as may be designated by Holder, shall be delivered to
Holder hereof within a reasonable time, not exceeding fifteen (15) days, after
the rights represented by this Warrant shall have been so exercised; and,
unless this Warrant has expired, a new Warrant representing the number of
shares (except a remaining fractional share), if any, with respect to which
this Warrant shall not then have been exercised shall also be issued to Holder
hereof within such time. The person in whose name any certificate for shares
of Common Stock is issued upon exercise of this Warrant shall for all purposes
be deemed to have become the holder of record of such shares on the date on
which Holder shall have complied with the conditions for exercise of this
Warrant set forth above, irrespective of the date of delivery of such
certificate, except that, if the date of such compliance is a date when the
stock transfer books of Company are closed, such person shall be deemed to have
become the holder of such shares at the close of business on the next
succeeding date on which the stock transfer books are open.

     2.2 Transfer Restriction Legend. Each certificate for
Warrant Shares shall bear the following legend (and any additional legend
required by (i) any applicable state securities laws and (ii) any securities
exchange upon which such Warrant Shares may, at the time of such exercise, be
listed) on the face thereof unless at the time of exercise such Warrant Shares
shall be registered under the Securities Act:

“The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may
not be sold or transferred in the absence of such registration or
an exemption therefrom under said Act.”

     Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon
completion of a public distribution under a registration statement of the
securities represented thereby) shall also bear such legend unless, in the
opinion of counsel for Holder thereof (which counsel shall be reasonably
satisfactory to
Company) the securities represented thereby are not, at such time, required by
law to bear such legend.

SECTION 3. Covenants as to Common Stock. The Company shall
at all times reserve and keep available out of its authorized but unissued
Common Stock (or out of shares of Common

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Stock held in its treasury) solely for
the purpose of issuance upon the exercise of this Warrant, the maximum number
of Warrant Shares issuable upon the exercise of this Warrant. The Company
covenants and agrees that all shares of Common Stock that may be issued upon
the exercise of the rights represented by this Warrant shall, upon issuance, be
validly issued, fully paid and nonassessable, and free from all taxes, liens,
preemptive rights and charges with respect to the issue thereof. The Company
shall take all such actions as may be necessary to ensure that all such Warrant
Shares may be so issued without violation by the Company of any applicable law
or governmental regulation or any requirements of any domestic securities
exchange or quotation system upon which shares of Common Stock or other
securities constituting Warrant Shares may be listed or quoted (except for
official notice of issuance which shall be immediately delivered by the Company
upon each such issuance). The Company will use its best efforts to cause the
Warrant Shares, immediately upon such exercise, to be listed on any domestic
national securities exchange or quotation system upon which shares of Common
Stock or other securities constituting Warrant Shares are listed or quoted at
the time of such exercise. The Company further covenants and agrees that it
shall pay when due and payable any and all federal and state documentary or
stamp taxes (other than federal or state income taxes or similar laws) or other
costs which may be payable in respect of the issue of this Warrant or any
Common Stock or certificates therefor issuable upon the exercise of this
Warrant (provided, however, the Company’s obligations in this regard will in
all events be conditioned upon the Holder cooperating with the Company in any
reasonable arrangement designed to minimize or eliminate any such taxes),
except that, if Warrant Shares or new Warrants shall be registered in a name or
names other than the name of the Holder, funds sufficient to pay all transfer
taxes payable as a result of such transfer shall be paid by the Holder at the
time of delivery of the Notice of Exercise.

SECTION 4. Adjustment of Number of Shares. Upon each adjustment of
the Warrant Price as provided in Section 5, Holder shall thereafter be entitled
to purchase, at the Warrant Price resulting from such adjustment, only the
number of shares (calculated to the nearest tenth of a share) obtained by
multiplying the Warrant Price in effect immediately prior to such adjustment by
the number of shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Warrant Price resulting from
such adjustment.

SECTION 5. Adjustment of Warrant Price. The Warrant Price shall be
subject to adjustment from time to time as follows:

     (i) If, at any time during the Term of this Warrant, the number of shares
of Common Stock outstanding is increased by a stock dividend payable in shares
of Common Stock or by a
subdivision or split-up of shares of Common Stock, then, following the
record date fixed for the determination of holders of Common Stock entitled to
receive such stock dividend, subdivision or split-up, the Warrant Price shall
be appropriately decreased so that the number of shares of Common Stock
issuable upon the exercise hereof shall be increased in proportion to such
increase in outstanding shares.

     (ii) If, at any time during the Term of this Warrant, the number of shares
of Common Stock outstanding is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date for such combination,
the Warrant Price shall be appropriately

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increased so that the number of shares
of Common Stock issuable upon the exercise hereof shall be decreased in
proportion to such decrease in outstanding shares.

     (iii) Whenever the Warrant Price shall be adjusted as provided in this
Section 5, Company shall promptly prepare a statement showing the facts
requiring such adjustment and the Warrant Price that shall be in effect after
such adjustment, setting forth in reasonable detail and certifying the
calculation of such adjustment. Company shall cause a copy of such statement
to be sent by mail, first class postage prepaid, to each Holder at its, his or
her address appearing on Company’s records. Where appropriate, such copy may
be given in advance and may be included as part of the notice required to be
mailed under the provisions of clause (v) of this Section 5.

     (iv) Adjustments made pursuant to this Section 5 shall be made on the date
such dividend, subdivision, split-up, combination or distribution, as the case
may be, is made, and shall become effective at the opening of business on the
business day next following the record date for the determination of
stockholders entitled to such dividend, subdivision, split-up, combination or
distribution.

     (v) In the event Company shall propose to take any action of the types
described in this Section 5, Company shall forward, at the same time and in the
same manner, to Holder such notice, if any, which Company shall give to the
holders of capital stock of Company.

     (vi) In any case in which the provisions of this Section 5 shall require
that an adjustment shall become effective immediately after a record date for
an event, Company may defer until the occurrence of such event, issuing to any
Holder of all or any part of this Warrant that exercised all or part of this
Warrant after such record date, and before the occurrence of such event, the
additional shares of capital stock issuable upon such exercise by reason of the
adjustment required by such event over and above the shares of capital stock
issuable upon such exercise before giving effect to such adjustment exercise;
provided, however, that Company shall deliver to such Holder a due bill or
other appropriate instrument evidencing such Holder’s right to receive such
additional shares upon the occurrence of the event requiring such adjustment.

SECTION 6. Ownership.

     6.1 Ownership of This Warrant.

     Company may deem and treat the person in whose name this Warrant is
registered as the holder and owner hereof (notwithstanding any notations of
ownership or writing hereon made by anyone other than Company) for all purposes
and shall not be affected by any notice to the contrary until presentation of
this Warrant for registration of transfer as provided in this Section 6.

     6.2 Transfer and Replacement. This Warrant and all rights
hereunder are transferable in whole or in part upon the books of Company by
Holder hereof in person or by duly authorized attorney, together with a
properly executed Assignment (in the form of Exhibit B or Exhibit C hereto, as
the case may be) and a new Warrant or Warrants, of the same tenor as this
Warrant but registered in the name of the transferee or transferees (and in the
name of Holder, if a partial transfer is effected) shall be promptly made and
delivered by Company upon surrender

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of this Warrant duly endorsed, at the
office of Company referred to in Section 11 hereof. Upon receipt by Company of
evidence reasonably satisfactory to it of the loss, theft or destruction, and,
in such case, of indemnity or security reasonably satisfactory to it
(provided, that if the Holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), and upon
surrender of this Warrant if mutilated, Company shall promptly make and deliver
a new Warrant of like tenor, in lieu of this Warrant. This Warrant shall be
promptly cancelled by Company upon the surrender hereof in connection with any
transfer or replacement. Except as otherwise provided above, in the case of
the loss, theft or destruction of a Warrant, Company shall pay all expenses,
taxes and other charges payable in connection with any transfer or replacement
of this Warrant, other than documentary or stamp taxes (if any) payable in
connection with a transfer of this Warrant, which shall be payable by Holder.
Holder shall not transfer this Warrant and the rights hereunder except in
compliance with federal and state securities laws.

SECTION 7.

     7.1 Mergers, Consolidation, Sales. In the case of any
proposed consolidation or merger of Company with another entity, or the
proposed sale of all or substantially all of its assets to another person or
entity, or any proposed reorganization, recapitalization, reclassification of
the capital stock of Company or other transaction, then, as a condition of such
consolidation, merger, sale, reorganization, recapitalization, reclassification
or other transaction, Company shall give 30 days’ prior written notice thereof
to Holder hereof and lawful and adequate provision shall be made whereby Holder
shall thereafter have the right to receive upon the basis and upon the terms
and conditions specified herein, in lieu of the shares of the Common Stock of
Company immediately theretofore purchasable hereunder, such shares of stock,
securities or assets as may (by virtue of such consolidation, merger, sale,
reorganization, recapitalization, reclassification or other transaction) be
issued or payable with respect to or in exchange for the number of shares of
such Common Stock purchasable hereunder immediately before such consolidation,
merger, sale, reorganization, recapitalization, reclassification or other
transaction. In any such case appropriate provision shall be made with respect
to the rights and interests of Holder to the end that the provisions hereof
shall thereafter be applicable as nearly as may be practicable, in
relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of this Warrant. The Company shall not effect
any such consolidation, merger, sale, reorganization, recapitalization,
reclassification or other transaction unless, prior to the consummation
thereof, the successor entity (if other than the Company) resulting from such
consolidation, merger, sale, reorganization, recapitalization, reclassification
or other transaction (including a purchaser of all or substantially all the
Company’s assets) assumes by written instrument the obligation to deliver to
each Holder of Warrants such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such Holder may be entitled to
acquire upon exercise of Warrants.

SECTION 8. Fractional Shares. Fractional shares shall not
be issued upon the exercise of this Warrant but in any case where Holder would,
except for the provisions of this Section 8, be entitled under the terms hereof
to receive a fractional share upon the complete exercise of this Warrant,
Company shall, upon the exercise of this Warrant for the largest number of
whole shares then called for, pay a sum in cash equal to the excess of the
value of such fractional share

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(determined in such reasonable manner as may be
prescribed in good faith by the Board of Directors of Company) over the Warrant
Price for such fractional share.

SECTION 9. Special Arrangements of Company. Company
covenants and agrees that during the Term of this Warrant, unless otherwise
approved by Holder:

     9.1 Certain Actions. The Company shall not amend its
certificate or articles, as the case may be, of incorporation to eliminate as
an authorized class of capital stock that class denominated as “Common Stock”
on the date hereof. The Company shall not, and shall not permit its
subsidiaries to, directly or indirectly, by any action (including, without
limitation, reincorporation in a jurisdiction other than Delaware, amending its
Third Amended and Restated Certificate of Incorporation or through any merger,
sale, consolidation, reorganization, reclassification, issuance or sale of
securities or any other action) avoid or seek to avoid the observance or
performance of any terms of this Warrant or impair or diminish its value, but
shall at all times in good faith assist in the carrying out of all such terms
of Warrant. Without limiting the generality of the foregoing, the Company
shall (a) obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be necessary to
enable the Company to perform its obligations under this Warrant and (b) not
undertake any reverse stock split, combination, reorganization or other
reclassification of its capital stock which would have the effect of making the
Warrant exercisable for less than one share of Common Stock.

     9.2 Shall Bind Successors. This Warrant and the rights
evidenced hereby shall be binding upon the successors of the Company.

     9.3 No Exercise Interference; Par Value. The Company shall
not close its books against the transfer of this Warrant or of any Warrant
Shares issued or issuable upon the exercise of this Warrant in any manner which
interferes with the timely exercise of this Warrant. The Company shall from
time to time take all such action as may be necessary to assure that the par
value per share of the unissued Warrant Shares acquirable upon exercise of this
Warrant is at all times equal to or less than the Warrant Price then in effect.

     9.4 Governmental Filings. The Company shall assist and
cooperate with any reasonable request by the Holder which is required to make
any governmental filings or obtain any governmental approvals prior to or in
connection with any exercise of this Warrant.

     9.5 Notices of Certain Actions.

     The Company shall give written notice to the Holder at least 30 days prior
to the date on which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the Common Stock, (B) with respect
to any pro rata subscription offer to holders of Common Stock, or (C) for
determining rights to vote with respect to any recapitalization,
reorganization, reclassification, consolidation, merger, dissolution,
liquidation or sale of all or substantially all of the Company’s assets or
other transaction which is effected in such a way that holders of Common Stock
are entitled to receive (either directly or upon

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subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock.

SECTION 10. Registration Rights. Company covenants and
agrees that the Holder shall be offered the right to become a party to the
Registration Rights Agreement with respect to the “piggyback” registration
rights provided in Section 5 thereof.

SECTION 11. Notices. Any notice or other document required
or permitted to be given or delivered to Holder shall be delivered at, or sent
by certified or registered mail to, Holder at such address as shall have been
furnished to Company in writing by Holder. Any notice or other document
required or permitted to be given or delivered to Company shall be delivered
at, or sent by certified or registered mail to, Company at its address for
notices set forth in the Agreement or to such other address as shall have been
furnished in writing to Holder by Company. Any notice so addressed and mailed
by registered or certified mail shall be deemed to be given when so mailed. Any
notice so addressed and otherwise delivered shall be deemed to be given when
actually received by the addressee.

SECTION 12. No Rights as Stockholder; Limitation of
Liability.
This Warrant shall not entitle Holder to any of the rights of a
stockholder of Company (including, without limitation, any preemption rights,
voting rights or rights to dividends) except upon exercise in accordance with
the terms hereof. No provision hereof, in the absence of affirmative action by
Holder to purchase shares of Common Stock, and no mere enumeration herein of
the rights or privileges of Holder, shall give rise to any liability of Holder
for the Warrant Price hereunder or as a stockholder of Company, whether such
liability is asserted by Company or by creditors of Company.

SECTION 13. Law Governing. THE VALIDITY, INTERPRETATION,
AND ENFORCEMENT OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF.

SECTION 14. Public Offering; Sale of Company.
Notwithstanding any other provision hereof, if an exercise of any portion of
this Warrant is to be made in connection with a public offering or a sale of
the Company (pursuant to a merger, sale of stock or otherwise), such exercise
may at the election of the Holder be conditioned upon the consummation of such
transaction, in which case such exercise shall not be deemed to be effective
until immediately prior to consummation of such transaction.

SECTION 15. Representations of the Company. The Company has
all requisite corporate power and authority to enter into and perform its
obligations under this Warrant and to issue and deliver the Warrant to the
Holder. The execution, delivery, and performance by the Company of its
obligations under this Warrant, including the issuance and delivery of the
Warrant to the Purchaser, have been duly authorized by all necessary corporate
action on the part of the Company. This Warrant has been duly executed and
delivered by the Company and is a legal, valid, and binding obligation of the
Company and is enforceable against the Company in accordance with its terms.

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SECTION 16. Warrant Register. The Company shall maintain at
its principal executive offices books for the registration and the registration
of transfer of Warrants.

SECTION 17. Company to Reaffirm Obligations. The Company
will, at the time of each exercise of this Warrant, upon the request of the
Holder hereof, acknowledge in writing its continuing obligation to afford to
such Holder all rights (including, without limitation, any rights to
registration, pursuant to the Registration Rights Agreement, of the Warrants
and the Warrant Shares issued upon such exercise) to which such Holder shall
continue to be entitled after such exercise in accordance with the terms of
this Warrant, provided, that if the Holder of this Warrant shall fail to
make any such request,
such failure shall not affect the continuing obligation of the Company to
afford such rights to such Holder.

SECTION 18. Amendments. This Warrant and any provision
hereof may be changed, waived, discharged or terminated only by an instrument
in writing signed by both parties (or any respective predecessor in interest
thereof). The headings in this Warrant are for purposes of reference only and
shall not affect the meaning or construction of any of the provisions hereof.

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     IN WITNESS WHEREOF, Company has caused this Warrant to be signed by its
duly authorized officer this     day of
   , 2003.

	 	 	 	 	 
	 	 	ORBIMAGE Inc.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

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EXHIBIT A

FORM OF NOTICE OF EXERCISE

[To be signed only upon exercise of the Warrant]

TO BE EXECUTED BY THE REGISTERED HOLDER

TO EXERCISE THE ATTACHED WARRANT

The undersigned hereby
exercises the right to purchase                     shares of
Common Stock which the undersigned is entitled to purchase by the terms of the
attached Warrant according to the conditions thereof, and herewith makes
payment of $                    therefor in cash.

All shares to be issued pursuant hereto shall be issued in the name of, and the
initial address of such person to be entered on the books of ORBIMAGE Inc.
shall be:

The shares are to be issued in certificates of the following denominations:

	 	 	 	 	 	 	 
	 	 	 	 	

[Type Name of Holder]
	 
	 	 	 	 	 	 
	

	 	 	 	By:	 	 
	

	 	 	 	 	 	

	

	 	 	 	Title:	 	 
	

	 	 	 	 	 	

	 
	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 
	

	 	
	 	 	 	 

 

 

EXHIBIT B

FORM OF ASSIGNMENT

(ENTIRE)

[To be signed only upon transfer of entire Warrant]

TO BE EXECUTED BY THE REGISTERED HOLDER

TO TRANSFER THE ATTACHED WARRANT

FOR VALUE RECEIVED                                       hereby sells, assigns and
transfers unto                                        all rights of the undersigned
under and pursuant to the attached Warrant, and the undersigned does hereby
irrevocably constitute and appoint                                                          Attorney to transfer
said Warrant on the books of ORBIMAGE Inc., with full power of substitution.

	 	 	 	 	 	 	 
	 	 	 	 	

[Type Name of Holder]
	 
	

	 	 	 	By:	 	 
	

	 	 	 	 	 	

	

	 	 	 	Title:	 	 
	

	 	 	 	 	 	

	Dated:	 	 	 	 
	

	 	
	 	 	 	 

NOTICE

The signature to the foregoing Assignment must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.

 

 

EXHIBIT C

FORM OF ASSIGNMENT

(PARTIAL)

[To be signed only upon partial transfer of Warrant]

TO BE EXECUTED BY THE REGISTERED HOLDER

TO TRANSFER THE ATTACHED WARRANT

FOR VALUE RECEIVED                                         hereby sells, assigns and
transfers unto                                        (i) the rights of the
undersigned to purchase                    shares of Common Stock under and pursuant to the
attached Warrant, and (ii) on a non-exclusive basis, all other rights of the
undersigned under and pursuant to the attached Warrant, it being understood
that the undersigned shall retain, severally (and not jointly) with the
transferee(s) named herein, all rights assigned on such non-exclusive basis.
The undersigned does hereby irrevocably constitute and appoint                                      
Attorney to transfer said Warrant on the books of
ORBIMAGE Inc., with full power of substitution.

	 	 	 	 	 	 	 
	 	 	 	 	

[Type Name of Holder]
	 
	

	 	 	 	By:	 	 
	

	 	 	 	 	 	

	

	 	 	 	Title:	 	 
	

	 	 	 	 	 	

	Dated:	 	 	 	 
	

	 	
	 	 	 	 

NOTICE

The signature to the foregoing Assignment must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.exv10w4

 

EXHIBIT 10.4

THE 2003 EMPLOYEE STOCK INCENTIVE PLAN

OF

ORBITAL IMAGING CORPORATION

 

 

Table of Contents

	 	 	 	 	 
	ARTICLE I. DEFINITIONS
	 	 	3	 
	ARTICLE II. SHARES SUBJECT TO PLAN
	 	 	9	 
	ARTICLE III. GRANTING OF AWARDS
	 	 	10	 
	ARTICLE IV. GRANTING OF OPTIONS TO EMPLOYEES AND CONSULTANTS
	 	 	12	 
	ARTICLE V. TERMS OF OPTIONS
	 	 	13	 
	ARTICLE VI. EXERCISE OF OPTIONS
	 	 	14	 
	ARTICLE VII. AWARD OF RESTRICTED STOCK
	 	 	17	 
	ARTICLE VIII. PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, DEFERRED STOCK, STOCK
PAYMENTS
	 	 	19	 
	ARTICLE IX. STOCK APPRECIATION RIGHTS
	 	 	21	 
	ARTICLE X. ADMINISTRATION
	 	 	22	 
	ARTICLE XI. MISCELLANEOUS PROVISIONS
	 	 	24	 

2

 

          Orbital Imaging Corporation, a Delaware corporation, has adopted the 2003
Incentive Award Plan of Orbital Imaging Corporation, (the “Plan”), effective
December 31, 2003, for the benefit of its eligible employees and consultants
who are also employees or consultants.

          The purposes of the Plan are as follows:

          A. To provide an additional incentive for key Employees and Consultants
(as such terms are defined below) to further the growth, development and
financial success of the Company by personally benefiting through the ownership
of Company stock and/or rights which recognize such growth, development and
financial success.

          B. To enable the Company to obtain and retain the services of key
Employees and Consultants considered essential to the long range success of the
Company by offering them an opportunity to own stock in the Company and/or
rights which will reflect the growth, development and financial success of the
Company.

ARTICLE I.

DEFINITIONS

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

          1.1 “Administrator” shall mean the entity that conducts the general
administration of the Plan as provided herein. With reference to the
administration of the Plan with respect to any Award, the term “Administrator”
shall refer to the Committee unless the Board has assumed the authority for
administration of the Plan generally as provided in Section 10.1.

          1.2 “Award” shall mean an Option, a Restricted Stock Award, a Performance
Award, a Dividend Equivalents Award, a Deferred Stock Award, a Stock Payment
Award or a Stock Appreciation Right which may be awarded or granted under the
Plan (collectively, “Awards”).

          1.3 “Award Agreement” shall mean a written agreement executed by an
authorized officer of the Company and the Holder which shall contain such terms
and conditions with respect to an Award as the Committee shall determine,
consistent with the Plan.

          1.4 “Award Limit” shall mean 275,455 shares of Common Stock; provided,
however, that solely with respect to Performance Awards granted pursuant to
Section 8.2(b) and Dividend Equivalents granted pursuant to Section 8.3, Award
Limit shall mean $1,000,000.

          1.5 “Board” shall mean the Board of Directors of the Company.

3

 

          1.6 “Change in Control” shall mean the occurrence of any of the following
events:

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

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

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

(C) an acquisition of voting securities pursuant to a
transaction described in clause (iii) below that would not be
a Change in Control under clause (iii);

     Notwithstanding the foregoing, neither of the following events shall
constitute an “acquisition” by any person or group for purposes of this clause
(i): (x) a change in the voting power of the Company’s voting securities based
on the relative trading values of the Company’s then outstanding securities as
determined pursuant to the Company’s Certificate of Incorporation, if
applicable, or (y) an acquisition of the Company’s securities by the Company
which, either alone or in combination only with the other event, causes the
Company’s voting securities beneficially owned by a person or group to
represent 50% or more of the combined voting power of the Company’s then
outstanding voting securities; provided, however, that if a person or group
shall become the beneficial owner of 50% or more of the combined voting power
of the Company’s then outstanding voting securities by reason of share
acquisitions by the Company as described above and shall, after such share
acquisitions by the Company, become the beneficial owner of any additional
voting securities of the Company, then such acquisition shall constitute a
Change in Control;

          (ii) individuals who, as of the date hereof, constitute the Board
(the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the
Incumbent Board;

4

 

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

(A) which results in the Company’s voting securities
outstanding immediately before the transaction continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the Company or the person
that, as a result of the transaction, controls, directly or
indirectly, the Company or owns, directly or indirectly, all
or substantially all of the Company’s assets or otherwise
succeeds to the business of the Company (the Company or such
person, the “Successor Entity”)) directly or indirectly, at
least 50% of the combined voting power of the Successor
Entity’s outstanding voting securities immediately after the
transaction, and

(B) after which more than 50% of the members of the board of
directors of the Successor Entity were members of the
Incumbent Board at the time of the Board’s approval of the
agreement providing for the transaction or other action of
the Board approving the transaction, and

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

          (iv) a liquidation or dissolution of the Company.

     For purposes of clause (i) above, the calculation of voting power shall be
made as if the date of the acquisition were a record date for a vote of the
Company’s shareholders, and for purposes of clause (iii) above, the calculation
of voting power shall be made as if the date of the consummation of the
transaction were a record date for a vote of the Company’s shareholders.

          1.7 “Code” shall mean the Internal Revenue Code of 1986, as amended.

          1.8 “Committee” shall mean the Compensation Committee of the Board, or
another committee or subcommittee of the Board, appointed as provided in
Section 10.1.

          1.9 “Common Stock” shall mean the common stock of the Company, par value
$0.01 per share.

          1.10 “Company” shall mean Orbital Imaging Corporation, a Delaware
corporation.

5

 

          1.11 “Consultant” shall mean any consultant or adviser if (i) the
consultant or adviser renders bona fide services to the Company; (ii) the
services rendered by the consultant or adviser are not in connection with the
offer or sale of securities in a capital-raising transaction and do not
directly or indirectly promote or maintain a market for the Company’s
securities; and (iii) the consultant or adviser is a natural person who has
contracted directly with the Company to render such services.

          1.12 “Deferred Stock” shall mean Common Stock awarded under Article VIII
of the Plan.

          1.13 “Director” shall mean a member of the Board.

          1.14 “Dividend Equivalent” shall mean a right to receive the equivalent
value (in cash or Common Stock) of dividends paid on Common Stock, awarded
under Article VIII of the Plan.

          1.15 “DRO” shall mean a domestic relations order as defined by the Code or
Title I of the Employee Retirement Income Security Act of 1974, as amended, or
the rules thereunder.

          1.16 “Employee” shall mean any officer or other employee (as defined in
accordance with Section 3401(c) of the Code) of the Company, or of any
corporation which is a Subsidiary.

          1.17 “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended.

          1.18 “Fair Market Value” of a share of Common Stock as of a given date
shall be (a) the closing price of a share of Common Stock on the principal
exchange on which shares of Common Stock are then trading, if any (or as
reported on any composite index which includes such principal exchange), on the
trading day previous to such date, or if shares were not traded on the trading
day previous to such date, then on the next preceding date on which a trade
occurred, or (b) if Common Stock is not traded on an exchange but is quoted on
NASDAQ or a successor quotation system, the mean between the closing
representative bid and asked prices for the Common Stock on the trading day
previous to such date as reported by NASDAQ or such successor quotation system,
or (c) if Common Stock is not publicly traded on an exchange and not quoted on
NASDAQ or a successor quotation system, the Fair Market Value of a share of
Common Stock as established by the Administrator acting in good faith.

          1.19 “Holder” shall mean a person who has been granted or awarded an
Award.

          1.20 “Incentive Stock Option” shall mean an option which conforms to the
applicable provisions of Section 422 of the Code or any successor provision,
and which is designated as an Incentive Stock Option by the Administrator.

          1.21 “Non-Employee Director” shall mean a member of the Board who is not
an Employee of the Company.

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          1.22 “Non-Qualified Stock Option” shall mean an Option which is not
designated as an Incentive Stock Option by the Administrator.

          1.23 “Option” shall mean a stock option granted under Article IV of the
Plan. An Option granted under the Plan shall, as determined by the
Administrator and set forth in the applicable Award Agreement, be either a
Non-Qualified Stock Option or an Incentive Stock Option; provided, however,
that Options granted to Consultants shall be Non-Qualified Stock Options.

          1.24 “Performance Award” shall mean a cash bonus, stock bonus or other
performance or incentive award that is paid in cash, Common Stock or a
combination of both, awarded under Article VIII of the Plan.

          1.25 “Performance Criteria” shall mean the following business criteria
with respect to the Company, any Subsidiary or any division or operating unit
thereof: (a) net income, (b) pre-tax income, (c) operating income, (d) cash
flow, (e) earnings per share, (f) return on equity, (g) return on invested
capital or assets, (h) cost reductions or savings, (i) funds from operations,
(j) appreciation in the Fair Market Value of a share of Common Stock, (k)
operating profit, (l) working capital and (m) earnings before any one or more
of the following items: interest, taxes, depreciation or amortization;
provided that each of the business criteria described in subsections (a)
through (m) shall be determined in accordance with generally accepted
accounting principles (“GAAP”). For each fiscal year of the Company, the
Committee may provide for objectively determinable adjustments, as determined
in accordance with GAAP, to any of the business criteria described in
subsections (a) through (m) for one or more of the items of gain, loss, profit
or expense: (i) determined to be extraordinary or unusual in nature or
infrequent in occurrence, (ii) related to the disposal of a segment of a
business, (iii) related to a change in accounting principles under GAAP, (iv)
related to discontinued operations that do not qualify as a segment of a
business under GAAP, and (v) attributable to the business operations of any
entity acquired by the Company during the fiscal year.

          1.26 “Plan” shall mean the 2003 Employee Stock Incentive Plan of Orbital
Imaging Corporation.

          1.27 “Public Trading Date” shall mean the first date upon which Common
Stock of the Company is listed (or approved for listing) upon notice of
issuance on any securities exchange or designated (or approved for designation)
upon notice of issuance as a national market security on an interdealer
quotation system.

          1.28 “Restricted Stock” shall mean Common Stock awarded under Article VII
of the Plan as to which neither the substantial risk of forfeiture nor the
prohibition on transfers referred to in Article VII has expired.

          1.29 “Rule 16b-3” shall mean Rule 16b-3 promulgated under the Exchange Act
(or any successor rule to the same effect), as such Rule may be amended from
time to time.

          1.30 “Section 162(m) Participant” shall mean any key Employee designated
by the Administrator as a key Employee whose compensation for the fiscal year
in which the key

7

 

Employee is so designated or a future fiscal year may be subject to the
limit on deductible compensation imposed by Section 162(m) of the Code.

          1.31 “Section 162(m)” shall mean Section 162(m) of the Code and the
Regulations promulgated thereunder (or any successor section to the same
effect), as such section may be amended from time to time.

          1.32 “Securities Act” shall mean the Securities Act of 1933, as amended.

          1.33 “Stock Appreciation Right” shall mean a stock appreciation right
granted under Article IX of the Plan.

          1.34 “Stock Payment” shall mean (a) a payment in the form of shares of
Common Stock, or (b) an option or other right to purchase shares of Common
Stock, as part of a deferred compensation arrangement, made in lieu of all or
any portion of the compensation, including without limitation, salary, bonuses
and commissions, that would otherwise become payable to a key Employee or
Consultant in cash, awarded under Article VIII of the Plan.

          1.35 “Subsidiary” shall mean any corporation, company or other entity (i)
more than fifty percent (50%) of whose outstanding shares or securities
(representing the right to vote for the election of directors or other managing
authority) are, or (ii) which does not have outstanding shares or securities
(as may be the case in a partnership, joint venture or unincorporated
association), but more than fifty percent (50%) of whose ownership interest
representing the right generally to make decisions for such other entity is,
now or hereafter, owned or controlled, directly or indirectly, but the Company
except that for purposes of determining whether any person may be a Participant
for purposes of any grant of Incentive Stock Options, “Subsidiary” means any
corporation in which, at the time, the Company owns or controls, directly or
indirectly, more than fifty percent (50%) of the total combined voting power
represented by all classes of stock issued by such corporation.

          1.36 “Substitute Award” shall mean an Award granted under this Plan upon
the assumption of, or in substitution for, outstanding equity awards previously
granted by a company or other entity in connection with a corporate
transaction, such as a merger, combination, consolidation or acquisition of
property or stock; provided, however, that in no event shall the term
“Substitute Award” be construed to refer to an award made in connection with
the cancellation and repricing of an Option.

          1.37 “Termination of Consultancy” shall mean the time when the engagement
of a Holder as a Consultant to the Company or a Subsidiary is terminated for
any reason, with or without cause, including, but not by way of limitation, by
resignation, discharge, death or retirement, but excluding terminations where
there is a simultaneous commencement of employment with the Company or any
Subsidiary. The Administrator, in its absolute discretion, shall determine the
effect of all matters and questions relating to Termination of Consultancy,
including, but not by way of limitation, the question of whether a Termination
of Consultancy resulted from a discharge for good cause, and all questions of
whether a particular leave of absence constitutes a Termination of Consultancy.
Notwithstanding any other provision of the Plan, the Company or any Subsidiary
has an absolute and unrestricted right to terminate a

8

 

Consultant’s service at any time for any reason whatsoever, with or
without cause, except to the extent expressly provided otherwise in writing.

          1.38 “Termination of Employment” shall mean the time when the
employee-employer relationship between a Holder and the Company or any
Subsidiary is terminated for any reason, with or without cause, including, but
not by way of limitation, a termination by resignation, discharge, death,
disability or retirement; but excluding (a) terminations where there is a
simultaneous reemployment or continuing employment of a Holder by the Company
or any Subsidiary, (b) at the discretion of the Administrator, terminations
which result in a temporary severance of the employee-employer relationship,
and (c) at the discretion of the Administrator, terminations which are followed
by the simultaneous establishment of a consulting relationship by the Company
or a Subsidiary with the former employee. The Administrator, in its absolute
discretion, shall determine the effect of all matters and questions relating to
Termination of Employment, including, but not by way of limitation, the
question of whether a Termination of Employment resulted from a discharge for
good cause, and all questions of whether a particular leave of absence
constitutes a Termination of Employment; provided, however, that, with respect
to Incentive Stock Options, unless otherwise determined by the Administrator in
its discretion, a leave of absence, change in status from an employee to an
independent contractor or other change in the employee-employer relationship
shall constitute a Termination of Employment if, and to the extent that, such
leave of absence, change in status or other change interrupts employment for
the purposes of Section 422(a)(2) of the Code and the then applicable
regulations and revenue rulings under said Section.

ARTICLE II.

SHARES SUBJECT TO PLAN

               2.1 Shares Subject to Plan.

               (a) The aggregate number of shares which may be issued with
respect to Awards granted under the Plan shall not exceed 826,363
shares of Common Stock subject to adjustment as provided in
Section 11.3.

     The shares of Common Stock issuable with respect to Awards
granted under the Plan may be authorized but unissued, or
reacquired Common Stock. If an Award expires or becomes
unexercisable without having been exercised in full, the shares of
Common Stock which were subject thereto shall become available for
future grant or sale under the Plan (unless the Plan has
terminated). Furthermore, any shares subject to Awards which are
adjusted pursuant to Section 11.3 and become exercisable with
respect to shares of stock of another corporation shall be
considered cancelled and may again be optioned, granted or awarded
hereunder, subject to the limitations of Section 2.1. Shares of
Common Stock which are delivered by the Holder or withheld by the
Company upon the exercise of an Award under the Plan, in payment
of the exercise price thereof or tax withholding thereon, may
again be optioned, granted or awarded hereunder, subject to the
limitations of this Section 2.1. If shares of Restricted Stock
are repurchased by the Company at their original purchase price,
such shares shall become available for future grant under the
Plan. In the event that Substitute

9

 

Awards are granted under the Plan, the aggregate number of shares of Common Stock available under the Plan for Substitute
Awards other than substitute Incentive Stock Options shall be
increased by the number of shares of Common Stock which may be
granted or issued with respect to such Substitute Awards. In no
event shall the maximum number of shares of Common Stock which may
be issued under this Plan with respect to Incentive Stock Options
be increased pursuant to the preceding sentence. Notwithstanding
the provisions of this Section 2.1, no shares of Common Stock may
again be optioned, granted or awarded if such action would cause
an Incentive Stock Option to fail to qualify as an Incentive Stock
Option under Code Section 422.

               (b) The maximum number of shares which may be subject to
Awards granted under the Plan to any individual in any calendar
year shall not exceed the Award Limit; provided, however, that the
foregoing limitation shall not apply prior to the Public Trading
Date and, following the Public Trading Date, the foregoing
limitation shall not apply until the earliest of: (i) the first
material modification of the Plan (within the meaning of Section
162(m) of the Code and the regulations issued thereunder); (ii)
the issuance of all of the shares of Common Stock reserved for
issuance under the Plan; (iii) the expiration of the Plan; (iv)
the first meeting of stockholders at which Directors are to be
elected that occurs after the close of the third calendar year
following the calendar year in which occurred the first
registration of an equity security of the Company under Section 12
of the Exchange Act; or (v) such other date required by Section
162(m) of the Code and the rules and regulations promulgated
thereunder. To the extent required by Section 162(m) of the Code, shares subject to Options which are canceled continue to be
counted against the Award Limit.

ARTICLE III.

GRANTING OF AWARDS

          3.1 Award Agreement. Each Award shall be evidenced by an Award Agreement.
Award Agreements evidencing Awards intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain
such terms and conditions as may be necessary to meet the applicable provisions
of Section 162(m) of the Code. Award Agreements evidencing Incentive Stock
Options shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.

          3.2 Provisions Applicable to Section 162(m) Participants.

               (a) The Committee, in its discretion, may determine whether
an Award is to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code.

               (b) To the extent necessary to comply with the
performance-based compensation requirements of Section
162(m)(4)(C) of the Code, with respect to any Award granted under
Articles VII and VIII which may be granted to one or more Section
162(m) Participants, no later than ninety (90) days

10

 

following the commencement of any fiscal year in question or
any other designated fiscal period or period of service (or such
other time as may be required or permitted by Section 162(m) of
the Code), the Committee shall, in writing, (i) designate one or
more Section 162(m) Participants, (ii) select the Performance
Criteria applicable to the fiscal year or other designated fiscal
period or period of service, (iii) establish the various
performance targets, in terms of an objective formula or standard,
and amounts of such Awards, as applicable, which may be earned for
such fiscal year or other designated fiscal period or period of
service, and (iv) specify the relationship between Performance
Criteria and the performance targets and the amounts of such
Awards, as applicable, to be earned by each Section 162(m)
Participant for such fiscal year or other designated fiscal period
or period of service. Following the completion of each fiscal
year or other designated fiscal period or period of service, the
Committee shall certify in writing whether the applicable
performance targets have been achieved for such fiscal year or
other designated fiscal period or period of service. In
determining the amount earned by a Section 162(m) Participant, the
Committee shall have the right to reduce (but not to increase) the
amount payable at a given level of performance to take into
account additional factors that the Committee may deem relevant to
the assessment of individual or corporate performance for the
fiscal year or other designated fiscal period or period of
service.

               (c) Furthermore, notwithstanding any other provision of the
Plan, any Award which is granted to a Section 162(m) Participant
and is intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code shall be subject to
any additional limitations set forth in Section 162(m) of the Code
(including any amendment to Section 162(m) of the Code) or any
regulations or rulings issued thereunder that are requirements for
qualification as performance-based compensation as described in
Section 162(m)(4)(C) of the Code, and the Plan and such award
shall be deemed amended to the extent necessary to conform to such
requirements.

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

          3.4 Consideration. In consideration of the granting of an Award under the
Plan, the Holder shall agree, in the Award Agreement, to remain in the employ
of (or to consult for) the Company or any Subsidiary for a period of at least
one year (or such shorter period as may be fixed in the Award Agreement or by
action of the Administrator following grant of the Award) after the Award is
granted.

11

 

          3.5 At-Will Employment. Nothing in the Plan or in any Award Agreement
hereunder shall confer upon any Holder any right to continue in the employ of,
or as a Consultant for, the Company or any Subsidiary, or shall interfere with
or restrict in any way the rights of the Company and any Subsidiary, which are
hereby expressly reserved, to discharge any Holder at any time for any reason
whatsoever, with or without cause, except to the extent expressly provided
otherwise in a written employment agreement between the Holder and the Company
and any Subsidiary.

ARTICLE IV.

GRANTING OF OPTIONS TO EMPLOYEES AND

CONSULTANTS

          4.1 Eligibility. Any Employee or Consultant selected by the Committee
pursuant to Section 4.4(a)(i) shall be eligible to be granted an Option.

          4.2 Disqualification for Stock Ownership. No person may be granted an
Incentive Stock Option under the Plan if such person, at the time the Incentive
Stock Option is granted, owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any then
existing Subsidiary or parent corporation (within the meaning of Section 424(e)
of the Code) unless such Incentive Stock Option conforms to the applicable
provisions of Section 422 of the Code.

          4.3 Qualification of Incentive Stock Options. No Incentive Stock Option
shall be granted to any person who is not an Employee.

          4.4 Granting of Options.

               (a) The Committee shall from time to time, in its absolute
discretion, and subject to applicable limitations of the Plan:

                    (i) Determine which Employees are key Employees and
select from among the key Employees or Consultants
(including Employees or Consultants who have previously
received Awards under the Plan) such of them as in its
opinion should be granted Options;

                    (ii) Subject to the Award Limit, determine the number
of shares to be subject to such Options granted to the
selected key Employees or Consultants;

                    (iii) Subject to Section 4.3, determine whether such
Options are to be Incentive Stock Options or Non-Qualified
Stock Options; and

                    (iv) Determine the terms and conditions of such
Options, consistent with the Plan.

               (b) Upon the selection of a key Employee or Consultant to be
granted an Option, the Committee shall instruct the Secretary of
the Company to

12

 

issue the Option and may impose such conditions on the grant
of the Option as it deems appropriate.

               (c) Any Incentive Stock Option granted under the Plan may be
modified by the Committee, with the consent of the Holder, to
disqualify such Option from treatment as an “incentive stock
option” under Section 422 of the Code.

          4.5 Options in Lieu of Cash Compensation. Options may be granted under
the Plan in lieu of cash bonuses which would otherwise be payable to the Holder
pursuant to such policies which may be adopted by the Administrator from time
to time.

ARTICLE V.

TERMS OF OPTIONS

               (a) Option Price. The price per share of the shares subject
to each Option granted to Employees and Consultants shall be set
by the Committee; provided, however, such price shall be no less
than the Fair Market Value of a share of Common Stock on the date
of grant, and in the case of Incentive Stock Options granted to an
individual then owning (within the meaning of Section 424(d) of
the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary or parent
corporation thereof (within the meaning of Section 424(e) of the
Code), such price shall not be less than 110% of the Fair Market
Value of a share of Common Stock on the date the Option is
granted.

          5.2 Option Term. The term of an Option granted to an Employee or
Consultant shall be set by the Committee in its discretion; provided, however,
that the term shall not be more than 10 years from the date the Award is
granted, or five years from the date the Incentive Stock Option is granted if
the Incentive Stock Option is granted to an individual then owning (within the
meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or any Subsidiary or parent
corporation thereof (within the meaning of Section 424(e) of the Code). Except
as limited by requirements of Section 422 of the Code and regulations and
rulings thereunder applicable to Incentive Stock Options, the Committee may
extend the term, subject to the foregoing sentence of this Section 5.2, of any
outstanding Option in connection with any Termination of Employment or
Termination of Consultancy of the Holder, or amend any other term or condition
of such Option relating to such a termination.

          5.3 Option Vesting.

               (a) The period during which the right to exercise, in whole
or in part, an Option vests in the Holder shall be set by the
Committee and the Committee may determine that an Option may not
be exercised in whole or in part for a specified period after it
is granted; provided, however, that, unless the Committee
otherwise provides in the terms of the Award Agreement or
otherwise, no Option shall be exercisable by any Holder who is then
subject to Section 16 of

13

 

the Exchange Act within the period ending
six months and one day after the date the Option is granted. At
any time after grant of an Option, the Committee may, in its sole
and absolute discretion and subject to whatever terms and
conditions it selects, accelerate the period during which an
Option granted to an Employee or Consultant vests.

               (b) No portion of an Option which is unexercisable at
Termination of Employment or Termination of Consultancy, as
applicable, shall thereafter become exercisable, except as may be
otherwise provided by the Committee either in the Award Agreement
or by action of the Committee following the grant of the Option.

               (c) To the extent that the aggregate Fair Market Value of
stock with respect to which “incentive stock options” (within the
meaning of Section 422 of the Code, but without regard to Section
422(d) of the Code) are exercisable for the first time by a Holder
during any calendar year (under the Plan and all other incentive
stock option plans of the Company and any parent or subsidiary
corporation, within the meaning of Section 422 of the Code) of the
Company, exceeds $100,000, such Options shall be treated as
Non-Qualified Stock Options to the extent required by Section 422
of the Code. The rule set forth in the preceding sentence shall be
applied by taking Options into account in the order in which they
were granted.

          5.4 Substitute Awards. Notwithstanding the foregoing provisions of this
Article V to the contrary, in the case of an Option that is a Substitute Award,
the price per share of the shares subject to such Option may be less than the
Fair Market Value per share on the date of grant, provided, that the excess of:

               (a) The aggregate Fair Market Value (as of the date such
Substitute Award is granted) of the shares subject to the
Substitute Award; over

               (b) The aggregate exercise price thereof;

does not exceed the excess of:

               (c) The aggregate fair market value (as of the time
immediately preceding the transaction giving rise to the
Substitute Award, such fair market value to be determined by the
Committee) of the shares of the predecessor entity that were
subject to the grant assumed or substituted for by the Company;
over

               (d) The aggregate exercise price of such shares.

ARTICLE VI.

EXERCISE OF OPTIONS

     6.1 Partial Exercise. An exercisable Option may be exercised in whole or
in part. However, an Option shall not be exercisable with respect to
fractional shares and the

14

 

Administrator may require that, by the terms of the
Option, a partial exercise be with respect to a minimum number of shares.

          6.2 Manner of Exercise. All or a portion of an exercisable Option shall
be deemed exercised upon delivery of all of the following to the Secretary of
the Company or his or her office:

               (a) A written notice complying with the applicable rules
established by the Administrator stating that the Option, or a
portion thereof, is exercised. The notice shall be signed by the
Holder or other person then entitled to exercise the Option or
such portion of the Option;

               (b) Such representations and documents as the Administrator,
in its absolute discretion, deems necessary or advisable to effect
compliance with all applicable provisions of the Securities Act
and any other federal or state securities laws or regulations.
The Administrator may, in its absolute discretion, also take
whatever additional actions it deems appropriate to effect such
compliance including, without limitation, placing legends on share
certificates and issuing stop-transfer notices to agents and
registrars;

               (c) In the event that the Option shall be exercised pursuant
to Section 11.1 by any person or persons other than the Holder,
appropriate proof of the right of such person or persons to
exercise the Option; and

               (d) (1) Full cash payment to the Secretary of the Company for
the shares with respect to which the Option, or portion thereof,
is exercised; (2) payment, in whole or in part, through the
delivery of shares of Common Stock which have been owned by the
Holder for at least six months, duly endorsed for transfer to the
Company with a Fair Market Value on the date of delivery equal to
the aggregate exercise price of the Option or exercised portion
thereof; (3) payment, in whole or in part, through the surrender
of shares of Common Stock then issuable upon exercise of the
Option having a Fair Market Value on the date of Option exercise
equal to the aggregate exercise price of the Option or exercised
portion thereof. However, the Administrator may, in its
discretion, (i) allow payment, in whole or in part, through the
delivery of property of any kind which constitutes good and
valuable consideration; (ii) allow payment, in whole or in part,
through the delivery of a full recourse promissory note bearing
interest (at no less than such rate as shall then preclude the
imputation of interest under the Code) and payable upon such terms
as may be prescribed by the Administrator; (iii) allow payment, in
whole or in part, through the delivery of a notice that the Holder
has placed a market sell order with a broker with respect to shares of Common Stock then issuable upon exercise of the Option,
and that the broker has
been directed to pay a sufficient portion of the net proceeds
of the sale to the Company in satisfaction of the Option exercise
price, provided that payment of such proceeds is then made to the
Company upon settlement of such sale; or (iv) allow payment
through any combination of the consideration provided in the
foregoing sentence or in subclauses (i), (ii) and (iii) of this
sentence. In the case

15

 

of a promissory note, the Administrator may
also prescribe the form of such note and the security to be given
for such note. The Option may not be exercised, however, by
delivery of a promissory note or by a loan from the Company when
or where such loan or other extension of credit is prohibited by
law, and payment in the manner prescribed by the preceding
sentences shall not be permitted to the extent that the
Administrator determines that payment in such manner may result in
an extension or maintenance of credit, an arrangement for the
extension of credit, or a renewal of an extension of credit in the
form of a personal loan to or for any Director or executive
officer of the Company that is prohibited by Section 13(k) of the
Exchange Act or other applicable law.

          6.3 Conditions to Issuance of Stock Certificates. The Company shall not
be required to issue or deliver any certificate or certificates for shares of
stock purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:

               (a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed;

               (b) The completion of any registration or other qualification
of such shares under any state or federal law, or under the
rulings or regulations of the Securities and Exchange Commission
or any other governmental regulatory body which the Administrator
shall, in its absolute discretion, deem necessary or advisable;

               (c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Administrator
shall, in its absolute discretion, determine to be necessary or
advisable;

               (d) The lapse of such reasonable period of time following the
exercise of the Option as the Administrator may establish from
time to time for reasons of administrative convenience; and

               (e) The receipt by the Company of full payment for such shares, including payment of any applicable withholding tax, which
in the discretion of the Administrator may be in the form of
consideration used by the Holder to pay for such shares under
Section 6.2(d).

          6.4 Rights as Stockholders. Holders shall not be, nor have any of the
rights or privileges of, stockholders of the Company in respect of any shares
purchasable upon the exercise of any part of an Option unless and until
certificates representing such shares have been issued by the Company to such
Holders.

          6.5 Exercise, Ownership and Transfer Restrictions. The Administrator, in
its absolute discretion, may impose such restrictions on the exercise of an
Option and the ownership and transferability of the shares purchasable upon the
exercise of an Option as it deems appropriate. Any such restriction shall be
set forth in the respective Award Agreement and may be referred to on the
certificates evidencing such shares. The Holder shall give the Company prompt
notice of any disposition of shares of Common Stock acquired by exercise of an

16

 

Incentive Stock Option within (a) two years from the date of granting
(including the date the Option is modified, extended or renewed for purposes of
Section 424(h) of the Code) such Option to such Holder, or (b) one year after
the transfer of such shares to such Holder.

          6.6 Additional Limitations on Exercise of Options. Holders may be
required to comply with any timing or other restrictions with respect to the
settlement or exercise of an Option, including a window-period limitation, as
may be imposed in the discretion of the Administrator.

ARTICLE VII.

AWARD OF RESTRICTED STOCK

          7.1 Eligibility. Subject to the Award Limit, Restricted Stock may be
awarded to any Employee or Consultant whom the Committee determines should
receive such an Award.

          7.2 Award of Restricted Stock.

               (a) The Committee may from time to time, in its absolute
discretion:

                    (i) Determine which Employees are key Employees and
select from among the key Employees or Consultants
(including Employees or Consultants who have previously
received other awards under the Plan) such of them as in its
opinion should be awarded Restricted Stock; and

                    (ii) Determine the purchase price, if any, and other
terms and conditions applicable to such Restricted Stock,
consistent with the Plan.

               (b) The Committee shall establish the purchase price, if any,
and form of payment for Restricted Stock; provided, however, that
such purchase price shall be no less than the par value of the
Common Stock to be purchased. In all cases, legal consideration
shall be required for each issuance of Restricted Stock.

               (c) Upon the selection of a key Employee or Consultant to be
awarded Restricted Stock, the Committee shall instruct the
Secretary of the Company to issue such Restricted Stock and may
impose such conditions on the issuance of such Restricted Stock as
it deems appropriate.

          7.3 Rights as Stockholders. Subject to Section 7.4, upon delivery of the
shares of Restricted Stock to the escrow holder pursuant to Section 7.6, the
Holder shall have, unless otherwise provided by the Committee, all the rights
of a stockholder with respect to said shares, subject to the restrictions in
his or her Award Agreement, including the right to receive all dividends and
other distributions paid or made with respect to the shares; provided, however,
that in the discretion of the Committee, any extraordinary distributions with
respect to the Common Stock shall be subject to the restrictions set forth in
Section 7.4.

17

 

          7.4 Restriction. All shares of Restricted Stock issued under the Plan
(including any shares received by holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of each individual Award Agreement, be
subject to such restrictions as the Committee shall provide, which restrictions
may include, without limitation, restrictions concerning voting rights and
transferability and restrictions based on duration of employment with the
Company, Company performance and individual performance; provided, however,
that, unless the Committee otherwise provides in the terms of the Award
Agreement or otherwise, no share of Restricted Stock granted to a person
subject to Section 16 of the Exchange Act shall be sold, assigned or otherwise
transferred until at least six months and one day have elapsed from the date on
which the Restricted Stock was issued, and provided, further, that, except with
respect to shares of Restricted Stock granted to Section 162(m) Participants,
by action taken after the Restricted Stock is issued, the Committee may, on
such terms and conditions as it may determine to be appropriate, remove any or
all of the restrictions imposed by the terms of the Award Agreement.
Restricted Stock may not be sold or encumbered until all restrictions are
terminated or expire. If no monetary consideration was paid by the Holder upon
issuance, a Holder’s rights in unvested Restricted Stock shall lapse, and such
Restricted Stock shall be surrendered to the Company without consideration,
upon Termination of Employment or Termination of Consultancy.

          7.5 Repurchase of Restricted Stock. The Committee shall provide in the
terms of each individual Award Agreement that the Company shall have the right
to repurchase from the Holder the Restricted Stock then subject to restrictions
under the Award Agreement immediately upon a Termination of Employment or
Termination of Consultancy, at a cash price per share equal to the price paid
by the Holder for such Restricted Stock.

          7.6 Escrow. The Secretary of the Company or such other escrow holder as
the Committee may appoint shall retain physical custody of each certificate
representing Restricted Stock until all of the restrictions imposed under the
Award Agreement with respect to the shares evidenced by such certificate expire
or shall have been removed.

          7.7 Legend. In order to enforce the restrictions imposed upon shares of
Restricted Stock hereunder, the Committee shall cause a legend or legends to be
placed on certificates representing all shares of Restricted Stock that are
still subject to restrictions under Award Agreements, which legend or legends
shall make appropriate reference to the conditions imposed thereby.

          7.8 Section 83(b) Election. If a Holder makes an election under Section
83(b) of the Code, or any successor section thereto, to be taxed with respect
to the Restricted Stock as
of the date of transfer of the Restricted Stock rather than as of the date
or dates upon which the Holder would otherwise be taxable under Section 83(a)
of the Code, the Holder shall deliver a copy of such election to the Company
immediately after filing such election with the Internal Revenue Service.

18

 

ARTICLE VIII.

PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, DEFERRED STOCK,

STOCK PAYMENTS

          8.1 Eligibility. Subject to the Award Limit, one or more Performance
Awards, Dividend Equivalents, awards of Deferred Stock and/or Stock Payments
may be granted to any Employee whom the Committee determines is a key Employee
or any Consultant whom the Committee determines should receive such an Award.

          8.2 Performance Awards.

               (a) Any key Employee or Consultant selected by the Committee
may be granted one or more Performance Awards. The value of such
Performance Awards may be linked to any one or more of the
Performance Criteria or other specific performance criteria
determined appropriate by the Committee, in each case on a
specified date or dates or over any period or periods determined
by the Committee and set forth in the Award Agreement. In making
such determinations, the Committee shall consider (among such
other factors as it deems relevant in light of the specific type
of award) the contributions, responsibilities and other
compensation of the particular key Employee or Consultant.

               (b) Without limiting Section 8.2(a), the Committee may grant
Performance Awards to any 162(m) Participant in the form of a cash
bonus payable upon the attainment of objective performance goals
which are established by the Committee and relate to one or more
of the Performance Criteria, in each case on a specified date or
dates or over any period or periods determined by the Committee.
Any such bonuses paid to 162(m) Participants shall be based upon
objectively determinable bonus formulas established in accordance
with the provisions of Section 3.2. The maximum amount of any
Performance Award payable to a 162(m) Participant under this
Section 8.2(b) shall not exceed the Award Limit with respect to
any calendar year of the Company. Unless otherwise specified by
the Committee at the time of grant, the Performance Criteria with
respect to a Performance Award payable to a 162(m) Participant
shall be determined on the basis of generally accepted accounting
principles.

          8.3 Dividend Equivalents.

               (a) Any key Employee or Consultant selected by the Committee
may be granted Dividend Equivalents based on the dividends
declared on Common Stock, to be credited as of dividend payment
dates, during the period between the date a Stock Appreciation
Right, Deferred Stock or Performance
Award is granted, and the date such Stock Appreciation Right,
Deferred Stock or Performance Award is exercised, vests or
expires, as determined by the Committee. Such Dividend
Equivalents shall be converted to cash or additional shares of
Common Stock by such formula and at such time and subject to such
limitations as may be determined by the Committee.

19

 

               (b) Any Holder of an Option who is an Employee or Consultant
selected by the Committee may be granted Dividend Equivalents
based on the dividends declared on Common Stock, to be credited as

of dividend payment dates, during the period between the date an
Option is granted, and the date such Option is exercised, vests or
expires, as determined by the Committee. Such Dividend
Equivalents shall be converted to cash or additional shares of
Common Stock by such formula and at such time and subject to such
limitations as may be determined by the Committee.

               (c) Dividend Equivalents granted with respect to Options
intended to be qualified performance-based compensation for
purposes of Section 162(m) of the Code shall be payable, with
respect to pre-exercise periods, regardless of whether such Option
is subsequently exercised.

          8.4 Stock Payments. Any key Employee or Consultant selected by the
Committee may receive Stock Payments in the manner determined from time to time
by the Committee. The number of shares shall be determined by the Committee
and may be based upon the Performance Criteria or other specific performance
criteria determined appropriate by the Committee, determined on the date such
Stock Payment is made or on any date thereafter.

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

          8.6 Term. The term of a Performance Award, Dividend Equivalent, award of
Deferred Stock and/or Stock Payment shall be set by the Committee in its
discretion and set forth in the applicable Award Agreement.

          8.7 Exercise or Purchase Price. The Committee may establish the exercise
or purchase price of a Performance Award, shares of Deferred Stock or shares
received as a Stock Payment; provided, however, that such price shall not be
less than the Fair Market Value of a share of Common Stock.

          8.8 Exercise Upon Termination of Employment or Termination of Consultancy.
A Performance Award, Dividend Equivalent, award of Deferred Stock and/or Stock
Payment is exercisable or payable only while the Holder is an Employee or
Consultant, as applicable; provided, however, that the Administrator in its
sole and absolute discretion may provide that the Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment may be exercised or
paid subsequent to a Termination of Employment following

20

 

a “change of control
or ownership” (within the meaning of Section 1.162-27(e)(2)(v) or any successor
regulation thereto) of the Company; provided, further, that except with respect
to Performance Awards granted to Section 162(m) Participants, the Administrator
in its sole and absolute discretion may provide that Performance Awards may be
exercised or paid following a Termination of Employment or Termination of
Consultancy without cause, or following a Change in Control of the Company, or
because of the Holder’s retirement, death or disability, or otherwise.

          8.9 Form of Payment. Payment of the amount determined under Section 8.2
or 8.3 above shall be in cash, in Common Stock or a combination of both, as
determined by the Committee. To the extent any payment under this Article VIII
is effected in Common Stock, it shall be made subject to satisfaction of all
provisions of Section 6.3.

ARTICLE IX.

STOCK APPRECIATION RIGHTS

          9.1 Grant of Stock Appreciation Rights. A Stock Appreciation Right may be
granted to any key Employee or Consultant selected by the Committee. A Stock
Appreciation Right may be granted (a) in connection and simultaneously with the
grant of an Option, (b) with respect to a previously granted Option, or (c)
independent of an Option. Stock Appreciating Rights awarded in relation to
Incentive Stock Options must be granted concurrently with such Incentive Stock
Options. A Stock Appreciation Right shall be subject to such terms and
conditions not inconsistent with the Plan as the Committee shall impose and
shall be evidenced by an Award Agreement. Any grant of a Stock Appreciation
right may specify that the amount payable on exercise may not exceed a maximum
price set by the Committee on the date of grant.

          9.2 Coupled Stock Appreciation Rights.

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

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

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

21

 

          9.3 Independent Stock Appreciation Rights.

               (a) An Independent Stock Appreciation Right (“ISAR”) shall be
unrelated to any Option and shall have a term set by the
Committee. An ISAR shall be exercisable in such installments as
the Committee may determine. An ISAR shall cover such number of shares of Common Stock as the Committee may determine; provided,
however, that unless the Committee otherwise provides in the terms
of the ISAR or otherwise, no ISAR granted to a person subject to
Section 16 of the Exchange Act shall be exercisable until at least
six months have elapsed from (but excluding) the date on which the
Option was granted. The exercise price per share of Common Stock
subject to each ISAR shall be set by the Committee. An ISAR is
exercisable only while the Holder is an Employee or Consultant;
provided, that the Committee may determine that the ISAR may be
exercised subsequent to Termination of Employment or Termination
of Consultancy without cause, or following a Change in Control of
the Company, or because of the Holder’s retirement, death or
disability, or otherwise.

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

          9.4 Payment and Limitations on Exercise.

               (a) Payment of the amounts determined under Section 9.2(c)
and 9.3(b) above shall be in cash, in Common Stock (based on its
Fair Market Value as of the date the Stock Appreciation Right is
exercised) or a combination of both, as determined by the
Committee. To the extent such payment is effected in Common Stock
it shall be made subject to satisfaction of all provisions of
Section 6.3 above pertaining to Options.

               (b) Holders of Stock Appreciation Rights may be required to
comply with any timing or other restrictions with respect to the
settlement or exercise of a Stock Appreciation Right, including a
window-period limitation, as may be imposed in the discretion of
the Committee.

ARTICLE X.

ADMINISTRATION

          10.1 Compensation Committee. The Compensation Committee (or another
committee or a subcommittee of the Board assuming the functions of the
Committee under the Plan) shall consist solely of two or more Non-Employee
Directors appointed by and holding office at the pleasure of the Board, each of
whom is both a “non-employee director” as defined

22

 

by Rule 16b-3 and an “outside
director” for purposes of Section 162(m) of the Code. Appointment of Committee
members shall be effective upon acceptance of appointment. Committee members
may resign at any time by delivering written notice to the Board. Vacancies in
the Committee may be filled by the Board.

          10.2 Duties and Powers of Committee. It shall be the duty of the
Committee to conduct the general administration of the Plan in accordance with
its provisions. The Committee shall have the power to interpret the Plan and
the Award Agreements, and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith, to
interpret, amend or revoke any such rules. Interpretations and rules with
respect to Incentive Stock Options shall be consistent with the provisions of
Section 422 of the Code. The Committee shall also have the power to amend any
Award Agreement provided that the rights or obligations of the Holder of the
Award that is the subject of any such Award Agreement are not affected
adversely; provided, however, that without the approval of the stockholders of
the Company, neither the Committee nor the Board shall authorize the amendment
of any outstanding Option or SAR to reduce its exercise price. Notwithstanding
anything contained herein, no Option or SAR shall be canceled and replaced with
the grant of an Option or SAR having a lower exercise price without the
approval of the stockholders of the Company. Grants or awards under the Plan
need not be the same with respect to each Holder. In its absolute discretion,
the Board may at any time and from time to time exercise any and all rights and
duties of the Committee under the Plan except with respect to matters which
under Rule 16b-3 or Section 162(m) of the Code, or any regulations or rules
issued thereunder, are required to be determined in the sole discretion of the
Committee.

          10.3 Majority Rule; Unanimous Written Consent. The Committee shall act by
a majority of its members in attendance at a meeting at which a quorum is
present or by a memorandum or other written instrument signed by all members of
the Committee.

          10.4 Compensation; Professional Assistance; Good Faith Actions. Members
of the Committee shall receive such compensation, if any, for their services as
members as may be determined by the Board; provided, however, that such
compensation may not disqualify such member as an outside director for purposes
of Section 162(m) or as a “non-employee director “ under Section 16b-3. All
expenses and liabilities which members of the Committee incur in connection
with the administration of the Plan shall be borne by the Company. The
Committee may, with the approval of the Board, employ attorneys, consultants,
accountants, appraisers, brokers or other persons. The Committee, the Company
and the Company’s officers and Directors shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee or the Board in good
faith shall be final and binding upon all Holders, the Company and all other
interested persons. No members of the Committee or Board shall be personally
liable for any action,
determination or interpretation made in good faith with respect to the
Plan or Awards, and all members of the Committee and the Board shall be fully
protected by the Company in respect of any such action, determination or
interpretation.

          10.5 Delegation of Authority to Grant Awards. The Committee may, but need
not, delegate from time to time some or all of its authority to grant Awards
under the Plan to a committee consisting of one or more members of the
Committee or of one or more officers of the

23

 

Company; provided, however, that
the Committee may not delegate its authority to grant Awards to individuals (a)
who are subject on the date of the grant to the reporting rules under Section
16(a) of the Exchange Act, (b) who are Section 162(m) Participants, or (c) who
are officers of the Company who are delegated authority by the Committee
hereunder. Any delegation hereunder shall be subject to the restrictions and
limits that the Committee specifies at the time of such delegation of authority
and may be rescinded at any time by the Committee. At all times, any committee
appointed under this Section 10.5 shall serve in such capacity at the pleasure
of the Committee.

ARTICLE XI.

MISCELLANEOUS PROVISIONS

          11.1 Not Transferable.

               (a) No Award under the Plan may be sold, pledged, assigned or
transferred in any manner other than by will or the laws of
descent and distribution or, subject to the consent of the
Administrator, pursuant to a DRO, unless and until such Award has
been exercised, or the shares underlying such Award have been
issued, and all restrictions applicable to such shares have
lapsed. No Award or interest or right therein shall be liable for
the debts, contracts or engagements of the Holder or his or her
successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy,
attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition
thereof shall be null and void and of no effect, except to the
extent that such disposition is permitted by the preceding
sentence.

               (b) During the lifetime of the Holder, only he or she, or his
or her legal guardian or representative, may exercise an Option or
other Award (or any portion thereof) granted to him or her under
the Plan, unless it has been disposed of with the consent of the
Administrator pursuant to a DRO. After the death of the Holder,
any exercisable portion of an Option or other Award may, prior to
the time when such portion becomes unexercisable under the Plan or
the applicable Award Agreement, be exercised by his or her
personal representative or by any person empowered to do so under
the deceased Holder’s will or under the then applicable laws of
descent and distribution.

          11.2 Amendment, Suspension or Termination of the Plan. Except as
otherwise provided in this Section 11.2, the Plan may be wholly or partially
amended or otherwise modified, suspended or terminated at any time or from time
to time by the Administrator. However, without approval of the Company’s
stockholders before or after the action by the Administrator, no action of the
Administrator may, except as provided in Section 11.3, increase the limits
imposed in Section 2.1 on the maximum number of shares which may be issued
under the Plan upon the exercise of any Incentive Stock Option, and no action
of the Administrator may be taken that would otherwise require approval by the
Company’s stockholders as a matter of applicable law, regulation or rule,
including, but not limited to Section 162(m) and any

24

 

applicable exchange rules.
No amendment, suspension or termination of the Plan shall, without the consent
of the Holder, alter or impair any rights or obligations under any Award
theretofore granted or awarded, unless the Award itself otherwise expressly so
provides. No Awards may be granted or awarded during any period of suspension
or after termination of the Plan, and in no event may any Incentive Stock
Option be granted under the Plan after the first to occur of the following
events:

               (a) The expiration of 10 years from the date the Plan is
adopted by the Board; or

               (b) The expiration of 10 years from the date the Plan is
approved by the Company’s stockholders under Section 11.4.

          11.3 Changes in Common Stock or Assets of the Company, Acquisition or
Liquidation of the Company and Other Corporate Events.

               (a) Subject to Sections 11.3(a)(vii), 11.3(b) and 11.3(d), in
the event that the Administrator determines that any dividend or
other distribution (whether in the form of cash, Common Stock,
other securities or other property), recapitalization,
reclassification, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, liquidation, dissolution, or sale,
transfer, exchange or other disposition of all or substantially
all of the assets of the Company, or exchange of Common Stock or
other securities of the Company, issuance of warrants or other
rights to purchase Common Stock or other securities of the
Company, other similar corporate transaction or event, or unusual
or nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the
Company or any affiliate, or of changes in applicable laws,
regulations or accounting principles, the Administrator, in its
sole and absolute discretion, and on such terms and conditions as
it deems appropriate, either by the terms of the Award or by
action taken prior to the occurrence of such transaction or event
and either automatically or upon the Holder’s request, is hereby
authorized to take any one or more of the following actions
whenever the Administrator determines that such action is
appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under
the Plan or with respect to any Award under the Plan, to
facilitate such transactions or events or to give effect to such
changes in laws, regulations or principles:

                    (i) To provide for either the purchase of any such
Award for an amount of cash equal to the amount that could
have been attained upon the exercise of such Award or
realization of the Holder’s rights had such Award been
currently exercisable or payable or fully vested, including
but not limited to conversion of the award to the right to
receive an amount equal to the excess, if any, of the
consideration (whether stock, cash, or other securities or
property) received in the transaction by holders of Common
Stock for each share held on the effective date of the
transaction over the exercise price of such Award

25

 

(less an
amount equal to any required tax withholdings), or the
replacement of such Award with other rights or property
selected by the Administrator in its sole discretion;

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

                    (iii) To provide that such Award shall be exercisable
as to all shares covered thereby, notwithstanding anything
to the contrary in Section 5.3 or 5.4 or the provisions of
such Award;

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

                    (v) To make adjustments in the number and type of shares of Common Stock (or other securities or property)
subject to outstanding Awards, and in the number and kind of
outstanding Restricted Stock or Deferred Stock and/or in the
terms and conditions of (including the grant or exercise
price), and the criteria included in, outstanding options,
rights and awards and options, rights and awards which may
be granted in the future.

                    (vi) To provide that, for a specified period of time
prior to such event, the restrictions imposed under an Award
Agreement upon some or all shares of Restricted Stock or
Deferred Stock may be terminated, and, in the case of
Restricted Stock, some or all shares of such Restricted
Stock may cease to be subject to repurchase under Section
7.5 or forfeiture under Section 7.4 after such event.

               (b) Notwithstanding any other provision of the Plan, in the
event of a merger of the Company with or into another corporation,
or the sale of substantially all of the assets of the Company or a
Change in Control, each outstanding Option shall be assumed or an
equivalent option substituted by the
successor corporation or a parent or subsidiary of the
successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Option, the
optionee shall have the right to exercise the Option as to all of
the optioned stock, including shares as to which it would not
otherwise be exercisable. If an Option is exercisable in lieu of
assumption or substitution in the event of a merger or sale of
assets, the Administrator shall notify the optionee that the
Option shall be fully exercisable for a period of 15 days from the
date of such notice, and the Option shall terminate upon the
expiration of such period. For the purposes of this Section
11.3(c), the Option shall be considered assumed if, following the
merger or sale of assets, the option confers the right to purchase
or

26

 

receive, for each share of optioned stock subject to the Option
immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of
Common Stock for each share held on the effective date of the
transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of
a majority of the outstanding shares); provided, however, that if
such consideration received in the merger or sale of assets was
not solely common stock of the successor corporation or its
parent, the Administrator may, with the consent of the successor
corporation, provide for the consideration to be received upon the
exercise of the Option, for each share of optioned stock subject
to the Option, to be solely common stock of the successor
corporation or its parent equal in fair market value to the per
share consideration received by holders of Common Stock in the
merger or sale of assets.

               (c) Subject to Sections 3.2, 3.3 and 11.3(e), the
Administrator may, in its discretion, include such further
provisions and limitations in any Award, agreement or certificate,
as it may deem equitable and in the best interests of the Company.

               (d) With respect to Awards which are granted to Section
162(m) Participants and are intended to qualify as
performance-based compensation under Section 162(m)(4)(C), no
adjustment or action described in this Section 11.3 or in any
other provision of the Plan shall be authorized to the extent that
such adjustment or action would cause such Award to fail to so
qualify under Section 162(m)(4)(C), or any successor provisions
thereto. No adjustment or action described in this Section 11.3 or
in any other provision of the Plan shall be authorized to the
extent that such adjustment or action would cause the Plan to
violate Section 422(b) of the Code. Furthermore, no such
adjustment or action shall be authorized to the extent such
adjustment or action would result in short-swing profits liability
under Section 16 or violate the exemptive conditions of Rule 16b-3
unless the Administrator determines that the Award is not to
comply with such exemptive conditions. The number of shares of
Common Stock subject to any Award shall always be rounded to the
next whole number.

               (e) The existence of the Plan, the Award Agreement and the
Awards granted hereunder shall not affect or restrict in any way
the right or power of the Company or the shareholders of the
Company to make or authorize any
adjustment, recapitalization, reorganization or other change
in the Company’s capital structure or its business, any merger or
consolidation of the Company, any issue of stock or of options,
warrants or rights to purchase stock or of bonds, debentures,
preferred or prior preference stocks whose rights are superior to
or affect the Common Stock or the rights thereof or which are
convertible into or exchangeable for Common Stock, or the
dissolution or liquidation of the company, or any sale or transfer
of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or
otherwise.

27

 

          11.4 Approval of Performance Criteria by Stockholders. If the Board
determines that Awards other than Options or Stock Appreciation Rights which
may be granted to Section 162(m) Participants should continue to be eligible to
qualify as performance-based compensation under Section 162(m)(4)(C) of the
Code, the Performance Criteria must be disclosed to and approved by the
Company’s stockholders no later than the first stockholder meeting that occurs
in the fifth year following the year in which the Company’s stockholders
previously approved the Performance Criteria.

          11.5 Tax Withholding. The Company shall be entitled to require payment in
cash or deduction from other compensation payable to each Holder of any sums
required by federal, state or local tax law to be withheld with respect to the
issuance, vesting, exercise or payment of any Award. The Administrator may in
its discretion and in satisfaction of the foregoing requirement allow such
Holder to elect to have the Company withhold shares of Common Stock otherwise
issuable under such Award (or allow the return of shares of Common Stock)
having a Fair Market Value equal to the sums required to be withheld, to the
extent permitted by law. Notwithstanding any other provision of the Plan, the
number of shares of Common Stock which may be withheld with respect to the
issuance, vesting, exercise or payment of any Award (or which may be
repurchased from the Holder of such Award within six months after such shares
of Common Stock were acquired by the Holder from the Company) in order to
satisfy the Holder’s federal and state income and payroll tax liabilities with
respect to the issuance, vesting, exercise or payment of the Award shall be
limited to the number of shares which have a Fair Market Value on the date of
withholding or repurchase equal to the aggregate amount of such liabilities
based on the minimum statutory withholding rates for federal and state tax
income and payroll tax purposes that are applicable to such supplemental
taxable income.

          11.6 Forfeiture Provisions. Pursuant to its general authority to
determine the terms and conditions applicable to Awards under the Plan, the
Administrator shall, to the extent permitted by applicable law, have the right
to provide, in the terms of Awards made under the Plan, or to require a Holder
to agree by separate written instrument, that (a)(i) any proceeds, gains or
other economic benefit actually or constructively received by the Holder upon
any receipt or exercise of the Award, or upon the receipt or resale of any
Common Stock underlying the Award, must be paid to the Company, and (ii) the
Award shall terminate and any unexercised portion of the Award (whether or not
vested) shall be forfeited, if (b)(i) a Termination of Employment or
Termination of Consultancy occurs prior to a specified date, or within a
specified time period following receipt or exercise of the Award, or (ii) the
Holder at any time, or during a specified time period, engages in any activity
in competition with the Company, or which is inimical, contrary or harmful to
the interests of the Company, as further defined by the
Administrator or (iii) the Holder incurs a Termination of Employment or
Termination of Consultancy for cause.

          11.7 Effect of Plan Upon Options and Compensation Plans. The adoption of
the Plan shall not affect any other compensation or incentive plans in effect
for the Company or any Subsidiary. Nothing in the Plan shall be construed to
limit the right of the Company (a) to establish any other forms of incentives
or compensation for Employees or Consultants of the Company or any Subsidiary,
or (b) to grant or assume options or other rights or awards otherwise than
under the Plan in connection with any proper corporate purpose including but
not by way of limitation, the grant or assumption of options in connection with
the acquisition by purchase,

28

 

lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, partnership, limited liability
company, firm or association.

          11.8 Compliance with Laws. The Plan, the granting and vesting of Awards
under the Plan and the issuance and delivery of shares of Common Stock and the
payment of money under the Plan or under Awards granted or awarded hereunder
are subject to compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal securities law and
federal margin requirements) and to such approvals by any listing, regulatory
or governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
the Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable
to assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan and Awards granted or awarded hereunder
shall be deemed amended to the extent necessary to conform to such laws, rules
and regulations.

          11.9 Titles. Titles are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of the Plan.

          11.10 Governing Law. The Plan and any agreements hereunder shall be
administered, interpreted and enforced under the internal laws of the State of
Delaware without regard to conflicts of laws thereof.

29

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