Document:

EXHIBIT 10.2

 

RELIANT
PHARMACEUTICALS, INC.

2007 INCENTIVE AWARD PLAN

 

PURPOSE

 

The purpose of the Reliant Pharmaceuticals, Inc.
2007 Incentive Award Plan (the “Plan”) is to promote the success and
enhance the value of Reliant Pharmaceuticals, Inc. (the “Company”)
by linking the personal interests of Directors, Employees, and Consultants,
including directors, employees and consultants to the Company’s Subsidiaries to
those of Company stockholders and by providing such individuals with an
incentive for outstanding performance to generate superior returns to Company
stockholders. The Plan is further intended to provide flexibility to the
Company in its ability to motivate, attract, and retain the services of
Directors, Employees, and Consultants upon whose judgment, interest, and
special effort the successful conduct of the Company’s operation is largely
dependent.

 

DEFINITIONS AND CONSTRUCTION

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

Notwithstanding the
foregoing, neither of the following events shall constitute an “acquisition” by
any person or group for purposes of this subsection 2.4: an acquisition of
the Company’s securities by the Company which causes the Company’s voting
securities beneficially owned by a person or group to represent 50% or more of
the combined voting power of the Company’s then outstanding voting securities; provided, however, that if a person or
group shall become the beneficial owner of 50% or more of the combined voting
power of the Company’s then outstanding voting securities by reason of share
acquisitions by the Company as described above and shall, after such share
acquisitions by the Company, become the beneficial owner of any additional
voting securities of the Company, then such acquisition shall constitute a
Change of Control; or

 

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

 

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

 

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

 

the Company’s
stockholders approve a liquidation or dissolution of the Company other than in
connection with a corporate restructuring transaction.

 

 

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

 

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

 

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

 

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

 

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

 

“Disability”  means that the Participant qualifies to receive long-term
disability payments under the Company’s long-term disability insurance program,
as it may be amended from time to time.

 

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

 

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

 

“Effective Date”
shall have the meaning set forth in Section 14.1.

 

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

 

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

 

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

 

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

 

 

“Fair Market Value”
means, as of any given date, (a) if Stock is traded on an exchange, the
closing price of a share of Stock as reported in the Wall Street
Journal on such date, or if no Stock is traded on such date, on the first
trading date immediately prior to such date during which a sale occurred; or (b) if
Stock is not traded on an exchange but is quoted on a national market or other
quotation system the last sales price  on
such date, or if no sales occurred on such date, then on the date immediately
prior to such date on which sales prices are reported; or (c) if Stock is
not publicly traded, the fair market value established by the Committee acting
in good faith.

 

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

 

“Independent Director”
means a Director who is not an Employee.

 

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

 

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

 

“Option” means a
right granted to a Participant pursuant to Article 5 of the Plan to
purchase a specified number of shares of Stock at a specified price during
specified time periods. An Option may be either an Incentive Stock Option
or a Non-Qualified Stock Option.

 

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

 

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

 

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

 

 

“Performance Criteria”
means the criteria that the Committee selects for purposes of establishing the
Performance Goal or Performance Goals for a Participant for a Performance
Period. The Performance Criteria that will be used to establish Performance
Goals are limited to the following: net earnings (either before or after
interest, taxes, depreciation and amortization), economic value-added, net
operating income (either before or after interest, taxes, depreciation and
amortization), gross profit, sales or revenue, net income (either before or
after taxes), operating earnings, cash flow (including, but not limited to,
operating cash flow and free cash flow), return on capital, return on net
assets, return on stockholders’ equity, return on assets, stockholder return,
return on sales, gross or net profit margin, productivity, expense, margins, operating
efficiency, customer satisfaction, working capital, earnings per share, price
per share of Stock, and market share, any of which may be measured either
in absolute terms or as compared to any incremental increase or as compared to
results of a peer group. The Committee shall define in an objective fashion the
manner of calculating the Performance Criteria it selects to use for such
Performance Period for such Participant.

 

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

 

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

 

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

 

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

 

“Prior Plans”
means, collectively, the following plans of the Company: Reliant
Pharmaceuticals, Inc. 2004 Equity Incentive Plan, and the Reliant
Pharmaceuticals, LLC Equity Incentive Plan in each case as such plan may be
amended from time to time.

 

“Plan” means this
Reliant Pharmaceuticals, Inc. 2007 Incentive Award Plan, as it may be
amended from time to time.

 

 

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

 

“Qualified
Performance-Based Compensation” means any compensation that is intended to
qualify as “qualified performance-based compensation” as described in Section 162(m)(4)(C) of
the Code.

 

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

 

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

 

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

 

“Stock” means the
common stock of the Company, par value $0.01 per share, and such other
securities of the Company that may be substituted for Stock pursuant to Article 12.

 

“Stock Appreciation
Right” or “SAR” means a right granted pursuant to Article 7 to
receive a payment equal to the excess of the Fair Market Value of a specified
number of shares of Stock on the date the SAR is exercised over the Fair Market
Value on the date the SAR was granted as set forth in the applicable Award
Agreement.

 

“Stock Payment”
means (a) a payment in the form of shares of Stock, or (b) an
option or other right to purchase shares of Stock, as part of any bonus,
deferred compensation or other arrangement, made in lieu of all or any portion
of the compensation, granted pursuant to Section 8.4.

 

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

 

SHARES SUBJECT TO THE PLAN

 

Number of Shares.

 

Subject to Article 12,
and Section 3.1(b), the aggregate number of shares of Stock which may be
issued or transferred pursuant to Awards under the Plan is the sum of (i) 2,800,000,
(ii) any shares of Stock which as of the Effective Date are available for
issuance under any of the Prior Plans, or are subject to awards under the Prior
Plans which are forfeited or lapse unexercised and which following the
Effective Date are not issued under the Prior Plans; and (iii) an annual
increase on the first day of each year beginning in 2008 and ending in 2017,
equal to the lesser of (A) 3,000,000 shares, (B) three percent (3%)
of the shares of Stock outstanding (on an as converted basis) on the last day
of the immediately preceding fiscal year and (C) such smaller number of
shares of Stock as determined by the Board; provided, however,

 

 

no more than 15,000,000 shares of Stock may be
issued upon the exercise of Incentive Stock Options.

 

To the extent that an
Award terminates, expires, or lapses for any reason, any shares of Stock
subject to the Award shall again be available for the grant of an Award
pursuant to the Plan. Additionally, any shares of Stock tendered or withheld to
satisfy the grant or exercise price or tax withholding obligation pursuant to
any Award shall again be available for the grant of an Award pursuant to the
Plan. To the extent permitted by applicable law or any exchange rule, shares of
Stock issued in assumption of, or in substitution for, any outstanding awards
of any entity acquired in any form of combination by the Company or any
Subsidiary shall not be counted against shares of Stock available for grant
pursuant to this Plan. The payment of Dividend Equivalents in cash in
conjunction with any outstanding Awards shall not be counted against the shares
available for issuance under the Plan. Notwithstanding the provisions of this Section 3.1(b),
no shares of Common Stock may again be optioned, granted or awarded if
such action would cause an Incentive Stock Option to fail to qualify as an
incentive stock option under Section 422 of the Code.

 

Stock
Distributed. Any Stock distributed pursuant to an Award may consist,
in whole or in part, of authorized and unissued Stock, treasury Stock or Stock
purchased on the open market.

 

Limitation
on Number of Shares Subject to Awards. Notwithstanding any
provision in the Plan to the contrary, and subject to Article 12, the
maximum number of shares of Stock with respect to one or more Awards that may be
granted to any one Participant during any twelve-month period shall be
1,000,000 and the maximum amount that may be paid in cash  during any calendar year with respect to any
Performance-Based Award (including, without limitation, any Performance Bonus
Award) shall be $2,000,000; provided, however,
that the foregoing limitation[s] shall not apply prior to the Public Trading
Date and, following the Public Trading Date, the foregoing limitations shall
not apply until the earliest of: (a) the first material modification of
the Plan (including any increase in the number of shares reserved for issuance
under the Plan in accordance with Section 3.1); (b) the issuance of
all of the shares of Stock reserved for issuance under the Plan; (c) the
expiration of the Plan; (d) the first meeting of stockholders at which
members of the Board are to be elected that occurs after the close of the third
calendar year following the calendar year in which occurred the first
registration of an equity security of the Company under Section 12 of the
Exchange Act; or (e) such other date required by Section 162(m) of
the Code and the rules and regulations promulgated thereunder.

 

ELIGIBILITY AND PARTICIPATION

 

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

 

Participation.
Subject to the provisions of the Plan, the Committee may, from time to time,
select from among all Eligible Individuals, those to whom Awards shall be
granted and shall determine the nature and amount of each Award. No Eligible
Individual shall have any right to be granted an Award pursuant to this Plan.

 

 

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

 

STOCK OPTIONS

 

General.
The Committee is authorized to grant Options to Eligible Individuals on the
following terms and conditions:

 

Exercise Price.
The exercise price per share of Stock subject to an Option shall be determined
by the Committee and set forth in the Award Agreement; provided, that, subject to Section 5.2(d), the exercise price for
any Option shall not be less than 100% of the Fair Market Value of a share of
Stock on the date of grant.

 

Time and Conditions of
Exercise. The Committee shall determine the time or times at
which an Option may be exercised in whole or in part; provided that the term of any Option
granted under the Plan shall not exceed ten years. The Committee shall also
determine the performance or other conditions, if any, that must be satisfied
before all or part of an Option may be exercised.

 

Payment.
The Committee shall determine the methods by which the exercise price of an
Option may be paid, the form of payment, including, without
limitation: (i) cash, (ii) shares of Stock held for such period of
time as may be required by the Committee in order to avoid adverse
accounting consequences and having a Fair Market Value on the date of delivery
equal to the aggregate exercise price of the Option or exercised portion
thereof, or (iii) other property acceptable to the Committee (including
through the delivery of a notice that the Participant has placed a market sell
order with a broker with respect to shares of Stock then issuable upon exercise
of the Option, and that the broker has been directed to pay a sufficient
portion of the net proceeds of the sale to the Company in satisfaction of the
Option exercise price; provided that payment of such proceeds is then made to
the Company upon settlement of such sale), and the methods by which shares of
Stock shall be delivered or deemed to be delivered to Participant. Notwithstanding
any other provision of the Plan to the contrary, after the Public Trading Date,
no Participant who is a Director or an “executive officer” of the 

 

 

Company within the meaning of Section 13(k) of
the Exchange Act shall be permitted to pay the exercise price of an Option, or
continue any extension of credit with respect to the exercise price of an
Option with a loan from the Company or a loan arranged by the Company in
violation of Section 13(k) of the Exchange Act.

 

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

 

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

 

Expiration.
Subject to Section 5.2(c), an Incentive Stock Option shall cease to be an
Incentive Stock Option and shall be a Non-Qualified Stock Option to any extent
exercised by anyone after the first to occur of the following events:

 

Ten years from the date it is granted, unless an
earlier time is set in the Award Agreement;

 

Three months after the Participant’s termination of
employment as an Employee; and

 

One year after the date of the Participant’s
termination of employment or service on account of Disability or death. Upon
the Participant’s Disability or death, any Incentive Stock Options exercisable
at the Participant’s Disability or death may be exercised by the
Participant’s legal representative or representatives, by the person or persons
entitled to do so pursuant to the Participant’s last will and testament, or, if
the Participant fails to make testamentary disposition of such Incentive Stock
Option or dies intestate, by the person or persons entitled to receive the
Incentive Stock Option pursuant to the applicable laws of descent and
distribution.

 

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

 

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

 

Notice of Disposition.
The Participant shall give the Company prompt notice of any disposition of
shares of Stock acquired by exercise of an Incentive Stock Option within 

 

 

(i) two years from the date of grant of such
Incentive Stock Option or (ii) one year after the transfer of such shares
of Stock to the Participant.

 

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

 

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

 

Substitution of Stock
Appreciation Rights. The Committee may provide in the
Award Agreement evidencing the grant of an Option that the Committee, in its
sole discretion, shall have to right to substitute a Stock Appreciation Right
for such Option at any time prior to or upon exercise of such Option; provided, that such Stock Appreciation Right shall be
exercisable with respect to the same number of shares of Stock for which such
substituted Option would have been exercisable.

 

RESTRICTED STOCK AWARDS

 

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

 

Issuance
and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may impose
(including, without limitation, limitations on the right to vote Restricted
Stock or the right to receive dividends on the Restricted Stock). These
restrictions may lapse separately or in combination at such times,
pursuant to such circumstances, in such installments, or otherwise, as the
Committee determines at the time of the grant of the Award or thereafter.

 

Forfeiture.
Except as otherwise determined by the Committee at the time of the grant of the
Award or thereafter, upon termination of employment or service during the
applicable restriction period, Restricted Stock that is at that time subject to
restrictions shall be forfeited; provided,
however, that, the Committee may (a) provide in any
Restricted Stock Award Agreement that restrictions or forfeiture conditions
relating to Restricted Stock will be waived in whole or in part in the
event of terminations resulting from specified causes, and (b) in other
cases waive in whole or in part restrictions or forfeiture conditions
relating to Restricted Stock.

 

Certificates
for Restricted Stock. Restricted Stock granted pursuant to
the Plan may be evidenced in such manner as the Committee shall determine.
If certificates representing shares of Restricted Stock are registered in the
name of the Participant, certificates must bear an appropriate legend referring
to the terms, conditions, and restrictions applicable to such Restricted Stock,
and the Company may, at its discretion, retain physical possession of the
certificate until such time as all applicable restrictions lapse.

 

 

STOCK APPRECIATION RIGHTS

 

Grant of Stock
Appreciation Rights.

 

A Stock Appreciation
Right may be granted to any Eligible Individual selected by the Committee.
A Stock Appreciation Right shall be subject to such terms and conditions not
inconsistent with the Plan as the Committee shall impose and shall be evidenced
by an Award Agreement.

 

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

 

Payment and Limitations
on Exercise. Payment of the amounts determined under Section 7.1(b)
above shall be in cash, in Stock (based on its Fair Market Value as of the date
the Stock Appreciation Right is exercised) or a combination of both, as
determined by the Committee in the Award Agreement.

 

OTHER TYPES OF AWARDS

 

Performance Share Awards.
Any Eligible Individual selected by the Committee may be granted one or
more Performance Share awards which shall be denominated in a number of shares
of Stock and which may be linked to any one or more of the Performance
Criteria or other specific performance criteria determined appropriate by the
Committee, in each case on a specified date or dates or over any period or
periods determined by the Committee. In making such determinations, the
Committee shall consider (among such other factors as it deems relevant in
light of the specific type of award) the contributions, responsibilities and
other compensation of the particular Participant.

 

Performance Stock Units.
Any Eligible Individual selected by the Committee may be granted one or
more Performance Stock Unit awards which shall be denominated in unit
equivalent of shares of Stock and/or units of value including dollar value of
shares of Stock and which may be linked to any one or more of the
Performance Criteria or other specific performance criteria determined
appropriate by the Committee, in each case on a specified date or dates or over
any period or periods determined by the Committee. In making such
determinations, the Committee shall consider (among such other factors as it
deems relevant in light of the specific type of award) the contributions,
responsibilities and other compensation of the particular Participant.

 

 

Dividend Equivalents.

 

Any Eligible Individual
selected by the Committee may be granted Dividend Equivalents based on the
dividends declared on the shares of Stock that are subject to any Award, to be
credited as of dividend payment dates, during the period between the date the
Award is granted and the date the Award is exercised, vests or expires, as
determined by the Committee. Such Dividend Equivalents shall be converted to
cash or additional shares of Stock by such formula and at such time and subject
to such limitations as may be determined by the Committee.

 

Dividend Equivalents
granted with respect to Options or SARs that are intended to be Qualified
Performance-Based Compensation shall be payable, with respect to pre-exercise
periods, regardless of whether such Option or SAR is subsequently exercised.

 

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

 

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

 

Restricted Stock Units.
The Committee is authorized to make Awards of Restricted Stock Units to any
Eligible Individual selected by the Committee in such amounts and subject to
such terms and conditions as determined by the Committee. At the time of grant,
the Committee shall specify the date or dates on which the Restricted Stock
Units shall become fully vested and nonforfeitable, and may specify such
conditions to vesting as it deems appropriate. At the time of grant, the
Committee shall specify the maturity date applicable to each grant of
Restricted Stock Units which shall be no earlier than the vesting date or dates
of the Award and may be determined at the election of the Participant. On
the maturity date, the Company shall, subject to Section 11.5(b),  transfer to the Participant one unrestricted,
fully transferable share of Stock for each Restricted Stock Unit scheduled to
be paid out on such date and not previously forfeited.

 

Performance Bonus Awards.
Any Eligible Individual selected by the Committee may be granted one or
more Performance-Based Awards in the form of a cash bonus (a “Performance
Bonus Award”) payable upon satisfying any one or more of the Performance
Criteria or other specific performance criteria determined appropriate by the
Committee, in each case on a specified date or dates or over any period or
periods determined by the Committee.

 

 

Term. Except
as otherwise provided herein, the term of any Award of  Performance Shares, Performance Stock Units,
Dividend Equivalents, Stock Payments, Deferred Stock or Restricted Stock Units
shall be set by the Committee in its discretion.

 

Exercise or Purchase
Price. The Committee may establish the exercise or
purchase price, if any, of any Award of Performance Shares, Performance Stock
Units, Deferred Stock, Stock Payments or Restricted Stock Units; provided, however, that such price shall
not be less than the par value of a share of Stock on the date of grant, unless
otherwise permitted by applicable state law.

 

Exercise
upon Termination of Employment or Service. An Award of
Performance Shares, Performance Stock Units, Dividend Equivalents, Deferred
Stock, Stock Payments and Restricted Stock Units shall only be exercisable or
payable while the Participant is an Employee, Consultant or a Director, as
applicable; provided, however,
that the Committee in its sole and absolute discretion may provide that an
Award of Performance Shares, Performance Stock Units, Dividend Equivalents,
Stock Payments, Deferred Stock or Restricted Stock Units may be exercised
or paid subsequent to a termination of employment or service, as applicable, or
following a Change of Control of the Company, or because of the Participant’s
retirement, death or disability, or otherwise; provided,
however, that any such provision with respect to Performance Shares
or Performance Stock Units shall be subject to the requirements of Section 162(m)
of the Code that apply to Qualified Performance-Based Compensation.

 

Form of Payment.
Payments with respect to any Awards granted under this Article 8 shall be
made in cash, in Stock or a combination of both, as determined by the
Committee.

 

Award Agreement.
All Awards under this Article 8 shall be subject to such additional terms
and conditions as determined by the Committee and shall be evidenced by an
Award Agreement.

 

PERFORMANCE-BASED AWARDS

 

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

 

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

 

 

a Participant shall not require designation of any
other Covered Employees as a Participant in such period or in any other period.

 

Procedures
with Respect to Performance-Based Awards. To the extent
necessary to comply with the Qualified Performance-Based Compensation
requirements of Section 162(m)(4)(C) of the Code, with respect to any
Award granted under Articles 6 or 8 which may be granted to one or more
Covered Employees, no later than ninety (90) days following the commencement of
any fiscal year in question or any other designated fiscal period or period of
service (or such other time as may be required or permitted by Section 162(m)
of the Code), the Committee shall, in writing, (a) designate one or more
Covered Employees, (b) select the Performance Criteria applicable to the
Performance Period, (c) establish the Performance Goals, and amounts of
such Awards, as applicable, which may be earned for such Performance
Period, and (d) specify the relationship between Performance Criteria and
the Performance Goals and the amounts of such Awards, as applicable, to be
earned by each Covered Employee for such Performance Period. Following the
completion of each Performance Period, the Committee shall certify in writing
whether the applicable Performance Goals have been achieved for such
Performance Period. In determining the amount earned by a Covered Employee, the
Committee shall have the right to reduce or eliminate (but not to increase) the
amount payable at a given level of performance to take into account additional
factors that the Committee may deem relevant to the assessment of
individual or corporate performance for the Performance Period.

 

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

 

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

 

INDEPENDENT DIRECTOR

 

Grant of Awards to New
Independent Directors. During the term of the Plan each
person who first becomes an Independent Director shall automatically and
without further action of the Committee be granted the right to receive 15,000
shares  of Stock  either in the form of Restricted Stock
or Deferred Stock on the thirty-first day following their election as a
Director.

 

 

Annual Grants to
Independent Directors. Each July 1 each Independent
Director shall automatically and without further action of the Committee be
granted the right to receive (i) 6,000 shares of Stock in the form of
Restricted Stock or Deferred Stock, if such Director has been a Director since
the prior July 1, or (ii) if such Director has not served as a
Director for a period of twelve months, then a pro rata portion of 6,000 shares
based on the number of months out of twelve that such Director will serve from
appointment to July 1 of the year immediately following appointment.

 

Elections.
The Independent Director shall elect whether to receive the grants under Section 10.1
or 10.2 in the form of Restricted Stock or Deferred Stock. For grants
under Section 10.1 such election shall be made within 30 days of the
Independent Director’s election or appointment as a Director. For grants under Section 10.2,
such election must be made by December 31 of the prior year. Once an
election is made it may be revoked and changed only for grants made in
subsequent calendar years.

 

Restricted Stock.
If the Independent Director elects to receive the grants under Sections 10.1 or
10.2 in the form of Restricted Stock, then such Restricted Stock shall
vest and no longer be subject to forfeiture or transfer restrictions as
follows:

 

Prior to Public Trading
Date:  If such Restricted Stock is
granted prior to a Public Trading Date, then the Restricted Stock shall vest
upon the earliest of the following:

 

The date the Independent Director is not reappointed
or re-elected to the Board for reasons other than cause;

 

Death;

 

Change of Control; and

 

180 days following the Public Trading Date.

 

After Public Trading
Date:  If such Restricted Stock is
granted after a Public Trading Date, then the Restricted Stock shall be fully
vested and nonforfeitable upon grant.

 

Deferred Stock.
All Deferred Stock shall be paid to the Independent Director to the extent
vested on the earlier of termination of service as a Director other than for
cause, or a Change of Control. If the Independent Director terminates service
prior to vesting, or is terminated for cause any unvested Deferred Stock shall
be forfeited and cancelled, and such Independent Director shall have no right
to receive any further shares of Stock. Deferred Stock granted to an
Independent Director under Sections 10.1 or 10.2 shall vest  as follows:

 

Deferred Stock granted under Section 10.1 shall
vest on the twelve-month anniversary of the date of grant; and

 

Deferred Stock granted under Section 10.2 shall
vest 90 days after the date of grant, unless such grant is made to an
Independent Director in the same year as he receives a grant under Section 10.1,
in which case, such Deferred Stock shall vest on the twelve month anniversary
of the date of grant.

 

 

Dividend Equivalents.
Each Independent Director who elects Deferred Stock under this Article 10
shall also be granted an equal number of Dividend Equivalents.

 

PROVISIONS APPLICABLE TO AWARDS

 

Stand-Alone
and Tandem Awards. Awards granted pursuant to the Plan may,
in the discretion of the Committee, be granted either alone, in addition to, or
in tandem with, any other Award granted pursuant to the Plan. Awards granted in
addition to or in tandem with other Awards may be granted either at the
same time as or at a different time from the grant of such other Awards.

 

Award
Agreement. Awards under the Plan shall be evidenced by Award
Agreements that set forth the terms, conditions and limitations for each Award
which may include the term of an Award, the provisions applicable in the
event the Participant’s employment or service terminates, and the Company’s
authority to unilaterally or bilaterally amend, modify, suspend, cancel or
rescind an Award.

 

Limits
on Transfer. No right or interest of a Participant in any
Award may be pledged, encumbered, or hypothecated to or in favor of any
party other than the Company or a Subsidiary, or shall be subject to any lien,
obligation, or liability of such Participant to any other party other than the
Company or a Subsidiary. Except as otherwise provided by the Committee, no
Award shall be assigned, transferred, or otherwise disposed of by a Participant
other than by will or the laws of descent and distribution. The Committee by
express provision in the Award or an amendment thereto may permit an Award
(other than an Incentive Stock Option) to be transferred to, exercised by and
paid to certain persons or entities related to the Participant, including but
not limited to members of the Participant’s family, charitable institutions, or
trusts or other entities whose beneficiaries or beneficial owners are members
of the Participant’s family and/or charitable institutions, or to such other
persons or entities as may be expressly approved by the Committee,
pursuant to such conditions and procedures as the Committee may establish.
Any permitted transfer shall be subject to the condition that the Committee
receive evidence satisfactory to it that the transfer is being made for estate
and/or tax planning purposes (or to a “blind trust” in connection with the
Participant’s termination of employment or service with the Company or a
Subsidiary to assume a position with a governmental, charitable, educational or
similar non-profit institution) and on a basis consistent with the Company’s
lawful issue of securities.

 

Beneficiaries.
Notwithstanding Section 11.3, a Participant may, in the manner determined
by the Committee, designate a beneficiary to exercise the rights of the
Participant and to receive any distribution with respect to any Award upon the
Participant’s death. A beneficiary, legal guardian, legal representative, or
other person claiming any rights pursuant to the Plan is subject to all terms
and conditions of the Plan and any Award Agreement applicable to the
Participant, except to the extent the Plan and Award Agreement otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee. If the Participant is married and resides in a community
property state, a designation of a person other than the Participant’s spouse
as his or her beneficiary with respect to more than 50% of the Participant’s
interest in the Award shall not be effective without the prior written consent
of the Participant’s spouse. If no 

 

 

beneficiary has been designated or survives the
Participant, payment shall be made to the person entitled thereto pursuant to
the Participant’s will or the laws of descent and distribution. Subject to the
foregoing, a beneficiary designation may be changed or revoked by a
Participant at any time provided the change or revocation is filed with the
Committee.

 

Stock Certificates; Book
Entry Procedures.

 

Notwithstanding anything
herein to the contrary, the Company shall not be required to issue or deliver
any certificates evidencing shares of Stock pursuant to the exercise of any
Award, unless and until the Board has determined, with advice of counsel, that
the issuance and delivery of such certificates is in compliance with all
applicable laws, regulations of governmental authorities and, if applicable,
the requirements of any exchange on which the shares of Stock are listed or
traded. All Stock certificates delivered pursuant to the Plan are subject to
any stop-transfer orders and other restrictions as the Committee deems
necessary or advisable to comply with federal, state, or foreign jurisdiction,
securities or other laws, rules and regulations and the rules of any
national securities exchange or automated quotation system on which the Stock
is listed, quoted, or traded. The Committee may place legends on any Stock
certificate to reference restrictions applicable to the Stock. In addition to
the terms and conditions provided herein, the Board may require that a
Participant make such reasonable covenants, agreements, and representations as
the Board, in its discretion, deems advisable in order to comply with any such
laws, regulations, or requirements. The Committee shall have the right to
require any Participant to comply with
any timing or other restrictions with respect to the settlement or exercise of
any Award, including a window-period limitation, as may be imposed in the discretion
of the Committee.

 

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

 

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

 

CHANGES IN CAPITAL STRUCTURE

 

Adjustments.

 

In the event of any combination or exchange of shares,
merger, consolidation or other distribution (other than normal cash dividends)
of Company assets to stockholders, or any other change affecting the shares of
Stock or the share price of the Stock, other than an Equity Restructuring, the
Committee shall make such proportionate adjustments, if any, as the Committee
in its discretion may deem appropriate to reflect such change with respect
to (i) the 

 

 

aggregate
number and kind of shares that may be issued under the Plan (including,
but not limited to, adjustments of the limitations in Sections 3.1 and 3.3); (ii) the
terms and conditions of any outstanding Awards (including, without limitation,
any applicable performance targets or criteria with respect thereto); and (iii) the
grant or exercise price per share for any outstanding Awards under the Plan. Any
adjustment affecting an Award intended as Qualified Performance-Based
Compensation shall be made consistent with the requirements of Section 162(m)
of the Code.

 

In the event of any
transaction or event described in Section 12.1(a) or any
unusual or nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the Company or any
affiliate, or of changes in applicable laws, regulations or accounting
principles, the Committee, in its sole and absolute discretion, and on such
terms and conditions as it deems appropriate, either by the terms of the Award
or by action taken prior to the occurrence of such transaction or event and
either automatically or upon the Participant’s request, is hereby authorized to
take any one or more of the following actions whenever the Committee determines
that such action is appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan
or with respect to any Award under the Plan, to facilitate such transactions or
events or to give effect to such changes in laws, regulations or principles:

 

To provide for either (A) termination of any such
Award in exchange for an amount of cash, if any, equal to the amount that would
have been attained upon the exercise of such Award or realization of the
Participant’s rights (and, for the avoidance of doubt, if as of the date of the
occurrence of the transaction or event described in this Section 12.1(b) the
Committee determines in good faith that no amount would have been attained upon
the exercise of such Award or realization of the Participant’s rights, then
such Award may be terminated by the Company without payment) or (B) the
replacement of such Award with other rights or property selected by the
Committee in its sole discretion;

 

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

 

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

 

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

 

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

 

 

In connection with the
occurrence of any Equity Restructuring, and notwithstanding anything to the
contrary in Sections 12.1(a) and 12.1(b):

 

The number and type of securities subject to each
outstanding Award and the exercise price or grant price thereof, if applicable,
will be equitably adjusted. The adjustments provided under this Section 12.1(c)(i) shall
be nondiscretionary and shall be final and binding on the affected Holder and
the Company.

 

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

 

Acceleration Upon a
Change of Control. Notwithstanding Section 12.1, and
except as may otherwise be provided in any applicable Award Agreement or
other written agreement entered into between the Company and a Participant, if
a Change of Control occurs and a Participant’s Awards are not converted,
assumed, or replaced by a successor entity, then immediately prior to the
Change of Control such Awards shall become fully exercisable and all forfeiture
restrictions on such Awards shall lapse. Upon, or in anticipation of, a Change
of Control, the Committee may cause any and all Awards outstanding
hereunder to terminate at a specific time in the future, including but not
limited to the date of such Change of Control, and shall give each Participant
the right to exercise such Awards during a period of time as the Committee, in
its sole and absolute discretion, shall determine. Unless such agreements
specifically override this Section 12.2, then in the event that the terms
of any agreement between the Company or any Company subsidiary or affiliate and
a Participant contains provisions that conflict with and are more restrictive
than the provisions of this Section 12.2, this Section 12.2 shall
prevail and control and the more restrictive terms of such agreement (and only
such terms) shall be of no force or effect.

 

No
Other Rights. Except as expressly provided in the Plan, no
Participant shall have any rights by reason of any subdivision or consolidation
of shares of stock of any class, the payment of any dividend, any increase or
decrease in the number of shares of stock of any class or any dissolution,
liquidation, merger, or consolidation of the Company or any other corporation. Except
as expressly provided in the Plan or pursuant to action of the Committee under
the Plan, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number of
shares of Stock subject to an Award or the grant or exercise price of any
Award.

 

ADMINISTRATION

 

Committee.
Unless and until the Board delegates administration of the Plan to a Committee
as set forth below, the Plan shall be administered by the full Board, and for
such purposes the term “Committee” as used in this Plan shall be deemed to
refer to the Board. The Board, at its discretion or as otherwise necessary to
comply with the requirements of Section 162(m) of the Code, Rule 16b-3
promulgated under the Exchange Act or to the extent required by any other
applicable rule or regulation, shall delegate administration of the Plan
to a 

 

 

Committee. Unless otherwise determined by the Board,
following the Public Trading Date, the Committee shall consist solely of two or
more Directors each of whom is an “outside director,” within the meaning of Section 162(m)
of the Code, a Non-Employee Director and an “independent director” under the rules of
the principal securities market on which shares of Stock are traded  Notwithstanding the foregoing: (a) the
full Board, acting by a majority of its members in office, shall conduct the
general administration of the Plan with respect to all Awards granted to
Independent Directors and for purposes of such Awards the term “Committee” as
used in this Plan shall be deemed to refer to the Board and (b) the
Committee may delegate its authority hereunder to the extent permitted by Section 13.5.
In its sole discretion, the Board may at any time and from time to time
exercise any and all rights and duties of the Committee under the Plan except
that following the Public Trading Date with respect to matters which under Rule 16b-3
under the Exchange Act or Section 162(m) of the Code, or any regulations
or rules issued thereunder, are required to be determined in the sole
discretion of the Committee. Committee members may resign at any time by
delivering written notice to the Board. Vacancies in the Committee may only
be filled by the Board.

 

Action
by the Committee. The Committee shall act in accordance with
its charter. If the Committee does not have a charter, then a majority of the
Committee shall constitute a quorum, and the acts of a majority of the members
present at any meeting at which a quorum is present, and acts approved in
writing by a majority of the Committee in lieu of a meeting, shall be deemed
the acts of the Committee. Each member of the Committee is entitled to, in good
faith, rely or act upon any report or other information furnished to that
member by any officer or other employee of the Company or any Subsidiary, the
Company’s independent certified public accountants, or any executive
compensation consultant or other professional retained by the Company to assist
in the administration of the Plan.

 

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

 

Designate Participants to
receive Awards;

 

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

 

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

 

Determine the terms and
conditions of any Award granted pursuant to the Plan, including, but not
limited to, the exercise price, grant price, or purchase price, any reload
provision, any restrictions or limitations on the Award, any schedule for
lapse of forfeiture restrictions or restrictions on the exercisability of an
Award, and accelerations or waivers thereof, any provisions related to
non-competition and recapture of gain on an Award, based in each case on such
considerations as the Committee in its sole discretion determines; provided, however, that the Committee
shall not have the authority to accelerate the vesting or waive the forfeiture
of any Performance-Based Awards;

 

 

Determine whether, to
what extent, and pursuant to what circumstances an Award may be settled
in, or the exercise price of an Award may be paid in, cash, Stock, other
Awards, or other property, or an Award may be canceled, forfeited, or
surrendered;

 

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

 

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

 

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

 

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

 

Make all other decisions
and determinations that may be required pursuant to the Plan or as the
Committee deems necessary or advisable to administer the Plan.

 

Decisions
Binding. The Committee’s interpretation of the Plan, any
Awards granted pursuant to the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding,
and conclusive on all parties.

 

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

 

EFFECTIVE AND EXPIRATION DATE

 

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

 

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

 

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

 

 

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

 

AMENDMENT, MODIFICATION, AND
TERMINATION

 

Amendment,
Modification, and Termination. Subject to Section 16.14,
with the approval of the Board, at any time and from time to time, the
Committee may terminate, amend or modify the Plan; provided, however, that (a) to the
extent necessary and desirable to comply with any applicable law, regulation,
or stock exchange rule, the Company shall obtain stockholder approval of any
Plan amendment in such a manner and to such a degree as required, and (b) stockholder
approval is required for any amendment to the Plan that (i) increases the
number of shares available under the Plan (other than any adjustment as
provided by Article 12), (ii) permits the Committee to grant Options
with an exercise price that is below Fair Market Value on the date of grant, or
(iii) permits the Committee to extend the exercise period for an Option
beyond ten years from the date of grant or (iv) results in a material
increase in benefits or a change in eligibility requirements. Notwithstanding
any provision in this Plan to the contrary, absent approval of the stockholders
of the Company, no Option may be amended to reduce the per share exercise
price of the shares subject to such Option below the per share exercise price
as of the date the Option is granted and, except as permitted by Article 12,
no Option may be granted in exchange for, or in connection with, the
cancellation or surrender of an Option having a higher per share exercise
price.

 

Awards
Previously Granted. Except with respect to amendments made
pursuant to Section 16.14, no termination, amendment, or modification of
the Plan shall adversely affect in any material way any Award previously
granted pursuant to the Plan without the prior written consent of the
Participant.

 

GENERAL PROVISIONS

 

No
Rights to Awards. No Eligible Individual or other person
shall have any claim to be granted any Award pursuant to the Plan, and neither
the Company nor the Committee is obligated to treat Eligible Individuals,
Participants or any other persons uniformly.

 

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

 

Withholding.
The Company or any Subsidiary shall have the authority and the right to deduct
or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state, local and foreign taxes (including the
Participant’s employment tax obligations) required by law to be withheld with
respect to any taxable event concerning a 

 

 

Participant arising as a result of this Plan. The
Committee may in its discretion and in satisfaction of the foregoing
requirement allow a Participant to elect to have the Company withhold shares of
Stock otherwise issuable under an Award (or allow the return of shares of
Stock) having a Fair Market Value equal to the sums required to be withheld. Notwithstanding
any other provision of the Plan, the number of shares of Stock which may be
withheld with respect to the issuance, vesting, exercise or payment of any
Award (or which may be repurchased from the Participant of such Award
within six months (or such other period as may be determined by the
Committee) after such shares of Stock were acquired by the Participant from the
Company) in order to satisfy the Participant’s federal, state, local and
foreign income and payroll tax liabilities with respect to the issuance,
vesting, exercise or payment of the Award shall be limited to the number of
shares which have a Fair Market Value on the date of withholding or repurchase
equal to the aggregate amount of such liabilities based on the minimum
statutory withholding rates for federal, state, local and foreign income tax
and payroll tax purposes that are applicable to such supplemental taxable
income.

 

No
Right to Employment or Services. Nothing in the Plan or any
Award Agreement shall interfere with or limit in any way the right of the
Company or any Subsidiary to terminate any Participant’s employment or services
at any time, nor confer upon any Participant any right to continue in the
employ or service of the Company or any Subsidiary.

 

Unfunded
Status of Awards. The Plan is intended to be an “unfunded”
plan for incentive compensation. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or any Award
Agreement shall give the Participant any rights that are greater than those of
a general creditor of the Company or any Subsidiary.

 

Indemnification.
To the extent allowable pursuant to applicable law, each member of the
Committee or of the Board shall be indemnified and held harmless by the Company
from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by such member in connection with or resulting from any
claim, action, suit, or proceeding to which he or she may be a party or in
which he or she may be involved by reason of any action or failure to act
pursuant to the Plan and against and from any and all amounts paid by him or
her in satisfaction of judgment in such action, suit, or proceeding against him
or her; provided he or she gives the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle
and defend it on his or her own behalf. The foregoing right of indemnification
shall not be exclusive of any other rights of indemnification to which such
persons may be entitled pursuant to the Company’s Certificate of Incorporation
or Bylaws, as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.

 

Relationship to other
Benefits. No payment pursuant to the Plan shall be taken into
account in determining any benefits pursuant to any pension, retirement,
savings, profit sharing, group insurance, welfare or other benefit plan of the
Company or any Subsidiary except to the extent otherwise expressly provided in
writing in such other plan or an agreement thereunder.

 

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

 

 

Titles
and Headings. The titles and headings of the Sections in the
Plan are for convenience of reference only and, in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.

 

Fractional
Shares. No fractional shares of Stock shall be issued and the
Committee shall determine, in its discretion, whether cash shall be given in
lieu of fractional shares or whether such fractional shares shall be eliminated
by rounding up or down as appropriate.

 

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

 

Government
and Other Regulations. The obligation of the Company to make
payment of awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by government agencies as may be
required. The Company shall be under no obligation to register pursuant to the
Securities Act, as amended, any of the shares of Stock paid pursuant to the
Plan. If the shares paid pursuant to the Plan may in certain circumstances
be exempt from registration pursuant to the Securities Act, as amended, the
Company may restrict the transfer of such shares in such manner as it
deems advisable to ensure the availability of any such exemption.

 

Governing
Law. The Plan and all Award Agreements shall be construed in
accordance with and governed by the laws of the State of Delaware.

 

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

 

 

*  * 
*  *  *

 

I hereby certify that the foregoing Plan was duly
adopted by the Board of Directors of Reliant Pharmaceuticals, Inc. on                            
     , 2007.

 

*  * 
*  *  *

 

I hereby certify that the foregoing Plan was approved
by the stockholders of Reliant Pharmaceuticals, Inc. on                            
     , 2007.

 

Executed on this          
day of                            ,
2007.

 

	
   

  	
   

  
	
  Corporate
  SecretaryEXHIBIT 10.2(a)

 

RELIANT PHARMACEUTICALS, INC.

2007 INCENTIVE AWARD PLAN

OPTION AGREEMENT

 

	
  Name:

  	
  Grant:

  	
  Option
  to purchase         shares of

  Common Stock (the “Shares”)

  
	
  Address:

  	
   

  
	
   

  	
  Exercise
  Price: $

  
	
   

  	
   

  
	
   

  	
  Grant
  Date:

  
	
   

  	
   

  
	
  Participant
  Signature:

  	
  Vesting
  Commencement Date:

  
	
   

  	
   

  
	
   

  	
  Type of
  Option:

  	
  o
  Incentive Stock Option

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o
  Non-Qualified Stock Option

  
				

 

1.                                       Grant
of Option. Effective on the Grant Date you have been granted the option (the
“Option”) to purchase the number of Shares
of the Company’s Common Stock at the exercise price designated above (the “Exercise Price”), in accordance with the provisions of the
Reliant Pharmaceuticals, Inc. 2007 Incentive Award Plan, (as amended from
time to time, the “Plan”). This Option
may be exercised for whole shares only.

 

Notwithstanding
anything to the contrary anywhere else in this Option Agreement, this grant of
an Option is subject to the terms, definitions and provisions of the Plan,
which are incorporated herein by reference. Unless otherwise defined herein,
capitalized terms shall have the same meanings as set forth in the Plan.

 

If
designated as an Incentive Stock Option above, then this Option is intended to
qualify as an Incentive Stock Option as defined in Section 422 of the
Code; provided, however, that to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options (within the
meaning of Code Section 422, but without regard to Code Section 422(d)),
including the Option, are exercisable by you for the first time during any
calendar year (under the Plan and all other incentive stock option plans of the
Company or any Subsidiary) exceeds $100,000, such options shall be treated as
not qualifying under Code Section 422, but rather shall be treated as a
Non-Qualified Stock Option to the extent required by Code Section 422. The
rule set forth in the preceding sentence shall be applied by taking
options into account in the order in which they were granted. For purposes of
these rules, the Fair Market Value of the Common Stock shall be determined as
of the time the option with respect to such stock is granted.

 

 

2.                                       Exercise
and Vesting Schedule. This Option is exercisable only to the extent it is
vested. In the event of the termination of your employment or service for any
reason, whether such termination is occasioned by you, by the Company or any of
its Subsidiaries, with or without cause or by mutual agreement (“Termination of Service”), your right to vest in this Option
will terminate and the unvested portion of the Option shall automatically
terminate and no longer be exercisable. This Option shall vest according to the
following schedule:

 

Twenty-five percent (25%) of the
Option (rounded down to the next whole number of Shares) shall vest on each
anniversary of the Vesting Commencement Date set forth above, so that one
hundred percent (100%) of this Option shall be vested on the fourth anniversary
of the Vesting Commencement Date.

 

Notwithstanding the foregoing, you shall be fully vested in
the Option upon a Change of Control.

 

3.                                       Exercise
Period

 

This
Option may be exercised to the extent vested at any time prior to your
Termination of Service, but in no event later than the Expiration Date as
provided above. Following your Termination of Service, this Option may be
exercised as follows, but no later than the Expiration Date as provided above:

 

(a)                                  If
your Termination of Service is for reasons other than death, disability or
Cause, for a period of thirty (30) days following your Termination of Service,

 

(b)                                 If
your Termination of Service is by reason of death, or disability for a period
of twelve (12) months following your Termination of Service,

 

(c)                                  If
your Termination of Service is by reason of Cause, then the Option shall expire
immediately and shall no longer be exercisable.

 

4.                                       Method
of Exercise. This Option shall be exercisable by delivery of an executed
Exercise Notice (in the form attached as Exhibit A if such
exercise is prior to a Public Offering (as defined in Exhibit A) or
on such form as the Company may require following a Public Offering).
The Exercise Notice must state the number of Shares for which the Option is
being exercised, and such other representations and agreements with respect to
such shares of Common Stock as may be required by the Company pursuant to
the provisions of the Plan. The Exercise Notice must be signed and delivered in
person or by certified mail to the Secretary of the Company. The Exercise
Notice must be accompanied by payment of the Exercise Price, including payment
of any applicable withholding tax. This Option shall be deemed to be exercised
upon receipt by the Company of such written Exercise Notice accompanied by the
Exercise Price and payment of any applicable withholding tax.

 

5.                                       Method
of Payment. Payment of the Exercise Price shall be by any of the following,
or a combination thereof, as you may determine:

 

(a)                                  cash;

 

2

 

(b)                                 check;

 

(c)                                  with
the consent of the Committee, surrender of other shares of Common Stock of the
Company which (A) in the case of Shares acquired from the Company, have
been owned by you for more than six (6) months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal
to the Exercise Price of the Shares as to which the Option is being exercised;

 

(d)                                 with
the consent of the Committee, surrendered Shares issuable upon the exercise of
the Option having a Fair Market Value on the date of exercise equal to the
aggregate Exercise Price of the Option or exercised portion thereof;

 

(e)                                  with
the consent of the Committee, delivery of a notice that you have placed a
market sell order with a broker with respect to Shares then issuable upon
exercise of the Option and that the broker has been directed to pay a
sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the aggregate Exercise Price; provided, that payment of such
proceeds is then made to the Company upon settlement of such sale; or

 

(f)                                    with
the consent of the Committee, property of any kind which constitutes good and
valuable consideration.

 

6.                                       Restrictions
on Shares. You hereby agree that Shares purchased upon the exercise of the
Option shall be subject to such terms and conditions as the Committee shall
determine in its sole discretion, including, without limitation, restrictions
on the transferability of Shares, the right of the Company to repurchase
Shares, and a right of first refusal in favor of the Company with respect to
permitted transfers of Shares. Such terms and conditions may, in the Committee’s
sole discretion, be contained in the Exercise Notice with respect to the Option
or in such other agreement as the Committee shall determine and which you hereby
agree to enter into at the request of the Company.

 

7.                                       Compliance
with Applicable Law. No Shares shall be issued pursuant to the exercise of
an Option unless such issuance and such exercise comply with all relevant
provisions of law and the requirements of any stock exchange upon which the
Shares may then be listed. Assuming such compliance, for income tax
purposes the Shares shall be considered transferred to you on the date on which
the Option is exercised with respect to such Shares. However, for purposes of
voting or rights to receive dividends, the Shares will not be considered issued
to you until you are listed on the books and records of the Company as the
holder of such Shares.

 

8.                                       Your
Representations. If the Shares purchasable pursuant to the exercise of this
Option have not been registered under the Securities Act of 1933, as amended
(the “Securities Act”), at the
time this Option is exercised, you shall concurrently with the exercise of all
or any portion of this Option, deliver to the Company your Investment
Representation Statement in the form attached hereto as Exhibit B.

 

9.                                       Non-Transferability
of Option. This Option may not be transferred in any manner except by
will or by the laws of descent or distribution. It may be exercised during
your lifetime only by you. Notwithstanding the foregoing if the Option is
designed in the Notice of Grant as a Non-Qualified Stock Option, then the
Option may be transferred to a member or members of 

 

3

 

your Immediate Family; provided, however, that any such transfer is
without payment of any consideration whatsoever, that no such transfer shall be
valid unless first approved by the Committee, acting in its sole discretion,
and that any Option so transferred shall remain subject to the terms and
conditions of this Option agreement. The terms of this Option shall be binding
upon your executors, heirs, successors and assigns. For this purpose “Immediate Family” shall mean your spouse,
former spouse, children, step-children, grandchildren, siblings, parents,
step-parents, nieces, nephews, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, sister-in-law, including adoptive
relationships, and any person sharing your household (other than as a tenant,
guest or employee), or trusts in which any of the foregoing have more than a
fifty percent interest, foundations in which the foregoing (or you) control the
management of assets or any other entity in which the foregoing persons (or you)
own more than fifty percent of the voting interests.

 

10.                                 Acknowledgements.
BY SIGNING THIS OPTION AGREEMENT YOU ACKNOWLEDGE AND AGREE THAT THE OPTION
CONTINUES TO BE EXERCISABLE ONLY FOR PERIODS DETERMINED WITH REFERENCE TO YOUR
CONTINUED CONSULTANCY OR EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE
ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). YOU
FURTHER ACKNOWLEDGE AND AGREE THAT NOTHING IN THIS AGREEMENT, NOR IN THE PLAN
SHALL CONFER UPON YOU ANY RIGHT WITH RESPECT TO CONTINUED EMPLOYMENT BY THE
COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH YOUR RIGHT OR THE COMPANY’S
RIGHT TO TERMINATE YOUR EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT
CAUSE OR NOTICE.

 

In
addition, by signing this Option Agreement, you:

 

(a)                                  acknowledge
receipt of a copy of the Plan and represent that you are familiar with the terms
and provisions thereof;

 

(b)                                 accept
this Option subject to all of the terms and provisions thereof;

 

(c)                                  have
reviewed the Plan, and this Option in their entirety, have had an opportunity
to obtain the advice of counsel prior to executing this Option and fully
understand all provisions of the Option;

 

(d)                                 agree
to accept as binding, conclusive and final all decisions or interpretations of
the Committee upon any questions arising under the Plan or this Option.

 

This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one document.

 

	
   

  	
  RELIANT PHARMACEUTICALS, INC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

4

 

EXHIBIT A

 

RELIANT PHARMACEUTICALS,
INC

 

2007 INCENTIVE AWARD PLAN

 

EXERCISE NOTICE

 

Reliant Pharmaceuticals, Inc.

110 Allen Road

Liberty Corner, New Jersey  07938

 

Attention: 
Secretary

 

11.                                 Exercise
of Option. Effective as of today,                         ,
            , I
hereby elect to exercise my option to purchase         
shares of Common Stock (the “Shares”)
of Reliant Pharmaceuticals, Inc. (the “Company”)
under and pursuant to the Reliant Pharmaceuticals, Inc. 2007 Incentive Award
Plan (the “Plan”) and the Option Agreement
dated                         ,
            , (the “Option Agreement”).

 

12.                                 Representations.
I, without
further action on my part, by purchase of the Shares agrees to be deemed a
party to, a signatory of and bound by the Stockholders’ Agreement dated April 1,
2004 as amended from time to time (the “Stockholders’ Agreement”), and the Shares shall be subject to such
rights and restrictions as contained therein. I acknowledge that I have
received, read and understood the Plan, the Option Agreement, the Stockholders’
Agreement, and this Exercise Notice and is familiar with their terms and
provisions. I hereby agree to accept as binding, conclusive and final all
decisions or interpretations of the Committee upon any questions arising under
this Agreement.

 

13.                                 Rights
and Obligations as a Stockholder. Until the stock certificate evidencing
such Shares is issued (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company), no right to
vote or receive dividends or any other rights as a stockholder shall exist with
respect to Shares subject to the Option, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such stock certificate
promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
stock certificate is issued.

 

I shall
enjoy rights as a stockholder until such time as I dispose of the Shares or the
Company and/or its assignee(s) exercises the Right of First Refusal hereunder. Upon
such exercise, I shall have no further rights as a holder of the Shares so
purchased except the right to receive payment for the Shares so purchased in
accordance with the provisions of this Agreement, and I shall forthwith cause
the certificate(s) evidencing the Shares so purchased to be surrendered to the
Company for transfer or cancellation.

 

5

 

14.                                 Rights
to Transfer Shares.

 

(a)                                  Limitations
on Transfer. I may transfer Shares subject to the restrictions
contained in this Section 4 and the Stockholders’ Agreement; provided that
prior to a Public Offering (as defined in Section 4(d)) no Shares may be
transferred (i) to a direct competitor of the Company as determined by the
Board, or (ii) for consideration other than cost.

 

(b)                                 Company’s
Right of First Refusal. Before any Shares held by me or any permitted
transferee (each, a “Holder”) may be
sold, pledged, assigned, hypothecated, transferred or otherwise disposed of
(including transfer by gift or operation of law, collectively a “Transfer” or “Transferred”),
the Company or its assignee(s) shall have a right of first refusal to purchase
the Shares on the terms and conditions set forth in this Section 4 (the “Right of First Refusal”).

 

(i)                                     Notice
of Proposed Transfer. The Holder of the Shares shall deliver to the Company
a written notice (the “Notice”)
stating:  (i) the Holder’s bona fide
intention to sell or otherwise Transfer such Shares; (ii) the name of each
proposed Participant or other transferee (“Proposed Transferee”);
(iii) the number of Shares to be Transferred to each Proposed Transferee;
and (iv) the bona fide cash price for which the Holder proposes to
Transfer the Shares (the “Offered Price”),
and the Holder shall offer the Shares at the Offered Price to the Company or
its assignee(s).

 

(ii)                                  Exercise
of Right of First Refusal. Within thirty (30) days after receipt of the
Notice, the Company and/or its assignee(s) may elect in writing to
purchase all, but not less than all, of the Shares proposed to be Transferred
to any one or more of the Proposed Transferees. The purchase price will be
determined in accordance with subsection (iii) below.

 

(iii)                               Purchase Price. The
purchase price (“Purchase Price”) for the Shares
repurchased under this Section shall be the Offered Price. If the Offered
Price includes consideration other than cash, the cash equivalent value of the
non-cash consideration will be determined by the Committee in good faith.

 

(iv)                              Payment.
Payment of the Purchase Price shall be made, at the option of the Company or
its assignee(s), in cash (by check), by cancellation of all or a portion of any
outstanding indebtedness of the Holder to the Company (or, in the case of
repurchase by an assignee, to the assignee), or by any combination thereof
within thirty (30) days after receipt of the Notice or in the manner and at the
times set forth in the Notice.

 

(v)                                 Holder’s
Right to Transfer. If all of the Shares proposed in the Notice to be
transferred to a given Proposed Transferee are not purchased by the Company
and/or its assignee(s) as provided in this Section, then subject to any rights
of first refusal or other restrictions on transfer contained in the
Stockholders’ Agreement, the Holder may sell or otherwise Transfer such
Shares to that Proposed Transferee at the Offered Price or at a higher price,
provided that such sale or other Transfer is consummated within one hundred
twenty (120) days after the date of the Notice and provided further that
any such sale or other Transfer is effected in accordance with any applicable
securities laws and the Proposed Transferee agrees in writing to the provisions
of this Section and shall continue to apply to the Shares in the hands of 

 

6

 

such Proposed Transferee. If the Shares described in the Notice are not
Transferred to the Proposed Transferee within such period, a new Notice shall
be given to the Company, and the Company and/or its assignees shall again be
offered the Right of First Refusal as provided herein before any Shares held by
the Holder may be sold or otherwise Transferred. The Company’s Right of
First Refusal as contained herein shall be in addition to and arise prior to
any rights of first refusal contained in the Stockholders’ Agreement.

 

(c)                                  Exception
for Certain Family Transfers. Anything to the contrary contained in this Section notwithstanding,
the Transfer of any or all of the Shares during my lifetime or on my death by
will or intestacy to my Immediate Family (as defined in the Option Agreement)
shall be exempt from the Right of First Refusal. In such case, the transferee
or other recipient shall receive and hold the Shares so Transferred subject to
the provisions of this Section 4, Section 5,  and the Stockholders’ Agreement, as
applicable, and there shall be no further Transfer of such Shares except in
accordance with the terms of this Section.

 

(d)                                 Termination
of Right of First Refusal. The Right of First Refusal and the restrictions
on transfer set forth in Section 4(a) shall terminate as to all
Shares ninety (90) days after a sale of Common Stock to the general public
pursuant to a registration statement filed with and declared effective by the
Securities and Exchange Commission under the Securities Exchange Act of 1934,
as amended (a “Public Offering”).

 

15.                                 Company
Call Right.

 

(a)                                  If
I cease to provide services to the Company and its Subsidiaries for any reason,
the Company shall have the right to purchase any or all of the Shares then held
by a Holder at a price equal to the  Fair Market
Value (as defined in the Plan) of the Shares on the date on which the
Participant ceases to provide such services (the “Call Right”).

 

(b)                                 The
Company may exercise the Company Call Right by delivering personally or by
registered mail to Holder, within ninety (90) days of the date on which
Participant ceases to provide services to the Company and its Subsidiaries, a
notice in writing indicating the Company’s intention to exercise the Company
Call Right and setting forth a date for closing not later than thirty (30) days
from the mailing of such notice. The closing shall take place at the Company’s
office.

 

(c)                                  At
its option, the Company may elect to make payment for the Shares to a bank
selected by the Company. The Company shall avail itself of this option by a
notice in writing to Holder stating the name and address of the bank, date of
closing, and waiving the closing at the Company’s office.

 

(d)                                 If
the Company does not elect to exercise the Company Call Right conferred above
by giving the requisite notice within ninety (90) days following the date on
which Participant ceases to provide services to the Company and its
Subsidiaries, the Company Call Right shall terminate.

 

(e)                                  The
Company Call Right shall terminate as to all Shares ninety (90) days after a
Public Offering.

 

7

 

16.                                 Lock-Up
Period. Participant hereby agrees that if so requested by the Company (or
any successor thereto) or any representative of the underwriters (the “Managing Underwriter”) in connection with any registration
of the offering of any securities of the Company under the Securities Act,
I shall not sell or otherwise transfer any Shares or other securities of the
Company during the 180-day period (or such longer period as may be
requested in writing by the Managing Underwriter and agreed to in writing by
the Company) (the “Market Standoff Period”)
following the effective date of a registration statement of the Company filed
under the Securities Act; provided, however,
that such restriction shall apply only to the first registration statement of
the Company to become effective under the Securities Act that includes
securities to be sold on behalf of the Company to the public in an underwritten
public offering under the Securities Act. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such Market Standoff Period.

 

17.                                 Spousal
Consent. As a further condition to the Company’s and my obligations under
this Agreement, my spouse, if any, shall execute and deliver to the Company the
Consent of Spouse attached hereto as Exhibit C.

 

18.                                 Restrictive
Legends and Stop-Transfer Orders.

 

(a)                                  Legends.
I understand and agree that the Company shall cause the legends set forth below
or legends substantially equivalent thereto, to be placed upon any
certificate(s) evidencing ownership of the Shares together with any other
legends that may be required by state or federal securities laws:

 

THE SECURITIES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED
OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN
COMPLIANCE THEREWITH.

 

THE SHARES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER
AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET
FORTH IN THE EXERCISE NOTICE AND THE STOCKHOLDERS AGREEMENT DATED APRIL 1, 2004, AS AMENDED
FROM TIME TO TIME BY AND BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF
THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF
THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING
ON TRANSFEREES OF THESE SHARES.

 

8

 

(b)                                 Stop-Transfer
Notices. I agree that, in order to ensure compliance with the restrictions
referred to herein, the Company may issue appropriate “stop transfer”
instructions to its transfer agent, if any, and that, if the Company transfers
its own securities, it may make appropriate notations to the same
effect in its own records.

 

(c)                                  Refusal
to Transfer. The Company shall not be required (i) to transfer on its
books any Shares that have been sold or otherwise transferred in violation of
any of the provisions of the Stockholders Agreement or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.

 

19.                                 Successors
and Assigns. The Company may assign any of its rights under this
Agreement to single or multiple assignees, and this Agreement shall inure to
the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
me and my heirs, executors, successors, and assigns.

 

20.                                 Interpretation.
Any dispute regarding the interpretation of this Agreement shall be submitted
by me or by the Company forthwith to the Company’s Board of Directors or
committee thereof that is responsible for the administration of the Plan (the “Committee”), which shall review such dispute at its next
regular meeting. The resolution of such a dispute by the Committee shall be
final and binding on the Company and on any Holder.

 

21.                                 Governing
Law; Severability. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware excluding that body of law
pertaining to conflicts of law. Should any provision of this Agreement be
determined by a court of law to be illegal or unenforceable, the other provisions
shall nevertheless remain effective and shall remain enforceable.

 

22.                                 Notices.
Any notice required or permitted hereunder shall be given in writing and shall
be deemed effectively given upon personal delivery or upon deposit in the
United States mail by certified mail, with postage and fees prepaid, addressed
to the other party at its address as shown below beneath its signature, or to
such other address as such party may designate in writing from time to
time to the other party. I further agree to notify the Company upon any change
in the residence address indicated below.

 

23.                                 Further
Instruments. The parties agree to execute such further instruments and to
take such further action as may be reasonably necessary to carry out the
purposes and intent of this Agreement.

 

24.                                 Delivery
of Payment. I am delivering with this Exercise Notice to the Company the
full Exercise Price for the Shares, as well as any applicable withholding tax.

 

9

 

25.                                 Entire
Agreement. The Plan, Option Agreement and Stockholders’ Agreement are
incorporated herein by reference. This Agreement, the Plan, the Option
Agreement, and the Investment Representation Statement, if applicable,
constitute the entire agreement of the parties and supersede in their entirety
all prior undertakings and agreements of the Company and me with respect to the
subject matter hereof.

 

 

	
  Submitted by:

  	
  Accepted by:

  
	
   

  	
   

  
	
  PARTICIPANT

  	
  RELIANT
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
					

 

10

 

EXHIBIT B

 

INVESTMENT REPRESENTATION
STATEMENT

 

	
  PARTICIPANT:

  	
   

  
	
   

  	
   

  	
   

  
	
  COMPANY

  	
  :

  	
  RELIANT PHARMACEUTICALS, INC

  
	
   

  	
   

  	
   

  
	
  SECURITY

  	
  :

  	
  COMMON STOCK

  
	
   

  	
   

  	
   

  
	
  AMOUNT

  	
  :

  	
   

  
	
   

  	
   

  	
   

  
	
  DATE

  	
  :

  	
   

  

 

In connection with the purchase of the above-listed
Securities, the undersigned Participant represents to the Company the
following:

 

(a)                                  I
am  aware of the Company’s business
affairs and financial condition and have acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
Securities. I am acquiring these Securities for investment for my own account
only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities
Act of 1933, as amended (the “Securities Act”).

 

(b)                                 I
acknowledge and understand that the Securities constitute “restricted
securities” under the Securities Act and have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of my investment
intent as expressed herein. In this connection, I understand that, in the view
of the Securities and Exchange Commission, the statutory basis for such
exemption may be unavailable if my representation was predicated solely
upon a present intention to hold these Securities for the minimum capital gains
period specified under tax statutes, for a deferred sale, for or until an
increase or decrease in the market price of the Securities, or for a period of
one year or any other fixed period in the future. I further understand that the
Securities must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available. I
further acknowledge and understand that the Company is under no obligation to
register the Securities.

 

(c)                                  I
am familiar with the provisions of Rule 701 and Rule 144, each
promulgated under the Securities Act, which, in substance, permit limited public
resale of “restricted securities” acquired,
directly or indirectly from the issuer thereof, in a non-public offering (or
held by any affiliate of the issuer), subject to the satisfaction of certain
conditions. Rule 701 provides that if the issuer qualifies under Rule 701
at the time of the grant of the Option to me, the exercise will be exempt from
registration under the Securities Act. In the event the Company becomes subject
to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer
period as any market stand-off agreement may require) the Securities
exempt under Rule 701 may be resold, 

 

 

subject to the satisfaction of certain of the conditions specified by Rule 144,
including:  (1) the resale being
made through a broker in an unsolicited “broker’s transaction”
or in transactions directly with a market maker (as said term is defined
under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the
availability of certain public information about the Company, (3) the
amount of Securities being sold during any three (3) month period not
exceeding the limitations specified in Rule 144(e), and (4) the
timely filing of a Form 144, if applicable.

 

In the
event that the Company does not qualify under Rule 701 at the time of
grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which
requires the resale to occur not less than one year after the later of the
date the Securities were sold by the Company or the date the Securities were
sold by an affiliate of the Company, within the meaning of Rule 144; and,
in the case of acquisition of the Securities by an affiliate, or by a
non-affiliate who subsequently holds the Securities less than two (2) years,
the satisfaction of the conditions set forth in sections (1), (2), (3) and
(4) of the paragraph immediately above.

 

(d)                                 I
further understand that in the event all of the applicable requirements of Rule 701
or 144 are not satisfied, registration under the Securities Act, compliance
with Regulation A, or some other registration exemption will be required; and
that, notwithstanding the fact that Rules 144 and 701 are not exclusive,
the Staff of the Securities and Exchange Commission has expressed its opinion
that persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rules 144 or 701 will
have a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that such persons and
their respective brokers who participate in such transactions do so at their
own risk. I understand that no assurances can be given that any such other
registration exemption will be available in such event.

 

	
   

  	
  Signature
  of Participant:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
  ,

  	
   

  	
   

  	
   

  
						

 

2

 

EXHIBIT C

 

CONSENT OF SPOUSE

 

I,                                              ,
spouse of                                              
have read and approve the foregoing Exercise Notice. In consideration of
granting of the right to my spouse to purchase Common Stock of  Reliant Pharmaceuticals, Inc. as set forth in the
Exercise Notice, I hereby appoint my spouse as my attorney-in-fact in respect
to the exercise of any rights under the Exercise Notice and agree to be bound
by the provisions of the Exercise Notice insofar as I may have any rights
in said Exercise Notice or any shares issued pursuant thereto under the
community property laws or similar laws relating to marital property in effect
in the state of our residence as of the date of the signing of the foregoing
Exercise Notice.

 

	
  Dated:

  	
   

  	
  ,

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