Document:

EXHIBIT 10.4

COMMERCIAL LEASE

	
 

	
 

	
1.

	
PARTIES:

	
 

	
 

	
 

	
In
 consideration for the terms and conditions stated herein Clematis LLC, a
 Massachusetts Limited Liability Company, with a principal place of business
 at 411 Waverley Oaks Road, Suite 340, Waltham, MA, 02452, LESSOR, which
 expression shall include its heirs, successors, and assigns where the context
 so admits, does hereby lease to Scientific Learning Corporation, a Delaware
 corporation with a principal place of business at 300 Frank H. Ogawa Plaza,
 Suite 600, Oakland, CA 94612, which expression shall include its successors,
 executors, administrators, and assigns where the context so admits, (LESSOR
 and LESSEE collectively described herein as the “Parties”), and the LESSEE
 hereby leases, the following described premises:

	
 

	
 

	
2.

	
PREMISES:

	
 

	
 

	
 

	
6,026
 rentable square feet + or - on the third floor at 135 Beaver Street, Suite
 308 Waltham, MA 02452 (the “Building”) as further depicted in Exhibit A
 hereto (the “Leased Premises”). Together with the right to use in common,
 with others entitled thereto, the hallways, stairways, and elevators,
 necessary for access to said Leased Premises, and lavatories nearest thereto,
 as well as the non exclusive use of twenty two (22) unassigned parking spaces
 serving the Building.

	
 

	
 

	
3.

	
TERM:

	
 

	
 

	
 

	
The term of
 this lease shall be for three and one half (3 1⁄2) years commencing on April 1,
 2008 and ending on September 30, 2011. LESSOR shall not be responsible for any
 delays, costs and expenses caused by LESSEE’S failure to make decisions
 affecting the LESSOR’S Work in a timely manner or by any other delay beyond
 the LESSOR’s control.

	
 

	
 

	
4.

	
RENT:

	
 

	
 

	
 

	
The LESSEE
 shall pay to the LESSOR base rent at the rate of $138,598.00 dollars per
 year, payable in advance in monthly installments of $11,549.83, commencing
 April 1, 2008. During the term of the lease, LESSEE shall pay base rent and
 additional rent to the LESSOR monthly, in advance, not later than the first
 day of each calendar month. Upon the execution of this lease the LESSEE shall
 pay to the LESSOR the amount of $11,549.83 dollars which is the first month’s
 base rent.

	
 

	
 

	
5.

	
SECURITY DEPOSIT:

	
 

	
 

	
 

	
Upon the
 execution of this lease, the LESSEE shall pay to the LESSOR the amount of
 $23,099.66 dollars and maintain said amount during the term and said amount
 shall be held as a security for the LESSEE’S performance as herein provided
 and refunded to the LESSEE at the end of this lease, or any extension
 thereof, subject to the LESSEE’S redelivery of the Leased Premises and
 compliance with the conditions hereof. 

	
 

	
 

	
6.

	
RENT ADJUSTMENT:

	
 

	
 

	
 

	
A. TAX
 ESCALATION: If in any tax year commencing with the fiscal year ending
 June 30, 2010, the real estate taxes on the land and buildings, of which the
 Leased Premises are a part, are in excess of the amount of the real estate
 taxes thereon for the fiscal year ending June 30, 2009 (hereinafter called
 the “Tax Base Year”), LESSEE will pay to LESSOR as additional rent hereunder,
 when and as designated by notice in writing by LESSOR, 6.28 percent (6.28%)
 of such excess that may occur in each year of the term of this lease or any
 extension or renewal thereof and proportionately for any part of a fiscal
 year. If the LESSOR obtains an abatement of any such excess real estate tax,
 a proportionate share of such abatement, less the reasonable fees and costs
 incurred in obtaining the same, if any, shall be refunded to the LESSEE. The
 LESSEE shall, effective July 1, 2009, make estimated installment payments as
 additional rent as and when the payment of base rent is due. During the fiscal
 year ending June 30, 2010 (July 1, 2009- June 30, 2010) the LESSEE’S
 estimated installment payments shall be 105% of the actual real estate taxes
 assessed during the fiscal year ending June 30, 2009 (July 1, 2008- June 30,
 2009) less the Tax Base Year amount. Thereafter, estimated real estate tax
 payments shall be based on 105% of the prior year’s actual real estate taxes
 less the Base Year amount. Actual real estate taxes will no be known at the
 beginning of each fiscal year and therefore retroactive adjustment to
 estimated payments shall be necessary when actual real estate taxes are
 known. After the end of each fiscal year, as and when the actual real estate
 taxes are available, LESSOR shall provide LESSEE written notice in reasonable
 detail of LESSEE’S pro rata share of the actual real estate taxes for such
 fiscal year less the Tax Base Year amount, the estimated payments made by
 LESSEE on account thereof, and the new estimated payments calculated in
 accordance with the above. The LESSEE shall pay LESSOR within thirty (30)
 days of receiving such written notice, the balance owed due to insufficient
 estimated payments made in accordance with the above, and the LESSOR shall
 credit the LESSEE’S account and deduct from the next monthly installments of
 base rent payable hereunder any excess estimated payments made in accordance
 with the above.

	
 

	
 

	
 

	
LESSEE’S
 percent of expense is calculated as follows: Leased Premises 6,026 rentable
 square feet, divided by total Building 95,989 rentable square feet equals 6.28%.

	
 

	
 

	
 

	
B. OPERATING
 COST ESCALATION: The LESSEE shall pay to the LESSOR as additional rent
 hereunder when and as designated by notice in writing by LESSOR, 6.28% of any
 increase in operating expenses over those incurred during the calendar year
 2008 (hereinafter called the “OPEX Base Year”). Operating expenses are
 defined for the purposes of this lease in Exhibit E hereto. The LESSEE
 shall, effective January 1, 2009, make estimated installment payments as
 additional rent as and when the payment of base rent is due. During the
 calendar year 2009, the LESSEE’S estimated installment payments shall be 105%
 of the actual operating expenses assessed during calendar year 2008 less the
 OPEX Base Year amount. Thereafter, estimated operating expenses shall be based
 on 105% of the prior year’s actual operating expenses less the OPEX Base Year
 amount. As actual operating expenses will not be known until after the
 conclusion of each calendar year, retroactive adjustment to estimated
 payments shall be necessary when actual operating expenses are determined.
 After the end of each calendar year, as and when the actual operating
 expenses are available, LESSOR shall provide LESSEE written notice in
 reasonable detail of LESSEE’S pro rata share of the actual operating expenses
 for such 

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calendar
 year less the OPEX Base Year amount, the estimated payments made by LESSEE on
 account thereof, and the new estimated payments calculated in accordance with
 the above. The LESSEE shall pay LESSOR, within thirty (30) days of receiving
 written notice thereof, the balance owed due to insufficient estimated
 payments made in accordance with the above, and the LESSOR shall credit the
 LESSEE’S account and deduct from the next monthly installments of base rent
 payable hereunder any excess estimated payments made in accordance with the
 above.

	
 

	
 

	
 

	
Increases
 shall be prorated should this lease be in effect with respect to only a
 portion of any calendar year.

	
 

	
 

	
 

	
C. LESSEE’S
 AUDIT: The LESSEE shall have a period of thirty (30) days from receipt of
 LESSOR’S statement or reconciliation of the annual operating expenses
 actually incurred for the Building to verify the same at the LESEE’S expense.
 LESSOR shall, upon reasonable notice from LESSEE, provide LESSEE, its
 accountants, advisors or consultants with reasonable access to such relevant
 books and records at the LESSOR’S office during reasonable business hours for
 the purpose of verifying LESSOR’S most recent statement or reconciliation of
 the annual operating expenses actually incurred for the Building. LESSEE
 agrees that the LESSEE, its accountants, advisors or consultants shall keep
 all information regarding the LESSOR strictly confidential. LESSEE shall
 provide LESSOR with the complete results of such inspection. Any mutually
 agreed upon verifiable overstatement of operating expenses shall be refunded
 to LESSEE within thirty (30) days of presentation of the results to LESSOR.
 Any understatement of operating expenses shall be paid to the LESSOR within
 thirty (30) days of completion of the above-mentioned inspection. LESSEE
 shall be entitled to such documentation and inspection no more than once per
 calendar year. If the LESSOR and LESSEE determine in good faith, as a result
 or consequence of such audit, that operating expenses were overstated by more
 than five percent (5%), all reasonable costs and expenses of LESSEE in
 conducting such audit shall be paid by LESSOR, within thirty (30) days of
 invoice to LESSOR.

	
 

	
 

	
7.

	
UTILITIES:

	
 

	
 

	
 

	
LESSEE shall
 have independent access to the Lease Premises twenty-four (24) hours per day,
 seven (7) days per week, fifty-two (52) weeks per year. The LESSEE shall pay,
 as they become due, all bills for electricity and other utilities (whether
 they are used for furnishing heat or other purposes) that are furnished to
 the Leased Premises and separately metered (or submetered), or are servicing
 the Leased Premises exclusively. The LESSOR agrees to provide all other
 utility service and reasonable heat and air conditioning (except to the
 extent that the same are furnished through separately metered or submetered
 utilities or separate fuel tanks as set forth above) to the Leased Premises,
 during normal business hours on regular business days of the heating and air
 conditioning seasons of each year, to furnish elevator service, to light
 passageways, stairways and parking lots during business hours, and to furnish
 the cleaning services to the Building and Leased Premises described in
 Exhibit F. Normal business hours are 8:00 a.m. to 6:00 p.m., Monday through
 Friday, excluding holidays. LESSEE shall be charged for HVAC use at a rate of
 $0.50 per ton per hour for HVAC usage (“HVAC Rate”) outside of normal
 business hours or in excess of normal office usage as additional rent. The
 HVAC Rate is subject to review and adjustment by LESSOR. LESSOR shall provide
 written notice to the LESSEE thirty (30) days prior to the 

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effective
 date of any increase in the HVAC Rate. LESSOR shall not be liable for damages
 for any reason, or for any inconvenience, interruption or consequences resulting
 from the failure of utilities or any service due to any accident, to the
 making of repairs, alterations, or improvements, to labor difficulties, to
 trouble in obtaining fuel, electricity, service, or supplies from the sources
 from which they are usually obtained for said building, or to any cause
 beyond the LESSOR’S control. If such cause is the result of the negligent act
 or omission of LESSOR, its agents, contractors or employees and continues for
 more than five (5) days after notice from LESSEE, as its sole remedy,
 LESSEE’S rental obligations shall be abated until such time as the damage or
 interruption is restored.

	
 

	
 

	
 

	
LESSOR shall
 have no obligation to provide utilities or equipment other than the utilities
 and equipment within the Leased Premises as of the commencement date of this
 lease. In the event LESSEE requires additional utilities or equipment, the
 installation and maintenance thereof shall be the obligation solely of the
 LESSEE, provided that such installation shall be subject to the written
 consent of the LESSOR, which shall not be unreasonably withheld, conditioned
 or delayed.

	
 

	
 

	
8.

	
USE OF LEASED PREMISES:

	
 

	
 

	
 

	
The LESSEE
 shall use the Leased Premises only for the purpose of an office use.

	
 

	
 

	
9.

	
COMPLIANCE WITH LAWS:

	
 

	
 

	
 

	
The LESSEE
 acknowledges that no trade or occupation shall be conducted in the Leased
 Premises or the building or property of which the Leased Premises are a part,
 or use made thereof which is unlawful, improper, noisy or offensive, or
 contrary to any law, regulation or municipal by-law or ordinance in force in
 the city or town in which the Leased Premises are situated.

	
 

	
 

	
10.

	
FIRE INSURANCE:

	
 

	
 

	
 

	
The LESSEE
 shall not permit any use of the Leased Premises which will make voidable any
 insurance on the property of which the Leased Premises are a part, or on the
 contents of said property or which shall be contrary to any law or regulation
 from time to time established by the New England Fire Insurance Rating
 Association, or any similar body succeeding to its powers. The LESSEE shall
 on demand reimburse the LESSOR, and all other tenants, all extra insurance
 premiums caused by any unusual use (i.e., not subsumed by the LESSEE’S
 permitted use established in Section 8) by LESSEE of the Leased Premises or
 the property of which the Leased Premises are a part.

	
 

	
 

	
11.

	
MAINTENANCE:

	
 

	
 

	
 

	
A. LESSEE’S
 OBLIGATIONS: The LESSEE agrees to maintain the Leased Premises in good
 condition acknowledging that the Leased Premises are now in good order and
 the glass whole. The LESSEE shall not permit the Leased Premises to be
 overloaded, damaged, stripped or defaced, nor suffer any waste. LESSEE shall
 obtain written consent of LESSOR which consent shall not be unreasonably
 withheld, conditioned or delayed, before erecting any sign on the Leased Premises
 or the building or property of which the Leased Premises 

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are a part.

	
 

	
 

	
 

	
B. LESSOR’S
 OBLIGATIONS: The LESSOR agrees to maintain the structure of the building
 of which the Leased Premises are a part in the same condition as it is at the
 commencement of the term or as it may be put in during the term of this
 lease, reasonable wear and tear, damage by fire and other casualty only
 excepted, unless such maintenance is required because of the LESSEE, its
 agents, employees, invitees or those for whose conduct the LESSEE is legally
 responsible.

	
 

	
 

	
 

	
C. SELF
 HELP IN EMERGENCY: In the event of an emergency which threatens the
 safety of individuals or damage to the building or it’s contents, including
 personal property, the LESSOR may respond to the emergency, and any costs
 incurred by the LESSOR on behalf of the LESSEE, or due to the acts or
 negligence of the LESSEE, its agents, employees, invitees or those for whose
 conduct the LESSEE is legally responsible, shall, subject to paragraph 17
 hereto, be charged to and recovered from the LESSEE. LESSOR shall not be
 liable for any damages caused by said emergency, or any action or omission by
 the LESSOR under this paragraph.

	
 

	
 

	
 

	
D. LESSOR’S
 APPROVAL: Whenever in this lease LESSOR’S approval is required, such
 approval shall be deemed given if the LESSOR has failed to deliver to LESSEE
 within thirty (30) days from the date LESSOR receives the later of (i)
 LESSEE’S request; or (ii) all information with relevant particularity and
 specificity, reasonably necessary to make a determination regarding LESSEE’S
 request; its determination to deny or modify LESSEE’S request with relevant
 particularity and specificity.

	
 

	
 

	
12.

	
ALTERATIONS - ADDITIONS:

	
 

	
 

	
 

	
The LESSEE
 shall not make structural alterations or additions to the Leased Premises,
 but may make non-structural alterations provided the LESSOR consents thereto
 in writing, such consent not to be unreasonably withheld, conditioned, or
 delayed. All such allowed alterations shall be at LESSEE’S expense and shall
 be in quality at least equal to the present construction. LESSEE shall not
 permit any mechanics’ liens, or similar liens, to remain upon the Leased
 Premises for labor and material furnished to LESSEE or claimed to have been
 furnished to LESSEE in connection with work of any character performed or
 claimed to have been performed at the direction of LESSEE and shall cause any
 such lien to be released of record forthwith without cost to LESSOR. LESSEE
 shall indemnify and hold the LESSOR harmless from any losses, costs and
 claims arising from all such liens. Any alterations or improvements made by
 the LESSEE shall become the property of the LESSOR at the termination of
 occupancy as provided herein.

	
 

	
 

	
13.

	
ASSIGNMENT - SUBLEASING:

	
 

	
 

	
 

	
The LESSEE
 shall not assign or sublet the whole or any part of the Leased Premises
 without LESSOR’S prior written consent, which shall not be unreasonably
 withheld, conditioned or delayed. Any transfer of interests in LESSEE between
 or among existing holders thereof, to an affiliate of LESSEE or an entity
 acquiring some or all of the stock of LESSEE in the nature of a merger or
 consolidation, or as a consequence of the public trading or LESSEE’S stock
 shall not be an assignment or subletting requiring any approval hereunder as
 long as 

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the
 transferee has the same or greater net worth than LESSEE on the date of
 execution hereof and complies and conforms with the terms and conditions of
 this lease and the LESSEE has provided LESSOR with thirty (30) days prior
 written notice therof. Notwithstanding such consent, LESSEE shall remain
 liable to LESSOR for the payment of all rent and for the full performance of
 the covenants and conditions of this lease. See Addendum.

	
 

	
 

	
14.

	
SUBORDINATION:

	
 

	
 

	
 

	
This lease
 shall be subject and subordinate to any and all mortgages, deeds of trust and
 other instruments in the nature of a mortgage granted by the LESSOR, in
 existence now or at any time hereafter as a lien or liens on the property of
 which the Leased Premises are a part and the LESSEE shall, when requested,
 promptly execute and deliver such written instruments as shall be necessary
 to show the subordination of this lease to said mortgages, deeds of trust or
 other such instruments in the nature of a mortgage. Notwithstanding the
 foregoing, the LESSOR shall use commercially reasonable efforts to obtain
 from any future mortgagee seeking a subordination of this lease a
 commercially reasonable agreement from said future mortgagee that LESSEE’S
 rights hereunder, so long as LESSEE is not in default beyond any applicable
 cure periods, shall not be disturbed by said future mortgagee.

	
 

	
 

	
15.

	
LESSOR’S ACCESS:

	
 

	
 

	
 

	
The LESSOR
 or agents of the LESSOR may, at reasonable times, upon reasonable notice,
 enter to view the Leased Premises and may remove placards and signs not
 approved and affixed as herein provided, and make repairs and alterations as
 LESSOR should elect to do and may show the Leased Premises to others, and at
 any time within six (6) months before the expiration of the term, may affix
 to any suitable part of the Leased Premises a notice for letting or selling
 the Leased Premises or property of which the Leased Premises are a part and
 keep the same so affixed without hindrance or molestation.

	
 

	
 

	
16.

	
INDEMNIFICATION AND LIABILITY:

	
 

	
 

	
 

	
The LESSEE
 shall indemnify and hold the LESSOR harmless from all loss and damage
 occasioned by the negligence of the LESSEE which is not otherwise covered by
 insurance, including loss and damaged occasioned by the use or escape of
 water or by the bursting of pipes, or by any nuisance made or suffered on the
 Leased Premises or the property of which the Leased Premises are a part,
 unless such loss is caused by the negligence of the LESSOR. LESSEE shall not
 install or attach any appurtenances to the plumbing or heating systems and
 LESSEE shall indemnify and hold LESSOR harmless from any and all loss
 occasioned by the installation or attachment of said appurtenances. LESSOR
 shall not be liable for damages arising from the natural accumulation of snow
 and/or ice. The reasonable removal of snow and ice from the sidewalks
 bordering upon the Leased Premises shall be LESSOR’S responsibility.

	
 

	
 

	
17.

	
LESSEE’S LIABILITY INSURANCE:

	
 

	
 

	
 

	
The LESSEE
 shall maintain with respect to the Leased Premises and the property of which
 the Leased Premises are a part therein (i) General Liability Bodily Injury
 and Property 

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Damage
 primary liability limit of $1,000,000 on an occurrence basis with a general
 aggregate limit of $2,000,000, (ii) Umbrella liability limit of a minimum of
 $1,000,000, (iii) Worker’s compensation statutory liability, (iv) employer’s
 non-owned and hired auto at a combined single limit for Bodily injury and
 Property Damage of $1,000,000, each in responsible companies qualified to do
 business in Massachusetts and in good standing therein insuring the LESSOR as
 well as LESSEE against injury to persons or damage to property as provided.
 The LESSEE shall deposit with the LESSOR certificates for such insurance at
 or prior to the commencement of the term, and thereafter within twenty (20)
 days prior to the expiration of any such policies. All such insurance
 certificates shall provide that such policies shall not be canceled without
 at least ten (10) days prior written notice to each assured named therein.

	
 

	
 

	
 

	
LESSOR and
 LESSEE intend that their respective property loss risks shall be borne by
 responsible insurance carriers qualified to do business in Massachusetts and
 in good standing therein, and LESSOR and LESSEE hereby agree to look solely
 to, and seek recovery only from, their respective insurance carriers in the
 event of a property loss to the extent that such coverage is agreed to be
 provided hereunder. The parties each hereby waive all rights and claims
 against each other for such losses, and to the extent they are able, waive
 all rights subrogation of their respective insurers, provided such waiver of
 subrogation shall not affect the right of the insured to recover hereunder.
 Each party hereto, to the extent they are able, will obtain from their
 respective insurance carriers as to such policies of insurance a waiver of
 such carrier’s rights of recovery under subrogation or otherwise against such
 party. Except as provided herein, the parties to this lease are each
 responsible for insuring their own property.

	
 

	
 

	
18.

	
FIRE, CASUALTY - EMINENT DOMAIN:

	
 

	
 

	
 

	
Should a
 substantial portion of the Leased Premises, or of the property of which they
 are a part be substantially damaged by fire or other casualty, or be taken by
 eminent domain, the LESSOR may elect to terminate this lease by notice given
 to LESSEE within thirty (30) days of such event. When, through no fault of
 the LESSEE, such fire, casualty, or taking renders the Leased Premises
 substantially unsuitable for their intended use, a just and proportionate
 abatement of rent shall be made, and the LESSEE may elect to terminate this
 lease if;

	
 

	
 

	
 

	
(a)

	
The LESSOR
 fails to give written notice within thirty (30) days of intention to restore
 Leased Premises, or

	
 

	
 

	
(b)

	
The LESSOR
 fails to restore the Leased Premises to a condition substantially suitable
 for their intended use within ninety (90) days of said fire, casualty or
 taking.

	
 

	
 

	
 

	
 

	
The LESSOR
 reserves and the LESSEE grants to the LESSOR, all rights which the LESSEE may
 have for damages or injury to the Leased Premises for any taking by eminent
 domain, except for damage to the LESSEE’S fixtures, property or equipment.

	
 

	
 

	
19.

	
DEFAULT AND BANKRUPTCY:

	
 

	
 

	
 

	
If:

	
 

	
 

	
 

	
(a)

	
The LESSEE
 shall default in the payment of any installment of base rent, additional

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rent or
 other sum herein specified and such default shall continue for five (5) days
 following written notice; provided that the LESSEE shall only be entitled to
 two (2) such notices per calendar year; after the second five (5) day notice
 in any calendar year, a default shall occur for a default in the payment of
 any installment of base rent, additional rent or other sum herein specified
 and such default shall continue for five (5) days after the date said payment
 is due; or

	
 

	
 

	
(b)

	
The LESSEE
 shall default in the observance or performance of any other of the LESSEE’S
 covenants, agreements, or obligations hereunder and such default shall not be
 corrected within thirty (30) days after written notice thereof, provided,
 however, that if such default of LESSEE is one not normally or particularly
 susceptible of cure within thirty (30) days and LESSEE has commenced and is
 diligently proceeding with cure of said default, LESSEE shall have a
 reasonable period of time to cure such default not to exceed ninety (90)
 days; or

	
 

	
 

	
(c)

	
The LESSEE
 shall be declared bankrupt or insolvent according to law, or, if any
 assignment shall be made of LESSEE’S property for the benefit of creditors,
 then the LESSOR shall have the right thereafter, while such default
 continues, to re-enter and take complete possession of the Leased Premises,
 to declare the term of this lease ended, and remove the LESSEE’S effects,
 without prejudice to any remedies which might be otherwise used for arrears
 of rent or other default. The LESSEE shall indemnify the LESSOR against all loss
 of rent and other payments which the LESSOR may incur by reason of such
 termination during the residue of the term, or the LESSOR may elect to be
 indemnified for loss of rent and other sums due under this lease by a lump
 sum payment representing the then present value of the amount of all sums
 which would have been paid in accordance with this lease for the remainder of
 the term minus the then present value of the aggregate market rate, as
 defined below, and additional charges payable for the Leased Premises for the
 remainder of the term, taking into account reasonable projections of vacancy
 and time required to re-lease the Leased Premises. For purposes hereof,
 market rate shall be the then current effective rate of rent (adjusted, if
 necessary, to reflect any free rent or comparable concessions), being charged
 for comparable space in comparable buildings. For the purposes of calculating
 the rent which would have been paid hereunder for the lump sum payment
 calculation described above, the most recent full year’s tax and operating
 expense payments shall be deemed constant for each year thereafter. The
 Federal Reserve discount rate (or equivalent) plus three percent (3%) shall
 be used in calculating present values. If the LESSEE shall default, after reasonable
 notice thereof, in the observance or performance of any conditions or
 covenants on LESSEE’S part to be observed or performed under or by virtue of
 any of the provisions in any article of this lease, the LESSOR, without being
 under any obligation to do so and without thereby waiving such default, may
 elect to remedy such default for the account and at the expense of the
 LESSEE. If the LESSOR makes any expenditures or incurs any obligations for
 the payment of money in connection therewith, including but not limited to,
 reasonable attorney’s fees in instituting, prosecuting or defending any
 action or proceeding, such sums paid or obligations insured, with interest at
 the rate of twelve percent (12%) per annum and costs, shall be paid to the
 LESSOR by the LESSEE as additional rent. It is expressly understood and
 agreed that the LESSEE’S obligation to pay base rent, additional rent, and
 any and all additional charges, is independent of any obligation or covenant
 entered into by the LESSOR.

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20.

	
NOTICE:

	
 

	
 

	
 

	
Any notice
 or other communication relating to the Leased Premises or to the occupancy
 thereof shall be deemed duly served if in writing and addressed and delivered
 in the manner herein described: (1) mailed by first class, United States
 Mail, registered or certified mail, return receipt requested, postage
 prepaid; or (2) hand delivered to the intended addressee; or (3) sent by a
 nationally recognized overnight courier service; or (4) sent by facsimile
 transmission during normal business hours followed by a confirmatory letter
 sent in another manner permitted hereunder within 24 hours. All notices shall
 be effective on the date of delivery or the date when proper delivery is
 refused by the addressee or any representative thereof.

	
 

	
 

	
 

	
All notices
 and other communications relating to the Leased Premises or to the occupancy
 thereof from the LESSOR to the LESSEE prior to the LESSEE’S occupancy shall
 be addressed to the LESSEE at LESSEE’S address in paragraph one, Attention:
 Louise Dube, VP, General Manager, Speech Products, Fax #781-547-6039. All
 notices and other communications relating to the Leased Premises or the
 occupancy thereof from the LESSOR to the LESSEE after the LESSEE’S occupancy
 shall be addressed to the LESSEE at LESSEE’S address in paragraph two,
 Attention: Louise Dube, VP, General Manager, Speech Products, Fax
 #781-547-6039 (Fax number is subject to change), with a copy of any notices
 required pursuant to Paragraph 19 to Linda Carloni, Vice President and
 General Counsel, Scientific Learning Corporation, 300 Frank H. Ogawa Plaza,
 Suite 600, Oakland, California 94612-2040, Fax #510-874-1864.

	
 

	
 

	
 

	
All notices,
 payments and other communications relating to the Leased Premises or to the
 occupancy thereof from the LESSEE to the LESSOR shall be addressed to the
 LESSOR at 411 Waverley Oaks Road, Suite 340, Waltham, MA 02452, fax
 #781-893-6623.

	
 

	
 

	
 

	
Either
 party, by written notice to the other, may change the address to which notice
 is required to be given hereunder.

	
 

	
 

	
21.

	
SURRENDER:

	
 

	
 

	
 

	
The LESSEE shall
 at the expiration or other termination of this lease remove all of LESSEE’S
 goods and effects from the Leased Premises, (including, without hereby
 limiting the generality of the foregoing, all signs and lettering affixed or
 painted by the LESSEE, either inside or outside the Leased Premises). LESSEE
 shall deliver to the LESSOR the Leased Premises and all keys, locks thereto,
 and other fixtures connected therewith and all alterations and additions made
 to or upon the Leased Premises, in good condition, damage by fire or other
 casualty only excepted. In the event of the LESSEE’S failure to remove any of
 LESSEE’S property from the Leased Premises upon the expiration or other
 termination of the lease, LESSOR is hereby authorized, without liability to
 LESSEE for loss or damage thereto, and at the sole risk of LESSEE, to remove
 and store any of the property at LESSEE’S expense, or to retain same under
 LESSOR’S control or to sell at public or private sale, without notice any or
 all of the property not so removed and to apply the net proceeds of such sale
 to the payment of any sum due hereunder, or to destroy such property.

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If LESSEE
 continues to occupy, control or remain in any part of the Leased Premises
 beyond the expiration or earlier termination of the term of this lease,
 including any extensions thereto, such holding over shall not be deemed to
 create any tenancy, but the LESSEE shall be a Tenant at Sufferance only and
 shall be liable for all loss, damage or expenses incurred by the LESSOR. All
 other terms of this lease shall apply, except that use and occupancy payments
 shall be due in full monthly installments which shall be paid to LESSOR at
 the times and manner determined by the LESSOR, in advance and in an amount
 equal to the greater of one and one half (1-1/2) times either of the
 following: (i) base rent, additional rent and other sums due under the lease,
 including any extensions thereto, immediately prior to termination, or (ii)
 LESSOR’S then published rent for the Leased Premises. It is expressly
 understood and agreed that such extended occupancy is a Tenancy at Sufferance
 only, solely for the benefit and convenience of the LESSEE and is of greater
 rental value. If LESSEE continues to occupy, control or remain in all or any
 part of the Leased Premises beyond noon of the last day of any monthly rental
 period, said action shall constitute LESSEE’S occupancy for an entire
 additional month, and increased payment as provided by this section, shall be
 due and payable immediately in advance. LESSOR’S acceptance of any payments
 from LESSEE during such extended occupancy shall not alter LESSEE’S status as
 a Tenant at Sufferance.

	
 

	
 

	
22.

	
LATE FEES:

	
 

	
 

	
 

	
LESSEE
 agrees that because of actual damages for a late payment or a dishonored
 check are difficult to fix or ascertain, but recognizing that damage and
 injury result therefore, LESSEE agrees that if payments of base rent,
 additional rent and other obligations are not received in hand by LESSOR five
 (5) days after the date it is due, LESSEE agrees to pay liquidated damages
 equal to five percent (5%) of the total delinquent amount owed. The postmark
 on the payment, received plus three (3) days, shall be conclusive evidence of
 whether the payment is delinquent. However, LESSOR is not responsible for
 late deliveries by U.S. Mail. LESSEE agrees to pay a liquidated damage of
 $25.00 for each dishonored check. If two (2) or more of the LESSEE’S checks
 are dishonored in a twelve (12) month period, the LESSOR, in addition to
 other rights, shall have the right to demand payment by Certified Check or
 Money Order. So long as the late payment is received no more than ten (10)
 days after it is due, the LESSEE shall be entitled to have the late fee
 waived once per calendar year. Said waivers shall not accumulate from year to
 year.

	
 

	
 

	
23.

	
BROKERAGE:

	
 

	
 

	
 

	
LESSOR and
 LESSEE represent to each other that neither party has dealt with any broker
 or any other person in connection with showing the Leased Premises and this
 lease other than Glenn Commercial Group and McPherson Corporation.
 LESSOR and LESSEE agree that each will hold harmless and indemnify the other
 from any loss, cost, damage and expense, including reasonable attorney’s fees
 incurred by LESSOR or LESSEE for a commission or finder’s fee as a result of
 the falseness of this representation.

	
 

	
 

	
24.

	
OPTION TO EXTEND:

	
 

	
 

	
 

	
Provided the
 LESSEE is not in default hereunder beyond any applicable grace or cure
 periods, LESSEE shall have one (1) three (3) year option to extend the lease
 term at a 

10

	
 

	
 

	
 

	
 

	
rent equal
 to the greater of the following: (a) market rate for equivalent office space
 in similarly located buildings within the Waltham market as determined by
 LESSOR; or (b) the total rent then in effect as of the expiration date of the
 then current lease term. In no event shall the rent for the option term be
 less than the total rent then in effect as of the expiration date of the then
 current lease term. LESSEE must give LESSOR written notice it is exercising
 its extension option no later than six (6) months prior to the expiration of
 the then current lease term (“Extension Notice”). LESSOR shall provide LESSEE
 with the rent rate for the extended term within thirty (30) days of receiving
 the Extension Notice. In the event LESSEE notifies LESSOR as provided herein
 and, within thirty (30) days of receiving the LESSOR’S rent rate for the
 extended term has, in accordance with this paragraph, (i) delivered a fully
 executed mutually agreeable lease amendment, (ii) updated all deposits, and
 (iii) tendered the first month’s base rent for the extended term, then the
 Lease Agreement shall automatically be extended three (3) years from the date
 the Lease Agreement would have expired had the option to extend not been
 exercised. LESSEE shall be responsible for all payments necessary to maintain
 a security deposit equivalent to a minimum of two (2) month’s base rent. All
 other terms and provisions under the Lease Agreement, other than LESSOR’S
 Work or other tenant improvements, shall continue through the extended lease
 term. In the event the LESSEE does not provide the Extension Notice, execute
 a lease amendment and provide payment as provided herein, the LESSEE shall be
 deemed to have waived its option to extend the lease term and this Lease
 Agreement shall terminate upon the expiration of the then current term.

	
 

	
 

	
25.

	
QUIET ENJOYMENT:

	
 

	
 

	
 

	
Subject to
 the terms, conditions and limitations set forth in this lease, LESSEE shall,
 upon paying base rent, additional rent and other sums herein specified in
 full compliance with the terms and conditions contained herein and performing
 all of LESSEE’S terms, conditions and obligations under this lease,
 peacefully and quietly have, hold and enjoy the Leased Premises, and LESSEE’S
 possession will not be disturbed by the LESSOR and anyone claiming by, through,
 or under the LESSOR throughout the lease term, and any extension thereof, or
 until the lease is otherwise terminated as herein provided.

	
 

	
 

	
26.

	
OTHER PROVISIONS:

	
 

	
 

	
 

	
(A)

	
Entire
 Agreement: This lease constitutes the entire agreement between LESSOR and
 LESSEE regarding the subject matter hereof and supersedes all oral statements
 and prior writings relating thereto. Except for those set forth in this
 lease, no representations, warranties, or agreements have been made by the
 LESSOR or LESSEE to the other with respect to this lease or the obligations
 of LESSOR and LESSEE in connection therewith. The normal rule of construction
 that any ambiguities be resolved against the drafting party shall not apply
 to the interpretation of this lease or any exhibits or amendments thereto.

	
 

	
 

	
 

	
 

	
(B)

	
It is also
 understood and agreed that the following attached items are part of this
 lease.

11

	
 

	
 

	
 

	
 

	
•

	
Addendum

	
 

	
 

	
 

	
 

	
•

	
Exhibit A -
 Floor Plan

	
 

	
 

	
 

	
 

	
•

	
Exhibit B -
 LESSOR’S Work

	
 

	
 

	
 

	
 

	
•

	
Exhibit C -
 Building Rules and Regulations

	
 

	
 

	
 

	
 

	
•

	
Exhibit D –
 Legal Description of Premises on which Leased Premises are located

	
 

	
 

	
 

	
 

	
•

	
Exhibit E -
 Building Operating Expenses

	
 

	
 

	
 

	
 

	
•

	
Exhibit F -
 Cleaning Schedules

IN WITNESS
WHEREOF, the Parties hereto set their hands and seals this _______ day of
February, 2008.

	
 

	
 

	
LESSEE

	
LESSOR

	
Scientific
 Learning Corporation

	
Clematis LLC

	
 

	
By its
 Manager, Duffy Bros. Management, Inc

	
 

	
 

	

	

	
By:

	
Norman J.
 Duffy, President

	
Its: Duly Authorized

	
Duly
 Authorized

12

LEASE ADDENDUM

	
 

	
 

	
1.

	
LESSEE shall
  not change the color or appearance of the outside of the Leased Premises. 

	
 

	
 

	
2.

	
LESSOR will
  provide, at LESSOR’S expense Directory signage similar with Directory signage
  provided other tenants in the building. Any signage at the entrance to the
  Leased Premises shall be at LESSEE’S expense and LESSEE shall obtain written
  consent of LESSOR which consent shall not be unreasonably withheld,
  conditioned or delayed, prior to installing entrance signage. Except as
  provided above, LESSEE shall not post signs on the exterior of the Leased
  Premises, or the building or property of which the Leased Premises are a
  part. 

	
 

	
 

	
3.

	
The parking
  spaces shall not be used for dead storage of vehicles or other merchandise or
  material. 

	
 

	
 

	
4.

	
LESSEE shall
  not keep or store any vehicles, containers, merchandise or refuse outside the
  Leased Premises. 

	
 

	
 

	
5.

	
LESSEE shall
  be responsible to dispose of LESSEE’S own trash and refuse except for normal
  office waste basket trash. 

	
 

	
 

	
6.

	
(A) Upon
  request for consent to assign or sublease, the LESSOR may refuse or consent
  to assign or sublease, or if LESSOR prefers to resume possession of the space
  which the LESSEE wishes to assign or sublet, LESSOR may refuse consent, and,
  in that event, this lease shall terminate at a mutually agreed date, with
  respect to the space proposed for assignment or sublease, and the parties
  hereby agree, thereupon, to mutually release each other from rights and
  obligations of this agreement, with respect to the space proposed for
  assignment or sublease. The parties shall deem the term of this agreement, as
  it applies to the space proposed for assignment or sublease, as expiring at
  the mutually agreed date. 

	
 

	
 

	
 

	
(B) The
  LESSEE may, upon written notice to LESSOR and provided such assignee or
  subtenant has the same or similar use as LESSEE and does not otherwise
  conflict or compete with existing tenants, assign or sublease to a parent,
  affiliate or subsidiary of the LESSEE.

	
 

	
 

	
 

	
(C) If an
  assignment or sublease is entered into, LESSEE shall, within thirty (30) days
  of receipt thereof, pay to LESSOR fifty percent (50%) of any base rent,
  additional rent or other sum or other consideration to be paid or given in
  connection with such assignment or sublease, either initially or over time,
  in excess of the base rent and/or additional rent and/or other charges to be
  paid under this lease (“Sublease Profits”) as if such amount were originally
  called for by the terms of this lease as additional rent, provided that,
  prior to the division of the Sublease Profits in the manner noted above, the
  LESSEE may deduct all reasonable, customary actual expenses of LESSEE which
  are attributable to the transfer, including, legal fees, brokerage
  commissions, allowances for free rent and tenant improvements and the like
  paid by LESSEE in connection with the assignment or sublease.

	
 

	
 

	
 

	
(D) LESSEE
  shall reimburse LESSOR from LESSEE’S portion of the Sublease Profits for
  reasonable LESSOR’S attorneys’ fees for examination of and/or preparation of
  any documents in connection with such assignment or subletting in an amount
  up to but not to exceed $1,500.00.

	
 

	
 

	
7.

	
LESSEE may
  maintain the insurance required to be carried by LESSEE under blanket policy
  of insurance insuring LESSEE and other companies affiliated with LESSEE.

13

	
 

	
 

	
8.

	
LESSEE
  acknowledges that it is part of a multi tenant building and agrees to refrain
  from and/or immediately cease any wrongful or harmful act or omission by the
  LESSEE, its employees, agents, affiliates, assignees, subtenants or invitees
  which may interfere, offend, or conflict with the rights of the LESSOR or
  other tenants.

14

EXHIBIT A

FLOOR PLAN

15

EXHIBIT B

LESSOR’S WORK 

LESSOR shall
conduct the following LESSOR’S Work using available building standard
quantities and materials: 

	
 

	
 

	
 

	
 

	
1.

	
Construct
  premises pursuant to the attached floor plan 

	
 

	
 

	
 

	
 

	
2.

	
Install new
  kitchen, sink, counter top, lower and upper cabinets. (Dishwasher not
  included) 

	
 

	
 

	
 

	
 

	
3.

	
Install new
  Ceiling tiles 

	
 

	
 

	
 

	
 

	
4.

	
Vent for
  computer room cooling unit 

	
 

	
 

	
 

	
 

	
5.

	
New carpet
  (color selected by LESSEE from building standards) 

	
 

	
 

	
 

	
 

	
6.

	
Paint
  throughout (color selected by LESSEE from building standards) 

Not included
in the LESSOR’S Work are any and all costs or work associated with: 

	
 

	
 

	
 

	
 

	
 

	
(i)
  telephone/data/voice/network throughout the Leased Premises; and

	
 

	
 

	
 

	
 

	
 

	
(ii)
  cubicles and/or open areas, including but not limited to costs or work
  associated with their installation or setup, and any
  telephone/data/voice/network and/or A/C power wiring, coring, through floor access
  modules, or other wiring therefore; and

	
 

	
 

	
 

	
 

	
 

	
(iii)
  Interior blinds; the installation of any interior blinds and/or window
  treatments which may be visible from the common area or outside the Leased
  Premises is subject to the LESSOR’S written consent; and 

	
 

	
 

	
 

	
 

	
 

	
(iv) Coring
  the conference room floor and the server room.

Except for the
items noted above, the Leased Premises shall be delivered in “AS IS” condition
and LESSEE acknowledges that by taking possession of the Leased Premises, the
Leased Premises “AS IS” are suitable for its intended use. LESSEE shall be
responsible for any delays, costs and expenses caused by LESSEE’S failure to
make decisions affecting the LESSOR’S Work in a timely manner. LESSEE shall be
solely responsible for all costs, expenses and delays resulting from requests
by LESSEE for work, quantities or materials in excess of the LESSOR’S Work
noted above, provided, however, that the LESSOR shall not incur or impose any
such costs, expenses or delays without first advising LESSEE of the nature and
amount of such costs, expenses or delays and allowing LESSEE to reconsider its
requirements. 

16

EXHIBIT C

BUILDING RULES AND REGULATIONS

	
 

	
 

	
1.

	
Every
  reference herein to “LESSOR’S Consent” means “prior written consent of the
  LESSOR in each instance”. 

	
 

	
 

	
2.

	
The
  sidewalk, entry, passages, elevator and stairways shall not be obstructed by
  the LESSEE and shall not be used by them for any other purpose than for
  ingress and egress to and from their respective premises. Excepted from this
  restriction is use of these facilities for purpose of moving furniture and
  equipment to or from the Leased Premises, which is permitted outside of
  normal office hours and on a non-interference basis with respect to other
  occupants of the Building. 

	
 

	
 

	
3.

	
The floors
  and windows that receive or admit light into passageways, or into any place
  in said building, shall not be obstructed by any LESSEE. The elevators, water
  closets, and other water apparatus shall not be used for any purpose other
  than those for which they were constructed, and no sweepings, rubbish, rags,
  ashes or unsuitable substances, shall be added to them. 

	
 

	
 

	
4.

	
Except as
  specifically provided in the lease, no sign, advertisement, or notice shall
  be placed on any part of the outside or inside of the building. 

	
 

	
 

	
5.

	
No auction
  sales shall be conducted in or around the Building. 

	
 

	
 

	
6.

	
No LESSEE or
  employee thereof shall smoke tobacco in any part of the Building. Upon notice
  from the LESSOR, LESSEE shall immediately cease all activity in and around
  the Building which, in the reasonable discretion of the LESSOR, constitutes
  noisy, offensive or disruptive activity. LESSEE shall be responsible for the
  acts and omissions of their employees, agents and assigns. 

	
 

	
 

	
7.

	
The LESSEE
  shall not at any time exceed a floor capacity of one hundred and twenty-five
  pounds per square foot. All damage done to the Building by taking in or out a
  safe or other heavy or bulky object, or during the time it is in or on the
  Leased Premises, shall be repaired at the expense of the responsible LESSEE.
  Each LESSEE is required to notify and arrange with the Building
  superintendent when safes, furniture, or like property are to be taken into
  or out of the Building. No freight, furniture, or bulky package or matter of
  any description shall be carried on the elevators except as shall not by
  their size, weight or nature damage the elevators, and which shall be loaded
  and carried only with appropriate protective measures, and which elevating
  shall not inhibit or restrict normal pedestrian traffic. 

	
 

	
 

	
8.

	
No LESSEE
  may change any locks without the LESSOR’S consent. 

	
 

	
 

	
9.

	
No LESSEE
  shall use any method of heating or cooling other than that provided by the
  LESSOR, except for personal fans and heaters (provided they are properly used
  and appropriately rated for office use) without the LESSOR’S consent. 

	
 

	
 

	
10.

	
Each LESSEE
  shall keep the Leased Premises in a good state of cleanliness, and for such
  purposes shall, during the term of the lease, make use of an approved
  cleaning service for the Building. LESSOR shall provide, at LESSOR’S expense
  the cleaning services as described in Exhibit F. No tenant shall employ any
  person or persons other than an approved cleaning service for the Building
  for the purpose of cleaning, or of taking charge of the Leased Premises
  unless other arrangements have been approved by LESSOR in writing. Each
  LESSEE agrees that the LESSOR shall not be responsible to any LESSEE for any
  damage or loss of property within the Leased Premises. 

17

	
 

	
 

	
11.

	
Nothing shall
  be thrown out of the windows or doors or down the passages or light shafts or
  upon the skylights of the Building or upon or into any heating or ventilating
  register or plumbing apparatus of the Building, or be placed or left upon any
  outside windowsill, fire escape or other projection of the Building. 

	
 

	
 

	
12.

	
No animals,
  including but not limited to reptiles and insects, shall be kept in or about
  the Building. 

	
 

	
 

	
13.

	
LESSEE will
  not introduce or admit into the Building any means of external communication
  without the LESSOR’S consent, which shall not be unreasonably withheld,
  conditioned or delayed. Notwithstanding the foregoing LESSEE shall have the
  right to select and employ the voice, data and other communications service
  vendors of their choice, and shall not be liable to pay LESSOR or anyone
  claiming by, through or under LESSOR any service fee or interconnection
  charges for access of such vendor to the Lease Premises. Notwithstanding the
  foregoing, LESSEE shall immediately cease such means of communication which
  disrupts and/or interferes with the rights of other tenants. LESSEE shall be
  solely responsible for such disruption and/or interference. 

	
 

	
 

	
14.

	
No machine
  or machinery of any kind other than usual and customary office equipment,
  including but not limited to typewriters, computers, copiers and fax
  machines, shall be operated on or in the Building, without the LESSOR’S
  consent. 

	
 

	
 

	
15.

	
All
  complaints by a LESSEE shall be made in writing to the LESSOR. Each tenant
  shall give to the LESSOR’S Building superintendent prompt written notice of
  any damage known to LESSEE or defect in pipes, wires, appliances or fixtures
  in or about the Building or their Leased Premises and of any damage to any
  part of the Building or Leased Premises. 

	
 

	
 

	
16.

	
LESSEE shall
  not be permitted to use or keep in the Building any kerosene, burning fluid,
  or other illuminating material, inflammable, explosive, corrosive or
  otherwise harmful substance or materials, except as is customary in office or
  computer facilities, without the LESSOR’S consent. Notwithstanding such
  consent, LESSEE shall be solely liable and responsible for ensuring that such
  material is kept, maintained, stored, destroyed, disposed and discharged in
  accordance with all applicable federal, state, regulatory and local laws,
  regulations and ordinances as well as industry standards and practices.
  LESSEE shall indemnify and hold LESSOR harmless for its failure to comply
  with the above. 

	
 

	
 

	
17.

	
No LESSEE
  shall use or permit any room or portion thereof to be used by anyone for the
  purpose of lodging or sleeping therein. 

	
 

	
 

	
18.

	
The LESSOR
  reserves the right to rescind any of these rules and to make such other and
  further reasonable and uniform rules and regulations of general applicability
  as in its reasonable judgment may from time to time be needful for the
  safety, care, and cleanliness of the Building, and for the preservation of
  good order therein, provided, that such other and further rules shall not be
  inconsistent with the proper and rightful enjoyment by the LESSEE under the
  within lease. 

	
 

	
 

	
19.

	
LESSEE shall
  not install, attach or modify any appurtenances to the plumbing or HVAC
  systems without the LESSOR’S prior written consent and LESSEE shall indemnify
  and hold LESSOR harmless from any and all loss occasioned by the
  installation, modification or attachment of any such appurtenances. 

18

EXHIBIT D

LEGAL DESCRIPTION OF PREMISES ON WHICH 

LEASED PREMISES ARE LOCATED 

135 BEAVER STREET

A certain
parcel of land in Waltham, Middlesex County, Massachusetts, situated on the
southerly side of Waverley Oaks Road and the easterly side of Beaver Street,
shown as Lot 1 on a Plan of Land entitled “Plan of Land in Waltham, MA”, dated
May 15, 1996 and revised on May 31, 1996 by Beals and Thomas, Inc., 200 Fribeg
Parkway, Westborough, MA and recorded with the Middlesex South District
Registry of Deeds as Plan 530 of 1996 and in Book 26405, Page 482. 

Beginning at a
point on the southerly side line of Waverley Oaks Road, said point being 195.00
feet easterly of a point of curvature shown on said plan, then; 

NORTHEASTERLY
by Waverley Oaks Road two hundred nineteen 12/100 (219.12) feet; 

SOUTHEASTERLY
by Lot 2 four hundred seven 91/100 (407.91) feet; 

NORTHEASTERLY
by Lot 2 twenty-seven 75/100 (27.75) feet; 

SOUTHEASTERLY
by Lot 2 one hundred nine 19/100 (109.19) feet; 

SOUTHWESTERLY
by Land now or formerly owned by the Commonwealth of Massachusetts one hundred
thirty-six 92/100 (136.92) feet; 

SOUTHWESTERLY
by Land now or formerly owned by the Commonwealth of Massachusetts by a curve
of five hundred eighty-eight 01/100 (588.01) feet radius and a length of
seventy 92/100 (70.92) feet; 

SOUTHWESTERLY
by Lot 3 one hundred thirty-six 63/100 (136.63) feet; 

NORTHWESTERLY
by Beaver Street two hundred ninety-two 27/100 (292.27) feet; 

NORTHEASTERLY
by Land now or formerly owned by Shell Oil Co. one hundred forty-five 00/100
(145.00) feet; 

NORTHWESTERLY
by Land now or formerly owned by Shell Oil Co. one hundred fifty-two 48/100
(152.48) feet to the point of beginning. 

Lot 1 contains
164,032 square feet of land, more or less. Subject to all easements, rights of
way, reservations, restrictions and encumbrances of record, to any existing
tenancies, to all zoning laws and ordinances, and to any state of facts an
accurate survey or inspection of the premises would show. 

19

EXHIBIT E

BUILDING OPERATING EXPENSES

	
 

	
 

	
I.

	
Operating
  Expenses shall consist by way of example the following items of building and
  property costs: 

	
 

	
 

	
1.

	
Labor,
  materials, supplies and services for all maintenance and cleaning of the
  Building, its machinery and other personal property; and for maintenance,
  cleaning, snow removal and landscape care on the grounds and the exterior of
  the Building. 

	
 

	
 

	
2.

	
Allowance
  equal to five percent (5%) of rent for general supervisory, administrative
  expenses and management fees. 

	
 

	
 

	
3.

	
Cost of
  waste disposal. 

	
 

	
 

	
4.

	
Costs of
  license, inspection and permit fees. 

	
 

	
 

	
5.

	
Heat, air
  conditioning and ventilation for the Building and lighting and power for
  common areas and property. 

	
 

	
 

	
6.

	
Janitorial
  and cleaning services provided to LESSEE on an equal basis with other
  tenants. 

	
 

	
 

	
7.

	
Maintenance,
  repair, and service contracts. 

	
 

	
 

	
8.

	
Security
  expenses including watchmen, guards and security services (if necessary). 

	
 

	
 

	
9.

	
Insurance
  premiums including fire, casualty, general liability, property damage, etc. 

	
 

	
 

	
10.

	
Reserves for
  capital replacement and improvements, equal to 2% of rent for the replacement
  value of capital equipment. However, expenditures for such capital replacements
  and improvements are specifically excluded. 

	
 

	
 

	
11.

	
Water, sewer
  and general utility charges. 

	
 

	
 

	
II.

	
The
  following items or categories of costs or expenses shall be specifically
  excluded from operating expenses:

	
 

	
 

	
1.

	
Costs
  incurred by LESSOR for the repair of damage to the Building, to the extent
  that LESSOR is reimbursed by insurance proceeds; 

	
 

	
 

	
2.

	
Costs
  including permit, license and inspection costs, incurred with respect to the
  installation of tenant improvements made for tenants in the Building or
  incurred in renovating or otherwise improving, decorating, painting or
  redecorating, other than costs associated with improvements made in areas
  accessible by all tenants in the Building; 

	
 

	
 

	
3.

	
Leasing
  commissions, attorney’s fees, space planning costs, and other costs and
  expenses incurred in connection with negotiations or disputes with present or
  prospective tenants or other occupants of the Building; 

	
 

	
 

	
4.

	
Expenses in
  connection with services or other benefits which are not offered to LESSEE
  but which are provided to another tenant or occupant of the Building or for
  which LESSEE is charged directly; 

	
 

	
 

	
5.

	
Costs
  incurred by LESSOR due to the violation by LESSOR or any tenant of the terms
  and conditions of any lease of space in the Building; 

	
 

	
 

20

	
 

	
 

	
6.

	
Overhead and
  profit increment paid to LESSOR or to subsidiaries or affiliates of LESSOR
  for goods and/or services in the Building to the extent the same exceeds the
  costs of such goods and/or services rendered by unaffiliated third party on a
  competitive basis. 

	
 

	
 

	
7.

	
Interest,
  principal, points and fees on debts or amortization on any mortgage or
  mortgages or any other debt instrument encumbering the Building or the
  property on which the Building stands; 

	
 

	
 

	
8.

	
All items
  and services for which LESSEE or any other tenant in the Building reimburses
  LESSOR (other than through LESSEE’S percentage share or any other tenant(s)
  percentage share of operating expenses), or which LESSOR does not offer to
  LESSEE and provides selectively to one or more tenants (other than LESSEE); 

	
 

	
 

	
9.

	
Advertising
  and promotional expenditures; 

	
 

	
 

	
10.

	
Electric
  power costs for which any tenant directly contracts with the local public
  service company; 

	
 

	
 

	
11.

	
Tax
  penalties incurred as a result of LESSOR’S negligence or inability or
  unwillingness to make payments when due; 

	
 

	
 

	
12.

	
LESSOR’S
  gifts, charitable contributions or political contributions; 

	
 

	
 

	
13.

	
Any ground
  lease rental; 

	
 

	
 

	
14.

	
All capital
  expenditures as determined pursuant to generally accepted accounting
  principles, except for those permitted in paragraph I.10 above; 

	
 

	
 

	
15.

	
Depreciation
  and interest payments; 

	
 

	
 

	
16.

	
LESSOR’S
  general corporate overhead and general and administrative expenses above the
  level of the building manager, except for those permitted in paragraph I.2
  above; 

	
 

	
 

	
17.

	
Costs to
  acquire art or decoration for the Building except for those permitted in
  paragraph I.1 or paragraph II.2 above; 

	
 

	
 

	
18.

	
Costs of
  installing, operating or maintaining any specialty services (e.g. luncheon
  club, sundry shop, newsstand, concession stand or athletic club);

	
 

	
 

	
19.

	
Costs
  incurred in connection with upgrading the Building to comply with handicap,
  life, fire and safety codes in effect prior to the Commencement Date; 

	
 

	
 

	
20.

	
Costs
  incurred for environmental testing, clean-up or remediation of hazardous
  wastes, hazardous materials or oil present at, on, in or under the Leased
  Premises or Building. 

Betterments
assessed by any governmental authority in excess of
$10,000.00 which are not specifically charged to LESSEE, and which can be paid
by LESSOR in installments, without penalty, over a period in excess of one
year, shall be deemed to have been paid by LESSOR in a reasonable number of
installments permitted by law and not included as operating expenses except in
the year in which the betterment installment was due. 

21

EXHIBIT F

CLEANING SCHEDULE

NIGHTLY: Between the
hours of 5:00 p.m. and 6:00 a.m., Monday through Friday, legal holidays
excluded. 

	
 

	
 

	
 

	
 

	
1.

	
Restrooms: 

	
 

	
 

	
 

	
 

	
 •

	
Dust and
  spot clean all toilet partitions, tile walls and receptacles. 

	
 

	
 

	
 

	
 

	
 •

	
Refill all
  dispensers including soap, toilet tissue, paper towels, etc. 

	
 

	
 

	
 

	
 

	
 •

	
Dust mop or
  sweep floors thoroughly; wash and rinse using a germicidal detergent. 

	
 

	
 

	
 

	
 

	
 •

	
Empty all
  trash receptacles and replace plastic liners. 

	
 

	
 

	
 

	
 

	
 •

	
Clean and
  polish all chrome fittings and bright work, including shelves, flushometers
  and metal dispensers. 

	
 

	
 

	
 

	
 

	
 •

	
Clean,
  sanitize and polish all fixtures including toilet bowls, urinals and sinks
  using a germicidal detergent solution. 

	
 

	
 

	
 

	
 

	
 •

	
Clean and
  sanitize both sides of toilet seats with a germicidal detergent solution. 

	
 

	
 

	
 

	
 

	
 •

	
Clean and
  polish all mirrors and glass. 

	
 

	
 

	
 

	
 

	
2.

	
Wash and
  clean water fountains with a germicidal detergent solution. 

	
 

	
 

	
 

	
 

	
3.

	
Office
  rubbish removal. Empty wastebaskets and replace liners, resulting from
  business office use, not including manufacturing or product packaging
  materials, the removal and disposal of this type of rubbish is Tenants
  responsibility. 

	
 

	
 

	
 

	
 

	
4.

	
Vacuum
  carpeted areas as needed. 

	
 

	
 

	
 

	
 

	
5.

	
Dry mop, wet
  mop and burnish tile floors to a polished appearance and/or vacuum and spot
  clean carpeting. 

	
 

	
 

	
 

	
 

	
6.

	
Wet wipe
  table tops in employee lounge, including cleaning of any spills, if applicable.
  

	
 

	
 

	
 

	
 

	
7.

	
Keep
  sidewalks and parking area clean and rubbish free. 

	
 

	
 

	
 

	
 

	
8.

	
Clean
  entrance door glass to remove finger marks, smudges, etc. 

WEEKLY: 

	
 

	
 

	
 

	
 

	
1.

	
Dust rails
  and sills or as needed. 

	
 

	
 

	
 

	
 

	
2.

	
Sweep
  stairwells and landings or as needed. 

	
 

	
 

	
 

	
 

	
3.

	
Edge vacuum
  and moldings. 

	
 

	
 

	
 

	
 

	
4.

	
Keep lawn
  and landscaping properly maintained, if applicable. 

QUARTERLY: 

	
 

	
 

	
 

	
 

	
1.

	
HVAC filters
  cleaning and/or changing filters on roof tops and air handlers. (Lab areas
  and specialized sections not included) 

ANNUALLY: 

	
 

	
 

	
 

	
 

	
1.

	
Wash all
  windows inside and out. 

* Note: Lab areas and
specialized sections are not included in the above-mentioned cleaning schedule
and are the sole responsibility of the LESSEE. 

22Exhibit 10.1

FAIRCHILD SEMICONDUCTOR 2007 STOCK PLAN

	Purpose

The purpose of the Fairchild Semiconductor 2007 Stock Plan is to give the Company a competitive advantage in attracting, retaining and motivating officers, employees, Nonemployee Directors and individual consultants and to provide the Company and its Subsidiaries and Affiliates with a stock plan providing incentives for future performance of services directly linked to the profitability of the Company's businesses and increases in Company stockholder value. The Plan provides for the grant of Incentive and Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock and Deferred Stock Units, any of which may be performance-based, and for Incentive Bonuses, which may be paid in cash or stock or a combination thereof, as determined by the Administrator.

	Definitions

As used in the Plan, the following terms shall have the meanings set forth below:

	"Administrator" means the Administrator of the Plan in accordance with Section 18.
	"Affiliate" means a corporation or other entity controlled by, controlling or under common control with the Company.
	"Award" means an Incentive Stock Option, Nonqualified Stock Option, Stock Appreciation Right, Restricted Stock, Deferred Stock Unit or Incentive Bonus granted to a Participant pursuant to the provisions of the Plan, any of which the Administrator may structure to qualify in whole or in part as a Performance Award.
	"Award Agreement" means a written agreement or other instrument as may be approved from time to time by the Administrator implementing the grant of each Award. An Agreement may be in the form of an agreement to be executed by both the Participant and the Company (or an authorized representative of the Company) or certificates, notices or similar instruments as approved by the Administrator.

	"Award Cycle" means a period of consecutive fiscal years or portions thereof designated by the Administrator over which Deferred Stock Units are to be earned.
	"Board" means the board of directors of the Company.
	"Cause" means, unless otherwise provided by the Administrator in the terms and conditions of a particular Award, (i) "Cause" pursuant to any Individual Agreement to which the Participant is a party that is then in effect, or (ii) if there is no such Individual Agreement or if it does not define Cause, termination of the Participant's employment by the Company or any of its Affiliates or Subsidiaries because of (A) the Participant's commission or conviction of a felony under federal law or the law of the state in which such action occurred, (B) the Participant's dishonesty in the course of fulfilling the Participant's employment duties, (C) the Participant's willful and deliberate failure to perform his or her employment duties in any material respect, or (D) in the case of a termination prior to a Change in Control, such other events as shall be determined by the Administrator. The Administrator shall, unless otherwise provided in an Individual Agreement with the Participant, have the sole discretion to determine whether "Cause" exists, and its determination shall be final.

	"Change in Control" and "Change in Control Price" have the meanings set forth in Sections 12(b) and (c), respectively.
	"Code" means the Internal Revenue Code of 1986, as amended from time to time, and the rulings and regulations issues thereunder.
	"Company" means Fairchild Semiconductor International, Inc., a Delaware corporation.
	"Deferred Stock Unit" means an Award granted to a Participant pursuant to Section 8 pursuant to which Shares or cash in lieu thereof may be issued in the future.

	 "Disability" means, unless otherwise provided by the Administrator in the terms and conditions of a particular Award, a Participant being considered "disabled" as defined in Section 409A(a)(2)(C) of the Code.
	"Early Retirement" means the termination of a Participant's employment or service, by the Participant or the Company, following which the Participant has no intention of engaging in, and does not in fact subsequently engage in, full-time employment, after attaining age 55, if the Participant's elapsed years of continuous full-time employment or service with the Company or an Affiliate plus the Participant's age equals 65 or more; provided that for any Nonemployee Director, it means the termination of the Nonemployee Director's service with the Company or an Affiliate, after attaining age 55, if the Nonemployee Director's elapsed years of continuous service with the Company or an Affiliate plus the Nonemployee Director's age equals 65 or more.

	"Fair Market Value" means, as of any given date, the closing sales price on such date during normal trading hours (or, if there are no reported sales on such date, on the last date prior to such date on which there were sales) of the Shares on the New York Stock Exchange Composite Tape or, if not listed on such exchange, on any other national securities exchange on which the Shares are listed or on NASDAQ, in any case, as reporting in such source as the Administrator shall select. If there is no regular public trading market for such Shares, the Fair Market Value of the Shares shall be determined by the Administrator in good faith and in compliance with Section 409A of the Code.

	"Good Reason" means a Termination of Employment for "Good Reason" pursuant to an Individual Agreement to which the Participant is a party that is then in effect. If a Participant does not have an Individual Agreement, or if it does not define Good Reason, no Termination of Employment for that Participant shall be considered to be for "Good Reason."
	"Incentive Bonus" means a bonus opportunity awarded under Section 9 pursuant to which a Participant may become entitled to receive an amount based on satisfaction of such performance criteria as are specified in the Award Agreement.
	"Incentive Stock Option" means a stock option that is intended to qualify as an "incentive stock option" within the meaning of Section 422 of the Code.

	"Individual Agreement" means a written employment, consulting or similar agreement, including the Company's Executive Severance Policy, between a Participant and the Company or one of its Subsidiaries or Affiliates.
	"Nonemployee Director" means each person who is, or is elected to be, a member of the Board and who is not an employee of the Company or any Subsidiary. 
	"Nonqualified Stock Option" means a stock option that is not intended to qualify as an "incentive stock option" within the meaning of Section 422 of the Code.

	"Normal Retirement" means retirement from active employment or service with the Company, a Subsidiary or Affiliate at or after age 65.
	"Option" means an Incentive Stock Option and/or a Nonqualified Stock Option granted pursuant to Section 6 of the Plan.
	"Participant" means any individual described in Section 3 to whom Awards have been granted from time to time by the Administrator and any authorized transferee of such individual.
	"Performance Award" means an Award, the grant, issuance, retention, vesting or settlement of which is subject to satisfaction of one or more Qualifying Performance Criteria established pursuant to Section 13.
	"Plan" means Fairchild Semiconductor 2007 Stock Plan as set forth herein and as amended from time to time.
	"Prior Plan" means the Fairchild Semiconductor Stock Plan, as amended and restated as of May 3, 2006.
	"Qualifying Performance Criteria" has the meaning set forth in Section 13(b).

	"Retirement" means Normal Retirement or Early Retirement. For the avoidance of doubt, the definitions of Retirement herein are solely for the purposes of the Plan and for no other purpose, provided, however, that the definitions are incorporated by reference into the Company's Executive Severance Plan.
	"Restricted Stock" means Shares granted pursuant to Section 8 of the Plan.
	"Share" means a share of the Company's common stock, par value $.01, subject to adjustment as provided in Section 12(d).
	"Stock Appreciation Right" means a right granted pursuant to Section 7 of the Plan that entitles the Participant to receive, in cash or Shares or a combination thereof, as determined by the Administrator, value equal to or otherwise based on the excess of (i) the market price of a specified number of Shares at the time of exercise over (ii) the exercise price of the right, as established by the Administrator on the date of grant.
	"Subsidiary" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company where each of the corporations in the unbroken chain other than the last corporation owns stock possessing at least 50 percent or more of the total combined voting power of all classes of stock in one of the other corporations in the chain, and if specifically determined by the Administrator in the context other than with respect to Incentive Stock Options, may include an entity in which the Company has a significant ownership interest or that is directly or indirectly controlled by the Company.
	"Substitute Awards" means Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a corporation acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.
	"Termination of Employment" means ceasing to serve as a full-time employee of the Company and its Subsidiaries of Affiliates, or, with respect to a service provider, ceasing to serve as such for the Company, except that with respect to all or any Awards held by a Participant (i) the Administrator may determine, subject to Section 6(d), that an approved leave of absence or approved employment on a less than full-time basis is not considered a "Termination of Employment," (ii) the Administrator may determine that a transition of employment to service with a partnership, joint venture or corporation not meeting the requirements of a Subsidiary in which the Company or a Subsidiary is a party is not considered a "Termination of Employment," (iii) service as a member of the Board or other service provider shall constitute continued employment with respect to Awards granted to a Participant while he or she served as an employee and (iv) service as an employee or other service provider of the Company or a Subsidiary or Affiliate shall constitute continued employment with respect to Awards granted to a Participant while he or she served as a member of the Board. A Participant employed by, or performing services for, a Subsidiary or an Affiliate shall also be deemed to incur a Termination of Employment if the Subsidiary or Affiliate ceases to be such a Subsidiary or an Affiliate, as the case may be, and the Participant does not immediately thereafter become an employee, or service-provider for, the Company or another Subsidiary or Affiliate. 

	Eligibility

Any person who is a current or prospective officer or employee (within the meaning of Section 303A.08 of the New York Stock Exchange Listed Company Manual), including any director who is also an employee, in his or her capacity as such, of the Company or of any Subsidiary shall be eligible for selection by the Administrator for the grant of Awards hereunder. To the extent provided by Section 5(d), any Nonemployee Director shall be eligible for the grant of Awards hereunder as determined by the Administrator. In addition, any service provider who has been retained to provide consulting, advisory or other services to the Company or to any Subsidiary shall be eligible for selection by the Administrator for the grant of Awards hereunder. Options intending to qualify as Incentive Stock Options may only be granted to employees of the Company or any Subsidiary within the meaning of the Code, as selected by the Administrator. For purposes of this Plan, the Chairman of the Board's status as an employee shall be determined by the Administrator.

	Effective Date and Termination of Plan

This Plan was adopted by the Board as of February 14, 2007, and became effective on May 2, 2007 (the "Effective Date") when it was approved by the Company's stockholders. All Awards granted under this Plan are subject to, and may not be exercised before, the approval of this Plan by the stockholders prior to the first anniversary date of the adoption of the Plan by the Board, by the affirmative vote of the holders of a majority of the outstanding Shares of the Company present, or represented by proxy, and entitled to vote, at a meeting of the Company's stockholders or by written consent in accordance with the laws of the State of Delaware; provided that if such approval by the stockholders of the Company is not forthcoming, all Awards previously granted under this Plan shall be void. The Plan shall remain available for the grant of Awards until the tenth (10th) anniversary of the Effective Date. Notwithstanding the foregoing, the Plan may be terminated at such earlier time as the Board may determine. Termination of the Plan will not affect the rights and obligations of the Participants and the Company arising under Awards theretofore granted and then in effect.

	Shares Subject to the Plan and to Awards

	Aggregate Limits. The aggregate number of Shares issuable pursuant to all Awards shall not exceed 6,002,065, plus (i) any Shares that were authorized for issuance under the Prior Plan that, as of May 2, 2007, remained available for issuance under the Prior Plan (not including any Shares that were subject to, as of  May 2, 2007, outstanding awards under the Prior Plan or any Shares that prior to May 2, 2007, were issued pursuant to awards granted under the Prior Plan that were settled or exercised) and (ii) any Shares that were subject to outstanding awards under the Prior Plan as of May 2, 2007 that on or after such date cease for any reason to be subject to such awards (other than by reason of exercise or settlement of the awards to the extent they are exercised for or settled in vested and nonforfeitable shares); provided that any Shares granted under Options or Stock Appreciation Rights shall be counted against this limit on a one-for-one basis and any Shares granted as Awards other than Options or Stock Appreciation Rights shall be counted against this limit as two (2) Shares for every one (1) Share subject to such Award. The aggregate number of Shares available for grant under this Plan and the number of Shares subject to outstanding Awards shall be subject to adjustment as provided in Section 12(d). The Shares issued pursuant to Awards granted under this Plan may be shares that are authorized and unissued or shares that were reacquired by the Company, including shares purchased in the open market.

	Issuance of Shares. For purposes of Section 5(a), the aggregate number of Shares issued under this Plan at any time shall equal only the number of Shares actually issued upon exercise or settlement of an Award. Notwithstanding the foregoing, Shares subject to an Award under the Plan may not again be made available for issuance under the Plan if such Shares are: (i) Shares that were subject to a stock-settled Stock Appreciation Right and were not issued upon the net settlement or net exercise of such Stock Appreciation Right, (ii) Shares used to pay the exercise price of an Option, (iii) Shares delivered to or withheld by the Company to pay the withholding taxes related an Option or a Stock Appreciation Right, or (iv) Shares repurchased on the open market with the proceeds of an Option exercise. Shares subject to Awards that have been canceled, expired, forfeited or otherwise not issued under an Award and Shares subject to Awards settled in cash shall not count as Shares issued under this Plan.

	Tax Code Limits. The aggregate number of Shares subject to Options or Stock Appreciation Rights granted under this Plan during any calendar year to any one Participant shall not exceed 2,000,000, which number shall be calculated and adjusted pursuant to Section 12(d) only to the extent that such calculation or adjustment will not affect the status of any Award intended to qualify as "performance based compensation" under Section 162(m) of the Code, but which number shall not count any tandem SARs (as defined in Section 7). The aggregate number of Shares granted as Awards other than Options or Stock Appreciation Rights that are intended to satisfy the requirements for "performance based compensation" under Section 162(m) of the Code during any calendar year to any one Participant shall not exceed 500,000, which number shall be calculated and adjusted pursuant to Section 12(d) only to the extent that such calculation or adjustment will not affect the status of any Award intended to qualify as "performance based compensation" under Section 162(m) of the Code. The aggregate number of Shares that may be issued pursuant to the exercise of Incentive Stock Options granted under this Plan shall not exceed 1,000,000, which number shall be calculated and adjusted pursuant to Section 12(d) only to the extent that such calculation or adjustment will not affect the status of any option intended to qualify as an Incentive Stock Option under Section 422 of the Code. The maximum amount payable pursuant to that portion of an Incentive Bonus granted in any calendar year to any Participant under this Plan that is intended to satisfy the requirements for "performance based compensation" under Section 162(m) of the Code shall not exceed five million dollars ($5,000,000).

	Nonemployee Director Awards. The aggregate number of Shares subject to Options and Stock Appreciation Rights granted under this Plan during any calendar year to any one Nonemployee Director shall not exceed 30,000, and the aggregate number of Shares issued or issuable under all Awards granted under this Plan other than Options or Stock Appreciation Rights during any calendar year to any one Nonemployee Director shall not exceed 15,000; provided, however, that (A) in the term of service in which a Nonemployee Director first joins the Board of Directors, the maximum number of shares subject to Awards granted to such Nonemployee Director may be up to two hundred percent (200%) of the number of shares set forth in the foregoing limits (provided, further, that, in the event such Nonemployee Director first joins the Board of Directors in the position of Chairman of the Board of Directors or Lead Director, the maximum number of shares subject to Awards granted to such Nonemployee Director may be up to three hundred percent (300%) of the number of shares set forth in the foregoing limits), and (B) in the annual term of the Board of Directors in which a Nonemployee Director is designated as independent Chairman of the Board of Directors or Lead Director, the maximum number of shares subject to Awards granted to such Nonemployee Director may be up to two hundred percent (200%) of the number of shares set forth in the foregoing limits. The foregoing limits shall not count any tandem SARs (as defined in Section 7).

	Substitute Awards. Substitute Awards shall not reduce the Shares authorized for issuance under the Plan or authorized for grant to a Participant in any calendar year. Additionally, in the event that a corporation acquired by the Company or any Subsidiary, or with which the Company or any Subsidiary combines, has shares available under a pre-existing plan approved by shareholders 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 issuance 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 employees, directors or consultants of the Company or its Subsidiaries immediately before such acquisition or combination.

	Options

	Option Awards. Options may be granted at any time and from time to time prior to the termination of the Plan to Participants as determined by the Administrator. No Participant shall have any rights as a stockholder with respect to any Shares subject to Option hereunder until said Shares have been issued, except that the Administrator may authorize dividend equivalent accruals with respect to such Shares. Each Option shall be evidenced by an Award Agreement. Such Award Agreements shall become effective upon execution by the Company and the Participant. If such an Award Agreement is not executed by the Participant and returned to the Company on or prior to 90 days after the date the Award Agreement is received by the Participant (or such earlier date as the Administrator may specify), such Option shall terminate unless the Administrator shall determine otherwise. Options granted pursuant to the Plan need not be identical but each Option must contain and be subject to the terms and conditions set forth below. 

	Price. The Administrator will establish the exercise price per Share under each Option, which, in no event will be less than the Fair Market Value of the Shares on the date of grant; provided, however, that the exercise price per Share with respect to an Option that is granted in connection with a merger or other acquisition as a substitute or replacement award for options held by optionees of the acquired entity may be less than 100% of the market price of the Shares on the date such Option is granted if such exercise price is based on a formula set forth in the terms of the options held by such optionees or in the terms of the agreement providing for such merger or other acquisition. The exercise price of any Option may be paid in Shares, cash or a combination thereof, as determined by the Administrator, including an irrevocable commitment by a broker to pay over such amount from a sale of the Shares issuable under an Option, the delivery of previously owned Shares and withholding of Shares otherwise deliverable upon exercise.

	No Repricing. Other than in connection with a change in the Company's capitalization (as described in Section 12) the exercise price of an Option may not be reduced without stockholder approval (including canceling previously awarded Options and regranting them with a lower exercise price).

	Provisions Applicable to Options. The date on which Options become exercisable shall be determined at the sole discretion of the Administrator and set forth in an Award Agreement. Unless provided otherwise in the applicable Award Agreement, to the extent that the Administrator determines that an approved leave of absence or employment on a less than full-time basis is not a Termination of Employment, the vesting period and/or exercisability of an Option shall be adjusted by the Administrator during or to reflect the effects of any period during which the Participant is on an approved leave of absence or is employed on a less than full-time basis. 

	Term of Options and Termination of Employment:  The Administrator shall establish the term of each Option, which in no case shall exceed a period of ten (10) years from the date of grant. Unless an Option earlier expires upon the expiration date established pursuant to the foregoing sentence, upon the termination of the Participant's employment, his or her rights to exercise an Option then held shall be only as follows, unless the Administrator specifies otherwise:

	Death. Unless otherwise determined by the Administrator (including under an Individual Agreement), if a Participant incurs a Termination of Employment by reason of death, any Option held by such Participant may thereafter be exercised, to the extent then exercisable, or on such accelerated basis as the Administrator may determine, for a period of five years (or such other period as the Administrator may specify in the Award Agreement) from the date of such death or until the expiration of the stated term of such Option, whichever period is the shorter. 

	Disability. Unless otherwise determined by the Administrator (including under an Individual Agreement), if a Participant incurs a Termination of Employment by reason of Disability, any Option held by such Participant may thereafter be exercised by the Participant, to the extent it was exercisable at the time of termination, or on such accelerated basis as the Administrator may determine, for a period of five years (or such other period as the Administrator may specify in the Award Agreement) from the date of such Termination of Employment or until the expiration of the stated term of such Option, whichever period is the shorter; provided, however, that if the Participant dies within such period, any unexercised Option held by such Participant shall, notwithstanding the expiration of such period, continue to be exercisable to the extent to which it was exercisable at the time of death for a period of at least 12 months from the date of such death or until the expiration of the stated term of such Option, whichever period is the shorter. 

	Retirement. Unless otherwise determined by the Administrator (including under an Individual Agreement), if a Participant incurs a Termination of Employment by reason of Retirement, any Option held by such Participant may thereafter be exercised by the Participant, to the extent it was exercisable at the time of such Retirement, or on such accelerated basis as the Administrator may determine, for a period of five years (or such other period as the Administrator may specify in the Award Agreement) from the date of such Termination of Employment or until the expiration of the stated term of such Option, whichever period is the shorter; provided, however, that if the Participant dies within such period any unexercised Option held by such Participant shall, notwithstanding the expiration of such period, continue to be exercisable to the extent to which it was exercisable at the time of death for a period of at least 12 months from the date of such death or until the expiration of the stated term of such Option, whichever period is the shorter. 

	Involuntary Termination Not for Cause. Unless otherwise determined by the Administrator (including under an Individual Agreement), if a Participant incurs a Termination of Employment that is involuntary on the part of the Participant and not for Cause or a result of death, Disability or Retirement, any Option held by such Participant may thereafter be exercised by the Participant, to the extent it was exercisable at the time of such termination, or on such accelerated basis as the Administrator may determine, for a period of 90 days (or such other period as the Administrator may specify in the Award Agreement) from the date of such Termination of Employment or until the expiration of the stated term of such Option, whichever period is the shorter.

	Other Reasons. Unless otherwise determined by the Administrator (including under an Individual Agreement): (A) if a Participant incurs a Termination of Employment for Cause, all Options held by such Participant shall thereupon terminate; (B) if a Participant incurs a Termination of Employment for any reason other than for Cause, death, Disability, Retirement or as provided in Section 6(e)(4), including a Termination of Employment that is voluntary on the part of the Participant and not involving Retirement, any Option held by such Participant may thereafter be exercised by the Participant, to the extent it was exercisable at the time of such termination, or on such accelerated basis as the Administrator may determine, for a period of 30 days (or such other period as the Administrator may specify in the Award Agreement) from the date of such Termination of Employment or until the expiration of the stated term of such Option, whichever period is the shorter. Notwithstanding any other provision of this Plan to the contrary, in the event that, during the 24-month period following a Change in Control, a Participant incurs a Termination of Employment (1) by the Company other than for Cause or (2) by reason of the Participant's resignation for Good Reason, any Option held by such Participant may thereafter be exercised by the Participant, to the extent it was exercisable at the time of termination, or on such accelerated basis as the Administrator may determine, for (x) the longer of (i) one year from such date of termination or (ii) such other period as may be provided in the Plan for such Termination of Employment or as the Administrator may provide in the Award Agreement or any Individual Agreement, or (y) until expiration of the stated term of such Option, whichever period is the shorter. 

	Incentive Stock Options. Notwithstanding anything to the contrary in this Section 6, in the case of the grant of an Option intending to qualify as an Incentive Stock Option: (i) if the Participant owns stock possessing more than 10 percent of the combined voting power of all classes of stock of the Company (a "10% Stockholder"), the exercise price of such Option must be at least 110 percent of the fair market value of the Shares on the date of grant and the Option must expire within a period of not more than five (5) years from the date of grant, and (ii) Termination of Employment will occur when the person to whom an Award was granted ceases to be an employee (as determined in accordance with Section 3401(c) of the Code and the regulations promulgated thereunder) of the Company and its Subsidiaries. Notwithstanding anything in this Section 6 to the contrary, options designated as Incentive Stock Options shall not be eligible for treatment under the Code as Incentive Stock Options (and will be deemed to be Nonqualified Stock Options) to the extent that either (a) the aggregate fair market value of Shares (determined as of the time of grant) with respect to which such Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Subsidiary) exceeds $100,000, taking Options into account in the order in which they were granted, or (b) such Options otherwise remain exercisable but are not exercised within three (3) months of Termination of Employment (or such other period of time provided in Section 422 of the Code).

	Cashing Out of Option. On receipt of written notice of exercise, the Administrator may elect to cash out all or part of the portion of the Shares for which an Option is being exercised by paying the Participant an amount, in cash or Shares, equal to the excess of the per Share Fair Market Value of the Shares over the per Share exercise price of the Option times the number of Shares for which the Option is being exercised on the effective date of such cash-out.

	Change in Control Cash-Out. Notwithstanding any other provision of the Plan, during the 60-day period from and after a Change in Control (the "Exercise Period"), if the Administrator shall determine at the time of grant or thereafter, a Participant shall have the right, whether or not the Option is fully exercisable and in lieu of the payment of the exercise price for the Shares being purchased under the Option and by giving notice to the Company, to elect (within the Exercise Period) to surrender all or part of the Option to the Company and to receive cash, within 30 days of such election, in an amount equal to the amount by which the Change in Control Price per Share on the date of such election shall exceed the exercise price per Share under the Option multiplied by the number of Shares granted under the Option as to which the right granted under this Section 6(h) shall have been exercised.

	Stock Appreciation Rights

Stock Appreciation Rights may be granted to Participants from time to time either in tandem with or as a component of other Awards granted under the Plan ("tandem SARs") or not in conjunction with other Awards ("freestanding SARs") and may, but need not, relate to a specific Option granted under Section 6. The provisions of Stock Appreciation Rights need not be the same with respect to each grant or each recipient. Any Stock Appreciation Right granted in tandem with an Award may be granted at the same time such Award is granted or at any time thereafter before exercise or expiration of such Award. All freestanding SARs shall be granted subject to the same terms and conditions applicable to Options as set forth in Section 6 and all tandem SARs shall have the same exercise price, vesting, exercisability, forfeiture and termination provisions as the Award to which they relate. Subject to the provisions of Section 6 and the immediately preceding sentence, the Administrator may impose such other conditions or restrictions on any Stock Appreciation Right as it shall deem appropriate. Stock Appreciation Rights may be settled in Shares, cash or a combination thereof, as determined by the Administrator and set forth in the applicable Award Agreement. Other than in connection with a change in the Company's capitalization (as described in Section 12) the exercise price of Stock Appreciation Rights may not be reduced without stockholder approval (including canceling previously awarded Stock Appreciation Rights and regranting them with a lower exercise price).

	Restricted Stock and Deferred Stock Units

	Restricted Stock and Deferred Stock Unit Awards. Restricted Stock and Deferred Stock Units may be granted at any time and from time to time prior to the termination of the Plan to Participants as determined by the Administrator. Restricted Stock is an award or issuance of Shares the grant, issuance, retention, vesting and/or transferability of which is subject during specified periods of time to such conditions (including continued employment or performance conditions) and terms as the Administrator deems appropriate. Deferred Stock Units are Awards denominated in units of Shares under which the issuance of Shares is subject to such conditions (including continued employment or performance conditions) and terms as the Administrator deems appropriate. Each grant of Restricted Stock and Deferred Stock Units shall be evidenced by an Award Agreement. Unless determined otherwise by the Administrator, each Deferred Stock Unit will be equal to one Share and will entitle a  Participant to either the issuance of Shares or payment of an amount of cash determined with reference to the value of Shares. To the extent determined by the Administrator, Deferred Stock Units may be satisfied or settled in Shares, cash or a combination thereof. Restricted Stock and Deferred Stock Units granted pursuant to the Plan need not be identical but each grant of Restricted Stock and Deferred Stock Units must contain and be subject to the terms and conditions set forth below.

	Contents of Agreement. Each Award Agreement shall contain provisions regarding (i) the number of Shares or Deferred Stock Units subject to such Award or a formula for determining such number, (ii) the purchase price of the Shares, if any, and the means of payment, (iii) the performance criteria, if any, and level of achievement versus these criteria that shall determine the number of Shares or Deferred Stock Units granted, issued, retainable and/or vested, (iv) such terms and conditions on the grant, issuance, vesting and/or forfeiture of the Shares or Deferred Stock Units as may be determined from time to time by the Administrator, (v) the term of the performance period, if any, as to which performance will be measured for determining the number of such Shares or Deferred Stock Units, including, with respect to Deferred Stock Units, the duration of the Award Cycle, if any, and (vi) restrictions on the transferability of the Shares or Deferred Stock Units. Shares issued under a Restricted Stock Award may be issued in the name of the Participant and held by the Participant or held by the Company, in each case as the Administrator may provide.

	Vesting and Performance Criteria. The grant, issuance, retention, vesting and/or settlement of shares of Restricted Stock and Deferred Stock Units will occur when and in such installments as the Administrator determines or under criteria the Administrator establishes, which may include Qualifying Performance Criteria. The grant, issuance, retention, vesting and/or settlement of Shares under any such Award that is based on performance criteria and level of achievement versus such criteria will be subject to a performance period of not less than one year, and the grant, issuance, retention, vesting and/or settlement of Shares under any Restricted Stock or Deferred Stock Unit Award that is based solely upon continued employment and/or the passage of time may not vest or be settled in full until the thirty-sixth month following the month in which the Award is granted, but may be subject to pro-rata vesting over such period, except that the Administrator may provide for the satisfaction and/or lapse of all conditions under any such Award in the event of the Participant's death, Disability, Retirement, Termination of Employment by the Company without Cause or by the Participant for Good Reason, or in connection with a Change in Control, and the Administrator may provide that any such restriction or limitation will not apply in the case of a Restricted Stock or Deferred Stock Unit Award that is issued in payment or settlement of compensation that has been earned by the Participant. At the expiration of an applicable Award Cycle, the Administrator shall evaluate the Company's performance in light of any performance goals for an Award of Deferred Stock Units, and shall determine the number of Deferred Stock Units granted to the Participant which have been earned, and the Administrator shall then cause to be delivered (A) a number of Shares equal to the number of Deferred Stock Units determined by the Administrator to have been earned, or (B) cash equal to the Fair Market Value of such number of Shares, or (C) a combination of cash and Shares equal to the Fair Market Value of the number of Deferred Stock Units determined by the Administrator to have been earned, as the Administrator shall elect. Notwithstanding anything in this Plan to the contrary, the performance criteria for any Restricted Stock or Deferred Stock Unit that is intended to satisfy the requirements for "performance-based compensation" under Section 162(m) of the Code will be a measure based on one or more Qualifying Performance Criteria selected by the Administrator and specified when the Award is granted.

	Discretionary Adjustments and Limits. Subject to the limits imposed under Section 162(m) of the Code for Awards that are intended to qualify as "performance based compensation," notwithstanding the satisfaction of any performance goals, the number of Shares granted, issued, retainable and/or vested under an Award of Restricted Stock or Deferred Stock Units on account of either financial performance or personal performance evaluations may, to the extent specified in the Award Agreement, be reduced by the Administrator on the basis of such further considerations as the Administrator shall determine.

	Voting Rights. Unless otherwise determined by the Administrator, Participants holding shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those shares during the period of restriction. Participants shall have no voting rights with respect to Shares underlying Deferred Stock Units unless and until such Shares are reflected as issued and outstanding shares on the Company's stock ledger.

	Dividends and Distributions. Participants in whose name Restricted Stock is granted shall be entitled to receive all dividends and other distributions paid with respect to those Shares, unless determined otherwise by the Administrator. The Administrator will determine whether any such dividends or distributions will be automatically reinvested in additional shares of Restricted Stock and subject to the same restrictions on transferability as the Restricted Stock with respect to which they were distributed or whether such dividends or distributions will be paid in cash. Shares underlying Deferred Stock Units shall be entitled to dividends or dividend equivalents only to the extent provided by the Administrator.  Reinvestment of dividends in additional Restricted Stock and/or Deferred Stock Units at the time of any dividend payment shall only be permissible if sufficient Shares are available under Section 5(a) for such reinvestment (taking into account then outstanding Awards).

	Deferred Stock Units for Nonemployee Directors. Each Nonemployee Director shall receive an Award of not more than 15,000 Deferred Stock Units, as determined by the Board upon the recommendation of the Administrator, upon his or her first election or appointment to the Board, which Award (i) shall vest ratably over a period that expires in the thirty-sixth month following the month in which the Award is granted, except that the Award shall vest in full upon the Nonemployee Director's Retirement, and (ii) shall be settled upon the first to occur of (A) the termination of the Nonemployee Director's service as a member of the Board (including, without limitation, as a result of the director's death or disability) other than as a result of removal for cause under applicable law or (B) the date chosen by the director at the time of the Award, which date must be a minimum of three years after the date of grant, or such longer minimum period as established by the Administrator. In addition, each Nonemployee Director other than the Nonemployee Director designated as independent Chairman of the Board of Directors or Lead Director (if applicable) shall receive an annual Award of not more than 15,000 Deferred Stock Units, and the Nonemployee Director designated as independent Chairman of the Board of Directors or Lead Director (if applicable) shall receive an annual Award of not more than two hundred percent of the number of Deferred Stock Units granted to the other Nonemployee Directors as their annual Deferred Stock Unit award, each as determined by the Board upon the recommendation of the Administrator, which Awards (i) shall vest ratably over the following three annual terms of the Nonemployee Director's service on the Board, except that the Award shall vest in full upon the Nonemployee Director's Retirement, and (ii) shall be settled upon the first to occur of (A) the termination of the Nonemployee Director's service as a member of the Board (including, without limitation, as a result of the director's death or disability) other than as a result of removal for cause under applicable law or (B) the date chosen by the director at the time of the Award, which date must be a minimum of three years after the date of grant, or such longer minimum period as established by the Administrator. Awards to Nonemployee Directors shall be made only in accordance with the foregoing terms, and, except as specifically provided in this Plan, neither the Administrator nor the Board shall have any authority or discretion with respect to such Awards.

	Incentive Bonuses

	General. Each Incentive Bonus Award will confer upon the Participant the opportunity to earn a future payment tied to the level of achievement with respect to one or more performance criteria established for a performance period of not less than one year.

	Incentive Bonus Document. The terms of any Incentive Bonus will be set forth in an Award Agreement. Each Award Agreement evidencing an Incentive Bonus shall contain provisions regarding (i) the target and maximum amount payable to the Participant as an Incentive Bonus, (ii) the performance criteria and level of achievement versus these criteria that shall determine the amount of such payment, (iii) the term of the performance period as to which performance shall be measured for determining the amount of any payment, (iv) the timing of any payment earned by virtue of performance, (v) restrictions on the alienation or transfer of the Incentive Bonus prior to actual payment, (vi) forfeiture provisions and (vii) such further terms and conditions, in each case not inconsistent with this Plan as may be determined from time to time by the Administrator.

	Performance Criteria. The Administrator shall establish the performance criteria and level of achievement versus these criteria that shall determine the target and maximum amount payable under an Incentive Bonus, which criteria may be based on financial performance and/or personal performance evaluations. The Administrator may specify the percentage of the target Incentive Bonus that is intended to satisfy the requirements for "performance-based compensation" under Section 162(m) of the Code. Notwithstanding anything to the contrary herein, the performance criteria for any portion of an Incentive Bonus that is intended by the Administrator to satisfy the requirements for "performance-based compensation" under Section 162(m) of the Code shall be a measure based on one or more Qualifying Performance Criteria (as defined in Section 13(b)) selected by the Administrator and specified at the time the Incentive Bonus is granted. The Administrator shall certify the extent to which any Qualifying Performance Criteria has been satisfied, and the amount payable as a result thereof, prior to payment of any Incentive Bonus that is intended to satisfy the requirements for "performance-based compensation" under Section 162(m) of the Code.

	Timing and Form of Payment. The Administrator shall determine the timing of payment of any Incentive Bonus. Payment of the amount due under an Incentive Bonus may be made in cash or in Shares, as determined by the Administrator. The Administrator may provide for or, subject to such terms and conditions as the Administrator may specify, may permit a Participant to elect for the payment of any Incentive Bonus to be deferred to a specified date or event.

	Discretionary Adjustments. Notwithstanding satisfaction of any performance goals, the amount paid under an Incentive Bonus on account of either financial performance or personal performance evaluations may, to the extent specified in the Award Agreement, be reduced by the Administrator on the basis of such further considerations as the Administrator shall determine.

	Tax Offset Bonuses.  At the time an Award other than Options or Stock Appreciation Rights is made under this Plan or at any time thereafter, the Administrator may grant to the Participant receiving such Award the right to receive a cash payment in an amount specified by the Administrator, to be paid at such time or times (if ever) as the Award results in compensation income to the Participant, for the purpose of assisting the Participant to pay the resulting taxes, all as determined by the Administrator and on such other terms and conditions as the Administrator shall determine.

	Deferral of Gains

The Administrator may, in an Award Agreement or otherwise, provide for the deferred delivery of Shares upon settlement, vesting or other events with respect to Restricted Stock or Deferred Stock Units, or in payment or satisfaction of an Incentive Bonus. Notwithstanding anything herein to the contrary, in no event will any deferral of the delivery of Shares or any other payment with respect to any Award be allowed if the Administrator determines, in its sole discretion, that the deferral would result in the imposition of the additional tax under Section 409A(a)(1)(B) of the Code.

	Conditions and Restrictions Upon Securities Subject to Awards

The Administrator may provide that the Shares issued upon exercise of an Option or Stock Appreciation Right or otherwise subject to or issued under an Award shall be subject to such further agreements, restrictions, conditions or limitations as the Administrator in its discretion may specify prior to the exercise of such Option or Stock Appreciation Right or the grant, vesting or settlement of such Award, including without limitation, conditions on vesting or transferability, forfeiture or repurchase provisions and method of payment for the Shares issued upon exercise, vesting or settlement of such Award (including the actual or constructive surrender of Shares already owned by the Participant) or payment of taxes arising in connection with an Award. Without limiting the foregoing, such restrictions may address the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any Shares issued under an Award, including without limitation (i) restrictions under an insider trading policy or pursuant to applicable law, (ii) restrictions designed to delay and/or coordinate the timing and manner of sales by Participant and holders of other Company equity compensation arrangements, (iii) restrictions as to the use of a specified brokerage firm for such resales or other transfers and (iv) provisions requiring Shares to be sold on the open market or to the Company in order to satisfy tax withholding or other obligations.

	Change in Control; Adjustment of and Changes in the Stock

	Impact of Event. Notwithstanding any other provision of the Plan to the contrary, unless otherwise provided in an Award Agreement, in the event of a Change in Control:

	any Options and Stock Appreciation Rights outstanding as of the date such Change in Control occurs, and which are not then exercisable and vested, shall become fully exercisable and vested;
	the restrictions and deferral limitations applicable to any Restricted Stock outstanding as of the date such Change in Control shall lapse, and such Restricted Stock shall become free of all restrictions and become fully vested and transferable; and
	all Deferred Stock Units outstanding as of the date such Change in Control shall be considered to be earned and payable in full, and any deferral or other restrictions shall lapse and such Deferred Stock Units shall be settled in cash as promptly as is practicable following the Change in Control.

Notwithstanding the foregoing, in no event shall the treatment specified in this Section 12(a)(1), (2) and (3) apply with respect to an Award prior to the earliest to occur of (i) the date such amounts would have been distributed in the absence of the Change in Control, (ii) a Participant's "separation from service" (as defined under Section 409A of the Code) with the Company (or six months thereafter for "specified employees" (as such term is defined under Section 409A of the Code)), (iii) the Participant's death or "disability" (as defined in Section 409A(a)(2)(C) of the Code), or (iv) a "change in the ownership or effective control" of the Company or in the "ownership of a substantial portion of the assets" of the Company within the meanings ascribed to such terms in Treasury Department regulations issued under Section 409A of the Code, if and to the extent that the Administrator determines, in its sole discretion, that the effect of such treatment prior to the time specified in this Section 12(a)(i), (ii), (iii) or (iv) would be the imposition of the additional tax under Section 409A(a)(1)(B) of the Code on a Participant holding such Award.

	Definition of Change in Control. For purposes of the Plan, a "Change in Control" shall mean the happening of any of the following events: 

	An acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") resulting in such Person having beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then-outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); excluding, however, the following: (A) Any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (B) Any acquisition by the Company, (C) Any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company, or (D) Any acquisition pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (3) of this Section 12(b); or 
	A change in the composition of the Board such that the individuals who, as of the Effective Date, constitute the Board (such Board shall be hereinafter referred to as the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this Section 12(b), that any individual who becomes a member of the Board subsequent to the Effective Date, whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; but, provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-12(c) of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or 
	Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of the shares or assets of another entity ("Corporate Transaction"); excluding, however, such a Corporate Transaction pursuant to which (i) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock (or equity interests), and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors (or equivalent governing body, if applicable), as the case may be, of the entity resulting from such Corporate Transaction (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (other than the Company, any employee benefit plan (or related trust) of the Company or such entity resulting from such Corporate Transaction) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock (or equity interests) of the entity resulting from such Corporate Transaction or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors (or equivalent governing body, if applicable) except to the extent that such ownership existed prior to the Corporate Transaction, and (iii) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors (or equivalent governing body, if applicable) of the entity resulting from such Corporate Transaction; or 
	The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

	Change in Control Price. For purposes of the Plan, "Change in Control Price" means the higher of (i) the highest reported sales price, regular way, of a Share in any transaction reported on the New York Stock Exchange Composite Tape or other national exchange on which such shares are listed or on NASDAQ during the 60-day period prior to and including the date of a Change in Control or (ii) if the Change in Control is the result of a tender or exchange offer or a Corporate Transaction, the highest price per Share paid in such tender or exchange offer or Corporate Transaction; provided, however, that in the case of Incentive Stock Options and Stock Appreciation Rights relating to Incentive Stock Options, the Change in Control Price shall be in all cases the Fair Market Value of the Shares on the date such Incentive Stock Option or Stock Appreciation Right is exercised. To the extent that the consideration paid in any such transaction described above consists all or in part of securities or other noncash consideration, the value of such securities or other noncash consideration shall be determined in the sole discretion of the Board.

	Adjustments. The number and kind of Shares available for issuance under this Plan (including under any Awards then outstanding), and the number and kind of Shares subject to the individual limits set forth in Section 5 of this Plan, shall be equitably adjusted by the Administrator to reflect any reorganization, reclassification, combination of shares, stock split, reverse stock split, spin-off, dividend or distribution of securities, property or cash (other than regular, quarterly cash dividends), or any other event or transaction that affects the number or kind of Shares of the Company outstanding. Such adjustment may be designed to comply with Section 425 of the Code or, except as otherwise expressly provided in Section 5(c) of this Plan, may be designed to treat the Shares available under the Plan and subject to Awards as if they were all outstanding on the record date for such event or transaction or to increase the number of such Shares to reflect a deemed reinvestment in Shares of the amount distributed to the Company's securityholders. The terms of any outstanding Award shall also be equitably adjusted by the Administrator as to price, number or kind of Shares subject to such Award and other terms to reflect the foregoing events, which adjustments need not be uniform as between different Awards or different types of Awards. In the event there shall be any other change in the number or kind of outstanding Shares, or any stock or other securities into which such Shares shall have been changed, or for which it shall have been exchanged, by reason of a Change in Control, other merger, consolidation or otherwise, then the Administrator shall determine the appropriate and equitable adjustment to be effected. No right to purchase fractional shares shall result from any adjustment in Awards pursuant to this Section 12(d). In case of any such adjustment, the Shares subject to the Award shall be rounded down to the nearest whole share. The Company shall notify Participants holding Awards subject to any adjustments pursuant to this Section 12(d) of such adjustment, but (whether or not notice is given) such adjustment shall be effective and binding for all purposes of the Plan.

	Qualifying Performance-Based Compensation

	General. The Administrator may establish performance criteria and level of achievement versus such criteria that shall determine the number of Shares to be granted, retained, vested, issued or issuable under or in settlement of or the amount payable pursuant to an Award, which criteria may be based on Qualifying Performance Criteria or other standards of financial performance and/or personal performance evaluations. In addition, the Administrator may specify that an Award or a portion of an Award is intended to satisfy the requirements for "performance-based compensation" under Section 162(m) of the Code, provided that the performance criteria for such Award (other than Options or Stock Appreciation Rights) or portion of an Award (other than Options or Stock Appreciation Rights) that is intended by the Administrator to satisfy the requirements for "performance-based compensation" under Section 162(m) of the Code shall be a measure based on one or more Qualifying Performance Criteria selected by the Administrator and specified at the time the Award is granted. The Administrator shall certify the extent to which any Qualifying Performance Criteria has been satisfied, and the amount payable as a result thereof, prior to payment, settlement or vesting of any Award that is intended to satisfy the requirements for "performance-based compensation" under Section 162(m) of the Code. Notwithstanding satisfaction of any performance goals, the number of Shares issued under or the amount paid under an award may, to the extent specified in the Award Agreement, be reduced by the Administrator on the basis of such further considerations as the Administrator in its sole discretion shall determine.

	Qualifying Performance Criteria. For purposes of this Plan, the term "Qualifying Performance Criteria" shall mean any one or more of the following performance criteria, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or Subsidiary, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years' results or to a designated comparison group, in each case as specified by the Administrator: earnings per share, revenues, net profit after tax, gross profit, operating profit, earnings before interest, taxes, depreciation and amortization (EBITDA), earnings before interest and taxes (EBIT), cash flow, asset quality, stock price performance, unit volume, return on equity, change in working capital, return on capital or shareholder return. To the extent consistent with Section 162(m) of the Code, the Administrator (A) shall appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to eliminate the effects of charges for restructurings, amortization of acquisition-related intangible assets, discontinued operations, extraordinary items and all items of gain, loss or expense determined to be extraordinary or unusual in nature or related to the disposal of a segment of a business or related to a change in accounting principle all as determined in accordance with standards established by opinion No. 30 of the Accounting Principles Board (APA Opinion No. 30) or other applicable or successor accounting provisions, as well as the cumulative effect of accounting changes, in each case as determined in accordance with generally accepted accounting principles or identified in the Company's financial statements, notes to the financial statements and/or in management's discussion and analysis of financial condition and results of operations appearing in the Company's annual report to stockholders for the applicable year, and (B) may appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the following events that occurs during a performance period: (i) asset write-downs, (ii) litigation, claims, judgments or settlements, (iii) the effect of changes in tax law or other such laws, provisions or assumptions affecting reported results, (iv) accruals for reorganization and restructuring programs, (v) accruals of any amounts for payment under this Plan or any other compensation arrangement maintained by the Company and (vi) amortization of acquisition-related intangible assets.

	Transferability

Each Award may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated by a Participant other than by will or the laws of descent and distribution, and each Option or Stock Appreciation Right shall be exercisable only by the Participant during his or her lifetime. Notwithstanding the foregoing, to the extent permitted by the Administrator in the case of a Nonqualified Stock Option or Stock Appreciation Right granted to a Nonemployee Director or member of the Company's Executive Committee, the person to whom an Award is initially granted (the "Grantee") may transfer an Award to any "family member" of the Grantee (as such term is defined in Section 1(a)(5) of the General Instructions to Form S-8 under the Securities Act of 1933, as amended ("Form S-8")), to trusts solely for the benefit of such family members and to partnerships in which such family members and/or trusts are the only partners; provided that, (i) as a condition thereof, the transferor and the transferee must execute a written agreement containing such terms as specified by the Administrator, and (ii) the transfer is pursuant to a gift or a domestic relations order to the extent permitted under the General Instructions to Form S-8. Except to the extent specified otherwise in the agreement the Administrator provides for the Grantee and transferee to execute, all vesting, exercisability and forfeiture provisions that are conditioned on the Grantee's continued employment or service shall continue to be determined with reference to the Grantee's employment or service (and not to the status of the transferee) after any transfer of an Award pursuant to this Section 14, and the responsibility to pay any taxes in connection with an Award shall remain with the Grantee notwithstanding any transfer other than by will or intestate succession.

	Suspension or Termination of Awards

Except as otherwise provided by the Administrator, if at any time (including after a notice of exercise has been delivered or an award has vested) the Chief Executive Officer or any other person designated by the Administrator (each such person, an "Authorized Officer") reasonably believes that a Participant may have committed an Act of Misconduct as described in this Section 15, the Authorized Officer, Administrator or the Board may suspend the Participant's rights to exercise any Option, to vest in an Award, and/or to receive payment for or receive Shares in settlement of an Award pending a determination of whether an Act of Misconduct has been committed.

If the Administrator or an Authorized Officer determines a Participant has committed an act of embezzlement, fraud, dishonesty, nonpayment of any obligation owed to the Company or any Subsidiary, breach of fiduciary duty, violation of Company ethics policy or code of conduct, or deliberate disregard of the Company or Subsidiary rules resulting in loss, damage or injury to the Company or any Subsidiary, or if a Participant makes an unauthorized disclosure of any Company or Subsidiary trade secret or confidential information, incurs a Termination of Employment for Early Retirement and subsequently engages in full-time employment, solicits any employee or service provider to leave the employ or cease providing services to the Company or any Subsidiary, breaches any intellectual property or assignment of inventions covenant, engages in any conduct constituting unfair competition, breaches any non-competition agreement or engages in any activity in competition with the business of the Company or any Subsidiary or Affiliate, induces any Company or Subsidiary customer to breach a contract with the Company or any Subsidiary or to cease doing business with the Company or any Subsidiary, or induces any principal for whom the Company or any Subsidiary acts as agent to terminate such agency relationship (any of the foregoing acts, an "Act of Misconduct"), then except as otherwise provided by the Administrator, (i) neither the Participant nor his or her estate nor transferee shall be entitled to exercise any Option or Stock Appreciation Right whatsoever, vest in or have the restrictions on an Award lapse, or otherwise receive payment of an Award, (ii) the Participant will forfeit all outstanding Awards and (iii) the Participant may be required, at the Administrator's sole discretion, to return and/or repay to the Company any then unvested Shares previously issued under the Plan, and/or following the exercise or payment of an Award within a period specified by the Administrator, to repay to the Company any gain realized or payment received upon the exercise or payment of such Award (with such gain or payment valued as of the date of exercise or payment). In making such determination, the Administrator or an Authorized Officer shall give the Participant an opportunity to appear and present evidence on his or her behalf at a hearing before the Administrator or its designee or an opportunity to submit written comments, documents, information and arguments to be considered by the  Administrator. Any dispute by a Participant or other person as to the determination of the Administrator shall be resolved pursuant to Section 23 of the Plan.

	Compliance with Laws and Regulations

This Plan, the grant, issuance, vesting, exercise and settlement of Awards thereunder, and the obligation of the Company to sell, issue or deliver Shares under such Awards, shall be subject to all applicable foreign, federal, state and local laws, rules and regulations, stock exchange rules and regulations, and to such approvals by any governmental or regulatory agency as may be required. The Company shall not be required to register in a Participant's name or deliver any Shares prior to the completion of any registration or qualification of such shares under any foreign, federal, state or local law or any ruling or regulation of any government body which the Administrator shall determine to be necessary or advisable. To the extent the Company is unable to or the Administrator deems it infeasible to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, the Company and its Subsidiaries shall be relieved of any liability with respect to the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. No Option shall be exercisable and no Shares shall be issued and/or transferable under any other Award unless a registration statement with respect to the Shares underlying such Option is effective and current or the Company has determined that such registration is unnecessary.

In the event an Award is granted to or held by a Participant who is employed or providing services outside the United States, the Administrator may, in its sole discretion, modify the provisions of the Plan or of such Award as they pertain to such individual to comply with applicable foreign law or to recognize differences in local law, currency or tax policy. The Administrator may also impose conditions on the grant, issuance, exercise, vesting, settlement or retention of Awards in order to comply with such foreign law and/or to minimize the Company's obligations with respect to tax equalization for Participants employed outside their home country.

	Withholding

To the extent required by applicable federal, state, local or foreign law, a Participant shall be required to satisfy, in a manner satisfactory to the Company, any withholding tax obligations that arise by reason of an Option exercise, disposition of Shares issued under an Incentive Stock Option, the vesting of or settlement of an Award, an election pursuant to Section 83(b) of the Code or otherwise with respect to an Award. The Company and its Subsidiaries shall not be required to issue Shares, make any payment or to recognize the transfer or disposition of Shares until such obligations are satisfied. The Administrator may provide for or permit these obligations to be satisfied through the mandatory or elective sale of Shares and/or by having the Company withhold a portion of the Shares that otherwise would be issued to him or her upon exercise of the Option or the vesting or settlement of an Award, or by tendering Shares previously acquired.

	Administration of the Plan

	Administrator of the Plan. The Plan shall be administered by the Administrator who shall be the Compensation Committee of the Board or, in the absence of a Compensation Committee, the Board itself. Any power of the Administrator may also be exercised by the Board, except to the extent that the grant or exercise of such authority would cause any Award or transaction to become subject to (or lose an exemption under) the short-swing profit recovery provisions of Section 16 of the Securities Exchange Act of 1934 or cause an Award designated as a Performance Award not to qualify for treatment as performance-based compensation under Section 162(m) of the Code. To the extent that any permitted action taken by the Board conflicts with action taken by the Administrator, the Board action shall control. The Compensation Committee may by resolution or written policy authorize one or more officers of the Company to perform any or all things that the Administrator is authorized and empowered to do or perform under the Plan, and for all purposes under this Plan, such officer or officers shall be treated as the Administrator; provided, however, that the resolution or policy so authorizing such officer or officers shall specify that the total number of Awards (if any) such officer or officers may award pursuant to such delegated authority shall not exceed the annual allotment of shares approved by the Compensation Committee, and any such Award shall be subject to the form of Award Agreement theretofore approved by the Compensation Committee. No such officer shall designate himself or herself as a recipient of any Awards granted under authority delegated to such officer. In addition, the Compensation Committee may delegate any or all aspects of the day-to-day administration of the Plan to one or more officers or employees of the Company or any Subsidiary, and/or to one or more agents.

	Powers of Administrator. Subject to the express provisions of this Plan, the Administrator shall be authorized and empowered to do all things that it determines to be necessary or appropriate in connection with the administration of this Plan, including, without limitation: (i) to prescribe, amend and rescind rules and regulations relating to this Plan and to define terms not otherwise defined herein; (ii) to determine which persons are Participants, to which of such Participants, if any, Awards shall be granted hereunder and the timing of any such Awards; (iii) to grant Awards to Participants and determine the terms and conditions thereof, including the number of Shares subject to Awards and the exercise or purchase price of such Shares and the circumstances under which Awards become exercisable or vested or are forfeited or expire, which terms may but need not be conditioned upon the passage of time, continued employment, the satisfaction of performance criteria, the occurrence of certain events, or other factors; (iv) to establish and verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award; (v) to prescribe and amend the terms of the agreements or other documents evidencing Awards made under this Plan (which need not be identical) and the terms of or form of any document or notice required to be delivered to the Company by Participants under this Plan; (vi) to interpret and construe this Plan, any rules and regulations under this Plan and the terms and conditions of any Award granted hereunder, and to make exceptions to any such provisions in good faith and for the benefit of the Company; and (vii) to make all other determinations deemed necessary or advisable for the administration of this Plan.

	Determinations by the Administrator. All decisions, determinations and interpretations by the Administrator regarding the Plan, any rules and regulations under the Plan and the terms and conditions of or operation of any Award granted hereunder, shall be final and binding on all Participants, beneficiaries, heirs, assigns or other persons holding or claiming rights under the Plan or any Award. The Administrator shall consider such factors as it deems relevant, in its sole and absolute discretion, to making such decisions, determinations and interpretations including, without limitation, the recommendations or advice of any officer or other employee of the Company and such attorneys, consultants and accountants as it may select.

	Correction of Defects, Omissions, and Inconsistencies. The Committee may correct any defect, supply any omission, or reconcile any inconsistency in any Award Agreement in the manner and to the extent it shall deem desirable to effectuate the purposes of the Plan and the related Award.  

	Subsidiary Awards. In the case of a grant of an Award to any Participant employed by a Subsidiary, such grant may, if the Administrator so directs, be implemented by the Company issuing any subject Shares to the Subsidiary, for such lawful consideration as the Administrator may determine, upon the condition or understanding that the Subsidiary will transfer the Shares to the Participant in accordance with the terms of the Award specified by the Administrator pursuant to the provisions of the Plan. Notwithstanding any other provision hereof, such Award may be issued by and in the name of the Subsidiary and shall be deemed granted on such date as the Administrator shall determine. 

	Foreign Employees. In the event an Award is granted to a Participant who is employed or providing services outside the United States and who is not compensated from a payroll maintained in the United States, the Administrator may, in its sole discretion, modify the provisions of the Plan as they pertain to such individual to comply with applicable foreign law or to recognize differences in local law, currency or tax policy. The Administrator may also impose conditions on the exercise or vesting of Awards in order to minimize the Company's obligations with respect to tax equalization for Participants on assignments outside their home country.

	Amendment of the Plan or Awards

The Board may amend, alter or discontinue this Plan and the Administrator may amend, or alter any agreement or other document evidencing an Award made under this Plan but, except as provided pursuant to the provisions of Section 12(d), no such amendment shall, without the approval of the stockholders of the Company:

	increase the maximum number of Shares for which Awards may be granted under this Plan;
	reduce the price at which Options may be granted below the price provided for in Section 6(a);
	reduce the exercise price of outstanding Options;
	extend the term of this Plan;
	change the class of persons eligible to be Participants;
	otherwise amend the Plan in any manner requiring stockholder approval by law or under the NASDAQ National Market listing requirements; or
	increase the individual maximum limits in Sections 5(c) and (d).

No amendment or alteration to the Plan or an Award or Award Agreement shall be made which would impair the rights of the holder of an Award, without such holder's consent, provided that no such consent shall be required if the Administrator determines in its sole discretion and prior to the date of any Change in Control that such amendment or alteration either is required or advisable in order for the Company, the Plan or the Award to satisfy any law or regulation or to meet the requirements of or avoid adverse financial accounting consequences under any accounting standard.

	No Liability of Company

The Company and any Subsidiary or affiliate which is in existence or hereafter comes into existence shall not be liable to a Participant or any other person as to: (i) the non-issuance or sale of Shares as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder; and (ii) any tax consequence expected, but not realized, by any Participant or other person due to the receipt, exercise or settlement of any Award granted hereunder.

	Non-Exclusivity of Plan

Neither the adoption of this Plan by the Board nor the submission of this Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or the Administrator to adopt such other incentive arrangements as either may deem desirable, including without limitation, the granting of restricted stock or stock options otherwise than under this Plan or an arrangement not intended to qualify under Code Section 162(m), and such arrangements may be either generally applicable or applicable only in specific cases.

	Governing Law

This Plan and any agreements or other documents hereunder shall be interpreted and construed in accordance with the laws of the Delaware and applicable federal law. Any reference in this Plan or in the agreement or other document evidencing any Awards to a provision of law or to a rule or regulation shall be deemed to include any successor law, rule or regulation of similar effect or applicability.

	No Right to Employment, Reelection or Continued Service

Nothing in this Plan or an Award Agreement shall interfere with or limit in any way the right of the Company, its Subsidiaries and/or its affiliates to terminate any Participant's employment, service on the Board or service for the Company at any time or for any reason not prohibited by law, nor shall this Plan or an Award itself confer upon any Participant any right to continue his or her employment or service for any specified period of time. Neither an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company, any Subsidiary and/or its affiliates. Subject to Sections 4 and 19, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Board without giving rise to any liability on the part of the Company, its Subsidiaries and/or its affiliates.

	Unfunded Plan

The Plan is intended to be an unfunded plan. Participants are and shall at all times be general creditors of the Company with respect to their Awards. If the Administrator or the Company chooses to set aside funds in a trust or otherwise for the payment of Awards under the Plan, such funds shall at all times be subject to the claims of the creditors of the Company in the event of its bankruptcy or insolvency.

	Inclusion of Awards as Part of Mandatory Holdings

The Board or the Compensation Committee may establish policies or make such provisions as either deems necessary or appropriate relating to Awards or portions thereof that may be included as part of a Participant's holdings for purposes of any stock ownership requirements implemented from time to time.

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