Document:

Exhibit 10.1

 

 

AMENDED AND RESTATED

PHARMACOPEIA DRUG DISCOVERY, INC.

2004 STOCK INCENTIVE PLAN

 

Originally Effective April 6,
2004

Amendment and Restatement Effective May 3,
2007

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1
  PURPOSE AND TERM OF PLAN

  	
  3

  
	
   

  	
   

  
	
  ARTICLE 2 DEFINITIONS

  	
  3

  
	
   

  	
   

  
	
  ARTICLE 3 ELIGIBILITY

  	
  7

  
	
   

  	
   

  
	
  ARTICLE 4 PLAN
  ADMINISTRATION

  	
  8

  
	
   

  	
   

  
	
  ARTICLE 5 FORM OF
  AWARDS

  	
  9

  
	
   

  	
   

  
	
  ARTICLE 6 SHARES SUBJECT
  TO PLAN

  	
  9

  
	
   

  	
   

  
	
  ARTICLE 7 PERFORMANCE
  AWARDS

  	
  10

  
	
   

  	
   

  
	
  ARTICLE 8 STOCK OPTIONS

  	
  11

  
	
   

  	
   

  
	
  ARTICLE 9 STOCK
  APPRECIATION RIGHTS

  	
  13

  
	
   

  	
   

  
	
  ARTICLE 10 STOCK AWARDS

  	
  14

  
	
   

  	
   

  
	
  ARTICLE 11 PERFORMANCE
  UNITS

  	
  14

  
	
   

  	
   

  
	
  ARTICLE 12 PERFORMANCE
  SHARES

  	
  14

  
	
   

  	
   

  
	
  ARTICLE 13 VESTING AND
  PAYMENT OF AWARDS

  	
  15

  
	
   

  	
   

  
	
  ARTICLE 14 DIVIDEND AND
  DIVIDEND EQUIVALENTS

  	
  17

  
	
   

  	
   

  
	
  ARTICLE 15 DEFERRAL OF
  AWARDS

  	
  17

  
	
   

  	
   

  
	
  ARTICLE 16 CHANGE IN
  CONTROL

  	
  18

  
	
   

  	
   

  
	
  ARTICLE 17 MISCELLANEOUS

  	
  19

  

 

2

 

PHARMACOPEIA DRUG DISCOVERY, INC.

AMENDED AND RESTATED 2004 STOCK INCENTIVE PLAN

 

Effective April 6, 2004

 

Effective as Amended and Restated May 3, 2007

 

ARTICLE 1 

PURPOSE AND TERM OF PLAN

 

1.1.                 Purpose. The purpose of the Plan is to provide motivation to
selected Employees, Directors and Consultants to put forth maximum efforts
toward the continued growth, profitability, and success of the Company by
providing incentives to such Employees, Directors and Consultants through the
ownership and performance of Common Stock.

 

1.2.                 Term. The Plan was originally approved by the Board on March 16,
2004, and became effective upon the date of the approval by Pharmacopeia’s
stockholders. This amendment and restatement was approved by the Board
effective March 15, 2007 and becomes effective on the date of the approval
by the Company’s stockholders.  The Plan
and any Awards granted thereunder shall be null and void if stockholder
approval is not obtained.

 

ARTICLE 2 

DEFINITIONS

 

In any necessary
construction of a provision of this Plan, the masculine gender may include the
feminine, and the singular may include the plural, and vice versa.

 

2.1.                 “Affiliate” means any entity other than the Subsidiaries in
which the Company has a substantial direct or indirect equity interest, as
determined by the Board.

 

2.2.                 “Approved Reason” means a reason for terminating employment
with the Company, which, in the opinion of the Committee, is in the best
interests of the Company. The Committee must specifically designate that a
Participant has been terminated for an Approved Reason. Absent such
determination by the Committee, a Participant cannot be found to have
terminated for an Approved Reason.

 

2.3.                 “Award” means any form of Option, SAR, Stock Award,
performance unit, performance share, or Performance Award, whether singly, in
combination, or in tandem, to a Participant by the Committee pursuant to such
terms, conditions, restrictions and/or limitations, if any, as the Committee
may establish by the Award Notice or otherwise.

 

2.4.                 “Award Notice” means the written document establishing the
terms, conditions, restrictions, and/or limitations of an Award in addition to
those established by this Plan and by the Committee’s exercise of its
administrative powers. The Committee will establish the form of the written
document in the exercise of its sole and absolute discretion.

 

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

 

2.6.                 “Calendar Year Subaccount” means a notional bookkeeping
account to which all of a Participant’s deferred Awards are credited.

 

2.7.                 “Cause” means, unless otherwise provided in an employment,
change in control, severance or similar agreement between a Participant and the
Company or in an Award Notice: (a) any gross failure by the Participant
(other than by reason of Disability) to faithfully and professionally carry out
his or her duties or to comply with any other material provision of his or her
employment agreement, if any, which continues for thirty days after written
notice by the Company; provided, that the Company does not have to provide
notice in the event that the failure is not susceptible to remedy or relates to
the same type of acts or omissions as to which notice has been given on a prior
occasion; (b) the Participant’s dishonesty or other willful
misconduct;  (c) the Participant’s
conviction of any felony or of any other crime involving moral turpitude,
whether or not relating to his or her employment; (d) the Participant’s
insobriety or use of drugs, chemicals or controlled substances either in the
course of performing his or her duties and responsibilities under his or her
employment agreement or otherwise affecting the ability of Participant to
perform those duties and responsibilities; (e) the Participant’s failure
to 

 

3

 

comply with a lawful written direction of the Company; (f) any
wanton or willful dereliction of duties by the Participant; or (g) breach
of the Company’s Code of Ethics or insider trading policies.

 

2.8.                 “CEO” means the Chief Executive Officer of the Company.

 

2.9.                 “Change In Control” means: (i) any “person” (within the
meaning of Section 13(d) or 14(d) of the Exchange Act, including
a “group” within the meaning of Section 13(d) but excluding the
Company and any of its Subsidiaries or Affiliates and any employee benefit plan
sponsored or maintained by the Company or any subsidiary thereof), shall become
the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing thirty
percent (30%) or more of the combined voting power of the then outstanding
securities entitled to vote generally in the election of directors (“Voting
Securities”) of the Company (the “Company Voting Securities”); or (ii) the
consummation of a merger, consolidation, reorganization or any other business
combination (any of the foregoing, a “Business Combination”) of or involving
the Company and another person or persons where the persons who were the
beneficial owners of Company Voting Securities outstanding immediately prior to
such Business Combination do not beneficially own, directly or indirectly,
immediately after such transaction, securities representing fifty percent (50%)
or more of the combined voting power of the then outstanding Company Voting
Securities or Voting Securities of the entity acquiring the Company in such
Business Combination; (iii) shareholder approval of a complete liquidation
or dissolution of the Company; or (iv) a sale, lease, exchange or other
disposition or transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets or business of the
Company; provided, that a change in control under this clause shall not be
deemed to have occurred where (x) the Company sells, exchanges or
otherwise disposes of or transfers all or substantially all of its assets or
business to another corporation which is beneficially owned, directly or
indirectly, immediately following such transaction by the holders of Company
Voting Securities in substantially the same proportions as their ownership of
Company Voting Securities immediately prior to such transaction and (y) such
corporation assumes the Plan; or (v) during any period of two consecutive
years, the Continuing Directors (as defined below) cease for any reason to
constitute at least a majority of the Board (or, if applicable, of a successor
to the Company), where the term “Continuing Director” means at any date a
director of the Company who was (x) a director at the beginning of such
period or (y) nominated or elected subsequent to such date by at least a
majority of the directors who were Continuing Directors at the time of such nomination
or election or whose election to the board was recommended or endorsed by at
least a majority of the directors who were Continuing Directors at the time of
such nomination or election (it being understood that no individual whose
initial assumption of office occurred as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
person other than the board shall be a Continuing Director).

 

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

 

2.11.               “Committe” means the Board or the committee designated by the
Board to administer the Plan under Article 4. The Committee shall have at
least two members, each of whom shall be a “non-employee director” as defined
in Rule 16b-3 under the Exchange Act and an “outside director” as defined
in Section 162(m) of the Code and the regulations thereunder, and, if
applicable meet the independence requirements of the applicable stock exchange,
quotation system or other self-regulatory organization on which the Common
Stock is traded. Notwithstanding the foregoing, the Board may designate one or
more of its members to serve as a Secondary Committee and delegate to the
Secondary Committee authority to grant Awards to eligible individuals who are
not subject to the requirements of Rule 16b-3 under the Exchange Act or Section 162(m) of
the Code and the regulations thereunder. The Secondary Committee shall have the
same authority with respect to selecting the individuals to whom such Awards
are granted and establishing the terms and conditions of such Awards as the
Committee has under the terms of the Plan.

 

2.12.               “Common Stock” means the common stock, $0.01 par value per
share, of the Company that may be newly issued or treasury stock.

 

2.13.               “Company” means with respect to Employees and consultants,
Pharmacopeia and its Subsidiaries and Affiliates provided, however, that with
respect to Directors, Company shall only mean Pharmacopeia.

 

2.14.               “Consultants” means the consultants, advisors and independent
contractors retained by the Company.

 

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2.15.               “Covered Employee” means an Employee who is a “Covered
Employee” within the meaning of Section 162(m) of the Code.

 

2.16.               “Director” means a non-Employee member of the Board.

 

2.17.               “Disability” means a physical or mental impairment that satisfies
the definition of disability under Section 22(e)(3) of the Code.

 

2.18.               “Effective Date” means the date an Award is determined to be
effective by the Committee upon its grant of such Award, which date shall be
set forth in the applicable Award Notice.

 

2.19.               “Employee” means any person employed by the Company on a full
or part-time basis.

 

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

 

2.21.               “Fair Market Value” means on any given date:

 

(a)           if the Common Stock is listed on an
established stock exchange or exchanges, the closing price of Common Stock on
the principal exchange on which it is traded on such date, or if no sale was
made on such date on such principal exchange, on the last preceding day on
which the Common Stock was traded;

 

(b)           if the Common Stock is not then
listed on an exchange, but is quoted on NASDAQ or a similar quotation system,
the closing price per share for the Common Stock as quoted on NASDAQ or similar
quotation system on such date;

 

(c)           if the Common Stock is not then
listed on an exchange or quoted on NASDAQ or a similar quotation system, the
value, as determined in good faith by the Committee and in accordance with
applicable provisions of the Code or regulations and rulings thereunder.

 

2.22.               “Incentive Stock Option” means an Option which meets the
requirements of Section 422 of the Code and which is designated as an
Incentive Stock Option by the Committee.

 

2.23.               “Negative Discretion” means the discretion authorized by the
Plan to be applied by the Committee in determining the size of an Award for a
Performance Period if, in the Committee’s sole judgment, such application is
appropriate. Negative Discretion may only be used by the Committee to eliminate
or reduce the size of an Award. In no event shall any discretionary authority
granted to the Committee by the Plan, including, but not limited to Negative
Discretion, be used to: (a) grant Awards for a Performance Period if the
Performance Goals for such Performance Period have not been attained under the
applicable Performance Formula; or (b) increase an Award above the maximum
amount payable under Section 6.3 of the Plan.

 

2.24.               “Non-Qualified Stock Option” means an Option not intended to
be an Incentive Stock Option, and designated as a Non-Qualified Stock Option by
the Committee.

 

2.25.               “Option” means the right, granted from time to time under the
Plan, to purchase Common Stock for a specified period of time at a stated
price. An Option may be an Incentive Stock Option or a Non-Qualified Stock
Option.

 

2.26.               “Participant” means either an Employee, Director or
Consultant to whom an Award has been granted by the Committee under the Plan.

 

2.27.               “Performance Awards” means the Stock Awards, performance
units and performance shares granted to Covered Employees pursuant to Article 7.
All Performance Awards are intended to qualify as “performance-based
compensation” under Section 162(m) of the Code.

 

2.28.               “Performance Criteria” means the one or more criteria that
the Committee shall select for purposes of establishing the Performance Goal(s) for
a Performance Period. The Performance Criteria that will be used to establish
such Performance Goal(s) shall be limited to the following:  revenue growth; earnings before interest,
taxes, depreciation and amortization (EBITDA); operating income; net operating
income after tax; pre- or after-tax income; cash flow; cash flow per share; net
earnings; earnings per share; return on equity; return on capital employed;
return on assets; economic value added (or an equivalent metric); share price
performance; total shareholder return; improvement in or attainment of expense
levels; 

 

5

 

improvement in or attainment of working capital levels; or debt
reduction. To the extent required by Section 162(m) of the Code, the
Committee shall, within the time period required by Section 162(m) of
the Code (generally, the first 90 days of a Performance Period), define in an
objective fashion the manner of calculating the Performance Criteria it selects
to use for such Performance Period.

 

2.29.               “Performance Formula” means, for a Performance Period, the
one or more objective formulas (expressed as a percentage or otherwise) applied
against the relevant Performance Goal(s) to determine, with regards to the
Award of a particular Participant, whether all, some portion but less than all,
or none of the Award has been earned for the Performance Period.

 

2.30.               “Performance Goals” means, for a Performance Period, the one
or more goals established by the Committee for the Performance Period based
upon the Performance Criteria. Performance Goals may be based on the
performance of the Company, any Subsidiary or any division or business unit
within the Company or any Subsidiary, and if so desired by the Committee, by
comparison with a peer group of companies. Unless otherwise stated, such
Performance Goals, need not be based upon an increase or positive result and could
include, for example, maintaining the status quo or limiting economic loss
(measured, in each case, by reference to specific Performance Criteria.) The
Committee is authorized at any time during the time period permitted by Section 162(m) of
the Code (generally, the first 90 days of a Performance Period), or at any time
thereafter, in its sole and absolute discretion, to adjust or modify the
calculation of a Performance Goal for such Performance Period in order to
prevent the dilution or enlargement of the rights of Participants, (a) in
the event of, or in anticipation of, any unusual or extraordinary corporate
item, transaction, event or development; (b) in recognition of, or in
anticipation of, any other unusual or nonrecurring events affecting the Company,
or the financial statements of the Company, or in response to, or in
anticipation of, changes in applicable laws, regulations, accounting
principles, or business conditions; and (c) in view of the Committee’s
assessment of the business strategy of the Company, performance of comparable
organizations, economic and business conditions, and any other circumstances
deemed relevant.

 

2.31.               “Performance Period” means the one or more periods of time
(of at least 12 months), which may be of varying and overlapping durations, as
the Committee may select, over which the attainment of one or more Performance
Goals will be measured for the purpose of determining a Participant’s right to
and the payment of a Performance Award.

 

2.32.               “Pharmacopeia” means Pharmacopeia, Inc., a Delaware
corporation, formerly known as Pharmacopeia Drug Discovery, Inc.

 

2.33.               “Plan” means this Pharmacopeia, Inc. 2004 Stock
Incentive Plan, as amended from time to time.

 

2.34.               “Restricted Stock” means a Stock Award granted pursuant to Article 11
subject to the restrictions provided in the applicable Award Notice.

 

2.35.               “Retirement” means, unless otherwise provided, a termination
for other than Cause after attaining at least age 55 and completing at least 5
years of service with the Company.

 

2.36.               “SAR”, or stock appreciation right, means the right to
receive, in cash or in Common Stock, as determined by the Committee, the
increase in the Fair Market Value of the Common Stock underlying the SAR from
the date of grant to the date of exercise.

 

2.37.               “Stock Award” means an award granted pursuant to Article 10
in the form of shares of Common Stock, Restricted Stock, and/or Units of Common
Stock.

 

2.38.               “Subsidiary” means any corporation (other than Pharmacopeia)
in an unbroken chain of corporations beginning with Pharmacopeia (or any
subsequent parent of Pharmacopeia) if each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50 percent or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.

 

2.39.               “Ten Percent Stockholder” means a person who on any given
date owns, either directly or indirectly (taking into account the attribution rules contained
in Section 424(d) of the Code), stock possessing more than 10 percent
of the total combined voting power of all classes of stock of the Company or
any Subsidiary.

 

6

 

2.40.               “Unit” means a bookkeeping entry used by Company to record
and account for the grant of the following Awards until such time as the Award
is paid, canceled, forfeited or terminated, as the case may be: Units of Common
Stock, performance units, and performance shares which are expressed in terms
of Units of Common Stock.

 

ARTICLE 3 

ELIGIBILITY

 

3.1.                 In General. Subject to Section 3.2, all Employees,
Directors and Consultants are eligible to participate in the Plan. The
Committee may select, from time to time, Participants from those Employees and
who, in the opinion of the Committee, can further the Plan’s purposes. In
addition, the Committee may select, from time to time, Participants from those
Directors and Consultants (who may or may not be Committee members) who, in the
opinion of the Committee, can further the Plan’s purposes. Once a Participant
is so selected, the Committee shall determine the type(s) of Awards to be
made to the Participant and shall establish in the related Award Notice(s) the
terms, conditions, restrictions and/or limitations, if any, applicable to the
Award(s) in addition to those set forth in this Plan and the
administrative rules and regulations issued by the Committee.

 

3.2.                 Incentive Stock Options. Only Employees shall be eligible to
receive “incentive stock options” (within the meaning of Section 422 of
the Code).

 

ARTICLE 4 

PLAN ADMINISTRATION

 

4.1.                 Members. Members of the Committee shall be appointed by and
hold office at the pleasure of the Board. Committee members may resign at any
time by delivering written notice to the Board. Vacancies in the Committee may
be filled by the Board.

 

4.2.                 Responsibility. The Committee shall have total and exclusive
responsibility to control, operate, manage and administer the Plan, in
accordance with its terms.

 

4.3.                 Authority of the Committee. The Committee shall have all the
authority that may be necessary or helpful to enable it to discharge its
responsibilities with respect to the Plan. Without limiting the generality of
the preceding sentence, the Committee shall have the exclusive right to: (a) select
the Participants and determine the type of Awards to be made to Participants,
the number of shares subject to Awards and the terms, conditions, restrictions
and limitations of the Awards; (b) interpret the Plan; (c) determine
eligibility for participation in the Plan; (d) decide all questions
concerning eligibility for and the amount of Awards payable under the Plan; (e) construe
any ambiguous provision of the Plan; (f) correct any default; (g) supply
any omission; (h) reconcile any inconsistency; (i) issue
administrative guidelines as an aid to administer the Plan and make changes in
such guidelines as it from time to time deems proper; (j) make regulations
for carrying out the Plan and make changes in such regulations as it from time
to time deems proper; (k) determine whether Awards should be granted
singly, in combination or in tandem; (l) to the extent permitted under the
Plan, grant waivers of Plan terms, conditions, restrictions, and limitations, (m) accelerate
the vesting, exercise, or payment of an Award or the performance period of an
Award when such action or actions would be in the best interest of the Company;
(n) subject to Section 17.3, grant Awards in replacement of Awards
previously granted under this Plan or any other executive compensation plan of
the Company; (o) establish; and administer the-Performance Goals and
certify whether, and to what extent, they have been attained; (p) determine
the terms and provisions of any agreements entered into hereunder; (q) take
any and all other action it deems necessary or advisable for the proper
operation or administration of the Plan; and (r) make all other
determinations it deems necessary or advisable for the administration of the
Plan, including factual determinations. Notwithstanding anything herein to the
contrary and except as expressly provided by the adjustment provisions of Section 6.2,
Options and SARs granted under the Plan shall not be directly or indirectly
repriced, replaced or regranted through cancellation without shareholder
approval, including, but not limited to, an exchange of an Option or SAR with
an exercise price or base price less than Fair Market Value for cash,
restricted stock, stock options or other stock awards.

 

4.4.                 Discretionary Authority. The Committee shall have full
discretionary authority in all matters related to the discharge of its
responsibilities and the exercise of its authority under the Plan including,
without limitation, its construction of the terms of the Plan and its
determination of eligibility for participation and Awards under the Plan. It is
the 

 

7

 

intent of Plan that the
decisions of the Committee and its actions with respect to the Plan shall be
final, binding and conclusive upon all persons having or claiming to have any
right or interest in or under the Plan.

 

4.5.                 Section 162(m) of the Code. With
regards to all Covered Employees, the Plan shall, for all purposes, be
interpreted and construed in accordance with Section 162(m) of the
Code.

 

4.6.                 Action by the Committee. The Committee may act at a meeting only
by a majority of its members. Any determination of the Committee may be made,
without a meeting, by a writing or writings signed by all of the members of the
Committee. In addition, the Committee may authorize any one or more of its
number to execute and deliver documents on behalf of the Committee.

 

4.7.                 Allocation and Delegation of  Authority. The Committee may allocate all or any portion of
its responsibilities and powers under the Plan to any one or more of its members,
the CEO or the Secondary Committee as the Committee deems appropriate and may
delegate all or any part of its responsibilities and powers to any such person
or persons, provided that any such allocation or delegation be in writing;
provided, however, that only the Committee may select and grant Awards to
Participants who are subject to Section 16 of the Exchange Act or are
Covered Employees. The Committee may revoke any such allocation or delegation
at any time for any reason with or without prior notice.

 

ARTICLE 5 

FORM OF AWARDS

 

5.1.                 In General. Awards may, at the Committee’s sole
discretion, be granted in the form of Performance Awards pursuant to Article 7,
Options pursuant to Article 8, SARs pursuant to Article 9, Stock
Awards pursuant to Article 10, performance units pursuant to Article 11,
performance shares pursuant to Article 12, or a combination thereof. All
Awards shall be subject to the terms, conditions, restrictions and limitations
of the Plan. The Committee may, in its sole judgment, subject an Award at any
time to such other terms, conditions, restrictions and/or limitations,
(including, but not limited to, the time and conditions of exercise and
restrictions on transferability and vesting), provided they are not
inconsistent with the terms of the Plan. Awards under a particular Article of
the Plan need not be uniform and Awards under two or more Articles may be
combined into a single Award Notice. Any combination of Awards may be granted
at one time and on more than one occasion to the same Participant.

 

5.2.                 Foreign Jurisdictions.

 

(a)           Special Terms.
In order to facilitate the making of any Award to Participants who are employed
or retained by the Company outside the United States as Employees, Directors or
Consultants (or who are foreign nationals temporarily within the United
States), the Committee may provide for such modifications and additional terms
and conditions (“special terms”) in Awards as the Committee may consider
necessary or appropriate to accommodate differences in local law, policy or
custom or to facilitate administration of the Plan. The special terms may
provide that the grant of an Award is subject to (1) applicable
governmental or, regulatory approval or other compliance with local legal
requirements and/or (2) the execution by the Participant of a written
instrument in the form specified by the Committee, and that in the event such
conditions are not satisfied, the grant shall be void. The special terms may
also provide that an Award shall become exercisable or redeemable, as the case
may be, if an Employee’s employment or Director or Consultant’s relationship
with the Company ends as a result of workforce reduction, realignment or
similar measure and the Committee may designate a person or persons to make
such determination for a location. The Committee may adopt or approve
sub-plans, appendices or supplements to, or amendments, restatements, or
alternative versions of, the Plan as it may consider necessary or appropriate
for purposes of implementing any special terms, without thereby affecting the
terms of the Plan as in effect for any other purpose; provided, however, no
such sub-plans, appendices or supplements to, or amendments, restatements, or
alternative versions of, the Plan shall: (a) increase the limitations contained
in Section 6.3; (b) increase the number of available shares under Section 6.1;
(c) cause the Plan to cease to satisfy any conditions of Rule 16b-3
under the Exchange Act or, with respect to Covered Employees whose compensation
is subject to Section 162(m) of the Code, Section 162(m) of
the Code; or (d) revoke, remove or reduce any vested right of a
Participant without the prior written consent of such Participant.

 

(b)           Currency Effects.
Unless otherwise specifically determined by the Committee, all Awards and
payments pursuant to such Awards shall be determined in U.S. currency. The
Committee shall determine, in its 

 

8

 

discretion, whether and to the extent any
payments made pursuant to an Award shall be made in local currency, as opposed
to U.S. dollars. In the event payments are made in local currency, the
Committee may determine, in its discretion and without liability to any
Participant, the method and rate of converting the payment into local currency.

 

(c)           Modifications to Awards.
The Committee shall have the right at any time and from time to time and
without prior notice to modify outstanding Awards to comply with or satisfy
local laws and regulations or to avoid costly governmental filings. By means of
illustration, but not limitation, the Committee may restrict the method of
exercise of an Award to facilitate compliance with applicable securities laws
or exchange control filings, laws or regulations.

 

(d)           No Acquired Rights.
No Employee in any country shall have any right to receive an Award, except as
expressly provided for under the Plan. All Awards made at any time are subject
to the prior approval of the Committee.

 

ARTICLE 6 

SHARES SUBJECT TO PLAN

 

6.1.                 Available Shares. The maximum number of shares of Common
Stock which shall be available for grant of Awards under the Plan (including
Incentive Stock Options) during its term shall not exceed 3,400,000. All of the
shares of Common Stock reserved hereunder may be issuable as Incentive Stock Options.  Such amount shall be subject to adjustment as provided in Section 6.2.
Any shares of Common Stock related to Awards which terminate by expiration,
forfeiture, cancellation or otherwise without the issuance of such shares, are
settled in cash in lieu of Common Stock, or are exchanged with the Committee’s
permission for Awards not involving Common Stock, shall be available again for
grant under the Plan. Moreover, if the exercise price of any Option or the tax
withholding requirements with respect to any Option, Stock Award or performance
share or performance unit award are satisfied by tendering shares of Common
Stock to the Company (by either actual delivery or by attestation), only the
number of shares of Common Stock issued net of the shares of Common Stock
tendered or withheld will be deemed delivered for purposes of determining the
maximum number of shares of Common Stock available for delivery under the Plan.
The maximum number of shares available for issuance under the Plan shall not be
reduced to reflect any dividends or dividend equivalents that are reinvested
into additional shares, of Common Stock or credited as additional performance
shares. The maximum number of shares of Common Stock shall not be reduced by
the issuance of shares of Common Stock hereunder due to the assumption,
conversion or substitution of awards made by an entity acquired by the Company.
The shares of Common Stock available for issuance under the Plan may be
authorized and unissued shares or treasury shares. For the purpose of computing
the total number of shares of Common Stock granted under the Plan, where one or
more types of Awards, both of which are payable in shares of Common Stock, are
granted in tandem with each other, such that the exercise of one type of Award with
respect to a number of shares cancels an equal number of shares of the other,
the number of shares granted under both Awards shall be deemed to be equivalent
to the number of shares under one of the Awards.

 

6.2.                 Adjustment to Shares. The provisions of this Section 6.2(a) are
subject to the limitation contained in Section 6.2(b). If there is any
change in the number of outstanding shares of Common Stock through the
declaration of stock dividends, stock splits or the like, the number of shares
available for Awards, the shares subject to any Award and the exercise prices
of Awards shall be automatically adjusted. If there is any change in the number
of outstanding shares of Common Stock through any change in the capital account
of the Company, or through a merger, consolidation, separation (including a
spin off or other distribution of stock or property), reorganization (whether
or not such reorganization comes within the meaning of such term in Section 368(a) of
the Code) or partial or complete liquidation, the Committee shall make
appropriate adjustments in the maximum number of shares of Common Stock which
may be issued under the Plan and any adjustments and/or modifications to
outstanding Awards. In the event of any other change in the capital structure or
in the Common Stock of the Company, the Committee shall also make such
appropriate adjustments in the maximum number of shares of Common Stock
available for issuance under the Plan and any adjustments and/or modifications
to outstanding Awards as it, in its sole discretion, deems appropriate. The
maximum number of shares available for issuance under the Plan shall be
automatically adjusted to the extent necessary to reflect any dividend
equivalents paid in the form of Common Stock. Subject to Section 6.2(b),
if the maximum number of shares of Common Stock available for issuance under
the Plan are adjusted pursuant to this Section 6.2(a), corresponding
adjustments shall be made to the limitations set forth in Section 6.3.

 

9

 

6.3.                 Maximum Award Payable. Notwithstanding any provision contained
in the Plan to the contrary, the maximum Award payable (or granted, if
applicable) to any one Participant under the Plan for a calendar year is: (a) for
Performance Awards, 200,000 shares of Common Stock or, in the event the
Performance Award is paid in cash, $500,000; (b) for Options and SARs,
500,000 shares of Common Stock; (c) for Stock Awards (including Restricted
Stock and those issued in the form of Performance Awards under Article 7),
200,000 shares of Common Stock.

 

ARTICLE 7 

PERFORMANCE AWARDS

 

7.1.                 Purpose. For purposes of grants issued to
Covered Employees, the provisions of this Article 7 shall apply in
addition to and, where necessary, in lieu of the provisions of Article 10,
Article 11 and Article 12. The purpose of this Article is to
provide the Committee the ability to qualify the Stock Awards authorized under Article 10,
the performance units under Article 11, and the performance shares under Article 12
as “Performance-Based Compensation” under Section 162(m) of the Code.
To the extent applicable, the provisions of this Article 7 shall control
over any contrary provision contained in Article 10, Article 11 or Article 12.

 

7.2.                 Eligibility. Only Covered Employees and Participants
that are expected to become Covered Employees during an applicable Performance
Period shall be eligible to receive Performance Awards. The Committee will, in
its sole discretion, designate within the earlier of the (1) first 90 days
of a Performance Period  and (2) the
lapse of 25% of the period of service to which the Performance Goals relate,
which Covered Employees will be Participants for such period. However,
designation of a Covered Employee as a Participant for a Performance Period
shall not in any manner entitle the Participant to receive an Award for the
period. The determination as to whether or not such Participant becomes
entitled to an Award for such Performance Period shall be decided solely in
accordance with the provisions of this Article 7. Moreover, designation of
a Covered Employee as a Participant for a particular Performance Period shall
not require designation of such Covered Employee as a Participant in any
subsequent Performance Period and designation of one Covered Employee as a
Participant shall not require designation of any other Covered Employee as a
Participant in such period or in any other period.

 

7.3.                 Discretion of Committee with Respect to Performance Awards. With
regards to a particular Performance Period, the Committee shall have full
discretion to select the length of such Performance Period, the types of
Performance Awards to be issued, the Performance Criteria that will be used to
establish the Performance Goals, the kinds and/or levels of the Performance
Goals, whether the Performance Goals are to apply to the Company or any one or
more subunits thereof, and the Performance Formula. Within the earlier of (1) the
first 90 days of a Performance Period and (2) the lapse of 25% of the
period of service, and in any event while the outcome is substantially
uncertain, the Committee shall, with regards to the Performance Awards to be
issued for such Performance Period, exercise its discretion with respect to
each of the matters enumerated in the immediately preceding sentence of this Section and
record the same in writing.

 

7.4.                 Payment of Performance Awards.

 

(a)           Condition to Receipt of
Performance Award. Unless otherwise provided in the relevant Award
Notice, a Participant must be employed by the Company on the last day of a
Performance Period to be eligible for a Performance Award for such Performance
Period.

 

(b)           Limitation. A
Participant shall be eligible to receive a Performance Award for a Performance
Period only to the extent that: (1) the Performance Goals for such period
are achieved; and (2) and the Performance Formula as applied against such
Performance Goals determines that all or some portion of such Participant’s
Performance Award has been earned for the Performance Period.

 

(c)           Certification.
Following the completion of a Performance Period, the Committee shall meet to
review and certify in writing whether, and to what extent, the Performance
Goals for the Performance Period have been achieved and, if so, to also
calculate and certify in writing the amount of the Performance Awards earned
for the period based upon the Performance Formula. The Committee shall then
determine the actual size of each Participant’s Performance Award for the
Performance Period and, in so doing, shall apply Negative Discretion, if and
when it deems appropriate.

 

(d)           Negative Discretion.
In determining the actual size of an individual Performance Award for a
Performance Period, the Committee may reduce or eliminate the amount of the
Performance Award earned under the 

 

10

 

Performance Formula for
the Performance Period through the use of Negative Discretion, if in its sole
judgment, such reduction or elimination is appropriate.

 

(e)          Timing of Award Payments.  The
Awards granted for a Performance Period shall be paid to Participants as soon
as administratively practicable following completion of the certifications
required by Section 7.4(c).

 

ARTICLE 8 

STOCK OPTIONS

 

8.1.                 In General.  Awards may be granted in the form of
Options. These Options may be Incentive Stock Options, Non-Qualified Stock
Options or a combination of both. All Awards under the Plan issued to Covered
Employees in the form of Non-Qualified Stock Options shall qualify as “Performance-Based
Compensation” under Section 162(m) of the Code.

 

8.2.                 Exercise Price.  The price at which Common Stock
may be purchased upon exercise of a Non-Qualified Stock Option shall be not
less than 100% of the Fair Market Value of the Common Stock, as determined by
the Committee, on the Effective Date of the option’s grant. Notwithstanding the
forgoing, the exercise price of any Incentive Stock Option shall not be less
than (i) 110% of the Fair Market Value on the Effective Date in the case
of a grant to a Ten Percent Stockholder, or (ii) 100% of the Fair Market
Value on the Effective Date in the case of a grant to any other Participant.
Notwithstanding the two immediately preceding sentences, if the Company
acquires another entity, the Company may substitute Options with exercise
prices below the Fair Market Value requirements stated above for any options
previously issued by such acquired company, to the extent permitted by Section 409A
of the Code and/or Section 424 of the Code.

 

8.3.                 Restrictions Relating to Incentive Stock Options.  Incentive
Stock Options shall, in addition to being subject to the terms and conditions
of Section 8.2, comply with Section 422 of the Code. Accordingly, the
aggregate Fair Market Value (determined at the time the option was granted) of
the Common Stock with respect to which Incentive Stock Options are exercisable
for the first time by a Participant during any calendar year (under this Plan
or any other plan of the Company) shall not exceed $100,000 (or such other
limit as may be required by the Code). Incentive Stock Options must be issued
within ten years from the effective date of the Plan, and the term of such
Incentive Stock Options may not exceed ten years (or any shorter period
required by Section 422 of the Code); provided, that the term of Incentive
Stock Options issued to Ten Percent Stockholders may not exceed five years.
Incentive Stock Options shall not be transferable other than by will or the
laws of descent and distribution.

 

8.4.                 Additional Terms and Conditions.  An Option shall
be exercisable in accordance with such terms and conditions and at such times
and during such periods as may be determined by the Committee; provided, that
Non-Qualified Stock Options must be issued within ten years from the effective
date of the Plan, and the term of such Non-Qualified Options may not exceed ten
years. The Committee may, by way of the Award Notice or otherwise, establish
such other terms, conditions, restrictions and/or limitations, including
vesting and post-termination exercise period if any, of any Option, provided
they are not inconsistent with the Plan.

 

8.5.                 Exercise of Option and Payment of Option Price.  An
Option may be exercised only for a whole number of shares of Common Stock. The
Committee shall establish the time and the manner in which an Option may be
exercised. The exercise price of the shares of Common Stock received upon the
exercise of an Option shall be paid in a manner that will not result in an
impermissible extension of credit under the Sarbanes-Oxley Act of 2002:  (i) in cash, (ii) with the consent
of the Committee in whole or in part in shares of Common Stock held by the
Participant (or to the extent permitted by the Committee, in Common Stock which
the Participant would otherwise receive upon the exercise of such Option) and
valued at their Fair Market Value on the date of exercise, (iii) in cash
received from a broker-dealer whom the Participant has authorized to sell all
or a portion of the Common Stock covered by the Option, or (iv) in such
other manner deemed appropriate by the Committee.

 

ARTICLE 9 

STOCK APPRECIATION RIGHTS

 

9.1.                 In General.  Awards may be granted in the form of
SARs. The “exercise price” for a particular SAR shall be defined in the Award
Notice for that SAR An SAR may be granted in tandem with all or a portion of a
related Option 

 

11

 

under the Plan (“Tandem SARs”), or may be granted separately (“Freestanding
SARs”). A Tandem SAR may be granted either at the time of the grant of the
related Option or at any time thereafter during the term of the Option. All
Awards under the Plan issued to Covered Employees in the form of an SAR shall
qualify as “Performance-Based Compensation” under Section 162(m) of
the Code.

 

9.2.                 Terms and Conditions of Tandem SARs.  A Tandem SAR
shall be exercisable to the extent, and only to the extent, that the related
Option is exercisable, and the “exercise price” of such an SAR (the base from
which the value of the SAR is measured at its exercise) shall be the exercise
price under the related Option. However, at no time shall a Tandem SAR be
issued if the exercise price of its related Option is less than the Fair Market
Value of the Common Stock, as determined by the Committee, on the Effective
Date of the Tandem SAR’s grant. If an Option is exercised as to some or all of
the shares covered by the Award, the related Tandem SAR, if any, shall be
canceled automatically to the extent of the number of shares covered by the
Option exercise. Upon exercise of a Tandem SAR as to some or all of the shares
covered by the Award, the related Option shall be canceled automatically to the
extent of the number of shares covered by such exercise. Moreover, all Tandem
SARs shall expire not later than 10 years from the Effective Date of the SAR’s
grant.

 

9.3.                 Terms and Conditions of Freestanding SARs.  Freestanding
SARS shall be exercisable or automatically mature in accordance with such terms
and conditions and at such times and during such periods as may be determined
by the Committee. The exercise price of a Freestanding SAR shall be not less
than 100% of the Fair Market Value of the Common Stock, as determined by the
Committee, on the Effective Date of the Freestanding SAR’s grant.
Notwithstanding the foregoing, if the Company acquires another entity, the
Company may substitute Freestanding SARs with exercise prices below the Fair
Market Value requirement stated above for any freestanding stock appreciation
right previously issued by such acquired company, to the extent permitted by Section 409A
of the Code and/or Section 424 of the Code. Moreover, all Freestanding
SARs shall expire not later than 10 years from the Effective Date of the
Freestanding SAR’s grant.

 

9.4.                 Deemed Exercise.  The Committee may provide that
an SAR shall be deemed to be exercised at the close of business on the
scheduled expiration date of such SAR if at such time the SAR by its terms
remains exercisable and, if so exercised, would result in a payment to the
holder of such SAR.

 

9.5.                 Additional Terms and Conditions.  The Committee
may, by way of the Award Notice or otherwise, determine such other terms,
conditions, restrictions and/or limitations, if any, including vesting and
post-termination exercise periods of any SAR Award, provided they are not
inconsistent with the Plan.

 

ARTICLE 10

STOCK AWARDS

 

10.1.               Grants.  Awards may be granted in the form of
Stock Awards. Stock Awards shall be awarded in such numbers and at such times
during the term of the Plan as the Committee shall determine.

 

10.2.               Stock Award Restrictions.  Stock Awards shall be
subject to such terms, conditions, restrictions, and/or limitations, if any, as
the Committee deems appropriate including, but not by way of limitation,
restrictions on transferability and continued employment, provided, however,
they are not inconsistent with the Plan. The Committee may modify or accelerate
the delivery of a Stock Award under such circumstances as it deems appropriate.

 

10.3.               Performance Criteria.  Stock Awards may be
contingent on the attainment during a Performance Period of certain performance
objectives. The length of the Performance Period, the Performance Goals to be
achieved during the Performance Period, and the measure of whether and to what
degree such goals have been attained shall be conclusively determined by the
Committee in the exercise of its absolute discretion. Performance Goals may be
revised by the Committee, at such times as it deems appropriate during the
Performance Period, in order to take into consideration any unforeseen events
or changes in circumstances.

 

10.4.               Rights as Stockholders.  During the period in
which any Restricted Stock are subject to any restrictions imposed under Section 10.2,
the Committee may, in its sole discretion, grant to the Participant to whom
such Restricted Stock have been awarded all or any of the rights of a
stockholder with respect to such shares, including, but not by way of
limitation, the right to vote such shares and, pursuant to Article 15, the
right to receive dividends.

 

12

 

10.5.               Evidence of Award.  Any Stock Award granted under
the Plan may be evidenced in such manner as the Committee deems appropriate,
including, without limitation, book-entry, registration or issuance of a stock
certificate or certificates.

 

ARTICLE 11

PERFORMANCE UNITS

 

11.1.               Grants.  Awards may be granted in the form of
performance units. Performance units, as that term is used in this Plan, shall
refer to Units valued by reference to designated criteria established by the
Committee, other than Common Stock.

 

11.2.               Performance Criteria.  Performance units shall be
contingent on the attainment during a Performance Period of certain performance
objectives. The length of the Performance Period, the performance objectives to
be achieved during the Performance Period, and the measure of whether and to
what degree such objectives have been attained shall be conclusively determined
by the Committee in the exercise of its absolute discretion. Performance
objectives may be revised by the Committee, at such times as it deems
appropriate during the Performance Period, in order to take into consideration
any unforeseen events or changes in circumstances.

 

11.3.               Additional Terms and Conditions.  The Committee
may, by way of the Award Notice or otherwise, determine such other terms,
conditions, restrictions, and/or limitations, if any, of any Award of
performance units, provided they are not inconsistent with the Plan.

 

ARTICLE 12

PERFORMANCE SHARES

 

12.1.               Grants.  Awards may be granted in the form of
performance shares. Performance shares, as that term is used in this Plan,
shall refer to shares of Common Stock or Units that are expressed in terms of
Common Stock.

 

12.2.               Performance Criteria.  Performance shares shall be
contingent upon the attainment during a Performance Period of certain
performance objectives. The length of the Performance Period, the performance
objectives to be achieved during the Performance Period, and the measure of
whether and to what degree such objectives have been attained shall be
conclusively determined by the Committee in the exercise of its absolute
discretion. Performance objectives may be revised by the Committee, at such
times as it deems appropriate during the Performance Period, in order to take
into consideration any unforeseen events or changes in circumstances.

 

12.3.               Additional Terms and Conditions.  The Committee
may, by way of the Award Notice or otherwise, determine such other terms,
conditions, restrictions and/or limitations, if any, of any Award of
performance shares, provided they are not inconsistent with the Plan.

 

ARTICLE 13

VESTING AND PAYMENT OF AWARDS

 

13.1.               Vesting.  The time when an Option or SAR shall
vest and become exercisable shall be stated in the Award Notice. The
restrictions, if any, on Restricted Stock shall expire at the times designated
in the Award Notice. Notwithstanding the foregoing, (i) no Option shall
vest before the one-year anniversary of the Effective Date of such Option,
unless such vesting is accelerated in accordance with the other provisions of
this Article 13 (not including this Section 13.1) or Article 16,
(ii) the Committee may determine an appropriate vesting schedule for any
Award granted by the Company in substitution of an equity award previously
granted by an entity acquired by the Company, to the extent permitted by Section 409A
of the Code and Section 424 of the Code, and (iii) no Restricted
Stock shall vest faster than pro rata over a three-year period from the
Effective Date, unless such Restricted Stock was issued to a Director, as a
form of payment of earned performance awards or other incentive compensation,
to replace a deferred Stock Award, to replace awards that a new Employee has
forfeited from his or her previous employer, or the restrictions lapse earlier
due to the other provisions of this Article 13 (not including this Section 13.1)
or Article 16.

 

13.2.               Payment.  Absent a Plan provision to the contrary,
payment of Awards may, at the discretion of the Committee, be made in cash,
Common Stock, a combination of cash and Common Stock, or any other form of
property as 

 

13

 

the Committee shall determine. In addition, payment of
Awards may include such terms, conditions, restrictions and/or limitations, if
any, as the Committee deems appropriate, including, in the case of Awards paid
in the form of Common Stock, restrictions on transfer and forfeiture
provisions; provided, however, such terms, conditions, restrictions and/or
limitations are not inconsistent with the Plan. Further, payment of Awards may
be made in the form of a lump sum or installments, as determined ,by the
Committee.

 

13.3.               Death.  The Committee shall have the authority to
promulgate rules and regulations to determine the treatment of a
Participant under the Plan in the event of such Participant’s death. Unless otherwise
provided in an Award Notice, in the event that a Participant shall die while he
or she is an Employee, Director or Consultant and prior to the complete
exercise of Options or complete maturity of SARs granted to him or her under
the Plan, any such remaining Options or SARs shall be fully vested and may be
exercised in whole or in part within one year after the date of the Participant’s
death and then only: (i) by the beneficiary designated by the Participant
in a writing submitted to the Company prior to the Participant’s death, or in
the absence of same, by the Participant’s estate or by or on behalf of such
person or persons to whom the Participant’s rights pass under his or her will
or the laws of descent and distribution, (ii) to the extent that the
Participant would have been entitled to exercise the Option or SAR at the date
of his or her death had it been fully vested, and subject to all of the
conditions on exercise imposed by the Plan and the Award Notice, and (iii) prior
to the expiration of the term of the Option or SAR. Notwithstanding this Section or
the terms of an Award Notice, the Committee shall have the right to extend the
period for exercise of an Option or SAR  to the extent
that such exercise period extension will not result in an additional tax to the
Participant under Section 409A of the Code, even if such extension exceeds
the original term of such Option or SAR.

 

13.4.               Disability.  The Committee shall have the
authority to promulgate rules and regulations to determine the treatment
of a Participant under the Plan in the event of such Participant’s Disability.
Unless otherwise provided in an Award Notice, in the event that a Participant’s
status as an Employee, Director or Consultant terminates due to the Participant’s
Disability prior to the complete exercise of Options or complete maturity of
SARs granted to him or her under the Plan, any such remaining Options or SARs
shall be fully vested and may be exercised in whole or in part up to three
years after the Participant’s termination of status due to Disability as an
Employee, Director or Consultant, as the case may be. Notwithstanding this Section or
the terms of an Award Notice, the Committee shall have the right to extend the
period for exercise of an Option or SAR to the extent that such exercise period
extension will not result in an additional tax to the Participant under Section 409A
of the Code, even if such extension exceeds the original term of such Option or
SAR.

 

13.5.               Retirement.  The Committee shall have the
authority to promulgate rules and regulations to determine the treatment
of a Participant under the Plan in the event of such Participant’s Retirement.
Unless otherwise provided in an Award Notice, in the event that a Participant’s
status as an Employee, Director or Consultant terminates due to Retirement
prior to the complete exercise of Options or complete maturity of SARs granted
to him or her under the Plan, any such remaining Options or SARs that were
vested as of the date of Retirement may be exercised in whole or in part up to
three years after the Participant’s Retirement. During such period, the
Participant shall also continue to vest in any unvested Options or SARs as if
such Participant were still an Employee, Director or Consultant hereunder, as
applicable; provided that the such Participant does not violate any applicable
non-competition, non-disparagement, non-solicitation, confidentiality or other
similar requirement. At the end of the three-year period, any remaining
unvested Options or SARs shall terminate, unless the Committee provides
otherwise. Notwithstanding this Section or the terms of an Award Notice,
the Committee shall have the right to extend the period for exercise of a
Option or SAR to the extent that such exercise period extension will not result
in an additional tax to the Participant under Section 409A of the Code,
provided such extension does not exceed the term of such Option or SAR and that
the Participant does not violate any applicable non-competition,
non-disparagement, non-solicitation, confidentiality or other similar
requirement.

 

13.6.               Approved Reason.  The Committee shall have the
authority to promulgate rules and regulations to determine the treatment
of a Participant under the Plan in the event of a Participant’s termination for
an Approved Reason, to the extent such rules and regulations are not
inconsistent with the Plan.

 

13.7.               Termination for Cause.  A Participant who is
terminated for Cause shall, unless otherwise determined by the Committee,
immediately: forfeit, effective as of the date the Participant engages in such
conduct, all unexercised, unearned, and/or unpaid Awards, including, but not by
way of limitation, Awards earned but not yet paid, all unpaid dividends and
dividend equivalents, and all interest, if any, accrued on the foregoing.

 

14

 

13.8.               Other Terminations.  Subject to the terms of any
employment or other agreement a Participant has with the Company, if a
Participant’s employment with the Company terminates for a reason other than
death, Disability, Retirement, Cause or an Approved Reason, and, unless
otherwise provided in an Award Notice, any Option or SAR shall be exercisable
on termination of a Participant’s status as an Employee, Director or Consultant
only to the extent such Option or SAR is vested and exercisable at the time of
the termination of such relationship; and further, no Option or SAR shall be
exercisable or mature after the later of 90 days or the expiration of the term
thereof. The Committee, in its absolute discretion, may: (i) accelerate
the vesting and exercisability of an Option or SAR in order to allow its
exercise by a terminating Participant; (ii) extend the period for exercise
of an Option or SAR to the extent that such exercise period extension will not
result in an additional tax to the Participant under Section 409A of the
Code, provided such extension does not exceed the term of such Option or SAR.

 

13.9.               Incentive Stock Options.  Unless otherwise
provided in an Award Notice, an Incentive Stock Option shall be exercisable,
during the lifetime of the Participant, only while he or she is an Employee and
has been an Employee continuously since the grant of the Incentive Stock Option
or, subject to the Award Notice, within three (3) months after termination
of his or her employment. In its sole discretion, the Committee may provide in
the Award Notice such further limitations on the survival of Incentive Stock
Options, and such limitations on the survival of Non-Qualified Stock Options and
SARs, as it may determine; provided, however that all Options and SARs shall be
exercisable for a minimum of sixty (60) days after termination of a Participant’s
employment, except in the case of termination for Cause, in which case the
exercise period shall lapse at termination.

 

13.10.             Other Awards.

 

(a)              The Committee shall have the
authority to promulgate rules and regulations to determine the treatment
of the Stock Awards of a Participant under the Plan in the event of such
Participant’s death, Disability, Retirement, or termination from the Company
for an Approved Reason or Cause. Unless otherwise provided in an Award Notice,
upon a Participant’s death, Disability, or Retirement, or termination from the
Company for an Approved Reason, any Stock Awards held by such Participant shall
accelerate and become fully vested.

 

(b)             If a Participant’s employment with
the Company terminates for any reason other than death, Disability or
Retirement, or an Approved Reason, and except as otherwise provided by Section 13.7,
all unexercised, unearned, and/or unpaid Awards, including without limitation,
Awards earned but not yet paid, all unpaid dividends and dividend equivalents,
and all interest accrued on the foregoing shall be canceled or forfeited, as
the case may be, unless the Participant’s Award Notice or the Committee
provides otherwise.

 

13.11.             Set-Off.  By accepting an Award under this Plan, a
Participant consents to a deduction from any amounts the Company owes the
Participant from time to time (including, but not limited to, amounts owed to
the Participant as wages or other compensation, fringe benefits, or vacation
pay), to the extent of the amounts the Participant owes the Company under Section 13.11(a).
Whether or not the Company elects to make any set-off in whole or in part, if
the Company does not recover by means of set-off the full amount the
Participant owes the Company, the Participant shall immediately pay the unpaid
balance to the Company.

 

ARTICLE 14 

DIVIDEND AND DIVIDEND EQUIVALENTS

 

If an Award is granted in
the form of a Stock Award, Option, SAR or performance share, the Committee may
choose, at the time of the grant of the Award or any time thereafter up to the
time of the Award’s payment, to include as part of such Award an entitlement to
receive dividends or dividend equivalents, subject to such terms, conditions,
restrictions and/or limitations, if any, as the Committee may establish.
Dividends and dividend equivalents shall be paid in such form and manner (i.e.,
lump sum or installments), and at such time(s) as the Committee shall
determine. All dividends or dividend equivalents which are not paid currently
may, at the Committee’s discretion, accrue interest, be reinvested into
additional shares of Common Stock of, in the case of dividends or dividend
equivalents, credited in connection with Stock Awards or performance shares, be
credited as additional Stock Awards or performance shares and paid to the
Participant if and when, and to the extent that, payment is made pursuant to
such Award. The total number of shares available for grant under shall not be
reduced to reflect any dividends or dividend equivalents that are reinvested
into additional shares of Common Stock or credited as additional Stock Awards
or performance shares.

 

15

 

ARTICLE 15

DEFERRAL OF AWARDS

 

15.1.               At
the discretion of the Committee, payment of any Award, dividend, or dividend
equivalent, or any portion thereof, may be deferred by a Participant until such
time as the Committee may establish. All such deferrals shall be accomplished
by the delivery of a written, irrevocable election by the Participant prior to
the time established by the Committee for such purpose, on a form provided by
the Company. Further, all deferrals shall be made in accordance with
administrative guidelines established by the Committee to ensure that such
deferrals comply with all applicable requirements of the Code. Deferred
payments shall be paid in a lump sum or installments, as determined by the
Committee. Deferred Awards may also be credited with interest, at such rates to
be determined by the Committee, and, with respect to those deferred Awards
denominated in the form of Common Stock, with dividends or dividend
equivalents.

 

15.2.               Elections to Defer.  Notwithstanding any provision
of the Plan to the contrary, any Participant may, at the discretion of the
Committee, elect to defer to a specified date the receipt of unrestricted
Common Stock or cash, or any portion thereof, that the Participant would otherwise
be entitled to receive pursuant to an Award by completing such form required by
the Committee and returning it to the Committee on or before the December 31
preceding the calendar year during which such Award is granted to the
Participant.

 

15.3.               New Participant Elections to Defer.  Each
individual who becomes a Participant during a calendar year may, at the
discretion of the Committee, elect to defer to a specified date the receipt of
unrestricted Common Stock or cash payment, as applicable, that the Participant
would otherwise be entitled to receive pursuant to an Award granted to the
Participant after such date such individual became a Participant by completing
such form required by the Committee and returning it to the Committee on or
before the date that is 30 days after the date on which the individual became a
Participant.

 

15.4.               Elections Irrevocable.  An election to defer an
Award shall become irrevocable on the first day of the calendar year to which
such election applies or, solely in the case of a new Participant, 30 days
after the date on which the individual became a Participant.

 

15.5.               Individual Elections.  A Participant must complete
a deferral election form in accordance with Section 15.1 or Section 15.2,
as applicable, for each calendar year in which such Participant desires to
defer Awards and a Participant’s elections with respect to Awards deferred in a
particular calendar year shall expire as of the last day of such calendar year.

 

15.6.               Establishment of Calendar Year Subaccounts.  The
Company may establish on its books for each Participant and for each calendar
year a Calendar Year Subaccount to which a Participant’s Awards deferred in a
particular calendar year are credited. A separate Calendar Year Subaccount
shall be created within each Participant’s Account for each calendar year in
which the Participant makes an Award deferral under the Plan.

 

15.7.               Effect on Vesting.  Notwithstanding anything
herein to the contrary, this Section 15 shall not effect the vesting or
vested percentage of a Participant’s Award. Any unvested Award will not be
distributed pursuant to this Section 15 or otherwise.

 

15.8.               Effect of Death, Disability and Change in Control.  Subject
to the provisions of this Section 15.8, the Participant’s Awards credited to
a particular Calendar Year Subaccount shall be distributed to him or her at the
time specified in his or her deferral election form related to the particular
calendar year. Notwithstanding any election made by a Participant to the
contrary, any deferred Awards that have not been distributed to the Participant
as of the date (i) of his or her death, (ii) on which he or she is
determined to be Disabled, or (iii) of a Change in Control shall be paid
to the Participant’s Beneficiary in a lump sum upon such Participant’s death,
date of Disability determination or Change in Control, as applicable.

 

ARTICLE 16

CHANGE IN CONTROL

 

16.1.               Background.  Except as provided in an employment,
change in control, severance or similar agreement between the Participant and the
Company, notwithstanding any provision contained in the Plan, including, but
not limited to, Section 4.5, the provisions of this Article 16 shall
control over any contrary provision.

 

16

 

16.2.               Options and SARs.  With respect to all Options and
SARs that are unexercised and outstanding, upon a Change In Control, such
Options and/or SARs shall become immediately and fully vested and exercisable;
unless such Options and/or SARs are assumed by the successor corporation, and
shall be substituted with options or SARs involving the common stock of the
successor corporation with equivalent value and with the terms and conditions
of the substituted options or SARs being no less favorable than the Options or
SARs granted hereunder. Substituted awards shall vest in full if employment is
terminated for any reason other than Cause or voluntary termination within
eighteen (18) months of the Change In Control.

 

16.3.               Stock Awards.  With respect to all Stock Awards
that are outstanding, upon a Change In Control, such Stock Awards shall become
immediately and fully vested; unless such Stock Awards are assumed by the
successor corporation, and are substituted with stock awards involving the
common stock of the successor corporation with equivalent value and with the
terms and conditions of the substituted restricted stock awards being no less
favorable than the Stock Awards granted hereunder. Substituted awards shall
vest in full if employment is terminated for any reason other than Cause or
voluntary termination within eighteen (18) months of the Change In Control.

 

16.4.               Treatment of Performance Units and Performance Shares.  If
a Change In Control occurs during the term of one or more performance periods
for which the Committee has granted performance units and/or performance shares
(including those issued as Performance Awards under Article 7), the term
of each such performance period (hereinafter a “current performance period”)
shall immediately terminate upon the occurrence of such event. Upon a Change In
Control, for each “current performance period” and each completed performance
period for which the Committee has not on or before such date made a
determination as to whether and to what degree the performance objectives for
such period have been attained (hereinafter a “completed performance period”),
it shall be assumed that the performance objectives have been attained at a
level of one hundred percent (100%) or the equivalent thereof. A Participant in
one or more “current performance periods” shall be considered to have earned
and, therefore, be entitled to receive, a prorated portion of the Awards
previously granted to him for each such “current performance period.” Such
prorated portion shall be determined by multiplying the number of performance
shares or performance units, as the case may be, granted to the Participant by
a fraction, the numerator of which is the total number of days that have
elapsed since the beginning of the “current performance period,” and the denominator
of which is the total number of days in such “current performance period.”  A Participant in one or more “completed
performance periods” shall be considered to have earned and, therefore, be
entitled to receive all the performance shares or performance units, as the
case may be, previously granted to him during each ‘such “completed performance
period.”

 

16.5.               Deferred Awards.  Unless otherwise provided by the
Committee, at any time, upon a Change In Control, any Awards deferred by a
Participant under Article 16 hereof, but for which he or she has not
received payment as of such date, shall be paid as soon as practicable, but in
no event later than 90 days after the Change In Ownership or the event giving
rise to rights under Article 17.

 

ARTICLE 17

MISCELLANEOUS

 

17.1.               Nonassignability.

 

(a)          In General.  Except
as otherwise determined by the Committee or as otherwise provided in Section 17.1(b),
no Awards or any other payment under the Plan shall be subject in any manner to
alienation, anticipation, sale, transfer (except by will or the laws of descent
and distribution), assignment, pledge, or encumbrance, nor shall any Award be
payable to or exercisable by anyone other than the Participant to whom it was
granted.

 

(b)          Non-Qualified Stock
Options.  The Committee shall have the discretionary
authority to grant Non-Qualified Stock Options or amend outstanding
Non-Qualified Stock Options to provide that they be transferable, subject to
such terms and conditions as the Committee shall establish. In addition to any
such terms and conditions, the following terms and conditions shall apply to
all transfers of Non-Qualified Stock Options:

 

(1)           Permissible Transferees. Transfers
shall only be permitted to: (i) the Participant’s “Immediate Family
Members,” as that term is defined in Section 17.1(b)(8); (ii) a trust
or trusts for the exclusive benefit of such Immediate Family Members; or (iii) a
family partnership or family limited partnership in which 

 

17

 

each partner is, at the time of transfer and all times
subsequent thereto, either an Immediate Family Member or a trust for the
exclusive benefit of one or more Immediate Family Members.

 

(2)              No Consideration. All transfers
shall be made for no consideration.

 

(3)              Subsequent Transfers. Once a
Participant transfers a Non-Qualified Stock Option, any subsequent transfer of
such transferred Option shall, notwithstanding Section 17.1(b)(1) to
the contrary, be permitted provided, however, such subsequent transfer complies
with all of the terms and conditions of this Section 17.1, with the
exception of Section 17.1(b)(1).

 

(4)              Transfer Agent. In order for a
transfer to be effective, the Committee’s designated transfer agent must be
used to effectuate the transfer. The costs of such transfer agent shall be
borne solely by the transferor.

 

(5)              Withholding. In order for a
transfer to be effective, a Participant must agree in writing prior to the
transfer on a form provided by the Company to pay any and all payroll and
withholding taxes due upon exercise of the transferred option. In addition,
prior to the exercise of a transferred option by a transferee, arrangements
must be made by the Participant with the Company for the payment of all payroll
and withholding taxes.

 

(6)              Terms and Conditions of
Transferred Option. Upon transfer, a Non-Qualified Stock Option continues to be
governed by and subject to the terms and conditions of the Plan and the option’s
applicable administrative guide and Award Notice. A transferee of a Non-Qualified
Stock Option is entitled to the same rights as the Participant to whom such
Non-Qualified Stock Options was awarded, as if no transfer had taken place.
Accordingly, the rights of the transferee are subject to the terms and
conditions of the original grant to the Participant, including provisions
relating to expiration date, exercisability, exercise price and forfeiture.

 

(7)              Notice to Transferees. The Company
shall be under no obligation to provide a transferee with any notice regarding
the transferred Options held by the transferee upon forfeiture or any other
circumstance.

 

(8)              Immediate Family Member. For
purposes of this Section 17.1, the term “Immediate Family Member” shall
mean the Participant and his or her spouse, children or grandchildren, whether
natural, step- or adopted children or grandchildren.

 

17.2.               Withholding Taxes.  The Company shall be entitled
to deduct from any payment under the Plan, regardless of the form of such
payment, the amount of all applicable income and employment taxes required by
law to be withheld with respect to such payment or may require the Participant
to pay to it such tax prior to and as a condition of the making of such
payment. In accordance with any applicable administrative guidelines it
establishes, the Committee may allow a Participant to pay the amount of taxes
required by law to be withheld from an Award by withholding from any payment of
Common Stock due as a result of such Award, or by permitting the Participant to
deliver to the Company, shares of Common Stock having a Fair Market Value, as
determined by the Committee.

 

17.3.               Section 409A.  To
the extent determined necessary or advisable by the Committee in its sole
discretion, Awards hereunder, and Award deferrals hereunder, shall be
interpreted to the extent possible to comply with the provisions of section
409A of the Code (or avoid application of such Code section), to the extent
applicable. Participants shall be deemed to consent to any changes to Awards,
or any Award deferral, that the Board determines are necessary or advisable to
comply with the provisions of section 409A of the Code. Adjustments made
pursuant to Section 16 shall, to the extent determined necessary or
advisable in the sole discretion of the Committee, be made in compliance with
the requirements of section 409A of the Code or, if applicable, to avoid
application of section 409A of the Code.

 

17.4.               Amendments to Awards.  The Committee may at any
time unilaterally amend any unexercised, unearned, or unpaid Award, including,
but not by way of limitation, Awards earned but not yet paid, to the extent it
deems appropriate; provided, however, (i) no Award may be repriced,
replaced with cash or another award, regranted through cancellation, or
modified without shareholder approval if the effect would be to reduce the
exercise price for the shares underlying the Award, and (ii) that any such
amendment which, in the opinion of the Committee, is adverse to the Participant
shall require the Participant’s consent.

 

18

 

17.5.               Regulatory Approvals and Listings.  Notwithstanding
anything contained in this Plan to the contrary, the Company shall have no
obligation to issue or deliver certificates of Common Stock evidencing Stock
Awards or any other Award resulting in the payment of Common Stock prior to (i) the
obtaining of any approval from any governmental agency which the Company shall,
in its sole discretion, determine to be necessary or advisable, (ii) the
admission of such shares to listing on the stock exchange on which the Common
Stock may be listed, and (iii) the completion of any registration or other
qualification of said shares under any state or federal law or ruling of any
governmental body which the Company shall, in its sole discretion, determine to
be necessary or advisable.

 

17.6.               No Right to Continued Employment, Service or Grants.  Participation
in the Plan shall not give any Employee, Consultant or Director any right to
remain in the employ or service of the Company. Further, the adoption of this
Plan shall not be deemed to give any Employee, Consultant or Director or any
other individual any right to be selected as a Participant or to be granted an
Award. In addition, no Employee, Consultant or Director having been selected
for an Award, shall have at any time the right to receive any additional
Awards.

 

17.7.               Amendment/Termination.  The Board may suspend or
terminate the Plan at any time for any reason with or without prior notice. In
addition, the Board may, from time to time for any reason and with or without
prior notice, amend the Plan in any manner, but may not, without stockholder
approval, adopt any amendment which would increase the number of shares
available under the Plan, which would alter the provisions of Section 4.3
or 17.4 as they relate to Option repricing, or which would require the vote of
the stockholders of the Company pursuant to Section 162(m) of the
Code or any applicable rule of the exchange or quotation system on which
the Common Stock is traded, but only insofar as such amendment affects Covered
Employees, or if such approval is necessary or deemed advisable with respect to
tax, securities, or other applicable laws, policies, or regulations.
Notwithstanding the foregoing, the Committee may not revoke, remove or reduce
any vested right of a Participant without the prior written consent of such
Participant.

 

17.8.               Governing Law.  The Plan shall be governed by and
construed in accordance with the laws of the State of Delaware, except as
superseded by applicable federal law, without giving effect to its conflicts of
law provisions.

 

17.9.               No Right, Title, or Interest in Company Assets.  No
Participant shall have any rights as a stockholder of the Company as a result
of participation in the Plan until the date of issuance of a stock certificate
in his or her name, and, in the case of Restricted Stock, such rights are
granted to the Participant under the Plan. To the extent any person acquires a
right, to receive payments from the Company under the Plan, such rights shall be
no greater than the rights of an unsecured creditor of the Company and the
Participant shall not have any rights in or against any specific assets of the
Company. All of the Awards granted under the Plan shall be unfunded.

 

17.10.             Section 16 of the Exchange Act.  In order to
avoid any Exchange Act violations, the Committee may, from time to time, impose
additional restrictions upon an Award, including but not limited to,
restrictions regarding tax withholdings and restrictions regarding the
Participant’s ability to exercise Awards under the Company’s broker-assisted
stock option exercise program.

 

17.11.             No Guarantee of Tax Consequences.  No person
connected with the Plan in any capacity, including, but not limited to, the
Company and its directors, officers, agents and employees, makes any
representation, commitment, or guarantee that any tax treatment, including, but
not limited to, federal, state and local income, estate and gift tax treatment,
will be applicable with respect to the tax treatment of any Award, any amounts
deferred under the Plan, or paid to or for the benefit of a Participant under
the Plan, or that such tax treatment will apply to or be available to a
Participant on account of participation in the Plan.

 

19Exhibit 10.2

 

PHARMACOPEIA, INC.

 

AMENDED
AND RESTATED 2004 STOCK INCENTIVE PLAN

 

Amendment No. 1

 

Pursuant to the power
reserved to it in Section 17.7 of the PHARMACOPEIA, INC. AMENDED AND
RESTATED 2004 STOCK INCENTIVE PLAN (the “Plan”), effective as amended and
restated on May 3, 2007, the Board of Directors of Pharmacopeia, Inc.,
a Delaware corporation (the “Company”), hereby amends the Plan as follows:

 

1.      The first sentence of Section 6.1 is hereby amended and
restated in its entirety to read as follows:

 

“Available Shares. The maximum number of shares of Common Stock which shall be available
for grant of Awards under the Plan (including Incentive Stock Options) during
its term shall not exceed 5,400,000.”

 

2.      This Amendment No. 1 to the Plan shall be effective only
after approval of the stockholders of the Company as set forth in Section 17.7
of the Plan.

 

To record the adoption of this Amendment No. 1, the Company has
caused its authorized officer to affix its corporate name this 30th day of April, 2008.

 

 

	
   

  	
  PHARMACOPEIA, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  

  	
  /s/ Joseph A. Mollica,
  Ph.D.

  
	
   

  	
   

  	
  Joseph A. Mollica, Ph.D.

  
	
   

  	
   

  	
  Chairman of the Board and
  Interim President and

  Chief Executive Officer

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