Document:

Exhibit 10.1

 

IMMUNOGEN, INC.

 

AMENDED
AND RESTATED 2018 EMPLOYEE, DIRECTOR AND CONSULTANT EQUITY INCENTIVE PLAN

 

		1.	DEFINITIONS.

 

Unless otherwise specified or unless the context otherwise requires,
the following terms, as used in this ImmunoGen, Inc. 2018 Employee, Director and Consultant Equity Incentive Plan, have the following
meanings:

 

Administrator
means the Board of Directors, unless it has delegated power to act on its behalf to the Committee, in which case the Administrator means
the Committee.

 

Affiliate
means a corporation which, for purposes of Section 424 of the Code, is a parent or subsidiary of the Company, direct or indirect.

 

Agreement
means an agreement between the Company and a Participant delivered pursuant to the Plan, in such form as the Administrator shall approve.

 

Board
of Directors means the Board of Directors of the Company.

 

Cause
shall include (and is not limited to) dishonesty with respect to the Company or any Affiliate, insubordination, substantial malfeasance
or non-feasance of duty, unauthorized disclosure of confidential information, breach by the Participant of any provision of any employment,
consulting, advisory, nondisclosure, non-competition or similar agreement between the Participant and the Company or any Affiliate, and
conduct substantially prejudicial to the business of the Company or any Affiliate provided, however that any provision in an agreement
between the Participant and the Company or an Affiliate, which contains a conflicting definition of “cause” for termination
and which is in effect at the time of such termination, shall supersede the definition in this Plan with respect to that Participant.
The determination of the Administrator as to the existence of Cause will be conclusive on the Participant and the Company.

 

Change
of Control means the occurrence of any of the following events:

 

		(i)	Ownership. Any “Person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended) becomes the “Beneficial Owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting
securities (excluding for this purpose any such voting securities held by the Company or its Affiliates or by any employee benefit plan
of the Company) pursuant to a transaction or a series of related transactions which the Board of Directors does not approve; or

 

     

     

    

 

		(ii)	Merger/Sale of Assets. (A) A merger or consolidation of the Company whether or not approved by the Board of Directors, other
than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such
corporation) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent
of such corporation, as the case may be, outstanding immediately after such merger or consolidation; or (B) the sale or disposition
by the Company of all or substantially all of the Company’s assets in a transaction requiring shareholder approval; or

 

		(iii)	Change in Board Composition. A change in the composition of the Board of Directors, as a result of which fewer than a majority of
the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A) are directors of the
Company as of March 28, 2018, or (B) are elected, or nominated for election, to the Board of Directors with the affirmative
votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual
whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the
Company);

 

provided, that if any payment or benefit payable hereunder
upon or following a Change of Control would be required to comply with the limitations of Section 409A(a)(2)(A)(v) of the Code
in order to avoid an additional tax under Section 409A of the Code, such payment or benefit shall be made only if such Change in
Control constitutes a change in ownership or control of the Company, or a change in ownership of the Company’s assets in accordance
with Section 409A of the Code.

 

Code
means the United States Internal Revenue Code of 1986, as amended, including any successor statute, regulation and guidance thereto.

 

Committee
means the committee of the Board of Directors to which the Board of Directors has delegated power to act under or pursuant to the provisions
of the Plan.

 

Common
Stock means shares of the Company’s common stock, $.01 par value per share.

 

Company
means ImmunoGen, Inc., a Massachusetts corporation.

 

Consultant
means any natural person who is an advisor or consultant that provides bona fide services to the Company or its Affiliates, provided that
such services 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 or its Affiliates’ securities.

 

Disability
or Disabled means permanent and total disability as defined in Section 22(e)(3) of the Code.

 

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Employee
means any employee of the Company or of an Affiliate (including, without limitation, an employee who is also serving as an officer or
director of the Company or of an Affiliate), designated by the Administrator to be eligible to be granted one or more Stock Rights under
the Plan.

 

Fair
Market Value of a Share of Common Stock means:

 

(1)            If
the Common Stock is listed on a national securities exchange or traded in the over-the-counter market and sales prices are regularly reported
for the Common Stock, the closing or, if not applicable, the last price of the Common Stock on the composite tape or other comparable
reporting system for the trading day on the applicable date, and if such applicable date is not a trading day, the last market trading
day prior to such date;

 

(2)            If
the Common Stock is not traded on a national securities exchange but is traded on the over-the-counter market, if sales prices are not
regularly reported for the Common Stock for the trading day referred to in clause (1), and if bid and asked prices for the Common Stock
are regularly reported, the mean between the bid and the asked price for the Common Stock at the close of trading in the over-the-counter
market for the trading day on which Common Stock was traded on the applicable date, and if such applicable date is not a trading day,
the last market trading day prior to such date; and

 

(3)            If
the Common Stock is neither listed on a national securities exchange nor traded in the over-the-counter market, such value as the Administrator,
in good faith, shall determine in compliance with applicable laws.

 

Full
Value Award means a Stock Grant or other Stock-Based Award whose intrinsic value is not solely dependent on appreciation in
the price of the Common Stock after the date of grant.

 

ISO
means an option meant to qualify as an incentive stock option under Section 422 of the Code.

 

Non-Qualified
Option means an option which is not intended to qualify as an ISO.

 

Option
means an ISO or Non-Qualified Option granted under the Plan.

 

Participant
means an Employee, director or Consultant of the Company or an Affiliate to whom one or more Stock Rights are granted under the Plan.
As used herein, “Participant” shall include “Participant’s Survivors” where the context requires.

 

Performance
Based Award means a Stock Grant or Stock-Based Award which vests based on attainment of Performance Goals as set forth in Paragraph
9 hereof.

 

Performance
Goals means performance goals determined by the Committee in its sole discretion and set forth in an Agreement. The
satisfaction of Performance Goals shall be subject to certification by the Committee. The Committee has the authority to take
appropriate action with respect to the Performance Goals (including, without limitation, to make adjustments to the Performance
Goals or determine the satisfaction of the Performance Goals, in each case, in connection with a Corporate Transaction) provided
that any such actions do not otherwise violate the terms of the Plan.

 

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Plan
means this ImmunoGen, Inc. 2018 Employee, Director and Consultant Equity Incentive Plan.

 

Shares
means shares of the Common Stock as to which Stock Rights have been or may be granted under the Plan or any shares of capital stock into
which the Shares are changed or for which they are exchanged within the provisions of Paragraph 25 of the Plan. The Shares issued under
the Plan may be authorized and unissued shares or shares held by the Company in its treasury, or both.

 

Stock-Based
Award means a grant by the Company under the Plan of an equity award or an equity-based award which is not an Option or a Stock
Grant.

 

Stock
Grant means a grant by the Company of Shares under the Plan.

 

Stock
Right means a right to Shares or the value of Shares of the Company granted pursuant to the Plan -- an ISO, a Non-Qualified
Option, a Stock Grant or a Stock-Based Award.

 

Survivor
means a deceased Participant’s legal representatives and/or any person or persons who acquired the Participant’s rights to
a Stock Right by will or by the laws of descent and distribution.

 

		2.	PURPOSES OF THE PLAN.

 

The Plan is intended to encourage ownership of Shares by Employees
and directors of and certain Consultants to the Company and its Affiliates in order to attract and retain such people, to induce them
to work for the benefit of the Company or of an Affiliate and to provide additional incentive for them to promote the success of the Company
or of an Affiliate. The Plan provides for the granting of ISOs, Non-Qualified Options, Stock Grants and Stock-Based Awards.

 

		3.	SHARES SUBJECT TO THE PLAN.

 

		(a)	The number of Shares which may be issued from time to time pursuant to this Plan shall be the sum of: (i) 13,000,000 shares of
Common Stock and (ii) the number of shares of Common Stock remaining under this Plan as of April 1, 2022, and (iii) any
shares of Common Stock that are represented by awards granted under this Plan, the Company’s 2006 or 2016 Employee, Director and
Consultant Equity Incentive Plans that are forfeited, expire, or are cancelled without delivery of shares of Common Stock or which result
in the forfeiture of shares of Common Stock back to the Company on or after April 1, 2022 (but in no event more than 28,742,013 Shares
shall be added to the Plan pursuant to clauses (ii) and (iii)), or the equivalent of such number of Shares after the Administrator,
in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction
in accordance with Paragraph 25 of this Plan.

 

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		(b)	If an Option ceases to be “outstanding”, in whole or in part (other than by exercise), or if the Company shall reacquire
(at not more than its original issuance price) any Shares issued pursuant to a Stock Grant or Stock-Based Award, or if any Stock Right
expires or is forfeited, cancelled, or otherwise terminated or results in any Shares not being issued, the unissued or reacquired Shares
which were subject to such Stock Right shall again be available for issuance from time to time pursuant to this Plan. Notwithstanding
the foregoing, if a Stock Right is exercised, in whole or in part, by tender of Shares or if the Company’s or an Affiliate’s
tax withholding obligation is satisfied by withholding Shares, the number of Shares deemed to have been issued under the Plan for purposes
of the limitations set forth in Paragraph 3(a) above shall be the number of Shares that were subject to the Stock Right or portion
thereof, and not the net number of Shares actually issued and any stock appreciation right to be settled in shares of Common Stock shall
be counted in full against the number of Shares available for issuance under the Plan, regardless of the number of exercise gain shares
issued upon settlement of the stock appreciation right. In addition, Shares repurchased by the Company with the proceeds of the option
exercise price may not be reissued under the Plan.

  

		(c)	For purposes of determining the number of Shares available for issuance under Paragraph 3(a) above, (i) for the grant of
any Option or similar Stock- Based Award one Share for each Share actually subject to such Option or similar Stock-Based Award shall be
deducted, and (ii) for the grant of any Full Value Award, one and one-quarter
(1.25) Shares for each Share actually subject to any such Full Value Award shall be deducted. If a Full Value Award expires, is forfeited,
or otherwise lapses, the Shares that were subject to the Full Value Award shall be restored to the total number of Shares available for
grant as were deducted as Full Value Awards pursuant to this paragraph. Except in the case of death, disability or Change of Control,
or as provided in the next sentence, no Stock Right shall vest, and no right of the Company to restrict or reacquire Shares subject to
Full Value Awards shall lapse, less than one (1) year from the date of grant. Notwithstanding the foregoing, Stock Rights may be
granted having time-based vesting of less than one (1) year from the date of grant so long as no more than five percent (5%) of the
Shares reserved for issuance under the Plan pursuant to Paragraph 3(a) above (as adjusted under Paragraph 25 of this Plan) may be
granted in the aggregate pursuant to such awards.

 

		4.	ADMINISTRATION OF THE PLAN.

 

The Administrator of the Plan will be the Board of Directors, except
to the extent the Board of Directors delegates its authority to the Committee, in which case the Committee shall be the Administrator.
Subject to the provisions of the Plan, the Administrator is authorized to:

 

		(a)	Interpret the provisions of the Plan and all Stock Rights and to make all rules and determinations which it deems necessary or
advisable for the administration of the Plan;

 

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		(b)	Determine which Employees, directors and Consultants shall be granted Stock Rights;

 

		(c)	Determine the number of Shares for which a Stock Right or Stock Rights shall be granted provided, that the aggregate grant date fair
value of Shares to be granted to any non-employee director under the Plan in any calendar year may not exceed $500,000 dollars except
that the foregoing limitation on Stock Rights granted to non-employee directors shall not apply to Stock Rights made pursuant to an election
by a non-employee director to receive the Stock Right in lieu of cash for all or a portion of cash fees to be received for service on
the Board of Directors or any Committee thereof.

 

		(d)	Specify the terms and conditions upon which a Stock Right or Stock Rights may be granted;

 

		(e)	Make any adjustments in the Performance Goals included in any Performance-Based Awards;

 

		(f)	Amend any term or condition of any outstanding Stock Right, other than reducing the exercise price or purchase price or extending
the expiration date of an Option, provided that (i) such term or condition as amended is not prohibited by the Plan; (ii) any
such amendment shall not impair the rights of a Participant under any Stock Right previously granted without such Participant’s
consent or in the event of death of the Participant the Participant’s Survivors; and (iii) any such amendment shall be
made only after the Administrator determines whether such amendment would cause any adverse tax consequences to the Participant, including,
but not limited to, the annual vesting limitation contained in Section 422(d) of the Code and described in Paragraph 6(b)(iv) below
with respect to ISOs and pursuant to Section 409A of the Code; and

 

		(g)	Adopt any sub-plans applicable to residents of any specified jurisdiction as it deems necessary or appropriate in order to comply
with or take advantage of any tax or other laws applicable to the Company or to Plan Participants or to otherwise facilitate the administration
of the Plan, which sub-plans may include additional restrictions or conditions applicable to Stock Rights or Shares issuable pursuant
to a Stock Right;

 

provided, however, that all such interpretations, rules, determinations,
terms and conditions shall be made and prescribed in the context of (i) preserving the tax status under Section 422 of the Code
of those Options which are designated as ISOs; and (ii) not causing any adverse tax consequences under Section 409A of
the Code. Subject to the foregoing, the interpretation and construction by the Administrator of any provisions of the Plan or of any Stock
Right granted under it shall be final, unless otherwise determined by the Board of Directors, if the Administrator is the Committee. In
addition, if the Administrator is the Committee, the Board of Directors may take any action under the Plan that would otherwise be the
responsibility of the Committee.

 

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To the extent permitted under applicable law, the Board of
Directors or the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and
may delegate all or any portion of its responsibilities and powers to any other person selected by it; provided that only a
Committee consisting solely of non-employee directors (or the full Board when only non-employee directors are present and voting)
shall have the authority to grant Options, Stock Grants or Stock-Based Awards to non-employee directors, or to amend the terms of
any such awards in a manner that would accelerate the exercisability or vesting of, or lapsing of any right by the Company to
restrict or reacquire Shares subject to, all or any portion of any such award. The Board of Directors or the Committee may revoke
any such allocation or delegation at any time.

  

		5.	ELIGIBILITY FOR PARTICIPATION.

 

The Administrator will, in its sole discretion, name the Participants
in the Plan, provided, however, that each Participant must be an Employee, director or Consultant of the Company or of an Affiliate at
the time a Stock Right is granted. Notwithstanding the foregoing, the Administrator may authorize the grant of a Stock Right to a person
not then an Employee, director or Consultant of the Company or of an Affiliate; provided, however, that the actual grant of such
Stock Right shall be conditioned upon such person becoming eligible to become a Participant at or prior to the time of the execution of
the Agreement evidencing such Stock Right. ISOs may be granted only to Employees who are deemed residents of the United States for tax
purposes. Non-Qualified Options, Stock Grants and Stock-Based Awards may be granted to any Employee, director or Consultant of the Company
or an Affiliate. The granting of any Stock Right to any individual shall neither entitle that individual to, nor disqualify him or her
from, participation in any other grant of Stock Rights or any grants under any other benefit plan established by the Company or any Affiliate
for Employees, directors or Consultants.

 

		6.	TERMS AND CONDITIONS OF OPTIONS.

 

Each Option shall be set forth in writing in an Option Agreement, duly
executed by the Company (or provided in electronic form by the Company) and, to the extent required by law or requested by the Company,
by the Participant. The Administrator may provide that Options be granted subject to such terms and conditions, consistent with the terms
and conditions specifically required under this Plan, as the Administrator may deem appropriate including, without limitation, subsequent
approval by the shareholders of the Company of this Plan or any amendments thereto. The Option Agreements shall be subject to at least
the following terms and conditions:

 

		(a)	Non-Qualified Options: Each Option intended to be a Non-Qualified Option shall be subject to the terms and conditions which
the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum standards for
any such Non-Qualified Option:

 

		(i)	Exercise Price: Each Option Agreement shall state the exercise price (per share) of the Shares covered by each Option, which
exercise price shall be determined by the Administrator but shall not be less than the Fair Market Value per share of Common Stock on
the date of grant of the Option.

 

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		(ii)	Number of Shares: Each Option Agreement shall state the number of Shares to which it pertains.

 

		(iii)	Term and Vesting Periods: Each Option Agreement shall state the date or dates on which it first is exercisable and the date
after which it may no longer be exercised, provided that each Non-Qualified Option shall terminate not more than ten years from the date
of the grant. Each Option Agreement may provide that the Option rights accrue or become exercisable in installments over a period of months
or years, or upon the occurrence of certain conditions or the attainment of stated performance goals or events.

 

		(iv)	Option Conditions: Exercise of any Option may be conditioned upon the Participant’s execution of a Share purchase agreement
in form satisfactory to the Administrator providing for certain protections for the Company and its other shareholders, including requirements
that:

 

		(A)	The Participant’s or the Participant’s Survivors’ right to sell or transfer the Shares may be restricted; and

 

		(B)	The Participant or the Participant’s Survivors may be required to execute letters of investment intent and must also acknowledge
that the Shares will bear legends noting any applicable restrictions.

 

		(b)	ISOs: Each Option intended to be an ISO shall be issued only to an Employee and be subject to the following terms and conditions,
with such additional restrictions or changes as the Administrator determines are appropriate but not in conflict with Section 422
of the Code and relevant regulations and rulings of the Internal Revenue Service:

 

		(i)	Minimum standards: The ISO shall meet the minimum standards required of Non-Qualified Options, as described in Paragraph 6(a) above.

 

		(ii)	Exercise Price: Immediately before the ISO is granted, if the Participant owns, directly or by reason of the applicable attribution
rules in Section 424(d) of the Code:

 

		(A)	10% or less of the total combined voting power of all classes of stock of the Company or an Affiliate, the exercise price per share
of the Shares covered by each ISO shall not be less than 100% of the Fair Market Value per share of the Common Stock on the date of the
grant of the ISO; or

 

		(B)	More than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, the exercise price per share
of the Shares covered by each ISO shall not be less than 110% of the Fair Market Value per share of the Common Stock on the date of the
grant of the ISO.

 

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		(iii)	Term of Option: For Participants who own:

  

		(A)	10% or less of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not
more than ten years from the date of the grant or at such earlier time as the Option Agreement may provide; or

 

		(B)	More than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate
not more than five years from the date of the grant or at such earlier time as the Option Agreement may provide.

 

		(iv)	Limitation on Yearly Exercise: The Option Agreements shall restrict the amount of ISOs which may become exercisable in any
calendar year (under this or any other ISO plan of the Company or an Affiliate) so that the aggregate Fair Market Value (determined at
the time each ISO is granted) of the stock with respect to which ISOs are exercisable for the first time by the Participant in any calendar
year does not exceed $100,000.

 

		7.	TERMS AND CONDITIONS OF STOCK GRANTS.

 

Each Stock Grant to a Participant shall state the principal terms in
an Agreement, duly executed by the Company (or provided in electronic form by the Company) and, to the extent required by law or requested
by the Company, by the Participant. The Agreement shall be in a form approved by the Administrator and shall contain terms and conditions
which the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum standards:

 

		(a)	Each Agreement shall state the purchase price (per share), if any, of the Shares covered by each Stock Grant, which purchase price
shall be determined by the Administrator but shall not be less than the minimum consideration required by the Massachusetts General Corporation
Law on the date of the grant of the Stock Grant;

 

		(b)	Each Agreement shall state the number of Shares to which the Stock Grant pertains;

 

		(c)	Each Agreement shall include the terms of any right of the Company to restrict or reacquire the Shares subject to the Stock Grant,
including the time period or attainment of Performance Goals upon which such rights shall accrue and the purchase price therefor, if any;
and

 

		(d)	Dividends (other than stock dividends to be issued pursuant to Section 25 of the Plan) may accrue but shall not be paid prior
to the time, and only to the extent that, the restrictions or rights to reacquire the Shares subject to the Stock Grant lapse.

 

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		8.	TERMS AND CONDITIONS OF OTHER STOCK-BASED AWARDS.

  

The Administrator shall have the right to grant other Stock-Based
Awards based upon the Common Stock having such terms and conditions as the Administrator may determine, including, without
limitation, the grant of Shares based upon certain conditions, the grant of securities convertible into Shares and the grant of
stock appreciation rights, phantom stock awards, or stock units, deferred or otherwise. The principal terms of each Stock-Based
Award shall be set forth in an Agreement, duly executed by the Company (or provided in electronic form by the Company) and, to the
extent required by law or requested by the Company, by the Participant. The Agreement shall be in a form approved by the
Administrator and shall contain terms and conditions which the Administrator determines to be appropriate and in the best interest
of the Company. Each Agreement shall include the terms of any right of the Company including the right to terminate the Stock-Based
Award without the issuance of Shares, the terms of any vesting conditions, Performance Goals or events upon which Shares shall be
issued, provided that dividends (other than stock dividends to be issued pursuant to Section 25 of the Plan) or dividend
equivalents may accrue but shall not be paid prior to and only to the extent that, the Shares subject to the Stock-Based Award vest.
Under no circumstances may the Agreement covering stock appreciation rights (a) have an exercise price (per share) that is less
than the Fair Market Value per share of Common Stock on the date of grant or (b) expire more than ten years following the date
of grant.

 

The Company intends that the Plan and any Stock-Based Awards granted
hereunder be exempt from the application of Section 409A of the Code or meet the requirements of paragraphs (2), (3) and (4) of
subsection (a) of Section 409A of the Code, to the extent applicable, and be operated in accordance with Section 409A so
that any compensation deferred under any Stock-Based Award (and applicable investment earnings) shall not be included in income under
Section 409A of the Code. Any ambiguities in the Plan shall be construed to effect the intent as described in this Paragraph 8.

 

		9.	PERFORMANCE BASED AWARDS.

 

The Committee shall determine whether, with respect to a performance
period, the applicable Performance Goals have been met with respect to a given Participant and, if they have, to so certify and ascertain
the amount of the applicable Performance-Based Award. No Performance-Based Awards will be issued for such performance period until such
certification is made by the Committee. The number of Shares issued in respect of a Performance-Based Award determined by the Committee
for a performance period shall be paid to the Participant at such time as determined by the Committee in its sole discretion after the
end of such performance period and any dividends (other than stock dividends to be issued pursuant to Section 25 of the Plan) or
dividend equivalents that accrue shall only be paid in respect of the number of Shares earned in respect of a Performance-Based Award.

 

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		10.	EXERCISE OF OPTIONS AND ISSUE OF SHARES.

 

An Option (or any part or installment thereof) shall be exercised by
giving written notice (in a form acceptable to the Administrator which may include electronic notice) to the Company or its designee,
together with provision for payment of the aggregate exercise price in accordance with this Paragraph for the Shares as to which the Option
is being exercised, and upon compliance with any other condition(s) set forth in the Option Agreement. Such notice shall be signed
by the person exercising the Option, shall state the number of Shares with respect to which the Option is being exercised and shall contain
any representation required by the Plan or the Option Agreement. Payment of the exercise price for the Shares as to which such Option
is being exercised shall be made (a) in United States dollars in cash or by check, or (b) at the discretion of the Administrator,
through delivery of shares of Common Stock having a Fair Market Value equal as of the date of the exercise to the cash exercise price
of the Option and held for at least six months (if required to avoid negative accounting treatment), or (c) at the discretion of
the Administrator, by having the Company retain from the Shares otherwise issuable upon exercise of the Option, a number of shares having
a Fair Market Value equal as of the date of exercise to the aggregate exercise price of the number of Shares being exercised, or (d) at
the discretion of the Administrator, in accordance with a cashless exercise program established with a securities brokerage firm, and
approved by the Administrator, or (e) at the discretion of the Administrator, by any combination of (a), (b), (c) and (d) above
or (f) at the discretion of the Administrator, payment of such other lawful consideration as the Administrator may determine. Notwithstanding
the foregoing, the Administrator shall accept only such payment on exercise of an ISO as is permitted by Section 422 of the Code.

  

The Company shall then reasonably promptly deliver the Shares as to
which such Option was exercised to the Participant (or to the Participant’s Survivors, as the case may be). In determining what
constitutes “reasonably promptly,” it is expressly understood that the issuance and delivery of the Shares may be delayed
by the Company in order to comply with any law or regulation (including, without limitation, state securities or “blue sky”
laws) which requires the Company to take any action with respect to the Shares prior to their issuance. The Shares shall, upon delivery,
be fully paid, non-assessable Shares.

 

The Administrator shall have the right to accelerate the date of exercise
of any installment of any Option; provided that the Administrator shall not accelerate the exercise date of any installment of any
Option granted to an Employee as an ISO (and not previously converted into a Non-Qualified Option pursuant to Paragraph 28) without the
prior approval of the Employee, if such acceleration would violate the annual vesting limitation contained in Section 422(d) of
the Code, as described in Paragraph 6(b)(iv).

 

The Administrator may, in its discretion, amend any term or condition
of an outstanding Option provided (i) such term or condition as amended is not prohibited by the Plan, (ii) any such amendment
shall be made only with the consent of the Participant to whom the Option was granted, or in the event of the death of the Participant,
the Participant’s Survivors, if the amendment is adverse to the Participant, and (iii) any such amendment of any Option shall
be made only after the Administrator determines whether such amendment would constitute a “modification” of any Option which
is an ISO (as that term is defined in Section 424(h) of the Code) or would cause any adverse tax consequences for the holder
of such Option including, but not limited to, pursuant to Section 409A of the Code.

 

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		11.	ACCEPTANCE OF STOCK GRANTS AND STOCK-BASED AWARDS AND ISSUE OF SHARES.

  

A Stock Grant or Stock-Based Award (or any part or installment thereof)
shall be accepted by executing the applicable Agreement and delivering it to the Company or its designee, together with provision for
payment of the full purchase price, if any, in accordance with this Paragraph for the Shares as to which such Stock Grant or Stock-Based
Award is being accepted, and upon compliance with any other conditions set forth in the applicable Agreement. Payment of the purchase
price for the Shares as to which such Stock Grant or Stock-Based Award is being accepted shall be made (a) in United States dollars
in cash or by check, or (b) at the discretion of the Administrator, through delivery of shares of Common Stock held for at least
six months (if required to avoid negative accounting treatment) and having a Fair Market Value equal as of the date of acceptance of the
Stock Grant or Stock Based-Award to the purchase price of the Stock Grant or Stock-Based Award, or (c) at the discretion of the Administrator,
by any combination of (a) and (b) above; or (d) at the discretion of the Administrator, payment of such other lawful
consideration as the Administrator may determine.

 

The Company shall then, if required by the applicable Agreement, reasonably
promptly deliver the Shares as to which such Stock Grant or Stock-Based Award was accepted to the Participant (or to the Participant’s
Survivors, as the case may be), subject to any escrow provision set forth in the applicable Agreement. In determining what constitutes
 “reasonably promptly,” it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company
in order to comply with any law or regulation (including, without limitation, state securities or “blue sky” laws) which requires
the Company to take any action with respect to the Shares prior to their issuance.

 

		12.	RIGHTS AS A SHAREHOLDER.

 

No Participant to whom a Stock Right has been granted shall have rights
as a shareholder with respect to any Shares covered by such Stock Right, except after due exercise of the Option or issuance of Shares
as set forth in any Agreement, and tender of the aggregate exercise or full purchase price, if any, for the Shares being purchased pursuant
to such exercise or acceptance and registration of the Shares in the Company’s share register in the name of the Participant.

 

		13.	ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.

 

By its terms, a Stock Right granted to a Participant shall not be transferable
by the Participant other than (i) by will or by the laws of descent and distribution, or (ii) as approved by the Administrator
in its discretion and set forth in the applicable Agreement; provided that no Stock Right may be transferred by a Participant for
value. Notwithstanding the foregoing, an ISO transferred except in compliance with clause (i) above shall no longer qualify as an
ISO. The designation of a beneficiary of a Stock Right by a Participant, with the prior approval of the Administrator and in such form
as the Administrator shall prescribe, shall not be deemed a transfer prohibited by this Paragraph. Except as provided above, a Stock Right
shall only be exercisable or may only be accepted, during the Participant’s lifetime, by such Participant (or by his or her legal
representative) and shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition
of any Stock Right or of any rights granted thereunder contrary to the provisions of this Plan, or the levy of any attachment or similar
process upon a Stock Right, shall be null and void.

 

    -12-

     

    

 

		14.	EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE OR DEATH OR DISABILITY.

 

Except as otherwise provided in a Participant’s Option Agreement,
in the event of a termination of service (whether as an Employee, director or Consultant) with the Company or an Affiliate before the
Participant has exercised an Option, the following rules apply:

 

		(a)	A Participant who ceases to be an Employee, director or Consultant of the Company or of an Affiliate (for any reason other than termination
for Cause, Disability, or death for which events there are special rules in Paragraphs 15, 16, and 17, respectively), may exercise
any Option granted to him or her to the extent that the Option is exercisable on the date of such termination of service, but only within
such term as the Administrator has designated in a Participant’s Option Agreement.

 

		(b)	Except as provided in Subparagraph (c) below, or Paragraph 16 or 17, in no event may an Option intended to be an ISO, be exercised
later than three months after the Participant’s termination of employment.

 

		(c)	The provisions of this Paragraph, and not the provisions of Paragraph 16 or 17, shall apply to a Participant who subsequently becomes
Disabled or dies after the termination of employment, director status or consultancy; provided, however, in the case of a Participant’s
Disability or death within three months after the termination of employment, director status or consultancy, the Participant or the Participant’s
Survivors may exercise the Option within one year after the date of the Participant’s termination of service, but in no event after
the date of expiration of the term of the Option.

 

		(d)	Notwithstanding anything herein to the contrary, if subsequent to a Participant’s termination of employment, termination of
director status or termination of consultancy, but prior to the exercise of an Option, the Administrator determines that, either prior
or subsequent to the Participant’s termination, the Participant engaged in conduct which would constitute Cause, then such Participant
shall forthwith cease to have any right to exercise any Option.

 

		(e)	A Participant to whom an Option has been granted under the Plan who is absent from the Company or an Affiliate because of temporary
disability (any disability other than a Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall
not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant’s employment,
director status or consultancy with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide;
provided, however, that, for ISOs, any leave of absence granted by the Administrator of greater than ninety days, unless pursuant to a
contract or statute that guarantees the right to reemployment, shall cause such ISO to become a Non-Qualified Option on the 181st day
following such leave of absence.

 

		(f)	Except as required by law or as set forth in a Participant’s Option Agreement, Options granted under the Plan shall not be affected
by any change of a Participant’s status within or among the Company and any Affiliates, so long as the Participant continues to
be an Employee, director or Consultant of the Company or any Affiliate.

 

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		15.	EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR CAUSE.

 

Except as otherwise provided in a Participant’s Option Agreement,
the following rules apply if the Participant’s service (whether as an Employee, director or Consultant) with the Company or
an Affiliate is terminated for Cause prior to the time that all his or her outstanding Options have been exercised:

 

		(a)	All outstanding and unexercised Options as of the time the Participant is notified his or her service is terminated for Cause will
immediately be forfeited.

 

		(b)	Cause is not limited to events which have occurred prior to a Participant’s termination of service, nor is it necessary that
the Administrator’s finding of Cause occur prior to termination. If the Administrator determines, subsequent to a Participant’s
termination of service but prior to the exercise of an Option, that either prior or subsequent to the Participant’s termination
the Participant engaged in conduct which would constitute Cause, then the right to exercise any Option is forfeited.

 

		16.	EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.

 

Except as otherwise provided in a Participant’s Option Agreement:

 

		(a)	A Participant who ceases to be an Employee, director or Consultant of the Company or of an Affiliate by reason of Disability may exercise
any Option granted to such Participant:

 

		(i)	To the extent that the Option has become exercisable but has not been exercised on the date of Disability; and

 

		(ii)	In the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of Disability
of any additional vesting rights that would have accrued on the next vesting date had the Participant not become Disabled. The proration
shall be based upon the number of days accrued in the current vesting period prior to the date of Disability.

 

    -14-

     

    

 

		(b)	A Disabled Participant may exercise such rights only within the period ending one year after the date of the Participant’s Disability,
notwithstanding that the Participant might have been able to exercise the Option as to some or all of the Shares on a later date if the
Participant had not become Disabled and had continued to be an Employee, director or Consultant or, if earlier, within the originally
prescribed term of the Option.

 

		(c)	The Administrator shall make the determination both of whether Disability has occurred and the date of its occurrence (unless a procedure
for such determination is set forth in another agreement between the Company and such Participant, in which case such procedure shall
be used for such determination). If requested, the Participant shall be examined by a physician selected or approved by the Administrator,
the cost of which examination shall be paid for by the Company.

 

		17.	EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

 

Except as otherwise provided in a Participant’s Option Agreement:

 

		(a)	In the event of the death of a Participant while the Participant is an Employee, director or Consultant of the Company or of an Affiliate,
such Option may be exercised by the Participant’s Survivors:

 

		(i)	To the extent that the Option has become exercisable but has not been exercised on the date of death; and

 

		(ii)	In the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of death of any
additional vesting rights that would have accrued on the next vesting date had the Participant not died. The proration shall be based
upon the number of days accrued in the current vesting period prior to the Participant’s date of death.

 

		(b)	If the Participant’s Survivors wish to exercise the Option, they must take all necessary steps to exercise the Option within
one year after the date of death of such Participant, notwithstanding that the decedent might have been able to exercise the Option as
to some or all of the Shares on a later date if he or she had not died and had continued to be an Employee, director or Consultant or,
if earlier, within the originally prescribed term of the Option.

 

		18.	EFFECT OF TERMINATION OF SERVICE ON STOCK GRANTS AND STOCK-BASED AWARDS.

 

In the event of a termination of service (whether as an Employee, director
or Consultant) with the Company or an Affiliate for any reason before the Participant has accepted a Stock Grant or a Stock-Based Award
and paid the purchase price, if required, such offer shall terminate.

 

For purposes of this Paragraph 18 and Paragraph 19 below, a Participant
to whom a Stock Grant or a Stock-Based Award has been issued under the Plan who is absent from work with the Company or with an Affiliate
because of temporary disability (any disability other than a Disability as defined in Paragraph 1 hereof), or who is on leave of absence
for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such
Participant’s employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may
otherwise expressly provide.

 

    -15-

     

    

 

In addition, for purposes of this Paragraph 18 and Paragraph 19 below,
any change of employment or other service within or among the Company and any Affiliates shall not be treated as a termination of employment,
director status or consultancy so long as the Participant continues to be an Employee, director or Consultant of the Company or any Affiliate.

 

		19.	EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE OR DEATH OR DISABILITY.

 

Except as otherwise provided in a Participant’s Agreement, in
the event of a termination of service (whether as an Employee, director or Consultant), other than termination for Cause, Disability,
or death for which events there are special rules in Paragraphs 20, 21, and 22, respectively, before all forfeiture provisions or
Company rights of repurchase shall have lapsed, then the Company shall have the right to cancel or repurchase that number of Shares subject
to a Stock Grant or Stock-Based Award as to which the Company’s forfeiture or repurchase rights have not lapsed.

 

		20.	EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF TERMINATION OF SERVICE FOR CAUSE.

 

Except as otherwise provided in a Participant’s Agreement, the
following rules apply if the Participant’s service (whether as an Employee, director or Consultant) with the Company or an
Affiliate is terminated for Cause:

 

		(a)	All Shares subject to any Stock Grant or a Stock-Based Award that remain subject to forfeiture provisions or as to which the Company
shall have a repurchase right shall be immediately forfeited to the Company as of the time the Participant is notified his or her service
is terminated for Cause.

 

		(b)	Cause is not limited to events which have occurred prior to a Participant’s termination of service, nor is it necessary that
the Administrator’s finding of Cause occur prior to termination. If the Administrator determines, subsequent to a Participant’s
termination of service, that either prior or subsequent to the Participant’s termination the Participant engaged in conduct which
would constitute Cause, then all shares subject to any Stock Grant or Stock-Based Award that remained subject to forfeiture provisions
or as to which the Company had a repurchase right on the date of termination shall be immediately forfeited to the Company.

 

		21.	EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF TERMINATION OF SERVICE FOR DISABILITY.

 

Except as otherwise provided in a Participant’s Agreement, the
following rules apply if a Participant ceases to be an Employee, director or Consultant of the Company or of an Affiliate by reason
of Disability: to the extent the forfeiture provisions or the Company’s rights of repurchase have not lapsed on the date of Disability,
they shall be exercisable; provided, however, that in the event such forfeiture provisions or rights of repurchase lapse periodically,
such provisions or rights shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant or Stock-Based Award
through the date of Disability as would have lapsed had the Participant not become Disabled. The proration shall be based upon the number
of days accrued prior to the date of Disability.

 

    -16-

     

    

 

The Administrator shall make the determination both of whether Disability
has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another agreement between the Company
and such Participant, in which case such procedure shall be used for such determination). If requested, the Participant shall be examined
by a physician selected or approved by the Administrator, the cost of which examination shall be paid for by the Company.

 

		22.	EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

 

Except as otherwise provided in a Participant’s Agreement, the
following rules apply in the event of the death of a Participant while the Participant is an Employee, director or Consultant of
the Company or of an Affiliate: to the extent the forfeiture provisions or the Company’s rights of repurchase have not lapsed on
the date of death, they shall be exercisable; provided, however, that in the event such forfeiture provisions or rights of repurchase
lapse periodically, such provisions or rights shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant
or Stock-Based Award through the date of death as would have lapsed had the Participant not died. The proration shall be based upon the
number of days accrued prior to the Participant’s death.

 

		23.	PURCHASE FOR INVESTMENT.

 

Unless the offering and sale of the Shares to be issued upon the particular
exercise or acceptance of a Stock Right shall have been effectively registered under the Securities Act of 1933, as now in force or hereafter
amended (the “1933 Act”), the Company shall be under no obligation to issue the Shares covered by such exercise unless and
until the following conditions have been fulfilled:

 

		(a)	The person(s) who exercise(s) or accept(s) such Stock Right shall warrant to the Company, prior to the receipt of such
Shares, that such person(s) are acquiring such Shares for their own respective accounts, for investment, and not with a view to,
or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring
such Shares shall be bound by the provisions of the following legend which shall be endorsed upon the certificate(s) evidencing their
Shares issued pursuant to such exercise or such grant:

 

“The shares represented by this certificate have been
taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a
Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or the Company shall
have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there
shall have been compliance with all applicable state securities laws.”

 

    -17-

     

    

 

		(b)	At the discretion of the Administrator, the Company shall have received an opinion of its counsel that the Shares may be issued upon
such particular exercise or acceptance in compliance with the 1933 Act without registration thereunder.

 

		24.	DISSOLUTION OR LIQUIDATION OF THE COMPANY.

 

Upon the dissolution or liquidation of the Company, all Options granted
under this Plan which as of such date shall not have been exercised and all Stock Grants and Stock-Based Awards which have not been accepted,
to the extent required under the applicable Agreement, will terminate and become null and void; provided, however, that if the rights
of a Participant or a Participant’s Survivors have not otherwise terminated and expired, the Participant or the Participant’s
Survivors will have the right immediately prior to such dissolution or liquidation to exercise or accept any Stock Right to the extent
that the Stock Right is exercisable or subject to acceptance as of the date immediately prior to such dissolution or liquidation. Upon
the dissolution or liquidation of the Company, any outstanding Stock-Based Awards shall immediately terminate unless otherwise determined
by the Administrator or specifically provided in the applicable Agreement.

 

		25.	ADJUSTMENTS.

 

Upon the occurrence of any of the following events, a Participant’s
rights with respect to any Stock Right granted to him or her hereunder shall be adjusted as hereinafter provided, unless otherwise specifically
provided in a Participant’s Agreement:

 

		(a)	Stock Dividends and Stock Splits. If (i) the shares of Common Stock shall be subdivided or combined into a greater or
smaller number of shares or if the Company shall issue any shares of Common Stock as a stock dividend on its outstanding Common Stock,
or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed
with respect to such shares of Common Stock, each Stock Right and the number of shares of Common Stock deliverable thereunder shall be
appropriately increased or decreased proportionately, and appropriate adjustments shall be made, including in the exercise or purchase
price per share and Performance Goals applicable to outstanding Performance-Based Awards, to reflect such events. The number of Shares
subject to the limitations in Paragraph 3(a) and 4(c) shall also be proportionately adjusted upon the occurrence of such events.

 

    -18-

     

    

 

		(b)	Corporate Transactions. If the Company is to be consolidated with or acquired by another entity in a merger, consolidation,
or sale of all or substantially all of the Company’s assets or the acquisition of all of the outstanding voting stock of the Company
in a single transaction or a series of related transactions by a single entity other than a transaction to merely change the state of
incorporation (a “Corporate Transaction”), the Administrator or the board of directors of any entity assuming the obligations
of the Company hereunder (the “Successor Board”), shall, as to outstanding Options, either (i) make appropriate provision
for the continuation of such Options by substituting on an equitable basis for the Shares then subject to such Options either the consideration
payable with respect to the outstanding shares of Common Stock in connection with the Corporate Transaction or securities of any successor
or acquiring entity; or (ii) upon written notice to the Participants, provide that such Options must be exercised (either (A) to
the extent then exercisable, or (B) at the discretion of the Administrator, any such Options being made partially or fully exercisable
for purposes of this Subparagraph), within a specified number of days of the date of such notice, at the end of which period the Options
shall terminate; or (iii) terminate such Options in exchange for payment of an amount equal to the consideration payable upon
consummation of such Corporate Transaction to a holder of the number of shares of Common Stock into which such Option would have been
exercisable (either (A) to the extent then exercisable, or (B) at the discretion of the Administrator, any such Options being
made partially or fully exercisable for purposes of this Subparagraph) less the aggregate exercise price thereof. For purposes of determining
the payments to be made pursuant to Subclause (iii) above, in the case of a Corporate Transaction the consideration for
which, in whole or in part, is other than cash, the consideration other than cash shall be valued at the fair value thereof as determined
in good faith by the Board of Directors.

 

With respect to outstanding Stock Grants, the Administrator
or the Successor Board, shall either (i) make appropriate provisions for the continuation of such Stock Grants on the same terms
and conditions by substituting on an equitable basis for the Shares then subject to such Stock Grants either the consideration payable
with respect to the outstanding shares of Common Stock in connection with the Corporate Transaction or securities of any successor or
acquiring entity; or (ii) terminate all Stock Grants in exchange for payment of an amount equal to the consideration payable
upon consummation of such Corporate Transaction to the holder of the number of shares of Common Stock comprising such Stock Grant (to
the extent such Stock Grant is no longer subject to any forfeiture or repurchase rights then in effect or, at the discretion of the Administrator,
all forfeiture and repurchase rights being waived upon such Corporate Transaction).

 

In taking any of the actions permitted under this Paragraph
25(b), the Administrator shall not be obligated by the Plan to treat all Stock Rights, all Stock Rights held by a Participant, or all
Stock Rights of the same type, identically.

 

		(c)	Recapitalization or Reorganization. In the event of a recapitalization or reorganization of the Company other than a Corporate
Transaction pursuant to which securities of the Company or of another corporation are issued with respect to the outstanding shares of
Common Stock, a Participant upon exercising an Option or accepting a Stock Grant after the recapitalization or reorganization shall be
entitled to receive for the price paid upon such exercise or acceptance, if any, the number of replacement securities which would have
been received if such Option had been exercised or Stock Grant accepted prior to such recapitalization or reorganization.

 

    -19-

     

    

 

		(d)	Adjustments to Stock-Based Awards. Upon the happening of any of the events described in Subparagraphs a, b or c above, any
outstanding Stock- Based Award shall be appropriately adjusted to reflect the events described in such Subparagraphs. The Administrator
or the Successor Board shall determine the specific adjustments to be made under this Paragraph 25, including, but not limited to the
effect if any, of a Change of Control and, subject to Paragraph 4, its determination shall be conclusive.

 

		(e)	Modification of Options. Notwithstanding the foregoing, any adjustments made pursuant to Subparagraph a, b or c above with
respect to Options shall be made only after the Administrator determines whether such adjustments would constitute a “modification”
of any ISOs (as that term is defined in Section 424(h) of the Code) or would cause any adverse tax consequences for the holders
of such Options. If the Administrator determines that such adjustments made with respect to Options would constitute a modification or
other adverse tax consequence, it may refrain from making such adjustments, unless the holder of an Option specifically agrees in writing
that such adjustment be made and such writing indicates that the holder has full knowledge of the consequences of such “modification”
on his or her income tax treatment with respect to the Option. This paragraph shall not apply to the acceleration of the vesting of any
ISO that would cause any portion of the ISO to violate the annual vesting limitation contained in Section 422(d) of the Code,
as described in Paragraph 6(b)(iv).

 

		26.	ISSUANCES OF SECURITIES.

 

Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares subject to Stock Rights. Except as expressly provided herein, no adjustments
shall be made for dividends paid in cash or in property (including without limitation, securities) of the Company prior to any issuance
of Shares pursuant to a Stock Right.

 

		27.	FRACTIONAL SHARES.

 

No fractional shares shall be issued under the Plan and the person
exercising a Stock Right shall receive from the Company cash in lieu of such fractional shares equal to the Fair Market Value thereof.

 

		28.	CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.

 

The Administrator, at the written request of any Participant, may in
its discretion take such actions as may be necessary to convert such Participant’s ISOs (or any portions thereof) that have not
been exercised on the date of conversion into Non-Qualified Options at any time prior to the expiration of such ISOs, regardless of whether
the Participant is an Employee of the Company or an Affiliate at the time of such conversion. At the time of such conversion, the Administrator
(with the consent of the Participant) may impose such conditions on the exercise of the resulting Non-Qualified Options as the Administrator
in its discretion may determine, provided that such conditions shall not be inconsistent with this Plan. Nothing in the Plan shall be
deemed to give any Participant the right to have such Participant’s ISOs converted into Non-Qualified Options, and no such conversion
shall occur until and unless the Administrator takes appropriate action. The Administrator, with the consent of the Participant, may also
terminate any portion of any ISO that has not been exercised at the time of such conversion.

 

    -20-

     

    

 

		29.	WITHHOLDING.

 

In the event that any federal, state, or local income taxes, employment
taxes, Federal Insurance Contributions Act (“F.I.C.A.”) withholdings or other amounts are required by applicable law or governmental
regulation to be withheld from the Participant’s salary, wages or other remuneration in connection with the exercise or acceptance
of a Stock Right or upon the lapsing of any forfeiture provision or right of repurchase or for any other reason required by law, the Company
may withhold from the Participant’s compensation, if any, or may require that the Participant advance in cash to the Company, or
to any Affiliate of the Company which employs or employed the Participant, the statutory minimum amount of such withholdings unless a
different withholding arrangement, including the use of shares of the Company’s Common Stock is authorized by the Administrator
(and permitted by law). For purposes hereof, the fair market value of the shares withheld for purposes of payroll withholding shall be
determined in the manner set forth under the definition of Fair Market Value provided in Paragraph 1 above, as of the most recent practicable
date prior to the date of exercise. If the Fair Market Value of the shares withheld is less than the amount of payroll withholdings required,
the Participant may be required to advance the difference in cash to the Company or the Affiliate employer.

 

		30.	NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.

 

Each Employee who receives an ISO must agree to notify the Company
in writing immediately after the Employee makes a Disqualifying Disposition of any shares acquired pursuant to the exercise of an ISO.
A Disqualifying Disposition is defined in Section 424(c) of the Code and includes any disposition (including any sale or gift)
of such shares before the later of (a) two years after the date the Employee was granted the ISO, or (b) one year after the
date the Employee acquired Shares by exercising the ISO, except as otherwise provided in Section 424(c) of the Code. If the
Employee has died before such stock is sold, these holding period requirements do not apply and no Disqualifying Disposition can occur
thereafter.

 

		31.	TERMINATION OF THE PLAN.

 

The Plan will terminate on March 28, 2028. The Plan may be terminated
at an earlier date by vote of the shareholders or the Board of Directors of the Company; provided, however, that any such earlier
termination shall not affect any Agreements executed prior to the effective date of such termination. Termination of the Plan shall not
affect any Stock Rights theretofore granted.

 

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		32.	AMENDMENT OF THE PLAN AND AGREEMENTS.

 

The Plan may be amended by the shareholders of the Company. The
Plan may also be amended by the Administrator, including, without limitation, to the extent necessary to qualify any or all
outstanding Stock Rights granted under the Plan or Stock Rights to be granted under the Plan for favorable federal income tax
treatment as may be afforded incentive stock options under Section 422 of the Code (including deferral of taxation upon
exercise), and to the extent necessary to qualify the shares issuable upon exercise or acceptance of any outstanding Stock Rights
granted, or Stock Rights to be granted, under the Plan for listing on any national securities exchange or quotation in any national
automated quotation system of securities dealers, provided that any amendment approved by the Administrator which the Administrator
determines is of a scope that requires shareholder approval shall also be subject to obtaining such shareholder approval. Other than
as set forth in Paragraph 25 of the Plan, the Administrator may not without shareholder approval reduce the exercise price of an
Option or cancel any outstanding Option in exchange for a replacement option having a lower exercise price, any Stock Grant, any
other Stock-Based Award or for cash. In addition, the Administrator may not take any other action that is considered a direct or
indirect “repricing” for purposes of the shareholder approval rules of the applicable securities exchange or
inter-dealer quotation system on which the Shares are listed, including any other action that is treated as a repricing under
generally accepted accounting principles. Any modification or amendment of the Plan shall not, without the consent of a Participant,
adversely affect his or her rights under a Stock Right previously granted to him or her, unless such amendment is required by
applicable law or necessary to preserve the economic value of such Stock Right. With the consent of the Participant affected, the
Administrator may amend outstanding Agreements in a manner which may be adverse to the Participant but which is not inconsistent
with the Plan. In the discretion of the Administrator, outstanding Agreements may be amended by the Administrator in a manner which
is not adverse to the Participant. Notwithstanding the foregoing, except in the case of death, disability or Change of Control,
outstanding Agreements may not be amended by the Administrator (or the Board) in a manner that would accelerate the exercisability
or vesting of, or lapsing of any right by the Company to restrict or reacquire Shares subject to, all or any portion of any Option,
Stock Grant or other Stock-Based Award. Nothing in this Paragraph 32 shall limit the Administrator’s authority to take any
action permitted pursuant to Paragraph 25.

 

		33.	EMPLOYMENT OR OTHER RELATIONSHIP.

 

Nothing in this Plan or any Agreement shall be deemed to prevent the
Company or an Affiliate from terminating the employment, consultancy or director status of a Participant, nor to prevent a Participant
from terminating his or her own employment, consultancy or director status or to give any Participant a right to be retained in employment
or other service by the Company or any Affiliate for any period of time.

 

		34.	CLAWBACK.

 

Notwithstanding anything to the contrary contained in this Plan, the
Company may recover from a Participant any compensation received from any Stock Right (whether or not settled) or cause a Participant
to forfeit any Stock Right (whether or not vested) in the event that the Company’s Incentive Compensation Recoupment Policy then
in effect is triggered.

 

    -22-

     

    

 

		35.	SECTION 409A.

 

If a Participant is a “specified employee” as defined in
Section 409A of the Code (and as applied according to procedures of the Company and its Affiliates) as of her or his separation from
service, to the extent any payment under this Plan or pursuant to the grant of a Stock-Based Award constitutes deferred compensation (after
taking into account any applicable exemptions from Section 409A of the Code), and to the extent required by Section 409A of
the Code, no payments due under this Plan or pursuant to a Stock-Based Award may be made until the earlier of: (i) the first day
of the seventh month following the Participant’s separation from service, or (ii) the Participant’s date of death;
provided, however, that any payments delayed during this six-month period shall be paid in the aggregate in a lump sum, without interest,
on the first day of the seventh month following the Participant’s separation from service.

 

The Administrator shall administer the Plan with a view toward ensuring
that Stock Rights under the Plan that are subject to Section 409A of the Code comply with the requirements thereof and that Options
under the Plan be exempt from the requirements of Section 409A of the Code, but neither the Administrator nor any member of the Board,
nor the Company nor any of its Affiliates, nor any other person acting hereunder on behalf of the Company, the Administrator or the Board
shall be liable to a Participant or any Survivor by reason of the acceleration of any income, or the imposition of any additional tax
or penalty, with respect to a Stock Right, whether by reason of a failure to satisfy the requirements of Section 409A of the Code
or otherwise.

 

		36.	GOVERNING LAW.

 

This Plan shall be construed and enforced in accordance with the law
of The Commonwealth of Massachusetts.

 

    -23-Document

Exhibit 10.1

VANDA PHARMACEUTICALS INC.
2016 EQUITY INCENTIVE PLAN
(AMENDED AND RESTATED EFFECTIVE AS OF JUNE 11, 2020)

TABLE OF CONTENTS
 
												
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	ARTICLE 1.	  	INTRODUCTION
	1

				
	ARTICLE 2.	  	ADMINISTRATION
	1

	2.1	  	Committee Composition
	1

	2.2	  	Committee Responsibilities
	1

	2.3	  	Committee for Non-Officer Grants
	1

				
	ARTICLE 3.	  	SHARES AVAILABLE FOR GRANTS
	1

	3.1	  	Basic Limitation
	1

	3.2	  	Shares Returned to Reserve
	2

				
	ARTICLE 4.	  	ELIGIBILITY
	2

	4.1	  	Incentive Stock Options
	

	4.2	  	Other Grants
	2

				
	ARTICLE 5.	  	OPTIONS
	2

	5.1	  	Stock Option Agreement
	2

	5.2	  	Number of Shares
	2

	5.3	  	Exercise Price
	2

	5.4	  	Exercisability and Term
	2

	5.5	  	Effect of Change in Control
	2

	5.6	  	Modification or Assumption of Options
	2

	5.7	  	Voting and Dividend Rights
	3

				
	ARTICLE 6.	  	PAYMENT FOR OPTION SHARES
	3

	6.1	  	General Rule
	3

	6.2	  	Surrender of Stock
	3

	6.3	  	Exercise/Sale
	3

	6.4	  	Promissory Note
	3

	6.5	  	Other Forms of Payment
	3

				
	ARTICLE 7.	  	STOCK APPRECIATION RIGHTS
	3

	7.1	  	SAR Agreement
	3

	7.2	  	Number of Shares
	3

	7.3	  	Exercise Price
	3

	7.4	  	Exercisability and Term
	3

	7.5	  	Effect of Change in Control
	4

	7.6	  	Exercise of SARs
	4

	7.7	  	Modification or Assumption of SARs
	4

	7.8	  	Voting and Dividend Rights
	4

				
	ARTICLE 8.	  	RESTRICTED SHARES
	4

	8.1	  	Restricted Stock Agreement
	4

	8.2	  	Payment for Awards
	4

	8.3	  	Vesting Conditions
	4

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	 	  	 	Page
	8.4	  	Voting and Dividend Rights
	4

				
	ARTICLE 9.	  	STOCK UNITS
	5

	9.1	  	Stock Unit Agreement
	5

	9.2	  	Payment for Awards
	5

	9.3	  	Vesting Conditions
	5

	9.4	  	Voting and Dividend Rights
	5

	9.5	  	Form and Time of Settlement of Stock Units
	5

	9.6	  	Death of Recipient
	5

	9.7	  	Creditors' Rights
	5

				
	ARTICLE 10.		PROTECTION AGAINST DILUTION
	5

	10.1		Adjustments
	6

	10.2		Dissolution or Liquidation
	6

	10.3		Reorganizations
	6

				
	ARTICLE 11.		AWARDS UNDER OTHER PLANS
	7

				
	ARTICLE 12.		PAYMENT OF DIRECTOR'S FEES IN SECURITIES
	7

	12.1		Effective Date
	7

	12.2		Elections to Receive NSOs, Restricted Shares or Stock Units
	7

	12.3		Number and Terms of NSOs, Restricted Shares or Stock Units
	7

				
	ARTICLE 13.		LIMITATION ON RIGHTS
	7

	13.1		Retention Rights
	7

	13.2		Stockholders' Rights
	7

	13.3		Regulatory Requirements
	7

	13.4		Transferability of Awards
	7

				
	ARTICLE 14.		TAXES
	8

	14.1		General Withholding Obligations
	8

	14.2		Share Withholding
	8

	14.3		Code Section 409A Matters
	8

				
	ARTICLE 15.		LIMITATION ON PAYMENTS
	8

	15.1		Scope of Limitation
	8

	15.2		Basic Rule
	8

	15.3		Reduction of Payments
	8

	15.4		Overpayments and Underpayments
	9

	15.5		Related Corporations
	9

				
	ARTICLE 16.		FUTURE OF THE PLAN
	9

	16.1		Term of the Plan
	9

	16.2		Amendment or Termination
	9

	16.3		Stockholder Approval
	9

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VANDA PHARMACEUTICALS INC.
AMENDED AND RESTATED 2016 EQUITY INCENTIVE PLAN

ARTICLE 1.    INTRODUCTION.
The Plan was adopted by the Board on April 27, 2016 and approved by the Company's stockholders on June 16, 2016 at the Company's 2016 Annual Meeting of Stockholders. The Plan was further amended and restated by the Board on April 25, 2017, which amendment and restatement became effective upon its approval by the Company's stockholders at the Company's 2017 Annual Meeting of Stockholders on June 15, 2017. The Plan was further amended and restated by the Board on April 26, 2018, which amendment and restatement became effective upon its approval by the Company's stockholders at the Company's 2018 Annual Meeting of Stockholders on June 13, 2018. The Plan was further amended and restated by the Board on April 20, 2020, which amendment and restatement will become effective upon its approval by the Company's stockholders at the  Company's 2020 Annual Meeting of Stockholders on June 11, 2020. The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by (a) encouraging Employees, Outside Directors and Consultants to focus on critical long-range objectives, (b) encouraging the attraction and retention of Employees, Outside Directors and Consultants with exceptional qualifications and (c) linking Employees, Outside Directors and Consultants directly to stockholder interests through increased stock ownership. The Plan seeks to achieve this purpose by providing for Awards in the form of Restricted Shares, Stock Units, Options (which may constitute ISOs or NSOs) or stock appreciation rights.
The Plan shall be governed by, and construed in accordance with, the laws of the State of Delaware (except their choice-of-law provisions).

ARTICLE 2.    ADMINISTRATION.

2.1 Committee Composition. The Committee shall administer the Plan. The Committee shall consist exclusively of two or more directors of the Company, who shall be appointed by the Board. In addition, each member of the Committee shall meet the following requirements:
(a)Any listing standards prescribed by the principal securities market on which the Company's equity securities are traded;
(b)Such requirements as the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act; and
(c)Any other requirements imposed by applicable law, regulations or rules.

2.2 Committee Responsibilities. The Committee shall (a) select the Employees, Outside Directors and Consultants who are to receive Awards under the Plan, (b) determine the type, number, vesting requirements and other features and conditions of such Awards, (c) interpret the Plan, (d) make all other decisions relating to the operation of the Plan and (e) carry out any other duties delegated to it by the Board. The Committee may adopt such rules or guidelines as it deems appropriate to implement the Plan. The Committee's determinations under the Plan shall be final and binding on all persons.

2.3 Committee for Non-Officer Grants. The Board may also appoint a secondary committee of the Board, which shall be composed of one or more directors or executive officers of the Company who need not satisfy the requirements of Section 2.1. Such secondary committee may administer the Plan with respect to Employees and Consultants who are not Outside Directors and are not considered executive officers of the Company under section 16 of the Exchange Act, may grant Awards under the Plan to such Employees and Consultants and may determine all features and conditions of such Awards. Within the limitations of this Section 2.3, any reference in the Plan to the Committee shall include such secondary committee.

ARTICLE 3.    SHARES AVAILABLE FOR GRANTS.

3.1 Basic Limitation. Common Shares issued pursuant to the Plan may be authorized but unissued shares or treasury shares. The aggregate number of Common Shares issued under the Plan shall not exceed (a) 8,790,000  plus (b) the additional Common Shares described in Section 3.2. The number of Common Shares that are subject to Awards outstanding at any time under the Plan shall not exceed the number of Common Shares that then remain available for issuance under the Plan. All Common Shares available under the Plan may be issued upon the exercise of ISOs. The limitations of this Section 3.1 shall be subject to adjustment pursuant to Article 10.
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3.2 Shares Returned to Reserve. If Options, SARs, Restricted Shares or Stock Units are forfeited, settled in cash (in whole or in part), or terminate for any other reason before being exercised or settled, then the Common Shares subject to such Options, SARs, Restricted Shares or Stock Units shall again become available for issuance under the Plan. If Restricted Shares or Common Shares issued upon the exercise of Awards are reacquired by the Company pursuant to a forfeiture provision or for any other reason, then such Common Shares shall again become available for issuance under the Plan. Common Shares that are (a) not issued or delivered as a result of the net settlement of an outstanding Option or SAR or (b) used or tendered by a Participant or withheld by the Company (i) in payment of the exercise price of an Option or SAR or (ii) in satisfaction of any tax withholding obligation relating to any Award, shall not become available again for issuance under the Plan.

ARTICLE 4.    ELIGIBILITY.

4.1 Incentive Stock Options. Only Employees who are common-law employees of the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs. In addition, an Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company or any of its Parents or Subsidiaries shall not be eligible for the grant of an ISO unless the requirements set forth in section 422(c)(5) of the Code are satisfied.

4.2 Other Grants. Only Employees, Outside Directors and Consultants shall be eligible for the grant of Restricted Shares, Stock Units, NSOs or SARs.

ARTICLE 5.    OPTIONS.

5.1 Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The Stock Option Agreement shall specify whether the Option is an ISO or an NSO. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical. Options may be granted in consideration of a reduction in the Optionee's other compensation.

5.2 Number of Shares. Each Stock Option Agreement shall specify the number of Common Shares subject to the Option and shall provide for the adjustment of such number in accordance with Article 10. Options granted to any Optionee in a single fiscal year of the Company shall not cover more than 500,000 Common Shares, except that Options granted to a new Employee in the fiscal year of the Company in which his or her Service as an Employee first commences shall not cover more than 1,000,000 Common Shares. The limitations set forth in the preceding sentence shall be subject to adjustment in accordance with Article 10.

5.3 Exercise Price. Each Stock Option Agreement shall specify the Exercise Price; provided that the Exercise Price shall in no event be less than 100% of the Fair Market Value of a Common Share on the date of grant. This Section 5.3 shall not apply to an Option granted pursuant to the assumption of, or substitution for, another option in a manner that complies with section 424(a) of the Code (whether or not the Option is an ISO).

5.4 Exercisability and Term. Each Stock Option Agreement shall specify the date or event when all or any installment of the Option is to become exercisable; provided that the Option will not become exercisable prior to the Optionee completing at least one year of Service following the Vesting Commencement Date of such Option. The Stock Option Agreement shall also specify the term of the Option; provided that the term of an Option shall in no event exceed 10 years from the date of grant. A Stock Option Agreement may provide for accelerated exercisability in the event of the Optionee's death, disability, retirement or Involuntary Termination and may provide for expiration prior to the end of its term in the event of the termination of the Optionee's Service. Options may be awarded in combination with SARs, and such an Award may provide that the Options will not be exercisable unless the related SARs are forfeited.

5.5 Effect of Change in Control. The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become exercisable as to all or part of the Common Shares subject to such Option in the event that a Change in Control occurs with respect to the Company or in the event that the Optionee is subject to an Involuntary Termination after a Change in Control. However, in the case of an ISO, the acceleration of exercisability shall not occur without the Optionee's written consent. In addition, acceleration of exercisability may be required under Section 10.3.

5.6 Modification or Assumption of Options. Within the limitations of the Plan, the Committee may modify, extend or assume outstanding options. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, alter or impair his or her rights or obligations under such Option. Notwithstanding anything in this Plan to the contrary, and except for the adjustments provided in Article 10, neither the Committee nor any other person may, without the 
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approval of the Company's stockholders: (a) decrease the exercise price for any outstanding Option after the date of grant, (b) cancel or allow an optionee to surrender an outstanding Option to the Company in exchange for cash or as consideration for the grant of a new Option with a lower exercise price or the grant of another type of Award the effect of which is to reduce the exercise price of any outstanding Option or (c) take any other action with respect to an Option that would be treated as a repricing under the rules and regulations of the NASDAQ Stock Market (or such other principal U.S. national securities exchange on which the Common Shares are traded).

5.7 Voting and Dividend Rights. The holders of Options shall have neither voting rights nor a right to receive dividends or dividend equivalents.

ARTICLE 6.    PAYMENT FOR OPTION SHARES.

6.1 General Rule. The entire Exercise Price of Common Shares issued upon exercise of Options shall be payable in cash or cash equivalents at the time when such Common Shares are purchased, except that the Committee at its sole discretion may accept payment of the Exercise Price in any other form(s) described in this Article 6. However, if the Optionee is an Outside Director or executive officer of the Company, he or she may pay the Exercise Price in a form other than cash or cash equivalents only to the extent permitted by section 13(k) of the Exchange Act.

6.2 Surrender of Stock. With the Committee's consent, all or any part of the Exercise Price may be paid by surrendering, or attesting to the ownership of, Common Shares that are already owned by the Optionee. Such Common Shares shall be valued at their Fair Market Value on the date when the new Common Shares are purchased under the Plan.

6.3 Exercise/Sale. With the Committee's consent, all or any part of the Exercise Price and any withholding taxes may be paid by delivering (on a form prescribed by the Company) an irrevocable direction to a securities broker approved by the Company to sell all or part of the Common Shares being purchased under the Plan and to deliver all or part of the sales proceeds to the Company.

6.4 Promissory Note. To the extent permitted by section 13(k) of the Exchange Act, with the Committee's consent, all or any part of the Exercise Price and any withholding taxes may be paid by delivering (on a form prescribed by the Company) a full-recourse promissory note.

6.5 Other Forms of Payment. With the Committee's consent, all or any part of the Exercise Price and any withholding taxes may be paid in any other form that is consistent with applicable laws, regulations and rules.

ARTICLE 7.    STOCK APPRECIATION RIGHTS.

7.1 SAR Agreement. Each grant of an SAR under the Plan shall be evidenced by an SAR Agreement between the Optionee and the Company. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SAR Agreements entered into under the Plan need not be identical. SARs may be granted in consideration of a reduction in the Optionee's other compensation.

7.2 Number of Shares. Each SAR Agreement shall specify the number of Common Shares to which the SAR pertains and shall provide for the adjustment of such number in accordance with Article 10. SARs granted to any Optionee in a single fiscal year shall in no event pertain to more than 500,000 Common Shares, except that SARs granted to a new Employee in the fiscal year of the Company in which his or her Service as an Employee first commences shall not pertain to more than 1,000,000 Common Shares. The limitations set forth in the preceding sentence shall be subject to adjustment in accordance with Article 10.

7.3 Exercise Price. Each SAR Agreement shall specify the Exercise Price; provided that the Exercise Price shall in no event be less than 100% of the Fair Market Value of a Common Share on the date of grant.

7.4 Exercisability and Term. Each SAR Agreement shall specify the date when all or any installment of the SAR is to become exercisable; provided that the SAR will not become exercisable prior to the Optionee completing at least one year of Service following the Vesting Commencement Date of such SAR. The SAR Agreement shall also specify the term of the SAR; provided that the term shall not exceed 10 years. An SAR Agreement may provide for accelerated exercisability in the event of the Optionee's death, disability, retirement or Involuntary Termination and may provide for expiration prior to the end of its term in the event of the termination of the Optionee's Service. An SAR granted under the Plan may provide that it will be exercisable only in the event of a Change in Control.
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7.5 Effect of Change in Control. The Committee may determine, at the time of granting an SAR or thereafter, that such SAR shall become fully exercisable as to all Common Shares subject to such SAR in the event that the Company is subject to a Change in Control or in the event that the Optionee is subject to an Involuntary Termination after a Change in Control. In addition, acceleration of exercisability may be required under Section 10.3.

7.6 Exercise of SARs. Upon exercise of an SAR, the Optionee (or any person having the right to exercise the SAR after his or her death) shall receive from the Company (a) Common Shares, (b) cash or (c) a combination of Common Shares and cash, as the Committee shall determine. The amount of cash and/or the Fair Market Value of Common Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Common Shares subject to the SARs exceeds the Exercise Price. If, on the date when an SAR expires, the Exercise Price under such SAR is less than the Fair Market Value on such date but any portion of such SAR has not been exercised or surrendered, then such SAR shall automatically be deemed to be exercised as of such date with respect to such portion.

7.7 Modification or Assumption of SARs. Within the limitations of the Plan, the Committee may modify, extend or assume outstanding SARs. The foregoing notwithstanding, no modification of an SAR shall,
without the consent of the Optionee, alter or impair his or her rights or obligations under such SAR. Notwithstanding anything in this Plan to the contrary, and except for the adjustments provided in Article 10, neither the Committee nor any other person may, without the approval of the Company's stockholders: (a) decrease the exercise price for any outstanding SAR after the date of grant, (b) assume, cancel or allow an optionee to surrender an outstanding SAR to the Company in exchange for cash or as consideration for the grant of a new SAR with a lower exercise price or the grant of another type of Award the effect of which is to reduce the exercise price of any outstanding SAR or (c) take any other action with respect to an SAR that would be treated as a repricing under the rules and regulations of the NASDAQ Stock Market (or such other principal U.S. national securities exchange on which the Common Shares are traded).

7.8 Voting and Dividend Rights. The holders of SARs shall have neither voting rights nor a right to receive dividends or dividend equivalents.

ARTICLE 8.    RESTRICTED SHARES.

8.1 Restricted Stock Agreement. Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Stock Agreement between the recipient and the Company. Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Stock Agreements entered into under the Plan need not be identical.

8.2 Payment for Awards. Restricted Shares may be sold or awarded under the Plan for such consideration as the Committee may determine, including (without limitation) cash, cash equivalents, property, full-recourse promissory notes, past services and future services. If the Participant is an Outside Director or executive officer of the Company, he or she may pay for Restricted Shares with a promissory note only to the extent permitted by section 13(k) of the Exchange Act. Within the limitations of the Plan, the Committee may accept the cancellation of outstanding options in return for the grant of Restricted Shares.

8.3 Vesting Conditions. Each Award of Restricted Shares shall be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Stock Agreement; provided that, the Restricted Shares will not vest prior to the holder completing at least one year of Service following the Vesting Commencement Date of such Award. The Committee may include among such conditions the requirement that the performance of the Company or a business unit of the Company for a specified period of one or more fiscal years equal or exceed a target determined in advance by the Committee. The Company's independent auditors shall determine such performance. Such target shall be based on one or more of the criteria set forth in Appendix A. The Committee shall identify such target not later than the 90th day of such period. In no event shall more than 500,000 Restricted Shares that are subject to performance-based vesting conditions be granted to any Participant in a single fiscal year of the Company, subject to adjustment in accordance with Article 10. A Restricted Stock Agreement may provide for accelerated vesting in the event of the Participant's death, disability, retirement or Involuntary Termination. The Committee may determine, at the time of granting Restricted Shares or thereafter, that all or part of such Restricted Shares shall become vested in the event that a Change in Control occurs with respect to the Company or in the event that the Participant is subject to an Involuntary Termination after a Change in Control.

8.4 Voting and Dividend Rights. The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company's other stockholders. A Restricted Stock Agreement, however, shall require that the holders of Restricted Shares invest any cash dividends received in additional Restricted Shares until such time as the Restricted Shares are no longer subject to a right of repurchase and forfeiture. Such additional Restricted Shares shall be subject 
4

to the same conditions and restrictions as the Award with respect to which the cash dividends were paid. Additionally, a Restricted Stock Agreement shall require that any stock dividend received on Restricted Shares shall also be Restricted Shares and shall be subject to the same conditions and restrictions as the Award with respect to which the stock dividends were paid.

ARTICLE 9.    STOCK UNITS.

9.1 Stock Unit Agreement. Each grant of Stock Units under the Plan shall be evidenced by a Stock Unit Agreement between the recipient and the Company. Such Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Stock Unit Agreements entered into under the Plan need not be identical. Stock Units may be granted in consideration of a reduction in the recipient's other compensation.

9.2 Payment for Awards. To the extent that an Award is granted in the form of Stock Units, no cash consideration shall be required of the Award recipients.

9.3 Vesting Conditions. Each Award of Stock Units shall be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Stock Unit Agreement; provided that, the Stock Units will not vest prior to the recipient completing at least one year of Service following the Vesting Commencement Date of such Award. The Committee may include among such conditions the requirement that the performance of the Company or a business unit of the Company for a specified period of one or more fiscal years equal or exceed a target determined in advance by the Committee. The Company's independent auditors shall determine such performance. Such target shall be based on one or more of the criteria set forth in Appendix A. The Committee shall identify such target not later than the 90th day of such period. In no event shall more than 500,000 Stock Units that are subject to performance-based vesting conditions be granted to any Participant in a single fiscal year of the Company, subject to adjustment in accordance with Article 10. A Stock Unit Agreement may provide for accelerated vesting in the event of the Participant's death, disability, retirement or Involuntary Termination. The Committee may determine, at the time of granting Stock Units or thereafter, that all or part of such Stock Units shall become vested in the event that the Company is subject to a Change in Control or in the event that the Participant is subject to an Involuntary Termination after a Change in Control. In addition, acceleration of vesting may be required under Section 10.3.

9.4 Voting and Dividend Rights. The holders of Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan may, at the Committee's discretion, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Common Share while the Stock Unit is outstanding. Dividend equivalents may be converted into additional Stock Units. Settlement of dividend equivalents may be made in the form of cash, in the form of Common Shares, or in a combination of both. Dividend equivalents shall be subject to the same terms, vesting conditions and restrictions as the Stock Units to which they attach.

9.5 Form and Time of Settlement of Stock Units. Settlement of vested Stock Units may be made in the form of (a) cash, (b) Common Shares or (c) any combination of both, as determined by the Committee. The actual number of Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on predetermined performance factors. Methods of converting Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Common Shares over a series of trading days. Vested Stock Units may be settled in a lump sum or in installments. The distribution may occur or commence when all vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred to any later date. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until an Award of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to Article 10.

9.6 Death of Recipient. Any Stock Units Award that becomes payable after the recipient's death shall be distributed to the recipient's beneficiary or beneficiaries. Each recipient of a Stock Units Award under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Award recipient's death. If no beneficiary was designated or if no designated beneficiary survives the Award recipient, then any Stock Units Award that becomes payable after the recipient's death shall be distributed to the recipient's estate.

9.7 Creditors' Rights. A holder of Stock Units shall have no rights other than those of a general creditor of the Company. Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Stock Unit Agreement.

ARTICLE 10.    PROTECTION AGAINST DILUTION.
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10.1 Adjustments. In the event of a subdivision of the outstanding Common Shares, a declaration of a dividend payable in Common Shares or a combination or consolidation of the outstanding Common Shares (by reclassification or otherwise) into a lesser number of Common Shares, corresponding proportionate adjustments shall automatically be made in each of the following:
(a)The number of Common Shares available for grant subject to Awards under Article 3;
(b)The limitations set forth in Sections 5.2, 8.2, 8.3 and 9.3;
(c)The number of Common Shares covered by each outstanding Option and SAR;
(d)The Exercise Price under each outstanding Option and SAR; or
(e)The number of Stock Units included in any prior Award that has not yet been settled.
In the event of a declaration of an extraordinary dividend payable in a form other than Common Shares in an amount that has a material effect on the price of Common Shares, a recapitalization, a spin-off or a similar occurrence, the Committee shall make such adjustments as it, in its sole discretion, deems appropriate in one or more of the foregoing. Except as provided in this Article 10, a Participant shall have no rights by reason of any issuance by the Company of stock of any class or securities convertible into stock of any class, any subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class.

10.2 Dissolution or Liquidation. To the extent not previously exercised or settled, Options, SARs and Stock Units shall terminate immediately prior to the dissolution or liquidation of the Company.

10.3 Reorganizations. In the event that the Company is a party to a merger or consolidation, all outstanding Awards shall be subject to the agreement of merger or consolidation. Such agreement shall provide for one or more of the following:
(a)The continuation of such outstanding Awards by the Company (if the Company is the surviving corporation).
(b)The assumption of such outstanding Awards by the surviving corporation or its parent, provided that the assumption of Options or SARs shall comply with section 424(a) of the Code (whether or not the Options are ISOs).
(c)The substitution by the surviving corporation or its parent of new awards for such outstanding Awards, provided that the substitution of Options or SARs shall comply with section 424(a) of the Code (whether or not the Options are ISOs).
(d)Full exercisability of outstanding Options and SARs and full vesting of the Common Shares subject to such Options and SARs, followed by the cancellation of such Options and SARs. The full exercisability of such Options and SARs and full vesting of such Common Shares may be contingent on the closing of such merger or consolidation. The Optionees shall be able to exercise such Options and SARs during a period of not less than five full business days preceding the closing date of such merger or consolidation, unless (i) a shorter period is required to permit a timely closing of such merger or consolidation and (ii) such shorter period still offers the Optionees a reasonable opportunity to exercise such Options and SARs. Any exercise of such Options and SARs during such period may be contingent on the closing of such merger or consolidation.
(e)The cancellation of outstanding Options and SARs and a payment to the Optionees equal to the excess of (i) the Fair Market Value of the Common Shares subject to such Options and SARs (whether or not such Options and SARs are then exercisable or such Common Shares are then vested) as of the closing date of such merger or consolidation over (ii) their Exercise Price. Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent with a Fair Market Value equal to the required amount. Except to the extent it would cause the Award to become subject to additional tax under Code Section 409A, such payment may be made in installments, may be deferred until the date or dates when such Options and SARs would have become exercisable or such Common Shares would have vested, and/or may be subject to vesting based on the Optionee's continuing Service, provided that the vesting schedule shall not be less favorable to the Optionee than the schedule under which such Options and SARs would have become exercisable or such Common Shares would have vested. If the Exercise Price of the Common Shares subject to such Options and SARs exceeds the Fair Market Value of such Common Shares, then such Options and SARs may be cancelled without making a payment to the Optionees. For purposes of this Subsection (e), the Fair Market Value of any security shall be determined without regard to any vesting conditions that may apply to such security.
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(f)The cancellation of outstanding Stock Units and a payment to the Participants equal to the Fair Market Value of the Common Shares subject to such Stock Units (whether or not such Stock Units are then vested) as of the closing date of such merger or consolidation. Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent with a Fair Market Value equal to the required amount. Except to the extent it would cause the Award to become subject to additional tax under Code Section 409A, such payment may be made in installments, may be deferred until the date or dates when such Stock Units would have vested, and/or may be subject to vesting based on the Participant's continuing Service, provided that the vesting schedule shall not be less favorable to the Participant than the schedule under which such Stock Units would have vested. For purposes of this Subsection (f), the Fair Market Value of any security shall be determined without regard to any vesting conditions that may apply to such security.

ARTICLE 11.    AWARDS UNDER OTHER PLANS.
The Company may grant awards under other plans or programs. Such awards may be settled in the form of Common Shares issued under this Plan. Such Common Shares shall be treated for all purposes under the Plan like Common Shares issued in settlement of Stock Units and shall, when issued, reduce the number of Common Shares available under Article 3.

ARTICLE 12.    PAYMENT OF DIRECTOR'S FEES IN SECURITIES.

12.1 Effective Date. No provision of this Article 12 shall be effective unless and until the Board has determined to implement such provision.

12.2 Elections to Receive NSOs, Restricted Shares or Stock Units. An Outside Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash, NSOs, Restricted Shares or Stock Units, or a combination thereof, as determined by the Board. Such NSOs, Restricted Shares and Stock Units shall be issued under the Plan. An election under this Article 12 shall be filed with the Company on the prescribed form.

12.3 Number and Terms of NSOs, Restricted Shares or Stock Units. The number of NSOs, Restricted Shares or Stock Units to be granted to Outside Directors in lieu of annual retainers and meeting fees that would otherwise be paid in cash shall be calculated in a manner determined by the Board. The Board shall also determine the terms of such NSOs, Restricted Shares or Stock Units.

ARTICLE 13.    LIMITATION ON RIGHTS.

13.1 Retention Rights. Neither the Plan nor any Award granted under the Plan shall be deemed to give any individual a right to remain an Employee, Outside Director or Consultant. The Company and its Parents, Subsidiaries and Affiliates reserve the right to terminate the Service of any Employee, Outside Director or Consultant at any time, with or without cause, subject to applicable laws, the Company's certificate of incorporation and by-laws and a written employment agreement (if any).

13.2 Stockholders' Rights. A Participant shall have no dividend rights, dividend equivalent rights, voting rights or other rights as a stockholder with respect to any Common Shares covered by his or her Award prior to the time when a stock certificate for such Common Shares is issued or, if applicable, the time when he or she becomes entitled to receive such Common Shares by filing any required notice of exercise and paying any required Exercise Price. No adjustment shall be made for cash dividends or other rights for which the record date is prior to such time, except as expressly provided in the Plan.

13.3 Regulatory Requirements. Any other provision of the Plan notwithstanding, the obligation of the Company to issue Common Shares under the Plan shall be subject to all applicable laws, rules and regulations and such approval by any regulatory body as may be required. The Company reserves the right to restrict, in whole or in part, the delivery of Common Shares pursuant to any Award prior to the satisfaction of all legal requirements relating to the issuance of such Common Shares, to their registration, qualification or listing or to an exemption from registration, qualification or listing.

13.4 Transferability of Awards. The Committee may, in its sole discretion, permit transfer of an Award in a manner consistent with applicable law and for no consideration. Unless otherwise determined by the Committee, Awards shall be transferable by a Participant only by (a) beneficiary designation, (b) a will or (c) the laws of descent and distribution; provided that, in any event, an ISO may only be transferred by will or by the laws of descent and distribution and may be exercised during the lifetime of the Optionee only by the Optionee or by the Optionee's guardian or legal representative.
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ARTICLE 14.    TAXES.

14.1 General Withholding Obligations. To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company shall not be required to issue any Common Shares or make any cash payment under the Plan until such obligations are satisfied.

14.2 Share Withholding. To the extent that applicable law subjects a Participant to tax withholding obligations, the Committee may permit such Participant to satisfy all or part of such obligations by having the Company withhold all or a portion of any Common Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Common Shares that he or she previously acquired. Such Common Shares shall be valued at their Fair Market Value on the date when they are withheld or surrendered.

14.3 Code Section 409A Matters. To the fullest extent applicable and unless otherwise expressly indicated in an applicable Award agreement, Awards granted under this Plan are intended to be exempt from the definition of "nonqualified deferred compensation" under Code Section 409A in accordance with one or more of the exemptions available under the final Treasury regulations promulgated under Code Section 409A and the terms of the Plan and the applicable Award agreement shall be interpreted and administered in a manner consistent with that intent. To the extent that an Award is, or becomes subject to, Code Section 409A either intentionally or due to a failure of an individual Award to qualify for an exemption from the definition of nonqualified deferred compensation in accordance with Code Section 409A, such Award is intended to comply with the applicable requirements of Code Section 409A to the maximum extent possible and with respect to any such Award, the terms of the Plan and the applicable Award agreement shall be interpreted and administered in a manner consistent with that intent. In no event will the Company be liable for any taxes, penalties or interest that may be imposed with respect to an Award under Code Section 409A or under any other similar provision of state tax law, or for any damages for an Award's failing to comply with Code Section 409A, any other similar provision of state tax law, or the provisions of this Section 15.3.

ARTICLE 15.    LIMITATION ON PAYMENTS.

15.1 Scope of Limitation. This Article 15 shall apply to an Award only if:
(a) The independent auditors selected for this purpose by the Committee (the "Auditors") determine that the after-tax value of such Award to the Participant, taking into account the effect of all federal, state and local income taxes, employment taxes and excise taxes applicable to the Participant (including the excise tax under section 4999 of the Code), will be greater after the application of this Article 15 than it was before the application of this Article 16; or
(b) The Committee, at the time of making an Award under the Plan or at any time thereafter, specifies in writing that such Award shall be subject to this Article 15 (regardless of the after-tax value of such Award to the Participant).
If this Article 15 applies to an Award, it shall supersede any contrary provision of the Plan or of any Award granted under the Plan.

15.2 Basic Rule. In the event that the Auditors determine that any payment or transfer by the Company under the Plan to or for the benefit of a Participant (a "Payment") would be nondeductible by the Company for federal income tax purposes because of the provisions concerning "excess parachute payments" in section 280G of the Code, then the aggregate present value of all Payments shall be reduced (but not below zero) to the Reduced Amount. For purposes of this Article 15, the "Reduced Amount" shall be the amount of the Payment, expressed as a present value, which provides the greatest economic benefit to the Participant without causing any of the Payments to be nondeductible by the Company because of section 280G of the Code, provided that if more than one manner of reduction of the Payments necessary to arrive at the Reduced Amount yields the greatest economic benefit to the Participant, the Payments shall be reduced pro rata. Neither the Participant nor the Company shall have the authority to specify the order of reduction of the Payments.

15.3 Reduction of Payments. If the Auditors determine that any Payment would be nondeductible by the Company because of section 280G of the Code, then the Company shall promptly provide the Participant appropriate notice to that effect, including a copy of the detailed calculation thereof and of the Reduced Amount, and details regarding the manner in which the reduction provided for under Section 15.2 shall be effected. For purposes of this Article 15, present value shall be determined in accordance with section 280G(d)(4) of the Code. All determinations made by the Auditors under this Article 15 shall be binding upon the Company and the Participant and shall be made within 60 days of the date when a Payment becomes payable or transferable. As promptly as practicable following such determination and the elections hereunder, the Company shall pay or transfer to or for the benefit of the Participant such amounts as are then due to him or her under the Plan and shall 
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promptly pay or transfer to or for the benefit of the Participant in the future such amounts as become due to him or her under the Plan.

15.4 Overpayments and Underpayments. As a result of uncertainty in the application of section 280G of the Code at the time of an initial determination by the Auditors hereunder, it is possible that Payments will have been made by the Company which should not have been made (an "Overpayment") or that additional Payments which will not have been made by the Company could have been made (an "Underpayment"), consistent in each case with the calculation of the Reduced Amount hereunder. In the event that the Auditors, based upon the assertion of a deficiency by the Internal Revenue Service against the Company or the Participant that the Auditors believe has a high probability of success, determine that an Overpayment has been made, such Overpayment shall be treated for all purposes as a loan to the Participant that he or she shall
repay to the Company, together with interest at the applicable federal rate provided in section 7872(f)(2) of the Code; provided, however, that no amount shall be payable by the Participant to the Company if and to the extent that such payment would not reduce the amount that is subject to taxation under section 4999 of the Code. In the event that the Auditors determine that an Underpayment has occurred, such Underpayment shall promptly be paid or transferred by the Company to or for the benefit of the Participant, together with interest at the applicable federal rate provided in section 7872(f)(2) of the Code.

15.5 Related Corporations. For purposes of this Article 15, the term "Company" shall include affiliated corporations to the extent determined by the Auditors in accordance with section 280G(d)(5) of the Code.

ARTICLE 16.    FUTURE OF THE PLAN.

16.1 Term of the Plan. The Plan shall remain in effect until the earlier of (a) the date when the Plan is terminated under Section 16.2 or (b) the 10th anniversary of the date when the Board adopted the Plan.

16.2 Amendment or Termination. The Board may, at any time and for any reason, amend or terminate the Plan. No Awards shall be granted under the Plan after the termination thereof. The termination of the Plan, or any amendment thereof, shall not affect any Award previously granted under the Plan.

16.3 Stockholder Approval. An amendment of the Plan shall be subject to the approval of the Company's stockholders only to the extent required by applicable laws, regulations or rules, including the listing requirements of the primary securities exchange or over-the-counter market where the Common Shares are listed for trading. 
DEFINITIONS.
"Affiliate" means any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not less than 50% of such entity.
"Award" means any award of an Option, an SAR, a Restricted Share or a Stock Unit under the Plan.
"Board" means the Company's Board of Directors, as constituted from time to time.
"Cause" means:
An unauthorized use or disclosure by the Participant of the Company's confidential information or trade secrets, which use or disclosure causes material harm to the Company;
A material breach by the Participant of any agreement between the Participant and the Company;
A material failure by the Participant to comply with the Company's written policies or rules;
The Participant's conviction of, or plea of "guilty" or "no contest" to, a felony under the laws of the United States or any State thereof;
The Participant's gross negligence or willful misconduct;
A continuing failure by the Participant to perform assigned duties after receiving written notification of such failure from the Board; or
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A failure by the Participant to cooperate in good faith with a governmental or internal investigation of the Company or its directors, officers or employees, if the Company has requested the Participant’s cooperation.
"Change in Control" means:
The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or more of the voting power of the outstanding securities of each of (i) the continuing or surviving entity and (ii) any direct or indirect parent corporation of such continuing or surviving entity;
The sale, transfer or other disposition of all or substantially all of the Company's assets;
A change in the composition of the Board, as a result of which fewer than 50% of the incumbent directors are directors who either:
Had been directors of the Company on the date 24 months prior to the date of such change in the composition of the Board (the "Original Directors"); or
Were appointed to the Board, or nominated for election to the Board, with the affirmative votes of at least a majority of the aggregate of (A) the Original Directors who were in office at the time of their appointment or nomination and (B) the directors whose appointment or nomination was previously approved in a manner consistent with this Paragraph (ii); or
Any transaction as a result of which any person is the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing at least 50% of the total voting power represented by the Company's then outstanding voting securities. For purposes of this Subsection (d), the term "person" shall have the same meaning as when used in sections 13(d) and 14(d) of the Exchange Act but shall exclude (i) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or of a Parent or Subsidiary and (ii) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the common stock of the Company.
A transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company's incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company's securities immediately before such transaction.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a committee of the Board, as described in Article 2.
"Common Share" means one share of the common stock of the Company.
"Company" means Vanda Pharmaceuticals Inc., a Delaware corporation.
"Consultant" means a consultant or adviser who provides bona fide services to the Company, a Parent, a Subsidiary or an Affiliate as an independent contractor. Service as a Consultant shall be considered employment for all purposes of the Plan, except as provided in Section 4.1.
"Employee" means a common-law employee of the Company, a Parent, a Subsidiary or an Affiliate.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Price," in the case of an Option, means the amount for which one Common Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. "Exercise Price," in the case of an SAR, means an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value of one Common Share in determining the amount payable upon exercise of such SAR.
"Fair Market Value" means the market price of one Common Share as determined by the Committee in good faith on such basis as it deems appropriate. Whenever possible, the determination of Fair Market Value by the Committee shall be based on the prices reported in The Wall Street Journal. Such determination shall be conclusive and binding on all persons.
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"Involuntary Termination" means the termination of the Participant's Service by reason of:
The involuntary discharge of the Participant by the Company (or the Parent, Subsidiary or Affiliate employing him or her) for reasons other than Cause; or
The voluntary resignation of the Participant following (i) a material adverse change in his or her title, stature, authority or responsibilities with the Company (or the Parent, Subsidiary or Affiliate employing him or her), (ii) a material reduction in his or her base salary or (iii) receipt of notice that his or her principal workplace will be relocated by more than 30 miles.
"ISO" means an incentive stock option described in section 422(b) of the Code.
"NSO" means a stock option not described in sections 422 or 423 of the Code.
"Option" means an ISO or NSO granted under the Plan and entitling the holder to purchase Common Shares.
"Optionee" means an individual or estate who holds an Option or SAR.
"Outside Director" means a member of the Board who is not an Employee. Service as an Outside Director shall be considered employment for all purposes of the Plan, except as provided in Section 4.1.
"Parent" means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.
"Participant" means an individual or estate who holds an Award.
"Plan" means this Vanda Pharmaceuticals Inc. 2016 Equity Incentive Plan, as amended and/or restated from time to time.
"Restricted Share" means a Common Share awarded under the Plan.
"Restricted Stock Agreement" means the agreement between the Company and the recipient of a Restricted Share that contains the terms, conditions and restrictions pertaining to such Restricted Share.
"SAR" means a stock appreciation right granted under the Plan.
"SAR Agreement" means the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to his or her SAR.
"Service" means service as an Employee, Outside Director or Consultant.
"Stock Option Agreement" means the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to his or her Option.
"Stock Unit" means a bookkeeping entry representing the equivalent of one Common Share, as awarded under the Plan.
"Stock Unit Agreement" means the agreement between the Company and the recipient of a Stock Unit that contains the terms, conditions and restrictions pertaining to such Stock Unit.
"Subsidiary" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.
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"Vesting Commencement Date" means (i) with respect any Award granted to a Participant upon the commencement of his or Service, the date on which his or her Service commences and (ii) with respect to any other Award, the date on which such Award is granted.

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APPENDIX A
PERFORMANCE CRITERIA FOR RESTRICTED SHARES AND STOCK UNITS
The performance goals that may be used by the Committee for such awards may consist of: (a) operating profits (including EBITDA); (b) net profits; (c) earnings per share; (d) profit returns and margins; (e) revenues; (f) stockholder return and/or value; (g) stock price; (h) working capital; (i) regulatory achievements (including submitting or filing applications or other documents with regulatory authorities or receiving approval of any such applications or other documents and passing pre-approval inspections (whether of the Company or the Company's third-party manufacturer) and validation of manufacturing processes (whether the Company's or the Company's third-party manufacturer's)); (j) clinical achievements (including initiating clinical studies, initiating enrollment, completing enrollment or enrolling particular numbers of subjects in clinical studies, completing phases of a clinical study (including the treatment phase), or announcing or presenting preliminary or final data from clinical studies in each case, whether on particular timelines or generally); and (k) other measurable objectives.
Performance goals may be measured solely on a corporate, subsidiary or business unit basis, or a combination thereof. Further, performance criteria may reflect absolute entity performance or a relative comparison of entity performance to the performance of a peer group of entities or other external measure of the selected performance criteria.
Profit, earnings and revenues used for any performance goal measurement may exclude: gains or losses on operating asset sales or dispositions; asset write-downs; litigation or claim judgments or settlements; accruals for historic environmental obligations; effect of changes in tax law or rate on deferred tax liabilities; accruals for reorganization and restructuring programs; uninsured catastrophic property losses; the cumulative effect of changes in accounting principles; and any extraordinary non-recurring items determined in accordance with generally accepted accounting principles and/or in management's discussion and analysis of financial performance appearing in the Company's annual report to stockholders for the applicable year.
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FIRST AMENDMENT TO 
VANDA PHARMACEUTICALS INC.
AMENDED AND RESTATED 2016 EQUITY INCENTIVE PLAN

A. The Vanda Pharmaceuticals Inc. Amended and Restated 2016 Equity Incentive Plan, as amended (the "Plan") is hereby amended further by the Board of Directors of Vanda Pharmaceuticals Inc. (the "Company"), subject to approval of the Company's stockholders, to increase the aggregate number of shares authorized for issuance under the Plan by 2,000,000 shares of common stock, par value $0.001 per share, of the Company, as follows:
                        Section 3.1 of the Plan is hereby amended and restated in its entirety as follows:
"3.1 Basic Limitation. Common Shares issued pursuant to the Plan may be authorized but unissued shares or treasury shares. The aggregate number of Common Shares issued under the Plan shall not exceed (a) 10,790,000 plus (b) the additional Common Shares described in Section 3.2. The number of Common Shares that are subject to Awards outstanding at any time under the Plan shall not exceed the number of Common Shares that then remain available for issuance under the Plan. All Common Shares available under the Plan may be issued upon the exercise of ISOs. The limitations of this Section 3.1 shall be subject to adjustment pursuant to Article 10."
B. Except as amended herein, the Plan is confirmed in all other respects.
Approved by the Board of Directors on March 18, 2021.
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SECOND AMENDMENT TO 
VANDA PHARMACEUTICALS INC.
AMENDED AND RESTATED 2016 EQUITY INCENTIVE PLAN

A. The Vanda Pharmaceuticals Inc. Amended and Restated 2016 Equity Incentive Plan, as amended (the "Plan") is hereby amended further by the Board of Directors of Vanda Pharmaceuticals Inc. (the "Company"), subject to approval of the Company's stockholders, to increase the aggregate number of shares authorized for issuance under the Plan by 1,100,000 shares of common stock, par value $0.001 per share, of the Company, as follows:
                        Section 3.1 of the Plan is hereby amended and restated in its entirety as follows:
"3.1 Basic Limitation. Common Shares issued pursuant to the Plan may be authorized but unissued shares or treasury shares. The aggregate number of Common Shares issued under the Plan shall not exceed (a) 11,890,000 plus (b) the additional Common Shares described in Section 3.2. The number of Common Shares that are subject to Awards outstanding at any time under the Plan shall not exceed the number of Common Shares that then remain available for issuance under the Plan. All Common Shares available under the Plan may be issued upon the exercise of ISOs. The limitations of this Section 3.1 shall be subject to adjustment pursuant to Article 10."
B. Except as amended herein, the Plan is confirmed in all other respects.
Approved by the Board of Directors on March 17, 2022.
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