Document:

Exhibit 10.1

 

NATIONAL SEMICONDUCTOR CORPORATION

 

2009 INCENTIVE AWARD PLAN

 

(As Adopted by the Board of
Directors on July 15, 2009)

 

ARTICLE 1.

 

PURPOSE

 

The purpose of the National
Semiconductor Corporation 2009 Incentive Award Plan (the “Plan”) is to promote the success and
enhance the value of the Company by linking the individual interests of the
members of the Board, Employees, and Consultants 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 members of the Board,
Employees, and Consultants upon whose judgment, interest, and special effort
the successful conduct of the Company’s operation is largely dependent.

 

ARTICLE 2.

 

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.

 

2.1         “Administrator” shall mean the entity that conducts the
general administration of the Plan as provided in Article 12. With
reference to the duties of the Committee under the Plan which have been
delegated to one or more persons pursuant to Section 12.6, or as to which
the Board has assumed, the term “Administrator” shall refer to such person(s) unless
the Committee or the Board has revoked such delegation or the Board has
terminated the assumption of such duties.

 

2.2         “Affiliate” shall mean (a) Subsidiary; and (b) any
domestic eligible entity that is disregarded, under Treasury Regulation Section 301.7701-3,
as an entity separate from either (i) the Company or (ii) any
Subsidiary.

 

2.3         “Applicable Accounting Standards” shall mean Generally
Accepted Accounting Principles in the United States, International Financial
Reporting Standards or such other accounting principles or standards as may apply
to the Company’s financial statements under United States federal securities
laws from time to time.

 

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

 

2.5         “Award Agreement” shall mean any written notice, agreement,
terms and conditions, contract or other instrument or document evidencing an
Award, including through electronic medium, which shall contain such terms and
conditions with respect to an Award as the Administrator shall determine
consistent with the Plan.

 

2.6         “Award Limit” shall mean with respect to Awards that shall be
payable in Shares or in cash, as the case may be, the respective limit set
forth in Section 3.3.

 

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

 

 

2.8         “Change in Control” shall mean and includes each of the
following:

 

(a)          A transaction or series of
transactions (other than an offering of Common Stock to the general public
through a registration statement filed with the Securities and Exchange
Commission) whereby any “person” or related “group” of “persons” (as such terms
are used in Sections 13(d) and 14(d)(2) of the Exchange Act)
(other than the Company, any of its subsidiaries, an employee benefit plan
maintained by the Company or any of its subsidiaries or a “person” that, prior
to such transaction, directly or indirectly controls, is controlled by, or is
under common control with, the Company) directly or indirectly acquires
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange
Act) of securities of the Company possessing more than 50% of the total combined
voting power of the Company’s securities outstanding immediately after such
acquisition; or

 

(b)         During any period of two
consecutive years, individuals who, at the beginning of such period, constitute
the Board together with any new director(s) (other than a director
designated by a person who shall have entered into an agreement with the
Company to effect a transaction described in Section 2.8(a) or Section 2.8(c))
whose election by the Board or nomination for election by the Company’s
stockholders was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the beginning of the two-year
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof (but excluding, for this
purpose, any new director whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board); or

 

(c)          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 in any single transaction
or series of related transactions or (z) the acquisition of assets or
stock of another entity, in each case other than a transaction:

 

(i)             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

 

(ii)          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 Section 2.8(c)(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

 

(d)         The Company’s stockholders
approve a liquidation or dissolution of the Company.

 

In addition, if a Change in
Control constitutes a payment event with respect to any Award which provides
for the deferral of compensation and is subject to Section 409A of the
Code, the transaction or event described in subsection (a), (b), (c) or
(d) with respect to such Award must also constitute a “change in control
event,” as defined in Treasury Regulation §1.409A-3(i)(5) to the extent
required by Section 409A.

 

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The Committee shall have
full and final authority, which shall be exercised in its discretion, to
determine conclusively whether a Change in Control of the Company has occurred
pursuant to the above definition, and the date of the occurrence of such Change
in Control and any incidental matters relating thereto.

 

2.9         “Code” shall mean the Internal Revenue Code of 1986, as
amended from time to time, together with the regulations and official guidance
promulgated thereunder.

 

2.10   “Committee” shall mean the Compensation Committee of the
Board, or another committee or subcommittee of the Board, appointed as provided
in Section 12.1.

 

2.11   “Common Stock” shall mean the common stock of the Company,
par value $0.50 per share.

 

2.12   “Company” shall mean National Semiconductor Corporation, a
Delaware corporation.

 

2.13   “Consultant” shall mean any consultant or adviser engaged to
provide services to the Company or any Affiliate that qualifies as a consultant
under the applicable rules of the Securities and Exchange Commission for
registration of shares on a Form S-8 Registration Statement.

 

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

 

2.15   “Deferred Stock” shall mean a right to receive Shares awarded
under Section 9.4.

 

2.16   “Director” shall mean a member of the Board, as constituted
from time to time.

 

2.17   “Dividend Equivalent” shall mean a right to receive the
equivalent value (in cash or Shares) of dividends paid on Shares, awarded under
Section 9.2.

 

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

 

2.19   “Effective Date” shall mean the date the Plan is approved by
the Board, subject to approval of the Plan by the Company’s stockholders.

 

2.20   “Eligible Individual” shall mean any person who is an
Employee, a Consultant or a Non-Employee Director, as determined by the
Committee.

 

2.21   “Employee” shall mean any officer or other employee (as
determined in accordance with Section 3401(c) of the Code and the
Treasury Regulations thereunder) of the Company or of any Affiliate.

 

2.22   “Equity Restructuring” shall mean a nonreciprocal 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 number or kind of shares of Common
Stock (or other securities of the Company) or the share price of Common Stock
(or other securities) and causes a change in the per share value of the Common
Stock underlying outstanding Awards.

 

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

 

2.24   “Fair Market Value” shall mean, as of any given date, the
value of a Share determined as follows:

 

(a)          If the Common Stock is
listed on any (i) established securities exchange (such as the New York
Stock Exchange, the NASDAQ Global Market and the NASDAQ Global Select Market), (ii) national
market system or (iii) automated quotation system on which the Shares are
listed, quoted or traded, its Fair Market Value shall be the closing sales
price for a share of Common

 

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Stock as quoted on such
exchange or system for such date or, if there is no closing sales price for a
share of Common Stock on the date in question, the closing sales price for a
share of Common Stock on the last preceding date for which such quotation
exists, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;

 

(b)         If the Common Stock is not
listed on an established securities exchange, national market system or
automated quotation system, but the Common Stock is regularly quoted by a
recognized securities dealer, its Fair Market Value shall be the mean of the
high bid and low asked prices for such date or, if there are no high bid and
low asked prices for a share of Common Stock on such date, the high bid and low
asked prices for a share of Common Stock on the last preceding date for which
such information exists, as reported in The
Wall Street Journal or such other source as the Administrator deems
reliable; or

 

(c)          If the Common Stock is
neither listed on an established securities exchange, national market system or
automated quotation system nor regularly quoted by a recognized securities
dealer, its Fair Market Value shall be established by the Administrator in good
faith.

 

2.25   “Full Value Award” shall mean any Award other than (i) an
Option, (ii) a Stock Appreciation Right or (iii) any other Award for
which the Holder pays the intrinsic value existing as of the date of grant
(whether directly or by forgoing a right to receive a payment from the Company
or any Affiliate).

 

2.26   “Greater Than 10% Stockholder” shall mean an individual then
owning (within the meaning of Section 424(d) of the Code) more than
10% of the total combined voting power of all classes of stock of the Company
or any Affiliate corporation (as defined in Section 424(f) of the
Code) or parent corporation thereof (as defined in Section 424(e) of
the Code).

 

2.27   “Holder” shall mean a person who has been granted an Award.

 

2.28   “Incentive Stock Option” shall mean an Option that is
intended to qualify as an incentive stock option and conforms to the applicable
provisions of Section 422 of the Code.

 

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

 

2.30   “Non-Qualified Stock Option” shall mean an Option that is not
an Incentive Stock Option.

 

2.31   “Option” shall mean a right to purchase Shares at a specified
exercise price, granted under Article 6. An Option shall be either a
Non-Qualified Stock Option or an Incentive Stock Option; provided, however,
that Options granted to Non-Employee Directors and Consultants shall only be
Non-Qualified Stock Options.

 

2.32   “Parent” shall mean any entity (other than the Company),
whether domestic or foreign, in an unbroken chain of entities ending with the
Company if each of the entities other than the Company beneficially owns, at
the time of the determination, securities or interests representing more than
fifty percent (50%) of the total combined voting power of all classes of
securities or interests in one of the other entities in such chain.

 

2.33   “Performance Award” shall mean a cash bonus award, stock
bonus award, performance award or incentive award that is paid in cash, Shares
or a combination of both, awarded under Section 9.1.

 

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

 

2.35   “Performance Criteria” shall mean the criteria (and
adjustments) that the Committee selects for an Award for purposes of
establishing the Performance Goal or Performance Goals for a Performance
Period, determined as follows:

 

(a)          The Performance Criteria
that shall be used to establish Performance Goals are limited to the following:
(i) net income, (ii) earnings per share, (iii) debt reduction, (iv) cash
flow,

 

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(v) stockholder return,
(vi) revenue, (vii) return on investment, (viii) revenue growth,
(ix) return on invested capital, (x) return on net assets,
(xi) return on equity, (xii) profit before tax, (xiii) gross
operating profit, (xiv) profit after tax, (xv) return on research and
development investment, (xvi) market capitalization, (xvii) total
stockholder return and (xviii) margin, any of which may be measured either
in absolute terms or as compared to any incremental increase or decrease or as
compared to results of a peer group or to market performance indicators or
indices.

 

(b)         The Administrator may, in
its sole discretion, provide that one or more objectively determinable
adjustments shall be made to one or more of the Performance Goals. Such
adjustments may include one or more of the following: (i) items related to
a change in accounting principle; (ii) items relating to financing
activities; (iii) expenses for restructuring or productivity initiatives; (iv) other
non-operating items; (v) items related to acquisitions; (vi) items
attributable to the business operations of any entity acquired by the Company
during the Performance Period; (vii) items related to the disposal of a
business or segment of a business; (viii) items related to discontinued
operations that do not qualify as a segment of a business under Applicable
Accounting Standards; (ix) items attributable to any stock dividend, stock
split, combination or exchange of stock occurring during the Performance
Period; (x) any other items of significant income or expense which are
determined to be appropriate adjustments; (xi) items relating to unusual
or extraordinary corporate transactions, events or developments,
(xii) items related to amortization of acquired intangible assets;
(xiii) items that are outside the scope of the Company’s core, on-going
business activities; (xiv) items related to acquired in-process research
and development; (xv) items relating to changes in tax laws;
(xvi) items relating to major licensing or partnership arrangements;
(xvii) items relating to asset impairment charges; (xviii) items
relating to gains or losses for litigation, arbitration and contractual
settlements; or (xix) items relating to any other unusual or nonrecurring
events or changes in applicable laws, accounting principles or business
conditions. For all Awards intended to qualify as Performance-Based
Compensation, such determinations shall be made within the time prescribed by,
and otherwise in compliance with, Section 162(m) of the Code.

 

2.36   “Performance Goals” shall mean, for a Performance Period, one
or more goals established in writing by the Administrator for the Performance
Period based upon one or more 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
Subsidiary, division, business unit, or an individual. The achievement of each
Performance Goal shall be determined in accordance with Applicable Accounting
Standards.

 

2.37   “Performance Period” shall mean one or more periods of time,
which may be of varying and overlapping durations, as the Administrator may
select, over which the attainment of one or more Performance Goals will be
measured for the purpose of determining a Holder’s right to, and the payment
of, a Performance Award.

 

2.38   “Permitted Transferee” shall mean, with respect to a Holder,
any “family member” of the Holder, as defined under the instructions to use of
the Form S-8 Registration Statement under the Securities Act, after taking
into account any state, federal, local or foreign tax and securities laws
applicable to transferable Awards.

 

2.39   “Plan” shall mean this National Semiconductor Corporation
2009 Incentive Award Plan, as it may be amended or restated from time to time.

 

2.40   “Program” shall mean any program adopted by the Administrator
pursuant to the Plan containing the terms and conditions intended to govern a
specified type of Award granted under the Plan and pursuant to which such type
of Award may be granted under the Plan.

 

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2.41   “Restricted Stock” shall mean Common Stock awarded under Article 8
that is subject to certain restrictions and may be subject to risk of
forfeiture or repurchase.

 

2.42   “Restricted Stock Units” shall mean the right to receive
Shares awarded under Section 9.5.

 

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

 

2.44   “Shares” shall mean shares of Common Stock.

 

2.45   “Stock Appreciation Right” shall mean a stock appreciation
right granted under Article 10.

 

2.46   “Stock Payment” shall mean (a) a payment in the form of
Shares, or (b) an option or other right to purchase Shares, as part of a
bonus, deferred compensation or other arrangement, awarded under Section 9.3.

 

2.47   “Subsidiary” shall mean any entity (other than the Company),
whether domestic or foreign, in an unbroken chain of entities beginning with
the Company if each of the entities other than the last entity in the unbroken
chain beneficially owns, at the time of the determination, securities or
interests representing more than fifty percent (50%) of the total combined
voting power of all classes of securities or interests in one of the other
entities in such chain.

 

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

 

2.49   “Termination of Service” shall mean,

 

(a)          As to a Consultant, the time
when the engagement of a Holder as a Consultant to the Company or an Affiliate
is terminated for any reason, with or without cause, including, without
limitation, by resignation, discharge, death or retirement, but excluding
terminations where the Consultant simultaneously commences or remains in
employment or service with the Company or any Affiliate.

 

(b)         As to a Non-Employee Director,
the time when a Holder who is a Non-Employee Director ceases to be a Director
for any reason, including, without limitation, a termination by resignation,
failure to be elected, death or retirement, but excluding terminations where
the Holder simultaneously commences or remains in employment or service with
the Company or any Affiliate.

 

(c)          As to an Employee, the time
when the employee-employer relationship between a Holder and the Company or any
Affiliate is terminated for any reason, including, without limitation, a
termination by resignation, discharge, death, disability or retirement; but
excluding terminations where the Holder simultaneously commences or remains in
employment or service with the Company or any Affiliate.

 

The Administrator, in its
sole discretion, shall determine the effect of all matters and questions
relating to Terminations of Service, including, without limitation, the
question of whether a Termination of Service resulted from a discharge for
cause and all questions of whether particular leaves of absence constitute a
Termination of Service; provided,
however, that, with respect to
Incentive Stock Options, unless the Administrator otherwise provides in the
terms of the Program, the Award Agreement or otherwise, a leave of absence,
change in status from an employee to an independent contractor or other change
in the employee-employer relationship shall constitute a Termination of Service
only if, and to the extent that, such leave of absence, change in status or
other change interrupts employment for the purposes of Section 422(a)(2) of
the Code and the then applicable regulations and revenue rulings under said
Section. For purposes of the Plan, a Holder’s employee-employer relationship or
consultancy relations shall be deemed to be terminated in the event that the
Affiliate employing or

 

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contracting with such Holder ceases to remain
an Affiliate following any merger, sale of stock or other corporate transaction
or event (including, without limitation, a spin-off)..

 

ARTICLE 3.

 

SHARES SUBJECT TO THE PLAN

 

3.1       Number of
Shares.

 

(a)          Subject to Section 13.2
and Section 3.1(b) the aggregate number of Shares which may be issued
or transferred pursuant to Awards under the Plan is 16,000,000. [NOTE: 
Aggregate number of shares which may be issued under the Plan will be
12,500,000 in the event that the option exchange proposal is not approved at
the 2009 Annual Meeting of Stockholders.]

 

(b)         If any Shares subject to an
Award are forfeited or expire or an Award is settled for cash (in whole or in
part), the Shares subject to such Award shall, to the extent of such
forfeiture, expiration or cash settlement, again be available for future grants
of Awards under the Plan. Notwithstanding anything to the contrary contained
herein, the following Shares shall not be added to the Shares authorized for
grant under Section 3.1(a) and will not be available for future
grants of Awards: (i) Shares tendered by a Holder or withheld by the
Company in payment of the exercise price of an Option or SAR; (ii) Shares
tendered by the Holder or withheld by the Company to satisfy any tax
withholding obligation with respect to an Award; (iii) Shares subject to a
Stock Appreciation Right that are not issued in connection with the stock
settlement of the Stock Appreciation Right on exercise thereof; and (iv) Shares
purchased on the open market with the cash proceeds from the exercise of
Options or SARs. Any Shares repurchased by the Company under Section 8.4
at the same price paid by the Holder so that such shares are returned to the
Company will again be available for Awards. 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 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.

 

(c)          Substitute Awards shall not
reduce the Shares authorized for grant under the Plan. Additionally, in the
event that a company acquired by the Company or any Affiliate or with which the
Company or any Affiliate combines has shares available under a pre-existing
plan approved by stockholders and not adopted in contemplation of such
acquisition or combination, the shares available for grant pursuant to the
terms of such pre-existing plan (as adjusted, to the extent appropriate, using
the exchange ratio or other adjustment or valuation ratio or formula used in
such acquisition or combination to determine the consideration payable to the
holders of common stock of the entities party to such acquisition or
combination) may be used for Awards under the Plan and shall not reduce the
Shares authorized for grant under the Plan; provided that Awards using such
available shares shall not be made after the date awards or grants could have
been made under the terms of the pre-existing plan, absent the acquisition or
combination, and shall only be made to individuals who were not employed by or
providing services to the Company or its Subsidiaries immediately prior to such
acquisition or combination.

 

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

 

3.3         Limitation
on Number of Shares Subject to Awards.  Notwithstanding any provision in the Plan to
the contrary, and subject to Section 13.2, the maximum aggregate number of
Shares with respect to one or more Awards that may be granted to any one person
during any calendar

 

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year shall be 2,000,000 and
the maximum aggregate amount of cash that may be paid in cash during any
calendar year with respect to one or more Awards which are Performance-Based
Compensation payable in cash shall be $5,000,000. To the extent required by Section 162(m) of
the Code, shares subject to Awards which are canceled shall continue to be
counted against the Award Limit.

 

ARTICLE 4.

 

GRANTING OF AWARDS

 

4.1         Participation.  The Administrator may, from time to time,
select from among all Eligible Individuals, those to whom an Award shall be granted
and shall determine the nature and amount of each Award, which shall not be
inconsistent with the requirements of the Plan. Except as provided in Section 8.7
regarding the automatic grant of Awards to Non-Employee Directors, no Eligible
Individual shall have any right to be granted an Award pursuant to the Plan.

 

4.2         Award
Agreement.  Each Award
shall be evidenced by an Award Agreement. Award Agreements evidencing Awards
intended to qualify as Performance-Based Compensation shall contain such terms
and conditions as may be necessary to meet the applicable provisions of Section 162(m) of
the Code. Award Agreements evidencing Incentive Stock Options shall contain
such terms and conditions as may be necessary to meet the applicable provisions
of Section 422 of the Code.

 

4.3         Limitations
Applicable to Section 16 Persons.  Notwithstanding any other provision of the
Plan, the Plan, and any Award granted or awarded to any individual who is then
subject to Section 16 of the Exchange Act, shall be subject to any
additional limitations set forth in any applicable exemptive rule under Section 16
of the Exchange Act (including Rule 16b-3 of the Exchange Act and any
amendments thereto) 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.

 

4.4         At-Will
Employment.  Nothing in
the Plan or in any Program or Award Agreement hereunder shall confer upon any
Holder any right to continue in the employ of, or as a Director or Consultant
for, the Company or any Affiliate, or shall interfere with or restrict in any
way the rights of the Company and any Affiliate, which rights are hereby
expressly reserved, to discharge any Holder at any time for any reason
whatsoever, with or without cause, and with or without notice, or to terminate
or change all other terms and conditions of employment or engagement, except to
the extent expressly provided otherwise in a written agreement between the
Holder and the Company or any Affiliate.

 

4.5         Foreign
Holders. 
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 Employees, Non-Employee Directors or Consultants, or in order
to comply with the requirements of any foreign securities exchange, the
Administrator, in its sole discretion, shall have the power and authority to: (a) determine
which Subsidiaries shall be covered by the Plan; (b) determine which
Eligible Individuals outside the United States are eligible to participate in
the Plan; (c) modify the terms and conditions of any Award granted to
Eligible Individuals outside the United States to comply with applicable
foreign laws or listing requirements of any such foreign securities exchange; (d) 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 the 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; and (e) 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 or listing
requirements of any such foreign securities exchange. Notwithstanding the
foregoing, the Administrator may not take any actions hereunder, and no Awards
shall be granted, that would violate the Code, the Exchange Act, the Securities
Act, any other securities law or governing statute, the rules of the
securities exchange or automated quotation system on which the Shares are
listed, quoted or traded or any other applicable law.

 

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4.6         Stand-Alone
and Tandem Awards.  Awards
granted pursuant to the Plan may, in the sole discretion of the Administrator,
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.

 

ARTICLE 5.

 

PROVISIONS APPLICABLE TO AWARDS INTENDED TO QUALIFY AS

PERFORMANCE-BASED COMPENSATION.

 

5.1         Purpose.  The Committee, in its sole discretion, may
determine at the time an Award is granted whether such Award is intended to
qualify as Performance-Based Compensation. If the Committee, in its sole
discretion, decides to grant such an Award to an Eligible Individual that is
intended to qualify as Performance-Based Compensation, then the provisions of
this Article 5 shall control over any contrary provision contained in the
Plan. The Administrator may in its sole discretion grant Awards to other
Eligible Individuals that are based on Performance Criteria or Performance
Goals but that do not satisfy the requirements of this Article 5 and that
are not intended to qualify as Performance-Based Compensation. Unless otherwise
specified by the Administrator at the time of grant, the Performance Criteria
with respect to an Award intended to be Performance-Based Compensation payable
to a Covered Employee shall be determined on the basis of Applicable Accounting
Standards. The Committee, in its sole discretion, may determine at the time an
Award is granted or at any time thereafter whether such Award is not intended
to qualify as Performance-Based Compensation.

 

5.2         Applicability.  The grant of an Award to an Eligible
Individual for a particular Performance Period shall not require the grant of
an Award to such Individual in any subsequent Performance Period and the grant
of an Award to any one Eligible Individual shall not require the grant of an
Award to any other Eligible Individual in such period or in any other period.

 

5.3         Types of
Awards.  Notwithstanding anything in the
Plan to the contrary, the Committee may grant any Award to an Eligible
Individual intended to qualify as Performance-Based Compensation, including,
without limitation, Restricted Stock the restrictions with respect to which
lapse upon the attainment of specified Performance Goals, and any Performance
Awards described in Article 9 that vest or become exercisable or payable
upon the attainment of one or more specified Performance Goals.

 

5.4         Procedures
with Respect to Performance-Based Awards.  To the extent necessary to comply with the
requirements of Section 162(m)(4)(C) of the Code, with respect to any
Award granted under Articles 7 or 8 to one or more Eligible Individuals
and which is intended to qualify as Performance-Based Compensation, no later
than 90 days following the commencement of any Performance Period or any
designated fiscal period or period of service (or such earlier time as may be
required under Section 162(m) of the Code), the Committee shall, in
writing, (a) designate one or more Eligible Individuals, (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 based on the Performance Criteria, 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 and the extent to which
the applicable Performance Goals have been achieved for such Performance
Period. In determining the amount earned under such Awards, 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, including the assessment of individual or
corporate performance for the Performance Period.

 

9

 

5.5   Payment of
Performance-Based Awards. 
Unless otherwise provided in the applicable Program or Award Agreement
and only to the extent otherwise permitted by Section 162(m)(4)(C) of
the Code, as to an Award that is intended to qualify as Performance-Based
Compensation, the Holder must be employed by the Company or an Affiliate
throughout the Performance Period. Unless otherwise provided in the applicable
Performance Goals, Program or Award Agreement, a Holder shall be eligible to
receive payment pursuant to such Awards for a Performance Period only if and to
the extent the Performance Goals for such period are achieved.

 

5.6   Additional
Limitations.  Notwithstanding
any other provision of the Plan and except as otherwise determined by the
Administrator, any Award which is granted to an Eligible Individual and is
intended to qualify as Performance-Based Compensation shall be subject to any
additional limitations set forth in Section 162(m) of the Code or any
regulations or rulings issued thereunder that are requirements for
qualification as Performance-Based Compensation, and the Plan, the Program and
the Award Agreement shall be deemed amended to the extent necessary to conform
to such requirements.

 

ARTICLE 6.

 

GRANTING OF OPTIONS

 

6.1   Granting of
Options to Eligible Individuals. 
The Administrator is authorized to grant Options to Eligible Individuals
from time to time, in its sole discretion, on such terms and conditions as it
may determine which shall not be inconsistent with the Plan.

 

6.2   Qualification
of Incentive Stock Options. 
No Incentive Stock Option shall be granted to any person who is not an
Employee of the Company or any Affiliate corporation of the Company (as defined
in Section 424(f) of the Code). No person who qualifies as a Greater
Than 10% Stockholder may be granted an Incentive Stock Option unless such
Incentive Stock Option conforms to the applicable provisions of Section 422
of the Code. Any Incentive Stock Option granted under the Plan may be modified
by the Administrator, with the consent of the Holder, to disqualify such Option
from treatment as an “incentive stock option” under Section 422 of the
Code. To the extent that the aggregate fair market value of stock with respect
to which “incentive stock options” (within the meaning of Section 422 of
the Code, but without regard to Section 422(d) of the Code) are
exercisable for the first time by a Holder during any calendar year under the
Plan, and all other plans of the Company and any Affiliate or parent
corporation thereof (each as defined in Section 424(f) and (e) of
the Code, respectively), exceeds $100,000, the Options shall be treated as
Non-Qualified Stock Options to the extent required by Section 422 of the
Code. The rule set forth in the preceding sentence shall be applied by
taking Options and other “incentive stock options” into account in the order in
which they were granted and the Fair Market Value of stock shall be determined
as of the time the respective options were granted.

 

6.3   Option
Exercise Price.  The exercise
price per Share subject to each Option shall be set by the Administrator, but
shall not be less than 100% of the Fair Market Value of a Share on the date the
Option is granted (or, as to Incentive Stock Options, on the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the
Code). In addition, in the case of Incentive Stock Options granted to a Greater
Than 10% Stockholder, such price shall not be less than 110% of the Fair Market
Value of a Share on the date the Option is granted (or the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the
Code).

 

6.4   Option Term.  The term of each Option shall be set by the
Administrator in its sole discretion; provided,
however, that the term shall not be more than six years and one day
from the date the Option is granted, or five (5) years from the date an
Incentive Stock Option is granted to a Greater Than 10% Stockholder. The
Administrator shall determine the time period, including the time period
following a Termination of Service, during which the Holder has the right to
exercise the vested Options, which time period may not extend beyond the term
of the Option term. Except as limited by 

 

10

 

the requirements of Section 409A
or Section 422 of the Code and regulations and rulings thereunder, the
Administrator may extend the term of any outstanding Option, and may extend the
time period during which vested Options may be exercised, in connection with
any Termination of Service of the Holder, and may amend any other term or
condition of such Option relating to such a Termination of Service.

 

6.5   Option
Vesting.

 

(a)   The period during which the right to
exercise, in whole or in part, an Option vests in the Holder shall be set by
the Administrator and the Administrator may determine that an Option may not be
exercised in whole or in part for a specified period after it is granted. Such
vesting may be based on service with the Company or any Affiliate, any of the
Performance Criteria, or any other criteria selected by the Administrator. At
any time after grant of an Option, the Administrator may, in its sole
discretion and subject to whatever terms and conditions it selects, accelerate
the period during which an Option vests.

 

(b)   No portion of an Option which is
unexercisable at a Holder’s Termination of Service shall thereafter become
exercisable, except as may be otherwise provided by the Administrator either in
the Program, the Award Agreement or by action of the Administrator following
the grant of the Option.

 

6.6   Substitute
Awards.  Notwithstanding the
foregoing provisions of this Article 6 to the contrary, in the case of an
Option that is a Substitute Award, the price per share of the shares subject to
such Option may be less than the Fair Market Value per share on the date of
grant, provided, that the excess
of: (a) the aggregate Fair Market Value (as of the date such Substitute
Award is granted) of the shares subject to the Substitute Award, over (b) the
aggregate exercise price thereof does not exceed the excess of: (x) the
aggregate fair market value (as of the time immediately preceding the
transaction giving rise to the Substitute Award, such fair market value to be
determined by the Administrator) of the shares of the predecessor entity that
were subject to the grant assumed or substituted for by the Company, over (y) the
aggregate exercise price of such shares.

 

6.7   Substitution
of Stock Appreciation Rights. 
The Administrator may provide in the applicable Program or the Award
Agreement evidencing the grant of an Option that the Administrator, in its sole
discretion, shall have the 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 for which
such substituted Option would have been exercisable, and shall also have the
same exercise price and remaining term as the substituted Option.

 

ARTICLE 7.

 

EXERCISE OF OPTIONS

 

7.1   Partial
Exercise.  An exercisable
Option may be exercised in whole or in part. However, an Option shall not be
exercisable with respect to fractional shares and the Administrator may require
that, by the terms of the Option, a partial exercise must be with respect to a
minimum number of shares.

 

7.2   Manner of
Exercise.  All or a portion of
an exercisable Option shall be deemed exercised upon delivery of all of the
following to the Secretary of the Company, or such other person or entity
designated by the Administrator, or his, her or its office, as applicable:

 

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

 

11

 

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

 

(c)   In the event that the Option shall be
exercised pursuant to Section 11.3 by any person or persons other than the
Holder, appropriate proof of the right of such person or persons to exercise
the Option, as determined in the sole discretion of the Administrator; and

 

(d)   Full payment of the exercise price and
applicable withholding taxes to the stock administrator of the Company for the
shares with respect to which the Option, or portion thereof, is exercised, in a
manner permitted by Section 11.1 and 11.2.

 

7.3   Notification
Regarding Disposition.  The
Holder shall give the Company prompt written or electronic notice of any
disposition of shares of Common Stock acquired by exercise of an Incentive
Stock Option which occurs within (a) two years from the date of granting
(including the date the Option is modified, extended or renewed for purposes of
Section 424(h) of the Code) such Option to such Holder, or (b) one
year after the transfer of such shares to such Holder.

 

ARTICLE 8.

 

AWARD OF RESTRICTED STOCK

 

8.1   Award of
Restricted Stock.

 

(a)   The Administrator is authorized to grant
Restricted Stock to Eligible Individuals, and shall determine the terms and
conditions, including the restrictions applicable to each award of Restricted
Stock, which terms and conditions shall not be inconsistent with the Plan, and
may impose such conditions on the issuance of such Restricted Stock as it deems
appropriate.

 

(b)   The Administrator shall establish the
purchase price, if any, and form of payment for Restricted Stock; provided, however, that if a purchase
price is charged, such purchase price shall be no less than the par value of
the Shares to be purchased, unless otherwise permitted by applicable state law.
In all cases, legal consideration shall be required for each issuance of
Restricted Stock.

 

8.2   Rights as
Stockholders.  Subject to Section 8.4,
upon issuance of Restricted Stock, the Holder shall have, unless otherwise
provided by the Administrator, all the rights of a stockholder with respect to
said shares, subject to the restrictions in the applicable Program or in each
individual Award Agreement, including the right to receive all dividends and
other distributions paid or made with respect to the shares; provided, however, that, in the sole
discretion of the Administrator, any extraordinary distributions with respect
to the Shares shall be subject to the restrictions set forth in Section 8.3.
In addition, with respect to a share of Restricted Stock with performance-based
vesting, dividends which are paid prior to vesting shall only be paid out to
the Holder to the extent that the performance-based vesting conditions are
subsequently satisfied and the share of Restricted Stock vests.

 

8.3   Restrictions.  All shares of Restricted Stock (including any
shares received by Holders thereof with respect to shares of Restricted Stock
as a result of stock dividends, stock splits or any other form of
recapitalization) shall, in the terms of the applicable Program or in each
individual Award Agreement, be subject to such restrictions and vesting
requirements as the Administrator shall provide. Such restrictions may include,
without limitation, restrictions concerning voting rights and transferability
and such restrictions may lapse separately or in combination at such times and
pursuant to such 

 

12

 

circumstances or based on
such criteria as selected by the Administrator, including, without limitation,
criteria based on the Holder’s duration of employment, directorship or
consultancy with the Company, the Performance Criteria, Company performance,
individual performance or other criteria selected by the Administrator. By
action taken after the Restricted Stock is issued, the Administrator may, on
such terms and conditions as it may determine to be appropriate, accelerate the
vesting of such Restricted Stock by removing any or all of the restrictions
imposed by the terms of the Program or the Award Agreement. Restricted Stock
may not be sold or encumbered until all restrictions are terminated or expire.

 

8.4   Repurchase or
Forfeiture of Restricted Stock. 
If no price was paid by the Holder for the Restricted Stock, upon a
Termination of Service the Holder’s rights in unvested Restricted Stock then
subject to restrictions shall lapse, and such Restricted Stock shall be
surrendered to the Company and cancelled without consideration. If a price was
paid by the Holder for the Restricted Stock, upon a Termination of Service the
Company shall have the right to repurchase from the Holder the unvested
Restricted Stock then subject to restrictions at a cash price per share equal
to the price paid by the Holder for such Restricted Stock or such other amount
as may be specified in the Program or the Award Agreement. The Administrator in
its sole discretion may provide that in the event of certain events, including
a Change in Control, the Holder’s death, retirement or disability or any other
specified Termination of Service or any other event, the Holder’s rights in
unvested Restricted Stock shall not lapse, such Restricted Stock shall vest
and, if applicable, the Company shall not have a right of repurchase.

 

8.5   Certificates
for Restricted Stock. 
Restricted Stock granted pursuant to the Plan may be evidenced in such
manner as the Administrator shall determine. Certificates or book entries
evidencing shares of Restricted Stock must include an appropriate legend
referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, and the Company may, in it sole discretion, retain physical
possession of any stock certificate until such time as all applicable
restrictions lapse.

 

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

 

8.7   Automatic
Grants to Non-Employee Directors.

 

(a)   Commencement
of Automatic Grants.  As of
the Effective Date, Non-Employee Directors are entitled to receive automatic
grants of restricted stock pursuant to the Company’s Director Stock Plan (the “Director Plan”). Following the date of the
termination of the Director Plan (the “Director
Plan Termination Date”), Non-Employee Directors shall become
eligible to receive the automatic grants described in this Section 8.7.

 

(b)   General.  Following the Director Plan Termination Date,
Restricted Stock shall be issued automatically to Non-Employee Directors as set
forth in this Section 8.7: (i) each Non-Employee Director shall be
issued 12,000 shares of Common Stock on the date of each election of such
Director to the Board by the stockholders on or after the Director Plan
Termination Date; and (ii) each Non-Employee Director who is first elected
or appointed to the Board at any time during the year other than at the annual
stockholders’ meeting shall be issued 12,000 shares of Restricted Stock on the
date of the appointment of such person to the Board.

 

(c)   Grant in
Lieu of Retainer.  Following
the Director Plan Termination Date, Restricted Stock shall be issued to each
Non-Employee Director who elects within ten (10) days after the date of (i) initial
appointment to the Board after the Director Plan Termination Date, or (ii) each
subsequent election to the Board by the stockholders, to receive the full value
of the Director’s 

 

13

 

annual cash retainer fees
for Board membership and Committee Chairmanship in Common Stock. The number of
shares of Common Stock to be issued shall be determined by dividing the
retainer fee by the opening price of the Common Stock on the New York Stock
Exchange on the date of initial appointment or the subsequent reelection by the
stockholders, as applicable. If there is no trading on such day, the opening
price of the Common Stock on the New York Stock Exchange on the first previous
trading date shall be used. Fractional shares shall not be issued and the value
of any fractional shares shall be paid in cash.

 

(d)   Vesting of
Restricted Stock Grants to Non-Employee Directors.  Except as provided in Section 8.7(e),
Common Stock issued under the Plan pursuant to Section 8.7(b) shall
vest and be restricted from sale, assignment or other transfer for a period of
thirty six (36) months from the date of issuance (“Restriction Period”) and in the event any
Non-Employee Director shall cease to act as a Director prior to expiration of
the Restriction Period, all rights in and to the Common Stock so issued shall
be forfeited and shall revert to the Company. Further, except as provided in Section 8.7(e),
Common Stock issued under the Plan pursuant to Section 8.7(c) shall
vest and be restricted from sale, assignment or other transfer for a period of
six (6) months from the date of issuance (“Retainer Restriction Period”) and in the event any
Non-Employee Director shall cease to act as a Director prior to the expiration
of the Retainer Restriction Period, all rights in and to the Common Stock so
issued shall be forfeited and shall revert to the Company.

 

(e)   Death,
Disability or Retirement.  In
the event any Non-Employee Director shall cease to act as a Director by reason
of death, Disability, or Retirement at any time during the Restriction Period
and/or the Retainer Restriction Period, as applicable, the Common Stock so
issued shall no longer be restricted from sale, assignment or other transfer.
For purposes of this Section 8.7(e), “Disability”
shall mean the Non-Employee Director’s inability to perform any services for
the Company as a Director due to physical or mental impairment, and “Retirement” shall mean termination of
service as a Director (i) at any time after completion of five years of
service as a Director; or (ii) upon reaching the mandatory retirement age
of seventy (70). Notwithstanding the foregoing, the shares of Common Stock
issued to any Non-Employee Director who was issued Common Stock upon an initial
appointment or election to the Board who terminates service as a director by
reason of death, Disability or Retirement shall revert back to the Company if
such recipient has not served at least six months as a Director after the
initial appointment or election.

 

ARTICLE 9.

 

AWARD OF PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, DEFERRED

STOCK, STOCK PAYMENTS, RESTRICTED STOCK UNITS

 

9.1   Performance
Awards.

 

(a)   The Administrator is authorized to grant
Performance Awards to any Eligible Individual and to determine whether such
Performance Awards shall be Performance-Based Compensation. The value of
Performance Awards may be linked to any one or more of the Performance Criteria
or other specific criteria determined by the Administrator, in each case on a
specified date or dates or over any period or periods determined by the
Administrator. Performance Awards may be paid in cash, Shares, or both, as
determined by the Administrator.

 

(b)   Without limiting Section 9.1(a), the
Administrator may grant Performance Awards to any Eligible Individual in the
form of a cash bonus payable upon the attainment of objective Performance
Goals, or such other criteria, whether or not objective, which are established
by the Administrator, in each case on a specified date or dates or over any
period or periods determined by the Administrator. Any such bonuses paid to a
Holder which are intended to be Performance-Based Compensation shall be based
upon objectively determinable bonus formulas established in accordance with the
provisions of Article 5.

 

14

 

9.2   Dividend Equivalents.

 

(a)   Dividend Equivalents may be granted by the
Administrator based on dividends declared on the Common Stock, to be credited
as of dividend payment dates during the period between the date an Award is
granted to a Holder and the date such Award vests, is exercised, is distributed
or expires, as determined by the Administrator. Such Dividend Equivalents shall
be converted to cash or additional shares of Common Stock by such formula and
at such time and subject to such limitations as may be determined by the
Administrator. In addition, Dividend Equivalents with respect to an Award with
performance-based vesting that are based on dividends paid prior to the vesting
of such Award shall only be paid out to the Holder to the extent that the
performance-based vesting conditions are subsequently satisfied and the Award
vests.

 

(b)   Notwithstanding the foregoing, no Dividend
Equivalents shall be payable with respect to Options or Stock Appreciation
Rights.

 

9.3   Stock
Payments.  The Administrator
is authorized to make Stock Payments to any Eligible Individual. The number or
value of shares of any Stock Payment shall be determined by the Administrator
and may be based upon one or more Performance Criteria or any other specific
criteria, including service to the Company or any Affiliate, determined by the
Administrator. Shares underlying a Stock Payment which is subject to a vesting
schedule or other conditions or criteria set by the Administrator will not be
issued until those conditions have been satisfied. Unless otherwise provided by
the Administrator, a Holder of a Stock Payment shall have no rights as a
Company stockholder with respect to such Stock Payment until such time as the
Stock Payment has vested and the Shares underlying the Award have been issued
to the Holder. Stock Payments may, but are not required to be made in lieu of
base salary, bonus, fees or other cash compensation otherwise payable to such
Eligible Individual.

 

9.4   Deferred
Stock.  The Administrator is
authorized to grant Deferred Stock to any Eligible Individual. The number of
shares of Deferred Stock shall be determined by the Administrator and may be
based on one or more Performance Criteria or other specific criteria, including
service to the Company or any Affiliate, as the Administrator determines, in
each case on a specified date or dates or over any period or periods determined
by the Administrator. Shares underlying a Deferred Stock award which is subject
to a vesting schedule or other conditions or criteria set by the Administrator
will not be issued until those conditions have been satisfied. Unless otherwise
provided by the Administrator, a Holder of Deferred Stock shall have no rights
as a Company stockholder with respect to such Deferred Stock until such time as
the Award has vested and the Shares underlying the Award has been issued to the
Holder.

 

9.5   Restricted
Stock Units.  The
Administrator is authorized to grant Restricted Stock Units to any Eligible
Individual. The number and terms and conditions of Restricted Stock Units shall
be determined by the Administrator. The Administrator 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, including conditions based on one or more Performance Criteria or
other specific criteria, including service to the Company or any Affiliate, in
each case on a specified date or dates or over any period or periods, as
determined by the Administrator. The Administrator shall specify, or permit the
Holder to elect, the conditions and dates upon which the Shares underlying the
Restricted Stock Units which shall be issued, which dates shall not be earlier
than the date as of which the Restricted Stock Units vest and become
nonforfeitable and which conditions and dates shall be subject to compliance
with Section 409A of the Code. Restricted Stock Units may be paid in cash,
Shares, or both, as determined by the Administrator. On the distribution dates,
the Company shall issue to the Holder one unrestricted, fully transferable
Share (or the Fair Market Value of one such Share in cash) for each vested and
nonforfeitable Restricted Stock Unit.

 

15

 

9.6   Term.  The term of a Performance Award, Dividend
Equivalent award, Deferred Stock award, Stock Payment award and/or Restricted
Stock Unit award shall be set by the Administrator in its sole discretion.

 

9.7   Exercise or
Purchase Price.  The
Administrator may establish the exercise or purchase price of a Performance
Award, shares of Deferred Stock, shares distributed as a Stock Payment award or
shares distributed pursuant to a Restricted Stock Unit award; provided, however, that value of the
consideration shall not be less than the par value of a Share, unless otherwise
permitted by applicable law.

 

9.8   Exercise upon
Termination of Service.  A
Performance Award, Dividend Equivalent award, Deferred Stock award, Stock
Payment award and/or Restricted Stock Unit award is exercisable or
distributable only while the Holder is an Employee, Director or Consultant, as
applicable. The Administrator, however, in its sole discretion may provide that
the Performance Award, Dividend Equivalent award, Deferred Stock award, Stock
Payment award and/or Restricted Stock Unit award may be exercised or distributed
subsequent to a Termination of Service in certain events, including a Change in
Control, the Holder’s death, retirement or disability or any other specified
Termination of Service.

 

ARTICLE 10.

 

AWARD OF STOCK APPRECIATION RIGHTS

 

10.1 Grant of Stock
Appreciation Rights.

 

(a)   The Administrator is authorized to grant
Stock Appreciation Rights to Eligible Individuals from time to time, in its
sole discretion, on such terms and conditions as it may determine consistent
with the Plan.

 

(b)   A Stock Appreciation Right shall entitle the
Holder (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 determined by multiplying the difference
obtained by subtracting the exercise price per share of the Stock Appreciation
Right from the Fair Market Value on the date of exercise of the Stock
Appreciation Right by the number of Shares with respect to which the Stock
Appreciation Right shall have been exercised, subject to any limitations the
Administrator may impose. Except as described in (c) below, the exercise
price per Share subject to each Stock Appreciation Right shall be set by the
Administrator, but shall not be less than 100% of the Fair Market Value on the
date the Stock Appreciation Right is granted.

 

(c)   Notwithstanding the foregoing provisions of Section 10.1(b) to
the contrary, in the case of an Stock Appreciation Right that is a Substitute
Award, the price per share of the shares subject to such Stock Appreciation
Right may be less than 100% of the Fair Market Value per share on the date of
grant; provided, that the excess
of: (a) the aggregate Fair Market Value (as of the date such Substitute
Award is granted) of the shares subject to the Substitute Award, over (b) the
aggregate exercise price thereof does not exceed the excess of: (x) the
aggregate fair market value (as of the time immediately preceding the
transaction giving rise to the Substitute Award, such fair market value to be
determined by the Administrator) of the shares of the predecessor entity that
were subject to the grant assumed or substituted for by the Company, over (y) the
aggregate exercise price of such shares.

 

10.2 Stock
Appreciation Right Vesting.

 

(a)   The period during which the right to
exercise, in whole or in part, a Stock Appreciation Right vests in the Holder
shall be set by the Administrator and the Administrator may determine that a
Stock Appreciation Right may not be exercised in whole or in part for a
specified period 

 

16

 

after it is granted. Such
vesting may be based on service with the Company or any Affiliate, or any other
criteria selected by the Administrator. At any time after grant of a Stock
Appreciation Right, the Administrator may, in its sole discretion and subject
to whatever terms and conditions it selects, accelerate the period during which
a Stock Appreciation Right vests.

 

(b)   No portion of a Stock Appreciation Right
which is unexercisable at Termination of Service shall thereafter become
exercisable, except as may be otherwise provided by the Administrator either in
the applicable Program or Award Agreement or by action of the Administrator
following the grant of the Stock Appreciation Right.

 

10.3 Manner of
Exercise.  All or a portion of
an exercisable Stock Appreciation Right shall be deemed exercised upon delivery
of all of the following to the stock administrator of the Company, or such
other person or entity designated by the Administrator, or his, her or its
office, as applicable:

 

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

 

(b)   Such representations and documents as the
Administrator, in its sole discretion, deems necessary or advisable to effect
compliance with all applicable provisions of the Securities Act and any other
federal, state or foreign securities laws or regulations. The Administrator
may, in its sole discretion, also take whatever additional actions it deems
appropriate to effect such compliance; and

 

(c)   In the event that the Stock Appreciation
Right shall be exercised pursuant to this Section 10.3 by any person or
persons other than the Holder, appropriate proof of the right of such person or
persons to exercise the Stock Appreciation Right.

 

10.4 Stock
Appreciation Right Term.  The
term of each Stock Appreciation Right shall be set by the Administrator in its
sole discretion; provided, however,
that the term shall not be more than six years and one day from the date the
Stock Appreciation Right is granted. The Administrator shall determine the time
period, including the time period following a Termination of Service, during
which the Holder has the right to exercise the vested Stock Appreciation
Rights, which time period may not extend beyond the expiration date of the
Stock Appreciation Right term. Except as limited by the requirements of Section 409A
of the Code and regulations and rulings thereunder, the Administrator may
extend the term of any outstanding Stock Appreciation Right, and may extend the
time period during which vested Stock Appreciation Rights may be exercised, in
connection with any Termination of Service of the Holder, and may amend any
other term or condition of such Stock Appreciation Right relating to such a
Termination of Service.

 

10.5 Payment.  Payment of the amounts payable with respect
to Stock Appreciation Rights pursuant to this Article 10 shall be in cash,
Shares (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
Administrator.

 

ARTICLE 11.

 

ADDITIONAL TERMS OF AWARDS

 

11.1 Payment.  The Administrator shall determine the methods
by which payments by any Holder with respect to any Awards granted under the
Plan shall be made, including, without limitation: (a) cash or check, (b) Shares
(including, in the case of payment of the exercise price of an Award, Shares
issuable pursuant to the exercise of the Award) or shares of Common Stock held
for such period of time as may be required by the Administrator in order to
avoid adverse accounting consequences, in each case, having a Fair Market Value
on the date of delivery equal to the aggregate payments required, (c) delivery
of a written or electronic notice that the Holder has placed a market 

 

17

 

sell order with a broker
with respect to Shares then issuable upon exercise or vesting of an Award, 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 payments
required; provided, that payment
of such proceeds is then made to the Company upon settlement of such sale, or (d) other
form of legal consideration acceptable to the Administrator. The Administrator
shall also determine the methods by which Shares shall be delivered or deemed
to be delivered to Holders. Notwithstanding any other provision of the Plan to
the contrary, no Holder 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 make payment with respect to any Awards granted under the Plan,
or continue any extension of credit with respect to such payment with a loan
from the Company or a loan arranged by the Company in violation of Section 13(k) of
the Exchange Act.

 

11.2 Tax
Withholding.  The Company or
any Affiliate shall have the authority and the right to deduct or withhold, or
require a Holder to remit to the Company, an amount sufficient to satisfy
federal, state, local and foreign taxes (including the Holder’s FICA or
employment tax obligation) required by law to be withheld with respect to any
taxable event concerning a Holder arising as a result of the Plan. The
Administrator may in its sole discretion and in satisfaction of the foregoing
requirement allow a Holder to elect to have the Company withhold Shares
otherwise issuable under an Award (or allow the surrender of Shares). The
number of Shares which may be so withheld or surrendered 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. The Administrator shall determine the fair market value of the
Shares, consistent with applicable provisions of the Code, for tax withholding
obligations due in connection with a broker-assisted cashless Option or Stock
Appreciation Right exercise involving the sale of shares to pay the Option or
Stock Appreciation Right exercise price or any tax withholding obligation.

 

11.3 Transferability
of Awards.

 

(a)   Except as otherwise provided in Section 11.3(b):

 

(i)    No Award under the Plan may be sold,
pledged, assigned or transferred in any manner other than by will or the laws
of descent and distribution or, subject to the consent of the Administrator,
pursuant to a DRO, unless and until such Award has been exercised, or the
shares underlying such Award have been issued, and all restrictions applicable
to such shares have lapsed;

 

(ii)   No Award or interest or right therein shall
be liable for the debts, contracts or engagements of the Holder or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, hypothecation, encumbrance, assignment or any
other means whether such disposition be voluntary or involuntary or by
operation of law by judgment, levy, attachment, garnishment or any other legal
or equitable proceedings (including bankruptcy), and any attempted disposition
thereof shall be null and void and of no effect, except to the extent that such
disposition is permitted by the preceding sentence; and

 

(iii)  During the lifetime of the Holder, only the
Holder may exercise an Award (or any portion thereof) granted to him under the
Plan, unless it has been disposed of pursuant to a DRO; after the death of the
Holder, any exercisable portion of an Award may, prior to the time when such
portion becomes unexercisable under the Plan or the applicable Program or Award
Agreement, be exercised by his personal representative or by any person
empowered to do so under the deceased Holder’s will or under the then
applicable laws of descent and distribution.

 

18

 

(b)   Notwithstanding Section 11.3(a), the
Administrator, in its sole discretion, may determine to permit a Holder to
transfer an Award other than an Incentive Stock Option to any one or more
Permitted Transferees, subject to the following terms and conditions: (i) an
Award transferred to a Permitted Transferee shall not be assignable or
transferable by the Permitted Transferee other than by will or the laws of
descent and distribution; (ii) an Award transferred to a Permitted
Transferee shall continue to be subject to all the terms and conditions of the
Award as applicable to the original Holder (other than the ability to further
transfer the Award); and (iii) the Holder and the Permitted Transferee
shall execute any and all documents requested by the Administrator, including,
without limitation documents to (A) confirm the status of the transferee
as a Permitted Transferee, (B) satisfy any requirements for an exemption
for the transfer under applicable federal, state and foreign securities laws
and (C) evidence the transfer.

 

(c)   Notwithstanding Section 11.3(a), a
Holder may, in the manner determined by the Administrator, designate a
beneficiary to exercise the rights of the Holder and to receive any
distribution with respect to any Award upon the Holder’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
Program or Award Agreement applicable to the Holder, except to the extent the
Plan, the Program and the Award Agreement otherwise provide, and to any additional
restrictions deemed necessary or appropriate by the Administrator. If the
Holder is married and resides in a community property state, a designation of a
person other than the Holder’s spouse as his or her beneficiary with respect to
more than 50% of the Holder’s interest in the Award shall not be effective
without the prior written or electronic consent of the Holder’s spouse. If no
beneficiary has been designated or survives the Holder, payment shall be made
to the person entitled thereto pursuant to the Holder’s will or the laws of
descent and distribution. Subject to the foregoing, a beneficiary designation
may be changed or revoked by a Holder at any time provided the change or
revocation is filed with the Administrator prior to the Holder’s death.

 

11.4 Conditions to
Issuance of Shares.

 

(a)   Notwithstanding anything herein to the
contrary, the Company shall not be required to issue or deliver any
certificates or make any book entries evidencing Shares pursuant to the
exercise of any Award, unless and until the Board or the Committee has
determined, with advice of counsel, that the issuance of such shares is in
compliance with all applicable laws, regulations of governmental authorities
and, if applicable, the requirements of any exchange on which the Shares are
listed or traded, and the Shares are covered by an effective registration
statement or applicable exemption from registration. In addition to the terms
and conditions provided herein, the Board or the Committee may require that a
Holder make such reasonable covenants, agreements, and representations as the
Board or the Committee, in its discretion, deems advisable in order to comply
with any such laws, regulations, or requirements.

 

(b)   All Share certificates delivered pursuant to
the Plan and all shares issued pursuant to book entry procedures are subject to
any stop-transfer orders and other restrictions as the Administrator deems
necessary or advisable to comply with federal, state, or foreign securities or
other laws, rules and regulations and the rules of any securities
exchange or automated quotation system on which the Shares are listed, quoted,
or traded. The Administrator may place legends on any Share certificate or book
entry to reference restrictions applicable to the Shares.

 

(c)   The Administrator shall have the right to
require any Holder to comply with any timing or other restrictions with respect
to the settlement, distribution or exercise of any Award, including a
window-period limitation, as may be imposed in the sole discretion of the
Administrator.

 

(d)   No fractional Shares shall be issued and the
Administrator shall determine, in its sole discretion, whether cash shall be
given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding down.

 

19

 

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

 

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

 

11.6 Prohibition on
Repricing.  Subject to Section 13.2,
the Administrator shall not, without the approval of the stockholders of the
Company, (i) authorize the amendment of any outstanding Option or Stock
Appreciation Right to reduce its price per share, or (ii) cancel any
Option or Stock Appreciation Right in exchange for cash or another Award when
the Option or Stock Appreciation Right price per share exceeds the Fair Market
Value of the underlying Shares. Subject to Section 13.2, the Administrator
shall have the authority, without the approval of the stockholders of the
Company, to amend any outstanding award to increase the price per share or to
cancel and replace an Award with the grant of an Award having a price per share
that is greater than or equal to the price per share of the original Award.

 

11.7 Full Value
Award Vesting Limitations. 
Notwithstanding any other provision of the Plan to the contrary, Full
Value Awards made to Employees or Consultants shall become vested over a period
of not less than three years (or, in the case of vesting based upon the
attainment of Performance Goals or other performance-based objectives, over a
period of not less than one year measured from the commencement of the period
over which performance is evaluated) following the date the Award is made; provided, however, that, notwithstanding
the foregoing, (a) the Administrator may lapse or waive such vesting
restrictions upon the Holder’s death, disability, retirement, and (b) Full
Value Awards that result in the issuance of an aggregate of up to 5% of the
shares of Stock available pursuant to Section 3.1(a) may be granted
to any one or more Holders without respect to such minimum vesting provisions.
Notwithstanding anything in this Section 11.7 to the contrary, Full Value
Awards granted as replacements or in substitution for cancelled Awards in
connection with a stock option exchange permitted under the terms of this Plan,
as may be amended with stockholder approval at the 2009 Annual Meeting of
Stockholders, shall not be subject to the minimum vesting provisions of this Section 11.7.

 

ARTICLE 12.

 

ADMINISTRATION

 

12.1 Administrator.  The Compensation Committee (or another
committee or a subcommittee of the Board assuming the functions of the
Committee under the Plan) shall administer the Plan (except as otherwise
permitted herein) and, unless otherwise determined by the Board, shall consist
solely of two or more Non-Employee Directors appointed by and holding office at
the pleasure of the Board, each of whom is intended to qualify as both a “non-employee
director” as defined by Rule 16b-3 of the 

 

20

 

Exchange Act or any
successor rule, an “outside director” for purposes of Section 162(m) of
the Code and an “independent director” under the rules of any securities
exchange or automated quotation system on which the Shares are listed, quoted
or traded; provided, that any
action taken by the Committee shall be valid and effective, whether or not
members of the Committee at the time of such action are later determined not to
have satisfied the requirements for membership set forth in this Section 12.l
or otherwise provided in any charter of the Committee. Except as may otherwise
be provided in any charter of the Committee, appointment of Committee members
shall be effective upon acceptance of appointment. Committee members may resign
at any time by delivering written or electronic notice to the Board. Vacancies
in the Committee may only be filled by the Board. 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
Awards granted to Non-Employee Directors and (b) the Board or Committee
may delegate its authority hereunder to the extent permitted by Section 12.6.

 

12.2 Duties and
Powers of Committee.  It shall
be the duty of the Committee to conduct the general administration of the Plan
in accordance with its provisions. The Committee shall have the power to
interpret the Plan, the Program and the Award Agreement, and to adopt such rules for
the administration, interpretation and application of the Plan as are not
inconsistent therewith, to interpret, amend or revoke any such rules and
to amend any Program or Award Agreement provided that the rights or obligations
of the Holder of the Award that is the subject of any such Program or Award
Agreement are not affected adversely by such amendment, unless the consent of
the Holder is obtained or such amendment is otherwise permitted under Section 13.10.
Any such grant or award under the Plan need not be the same with respect to
each Holder. Any such interpretations and rules with respect to Incentive
Stock Options shall be consistent with the provisions of Section 422 of
the Code. 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 with respect to matters which under Rule 16b-3 under the Exchange
Act or any successor rule, or Section 162(m) of the Code, or any
regulations or rules issued thereunder, or the rules of any
securities exchange or automated quotation system on which the Shares are
listed, quoted or traded are required to be determined in the sole discretion
of the Committee.

 

12.3 Action by the
Committee.  Unless otherwise
established by the Board or in any charter of the Committee, 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 all members 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 Affiliate, 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.

 

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

 

(a)   Designate Eligible Individuals to receive
Awards;

 

(b)   Determine the type or types of Awards to be
granted to each Eligible Individual;

 

(c)   Determine the number of Awards to be granted
and the number of Shares to which an Award will relate;

 

(d)   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 performance criteria, any reload
provision, any restrictions or limitations on the Award, any schedule for
vesting, lapse of forfeiture restrictions or restrictions on the exercisability
of an Award, and accelerations or waivers thereof, and any provisions related
to non-competition and recapture of gain on an Award, based in each case on
such considerations as the Administrator in its sole discretion determines;

 

21

 

(e)   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, Shares, other Awards, or other property,
or an Award may be canceled, forfeited, or surrendered;

 

(f)    Prescribe the form of each Award Agreement,
which need not be identical for each Holder;

 

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

 

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

 

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

 

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

 

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

 

12.6 Delegation of
Authority.  To the extent
permitted by applicable law or the rules of any securities exchange or
automated quotation system on which the Shares are listed, quoted or traded,
the Board or 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 or to take other administrative actions pursuant to Article 12;
provided, however, that in no event
shall an officer of the Company be delegated the authority to grant awards to,
or amend awards held by, the following individuals: (a) individuals who
are subject to Section 16 of the Exchange Act, (b) Covered Employees,
or (c) officers of the Company (or Directors) to whom authority to grant
or amend Awards has been delegated hereunder; provided
further, that any delegation of administrative authority shall only
be permitted to the extent it is permissible under Section 162(m) of
the Code and applicable securities laws or the rules of any securities
exchange or automated quotation system on which the Shares are listed, quoted
or traded. Any delegation hereunder shall be subject to the restrictions and
limits that the Board or Committee specifies at the time of such delegation,
and the Board may at any time rescind the authority so delegated or appoint a
new delegatee. At all times, the delegatee appointed under this Section 12.6
shall serve in such capacity at the pleasure of the Board and the Committee.

 

ARTICLE 13.

 

MISCELLANEOUS PROVISIONS

 

13.1 Amendment,
Suspension or Termination of the Plan.  Except as otherwise provided in this Section 13.1,
the Plan may be wholly or partially amended or otherwise modified, suspended or
terminated at any time or from time to time by the Board or the Committee.
However, without approval of the Company’s stockholders given within twelve
(12) months before or after the action by the Administrator, no action of
the Administrator may, except as provided in Section 13.2, (i) increase
the limits imposed in Section 3.1 on the maximum number of shares which
may be issued under the Plan, or (ii) reduce the price per share of any
outstanding Option or Stock Appreciation Right granted under the Plan, or (iii) cancel
any Option or Stock Appreciation Right in exchange for cash or another Award
when the Option or Stock Appreciation Right price per share exceeds the Fair
Market Value of the underlying Shares. Except as provided in Section 13.10,
no amendment, suspension or termination of the Plan shall, without the consent
of the Holder, impair any rights or obligations under any Award theretofore
granted or awarded, unless the Award itself otherwise expressly so provides. No
Awards may be granted or awarded during any period of suspension or after
termination of the Plan, and in no event may any Award be granted under the
Plan after the tenth (10th) anniversary
of the Effective Date.

 

22

 

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

 

(a)   In the event of any stock dividend, stock
split, 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 the Company’s stock
or the share price of the Company’s stock other than an Equity Restructuring,
the Administrator shall make equitable adjustments, if any, 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 Section 3.1 on the maximum number and kind of shares which
may be issued under the Plan, and adjustments of the Award Limit, and
adjustments of the manner in which shares subject to Full Value Awards will be
counted); (ii) the number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Awards; (iii) the number
and kind of shares of Common Stock (or other securities or property) for which
automatic grants are subsequently to be made to new and continuing Non-Employee
Directors pursuant to Section 8.7; (iv) the terms and conditions of
any outstanding Awards (including, without limitation, any applicable
performance targets or criteria with respect thereto); and (v) the grant
or exercise price per share for any outstanding Awards under the Plan. Any
adjustment affecting an Award intended as Performance-Based Compensation shall
be made consistent with the requirements of Section 162(m) of the
Code.

 

(b)   In the event of any transaction or event
described in Section 13.2(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 Administrator, in
its sole discretion, and on such terms and conditions as it deems appropriate,
either by the terms of the Award or by action taken prior to the occurrence of
such transaction or event and either automatically or upon the Holder’s
request, is hereby authorized to take any one or more of the following actions
whenever the Administrator determines that such action is appropriate in order
to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan or with respect to any Award under
the Plan, to facilitate such transactions or events or to give effect to such
changes in laws, regulations or principles:

 

(i)    To provide for either (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 Holder’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 13.2
the Administrator determines in good faith that no amount would have been
attained upon the exercise of such Award or realization of the Holder’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
Administrator in its sole discretion having an aggregate value not exceeding
the amount that could have been attained upon the exercise of such Award or
realization of the Holder’s rights had such Award been currently exercisable or
payable or fully vested;

 

(ii)   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;

 

(iii)  To make adjustments in the number and type of
shares of the Company’s 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 

 

23

 

(including the grant or
exercise price), and the criteria included in, outstanding Awards and Awards
which may be granted in the future;

 

(iv)  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
Program or Award Agreement; and

 

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

 

(c)   In connection with the occurrence of any
Equity Restructuring, and notwithstanding anything to the contrary in
Sections 13.2(a) and 13.2(b):

 

(i)    The number and type of securities subject to
each outstanding Award and the exercise price or grant price thereof, if
applicable, shall be equitably adjusted; and/or

 

(ii)   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 Section 3.1 on the maximum
number and kind of shares which may be issued under the Plan, and adjustments
of the Award Limit, and adjustments of the manner in which shares subject to
Full Value Awards will be counted). The adjustments provided under this Section 13.2(c) shall
be nondiscretionary and shall be final and binding on the affected Holder and
the Company.

 

(d)   Notwithstanding any other provision of the
Plan, in the event of a Change in Control where a Holder’s Awards are assumed
by the surviving or successor entity (or a parent or subsidiary thereof) or the
surviving or successor entity (or a parent or subsidiary thereof) substitutes
substantially similar awards for the Holder’s Awards, and within twelve
(12) months following such Change in Control, (i) the Company (or an
Affiliate) or the surviving or successor entity (or a parent or subsidiary
thereof) terminates a Holder’s employment or service without Cause or (ii) the
Holder voluntarily terminates his or her employment or service with the Company
(or an Affiliate) or the surviving or successor entity (or a parent or subsidiary
thereof) due to Good Reason, then such Holder’s remaining unvested Awards
(including any substituted awards) shall become fully vested, exercisable
and/or payable, as applicable, and all forfeiture restrictions on such Awards
(including any substituted awards) shall lapse, on the date of such
termination.

 

For
purposes of Section 13.2(d), “Cause”
shall mean any one or more of the following by a Holder: (1) the
conviction of, or entry of a plea of “guilty” or “no contest” to, a felony or a
crime involving moral turpitude, (2) an unauthorized use or disclosure of
confidential information or trade secrets of the Company (or an Affiliate) or
the surviving or successor entity (or a parent or subsidiary thereof); (3) other
intentional misconduct, fraud, embezzlement or act of dishonesty that has a
material adverse impact on the Company (or an Affiliate) or the surviving or
successor entity (or a parent or subsidiary thereof); or (4) an
intentional and continued refusal or failure to act in accordance with any
lawful and proper direction or order of the Board or the appropriate individual
to whom the Holder reports. Notwithstanding the foregoing, if the term or
concept of “Cause” has been defined in an agreement between a Holder and the
Company (or an Affiliate) or the surviving or successor entity (or a parent or
subsidiary thereof), then “Cause” shall have the definition set forth in such
agreement with respect to such Holder’s Awards for purposes of this Section 13.2(d).

 

For
purposes of Section 13.2(d), “Good
Reason” shall mean the occurrence of any of the following conditions
without the Holder’s written consent: (1) a material diminution in the
Holder’s base compensation, (2) a material diminution in the Holder’s
authority, duties, or 

 

24

 

responsibilities, or (3) a
material change in the geographic location at which the Holder must perform
services for the Company (or an Affiliate) or the surviving or successor entity
(or a parent or subsidiary thereof). In order to resign for Good Reason, the
Holder must provide written notice to the Company (or an Affiliate) or the
surviving or successor entity (or a parent or subsidiary thereof) of the
existence of the condition giving rise to Good Reason (the “Good Reason Condition”) within ninety
(90) days of the initial existence of such Good Reason Condition. Upon
receipt of such notice of the Good Reason Condition, the Company (or an
Affiliate) or the surviving or successor entity (or a parent or subsidiary
thereof) will be provided with a period of thirty (30) days during which
it may remedy the Good Reason Condition and if the Good Reason Condition is not
remedied within such period, the Holder may resign for Good Reason based on the
Good Reason Condition specified in the notice, provided that such resignation
must occur within six (6) months after the initial existence of such Good
Reason Condition. Notwithstanding the foregoing, if the term or concept of “Good
Reason” has been defined in an agreement between a Holder and the Company (or
an Affiliate) or the surviving or successor entity (or a parent or subsidiary
thereof), then “Good Reason” shall have the definition set forth in such
agreement with respect to such Holder’s Awards for purposes of this Section 13.2(d).

 

(e)   The Administrator may, in its sole
discretion, include such further provisions and limitations in any Award,
agreement or certificate, as it may deem equitable and in the best interests of
the Company that are not inconsistent with the provisions of the Plan.

 

(f)    With respect to Awards which are granted to
Covered Employees and are intended to qualify as Performance-Based
Compensation, no adjustment or action described in this Section 13.2 or in
any other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause such Award to fail to so qualify as
Performance-Based Compensation, unless the Administrator determines that the
Award should not so qualify. No adjustment or action described in this Section 13.2
or in any other provision of the Plan shall be authorized to the extent that
such adjustment or action would cause the Plan to violate Section 422(b)(1) of
the Code. Furthermore, no such adjustment or action shall be authorized to the
extent such adjustment or action would result in short-swing profits liability
under Section 16 or violate the exemptive conditions of Rule 16b-3
unless the Administrator determines that the Award is not to comply with such
exemptive conditions.

 

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

 

(h)   No action shall be taken under this Section 13.2
which shall cause an Award to fail to comply with Section 409A of the Code
or the Treasury Regulations thereunder, to the extent applicable to such Award.

 

13.3 Approval of
Plan by Stockholders.  The
Plan will be submitted for the approval of the Company’s stockholders within
twelve (12) months after the date of the Board’s initial adoption of the
Plan.

 

25

 

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

 

13.5 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 or exercise of
Awards, such as a system using an internet website or interactive voice
response, then the paperless documentation, granting or exercise of Awards by a
Holder may be permitted through the use of such an automated system.

 

13.6  Effect of
Plan upon Other Compensation Plans. 
The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company or any Affiliate. Nothing in the Plan
shall be construed to limit the right of the Company or any Affiliate: (a) to
establish any other forms of incentives or compensation for Employees,
Directors or Consultants of the Company or any Affiliate, or (b) to grant
or assume options or other rights or awards otherwise than under the Plan in
connection with any proper corporate purpose including without limitation, the
grant or assumption of options in connection with the acquisition by purchase,
lease, merger, consolidation or otherwise, of the business, stock or assets of
any corporation, partnership, limited liability company, firm or association.

 

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

 

13.8 Titles and
Headings, References to Sections of the Code or Exchange Act.  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. References to sections of the Code or the Exchange Act shall include
any amendment or successor thereto.

 

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

 

13.10  Section 409A.  To the extent that the Administrator
determines that any Award granted under the Plan is subject to Section 409A
of the Code, the Program pursuant to which such Award is granted and 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,
the Program and any 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 Administrator 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
Administrator may adopt such amendments to the Plan and the applicable Program
and Award Agreement or adopt other policies and procedures (including
amendments, 

 

26

 

policies and procedures with retroactive
effect), or take any other actions, that the Administrator 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 and thereby avoid the
application of any penalty taxes under such Section.

 

13.11  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 Administrator is
obligated to treat Eligible Individuals, Holders or any other persons
uniformly.

 

13.12  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 Holder pursuant to an Award, nothing contained
in the Plan or any Program or Award Agreement shall give the Holder any rights
that are greater than those of a general creditor of the Company or any Affiliate.

 

13.13  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.

 

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

 

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

 

27Exhibit
10.1

 

STOCK VOTING AGREEMENT

 

STOCK
VOTING AGREEMENT, dated as of September 29, 2009 (this “Agreement”), is by and among the undersigned
stockholder (the “Stockholder”), and Cano Petroleum, Inc., a Delaware
corporation (the “Company”).

 

WHEREAS, concurrently
herewith, Resaca Exploitation, Inc., a Texas corporation (“Resaca”),
Resaca Acquisition Sub, Inc., a Delaware corporation and a wholly-owned
subsidiary of Resaca (“Merger Sub”), and
the Company are entering into an Agreement and Plan of Merger of even date
herewith (the “Merger Agreement”),
pursuant to which Merger Sub will merge with and into Company (the “Merger”).  Each capitalized term used herein and not
otherwise defined shall have the meaning set forth in the Merger Agreement;

 

WHEREAS, the
Stockholder, as of the date hereof, has Beneficial Ownership, as defined in Section 6
hereof, of the number of shares of Series D Convertible Preferred Stock,
no par value per share, of the Company (“Company
Preferred Stock”) set forth on Exhibit A
hereto (together with any shares of Company Preferred Stock or common stock,
par value $0.0001 per share, of the Company (“Company Common Stock”)
acquired by the Stockholder after the date hereof and prior to the termination
of this Agreement whether upon the exercise of options, warrants or rights, the
conversion or exchange of convertible or exchangeable shares, or by means of
purchase, dividend, distribution or otherwise, hereinafter collectively
referred to as the “Shares”); and

 

WHEREAS, the Company
has required, as condition to it entering into the Merger Agreement, that the
Stockholder enter into this Agreement.

 

NOW,
THEREFORE, in consideration of the Company’s execution of the
Merger Agreement and the mutual covenants and agreements herein contained and other
good and valuable consideration, and intending to be legally bound hereby, it
is agreed as follows:

 

1.             Vote.

 

1.1           Agreement
to Vote.  The Stockholder hereby revokes any and all
previous proxies with respect to the Stockholder’s Shares and irrevocably
agrees to vote and otherwise act (including pursuant to written consent) with
respect to all of such Shares:  (i) in
favor of the amendment to the Certificate of Designations, Preferences and
Rights of Series D Convertible Preferred Stock of the Company, filed with
the Secretary of State of Delaware on August 31, 2006 (the “Original
Certificate”), attached hereto as Exhibit B (the “Amendment”),
(ii) in favor of the adoption and approval of the Merger Agreement (or any
amended version or versions of the Merger Agreement, and (iii) in accordance with the recommendation of the
Board of Directors of the Company in connection with any Target Acquisition
Proposal, and, in each case, take all actions required in furtherance thereof,
at any meeting or meetings of the stockholders of the Company, and at any
adjournment, postponement or continuation thereof, at which the such matter is
submitted for the consideration and vote of the stockholders of the Company.  The Stockholder shall not enter into any
agreement or understanding with any person or entity the effect of which would
be inconsistent or violative of the provisions and agreements contained in this
Section 1.  The obligations
of the Stockholder under this Section 1 shall remain in effect with
respect to the Shares until, and shall terminate upon, the earlier to occur of
the Effective Time or the termination of the Merger Agreement in accordance
with its terms.  The Stockholder hereby
agrees to execute such additional documents as the Company may reasonably request
to effectuate the foregoing.

 

 

1.2           Irrevocable
Proxy.  Concurrently with the execution of this Agreement, the
Stockholder agrees to deliver to the Company a proxy in the form attached
hereto as Exhibit C (the “Proxy”), which shall be irrevocable to the
fullest extent permissible by applicable law, with respect to the Shares.

 

2.             Representations and Warranties of the
Stockholder.  The Stockholder represents and warrants to
the Company as follows:

 

2.1           Ownership
of Shares.  On the date hereof, the Shares are all of the
Shares currently Beneficially Owned by the Stockholder.  The Stockholder has sole voting power and
sole power to issue instructions with respect to the matters set forth in Section 1
hereof, sole power of disposition, sole power of conversion and sole power to
agree to all of the matters set forth in this Agreement, in each case with
respect to all of the Shares set forth on Exhibit A hereto, with no
limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement.  The Stockholder currently has, and at all
times during the term hereof will have, good, valid and marketable title to the
Shares, free and clear of all liens, encumbrances and security interests (other
than the encumbrances created by this Agreement and other than restrictions on
transfer under applicable federal and state securities laws) and free of other
restrictions, options, rights to purchase or other claims that would adversely
affect the ability of the Stockholder to perform its obligations hereunder or
pursuant to which the Stockholder could be required to sell, assign or
otherwise transfer the Shares.

 

2.2           Authority;
Binding Agreement.  The
Stockholder has the full legal right, power and authority to enter into and
perform all of its obligations under this Agreement. This Agreement has been
duly executed and delivered by the Stockholder and constitutes a legal, valid
and binding agreement of the Stockholder, enforceable in accordance with its
terms, subject, as to enforceability, to bankruptcy, insolvency,
reorganization, moratorium and other laws of general applicability relating to
or affecting creditors’ rights and to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).  Neither the execution and delivery
of this Agreement nor the consummation by the Stockholder of the transactions
contemplated hereby will (i) violate, or require any consent, approval or
notice under, any provision of any judgment, order, decree, statute, law, rule or
regulation applicable to the Stockholder or the Shares or (ii) constitute
a violation of, conflict with or constitute a default under, any contract,
commitment, agreement, understanding, arrangement or other restriction of any
kind to which the Stockholder is a party or by which the Stockholder is bound,
in each case the effect of which would adversely affect the ability of the
Stockholder to perform his obligations hereunder.

 

3.             Certain Covenants of the Stockholder. 
Except in accordance with the provisions of this Agreement, the
Stockholder agrees with and covenants to the Company as follows:

 

3.1           Transfer. 
Prior to the termination of this Agreement, except as otherwise provided
herein, the Stockholder shall not:  (i) transfer
(which term shall include, without limitation, for the purposes of this
Agreement, any sale, gift, pledge, assignment, encumbrance or other
disposition), whether directly or indirectly (including by operation of law),
or consent to any transfer of, any or all of the Shares or any interest
therein, except pursuant to the Merger; (ii) grant any proxies,
powers-of-attorney or other authorizations or consents with respect to the
Shares, deposit the Shares into a voting trust or enter into a voting agreement
or similar arrangement with respect to the Shares; or (iii) enter into any
contract, option or other agreement or understanding with respect to any
transfer of any or all such Shares or any interest therein.

 

3.2           Stop
Transfer.  The Stockholder hereby agrees with and
covenants to each other party hereto that the Stockholder shall not request
that the Company register the transfer (book entry or otherwise) of any
certificate or uncertified interest representing any of its Shares, unless such
transfer is

 

2

 

made in compliance with this Agreement.

 

3.3           Notifications. 
The Stockholder shall, while this Agreement is in effect, notify the
Company promptly, but in no event later than two business days, of the number
of any shares of Company Common Stock acquired by the Stockholder after the
date hereof.

 

3.4           Waiver
of Claims. 
The Stockholder agrees that it will not bring, commence, institute,
maintain, prosecute, participate in or voluntarily aid any action, claim, suit
or cause of action, in law or in equity, in any court or before any
governmental entity, which challenges the validity of or seeks to enjoin the
operation of any provision of this Agreement; provided, that the Stockholder
may defend against, contest or settle any such action, claim, suit or cause of
action brought against the Stockholder that relates to the Stockholder’s
capacity as a director or officer of the Company.

 

3.5           Appraisal Rights. 
To the extent permitted by applicable law, the Stockholder shall not
exercise any rights (including, without limitation, under Section 262 of
the DGCL) to demand appraisal of any Shares that may arise with respect to the
Merger.

 

3.6           Additional Voting
Agreements.  If requested by the Company, the Stockholder
agrees to use its commercially reasonable efforts to cause the other beneficial
owners of any shares of capital stock of the Company over which the Stockholder
has shared voting or dispositive power (such shares, the “Shared Securities”) to
execute stock voting agreements and Irrevocable Proxies, in substantially
similar form to this Agreement and the Irrevocable Proxy attached hereto, prior
to the Effective Time.  If not so
requested by the Company, the Stockholder nonetheless agrees to use its
commercially reasonable efforts to cause the Shared Securities to be voted in a
manner consistent with this Agreement.

 

4.             Effect
of Purported Transfer.  The
Company agrees with, and covenants with, the Stockholder that the Company shall
not register the transfer (book entry or otherwise) of any certificate or
uncertified interest representing any of the Shares, unless such transfer is
made in compliance with this Agreement. 
The parties hereto agree that any transfer of the Shares made other than
in compliance with this Agreement shall be null and void.  Any such transfer shall convey no interest in
any of the Shares purported to be transferred, and the transferee shall not be
deemed to be a stockholder of the Company nor entitled to receive a new share
certificate or any rights, dividends or other distributions on or with respect
to such Shares.

 

5.             Termination. This Agreement shall terminate, and
neither the Company nor the Stockholder shall have any rights or obligations
hereunder, and this Agreement shall become null and void and have no effect on
the earlier of (i) the Effective Time, (ii) upon the termination of
the Merger Agreement in accordance with its terms, (iii) upon any
amendment, modification or supplement to the Merger Agreement or any waiver by
any party thereto that is individually or in the aggregate adverse to the
interests of the Stockholder without the prior written consent of the
Stockholder, or (iv) the failure of Resaca to assume the Company’s
obligations under the Transaction Documents (as defined in the Original
Certificate) to the extent not otherwise eliminated pursuant to proposed Section (23)
of the Amendment with respect to the Merger.

 

6.             Definitions. 
For the purposes of this Agreement:

 

6.1           “Beneficial
Ownership” or “Beneficial Owner” with respect to any securities shall mean
having “beneficial ownership” of such securities (as determined pursuant to Rule 13d-3
under the Securities Exchange Act of 1934 (the “Exchange Act”),
including pursuant to any agreement, arrangement or understanding, whether or
not in writing; provided, however, that notwithstanding Rule 13d-3
under the Exchange Act, “Beneficial Ownership” or “Beneficial Owner” for
purposes of this

 

3

 

Agreement shall include only those securities
over which the Stockholder has sole voting and dispositive power.  Without duplicative counting of the same
security by the same holder, securities Beneficially Owned by a Person shall
include securities Beneficially Owned by all other Persons with whom such
Person would constitute a “group” as within the meaning of Section 13(d)(3) of
the Exchange Act.

 

6.2           “Person” shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.

 

7.     Miscellaneous.

 

7.1           Notices. 
Any notice or communication required or permitted hereunder shall be in
writing and either delivered personally, telegraphed or telecopied or sent by
certified or registered mail, postage prepaid, and shall be deemed to be given,
dated and received (i) when so delivered personally, (ii) upon
receipt of an appropriate electronic answerback or confirmation when so
delivered by telegraph or telecopy (to such number specified below or another
number or numbers as such person may subsequently designate by notice given
hereunder), or (iii) five business days after the date of mailing to the
following address or to such other address or addresses as such person may
subsequently designate by notice given hereunder, if so delivered by mail:

 

	
  If
  to the Company:

  	
  Cano
  Petroleum, Inc.

  
	
   

  	
  Burnett
  Plaza

  
	
   

  	
  801
  Cherry St., Suite 3200

  
	
   

  	
  Fort
  Worth, Texas 76102

  
	
   

  	
  Telephone:
  (817) 698-0900

  
	
   

  	
  Facsimile:  (817) 334-0222

  
	
   

  	
  Attention:  Phillip B. Feiner, Esq., General
  Counsel

  
	
   

  	
   

  
	
  with
  a copy to:

  	
  Thompson & Knight LLP

  
	
   

  	
  1722 Routh Street

  
	
   

  	
  Suite 1500

  
	
   

  	
  Dallas, Texas 75201-2533

  
	
   

  	
  Telephone: (214) 969-1303

  
	
   

  	
  Facsimile:
  (214) 999-1695

  
	
   

  	
  Attention: Wesley P. Williams

  

 

If to the Stockholder: at the
address set forth on Exhibit A

 

7.2           Tax
Matters.  The parties agree to treat the exchange
of Company Preferred Stock for Parent Series A Shares as qualifying
for non-recognition of gain or loss for federal and any applicable state or
local income tax purposes, except to the extent of payments received for
accrued dividends, and further agree to file all U.S. federal, state and local
income tax and information returns and reports consistent with such treatment
unless and until the occurrence of a “determination” to the contrary under
section 1313 of the Internal Revenue Code of 1986, as amended.

 

7.3           Further
Actions. 
Each
of the parties hereto agrees that it will use its commercially reasonable
efforts to do all things necessary to effectuate this Agreement.  The Stockholder and the Company hereby
covenant and agree to execute and deliver any additional documents reasonably
necessary or desirable to carry out the purpose and intent of this Agreement.

 

7.4           Entire
Agreement.  This Agreement, together with the documents
expressly referred to herein, constitutes the entire agreement, and supersedes
all prior agreements and understandings, both 

 

4

 

written and oral, among the parties with respect
to the subject matter hereof.

 

7.5           Amendments. 
This Agreement may not be modified, amended, altered or supplemented,
except upon the execution and delivery of a written agreement executed by the
parties hereto.  The failure of any party
hereto to exercise any right, power or remedy provided under this Agreement or
otherwise available in respect hereof at law or in equity, or to insist upon
compliance by any other party hereto with its obligations hereunder, and any
custom or practice of the parties at variance with the terms hereof shall not
constitute a waiver by such party of its right to exercise any such or other
right, power or remedy or to demand such compliance.

 

7.6           Expenses. 
All costs and expenses incurred in connection with this Agreement shall
be paid by the party incurring such cost or expense.  Notwithstanding the foregoing, the Company
will reimburse to Stockholder its reasonable out-of-pocket expenses (including
attorneys fees, etc.).

 

7.7           Specific Performance. 
Each of the parties hereto acknowledges and agrees that in the event of
any breach of this Agreement, each non-breaching party would be irreparably and
immediately harmed and could not be made whole by monetary damages. It is
accordingly agreed that the parties hereto (i) will waive, in any action
for specific performance, the defense of adequacy of a remedy at law and (ii) shall
be entitled, in addition to any other remedy to which they may be entitled at
law or in equity, including monetary damages, to compel specific performance of
this Agreement without the necessity of posting bond or proving actual damages.

 

7.8           Assignment. 
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, assigns and personal
representatives, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties without the prior
written consent of the other parties.

 

7.9           Governing
Law.  This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.

 

7.10         Counterparts. 
This Agreement may be executed manually or by facsimile in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when a counterpart hereof shall have been signed by each
of the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

 

7.11         Severability. 
Any term or provision of this Agreement that is invalid or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction.  If
any provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.

 

7.12         Effect of Headings. The section headings herein are for convenience
only and shall not affect the construction or interpretation of this Agreement.

 

[SIGNATURE
PAGE FOLLOWS]

 

5

 

IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed, as of the date and year
first above written.

 

	
   

  	
  CANO PETROLEUM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Benjamin Daitch

  
	
   

  	
  Name:

  	
  Benjamin
  Daitch

  
	
   

  	
  Title:

  	
  Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  D.E. SHAW LAMINAR PORTFOLIOS, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robert T. Ladd

  
	
   

  	
  Name:

  	
  Robert
  T. Ladd

  
	
   

  	
  Title:

  	
  Authorized
  Signatory

  

 

SIGNATURE PAGE TO STOCK VOTING AGREEMENT

 

1

 

EXHIBIT A

 

Stock Ownership and Address Notice List

 

	
  Beneficial
  Ownership:

  	
  12,423
  shares of Company Preferred Stock 2,160,591 shares of Company Common Stock,
  acquirable upon conversion of the Company Preferred Stock.

  
	
   

  	
   

  
	
  Address
  for Notices:

  	
  D.
  E. Shaw Laminar Portfolios, L.L.C.

  
	
   

  	
  c/o
  D. E. Shaw & Co., L.P.

  
	
   

  	
  10000
  Memorial Drive

  
	
   

  	
  Suite 500

  
	
   

  	
  Houston,
  TX   77024

  
	
   

  	
  Fax
  Number:  (713) 292-5454

  
	
   

  	
  Attention:   Debbie Blank

  

 

A-1

 

EXHIBIT B

 

CERTIFICATE OF AMENDMENT

TO

CERTIFICATE OF DESIGNATIONS, PREFERENCES

AND RIGHTS OF SERIES D CONVERTIBLE PREFERRED STOCK

OF

CANO PETROLEUM, INC.

 

 

Cano
Petroleum, Inc., a corporation organized and existing under the laws of
the State of Delaware (the “Company”), DOES
HEREBY CERTIFY as follows:

 

FIRST:  That the Board of Directors of the Company,
at a duly convened meeting on September 29, 2009, duly adopted resolutions
approving and adopting the amendments set forth below to the Certificate of
Designations of Series D Convertible Preferred Stock of the Company (the “Certificate of Designations”), and that such amendments have
been approved and adopted by the requisite number of existing holders of the
Common Stock and the Series D Convertible Preferred Stock of the Company.

 

SECOND:  That the amendments set forth below have been
duly adopted in accordance with the applicable provisions of Section 242
of the General Corporation Law of the State of Delaware.

 

THIRD:
That the Certificate of Designations is hereby amended as follows:

 

A.            The following
is added as Section (23) of the Certificate of Designations:

 

Notwithstanding
anything to the contrary contained in the Transaction Documents, the holders of
the Preferred Shares shall have none of the preferences, rights, privileges or
powers of, or restrictions provided for the benefit of, the Preferred Shares contained
in the Transaction Documents relating to, arising out of or caused by the
execution and delivery of that certain Agreement and Plan of Merger dated September 29,
2009, by and among Resaca Exploitation, Inc., a Texas corporation (“Resaca”), Resaca Acquisition Sub, Inc., a Delaware
corporation and the Company (the “Merger Agreement”)
and the consummation of the transactions contemplated thereby (the “Merger”) (including, without limitation, any rights to
require the Company to redeem any of the Preferred Shares or notice, voting or
consent rights), except to receive the Preferred Conversion Consideration (as
such term is defined in the Merger Agreement) pursuant to the terms of the
Merger Agreement and such other rights (including registration rights and
preemptive rights having terms consistent with those presently contained in the
Transaction Documents) not inconsistent with the foregoing as shall be
reasonably acceptable to the Company, Resaca and the Required Holders.  In the event that (i) the Merger
Agreement is terminated in accordance with its terms, (ii) the Merger
Agreement is amended, modified or 

 

B-1

 

supplemented
or any waiver is given by any party thereto that is individually or in the aggregate
adverse to the interests of the holders of the Preferred Shares without the
prior written consent of the Required Holders or (iii) Parent fails to
assume the Company’s obligations under the Transaction Documents to the extent
not otherwise eliminated pursuant to this Section (23) with respect to the
Merger, this Section (23) shall be inoperative and of no force or effect.

 

IN
WITNESS WHEREOF, the Company has caused this Certificate of Amendment to be
signed by S. Jeffrey Johnson, its Chairman of the Board of Directors and Chief
Executive Officer, as of the        day of                         ,
2009.

 

	
   

  	
  CANO
  PETROLEUM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  S.
  Jeffrey Johnson,

  
	
   

  	
  Title:

  	
  Chairman
  of the Board of Directors and Chief Executive Officer

  

 

B-2

 

EXHIBIT C

 

Irrevocable Proxy

 

The
undersigned stockholder of Cano Petroleum, Inc., a Delaware corporation
(the “Company”), hereby irrevocably (to the fullest extent permitted by
law) appoints the directors on the board of directors of the Company, and each
of them, as the sole and exclusive attorneys and proxies of the undersigned,
with full power of substitution and resubstitution, to vote and exercise all
voting and related rights (to the full extent that the undersigned is entitled
to do so) with respect to all of the shares of capital stock of the Company
that now or hereafter may be beneficially owned by the undersigned, and any and
all other shares or securities of the Company issued or issuable in respect
thereof on or after the date hereof (collectively, the “Shares”) in
accordance with the terms of this Proxy. 
The Shares beneficially owned by the undersigned stockholder of the
Company as of the date of this Proxy are listed on the final page of this
Proxy.  Upon the execution of this Proxy
by the undersigned, any and all prior proxies given by the undersigned with
respect to any Shares shall be revoked and the undersigned hereby agrees not to
grant any subsequent proxies with respect to the Shares until after the
Expiration Date (as defined below).

 

This
Proxy is irrevocable (to the fullest extent permitted by law), is coupled with
an interest and is granted pursuant to the Stock Voting Agreement of even date
herewith by and between the Company and the undersigned stockholder (the “Stock
Voting Agreement”), and is granted in consideration of the Company entering
into the Agreement and Plan of Merger (the “Merger Agreement”), by and
among the Resaca, Merger Sub and the Company, which provides for the merger of
Merger Sub with and into the Company, with the Company being the surviving
corporation (the “Merger”).  This
Proxy shall terminate and be of no further force and effect automatically upon
the Expiration Date.  As used herein, the
term “Expiration Date” shall mean the date that the Stock Voting
Agreement terminates in accordance with its terms.

 

The
attorneys and proxies named above, and each of them, are hereby authorized and
empowered by the undersigned, at any time prior to the Expiration Date, to act
as the undersigned’s attorney and proxy to vote the Shares, and to exercise all
voting, consent and similar rights of the undersigned with respect to the
Shares (including, without limitation, the power to execute and deliver written
consents) (i) in favor of the Amendment (as such term is defined in the
Stock Voting Agreement) and (ii) in favor of the adoption and approval of
the Merger Agreement (or any amended version or versions of the Merger
Agreement), and all actions required in furtherance thereof, at any meeting or
meetings of the stockholders of the Company, and at any adjournment,
postponement or continuation thereof, at which the Amendment and/or the Merger
Agreement (or any amended version or versions of the Merger Agreement) are
submitted for the consideration and vote of the stockholders of the Company.

 

The
attorneys and proxies named above may not exercise this Proxy to vote, consent
or act on any other matter except as provided above.  The undersigned stockholder may vote the
Shares on all other matters.

 

Any
obligation of the undersigned hereunder shall be binding upon the successors
and assigns of the undersigned.

 

[Remainder of Page Intentionally Left Blank]

 

C-1

 

Dated:  September 29, 2009

 

	
   

  	
  Signature
  of Stockholder:

  	
  /s/
  Robert T. Ladd,

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Print
  Name of Stockholder:

  	
  Robert
  T. Ladd, Authorized Signatory for D.E. Shaw Laminar Portfolios, L.L.C., as
  Stockholder

  
	
   

  	
   

  
	
  2.

  	
  Shares
  beneficially owned:

  
	
   

  	
   

  
	
   

  	
  12,423
  shares of Company Preferred Stock

  
	
   

  	
   

  
	
   

  	
  0
  shares of Company Common Stock

  
	
   

  	
   

  
	
   

  	
  2,160,591 shares of
  Company Common Stock issuable upon the exercise of outstanding options,
  warrants or other rights (including upon conversion shares of Company
  Preferred Stock)

  

 

C-2

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