Document:

EXHIBIT 10.29

 

TECHNOLOGY
TRANSFER AND SUPPLY AGREEMENT

 

THIS
TECHNOLOGY TRANSFER AND SUPPLY AGREEMENT (hereinafter referred to as the “Agreement”)
with an effective date of this 31st day of December 2009 (the “Effective
Date”) is made by and between Genzyme Corporation, a Massachusetts corporation
and Genzyme Therapeutics Products Limited Partnership, a Massachusetts Limited Partnership,
each having its headquarters at  500
Kendall Street, Cambridge, Massachusetts 02142 (hereinafter referred to as “GENZYME”),
and Hospira Worldwide, Inc., a Delaware corporation having its
headquarters at 275 North Field Drive, Lake Forest, Illinois, 60045, U.S.A.  (hereinafter referred to as “HOSPIRA”).

 

WITNESSETH:

 

WHEREAS,
Genzyme owns rights to the compounds Cerezyme® (imiglucerase
for injection), Fabrazyme® (agalsidase beta for injection), Thyrogen® (thyrotropin alpha for injection) and Myozyme® (alglucosidase alfa for injection), and markets
each in a standard flip top vial;

 

WHEREAS,
Genzyme desires to use Hospira to perform fill and finish services with respect
to Genzyme’s Cerezyme® (imiglucerase for injection), Fabrazyme® (agalsidase beta for injection), Thyrogen® (thyrotropin alpha for injection) and certain
Myozyme® (alglucosidase
alfa for injection) pharmaceutical products; and

 

WHEREAS,
Hospira desires to perform such services for Genzyme with respect to Genzyme’s Cerezyme® (imiglucerase for injection), Fabrazyme® (agalsidase beta for injection), Thyrogen® (thyrotropin alpha for injection)  and certain Myozyme® (alglucosidase alfa for injection) pharmaceutical
products.

 

NOW,
THEREFORE, in consideration of the premises and the mutual promises and
agreements contained herein, Genzyme and Hospira agree as follows:

 

Article
1.                DEFINITIONS

 

The
following words and phrases when used herein with capital letters shall have
the meanings set forth or referenced below:

 

1.1           “Act” shall mean the
United States Federal Food, Drug and Cosmetic Act (21 U.S.C. 301), as amended.

 

1.2           “Affiliate” shall mean any
corporation or non-corporate business entity which controls, is controlled by,
or is under common control with a Party to this Agreement.  A corporation or non-corporate business
entity shall be regarded as in control of another

 

[**] = Portions of
this exhibit have been omitted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.

 

 

corporation or non-corporate business entity
if it owns, or directly or indirectly controls, in excess of fifty percent
(50%) of the voting stock of the other corporation, or (a) in the absence
of the ownership of in excess of fifty percent (50%) of the voting stock of a
corporation or (b) in the case of a non-corporate business entity, if it
possesses, directly or indirectly, the power to direct or cause the direction
of the management and policies of such corporation or non-corporate business
entity, as applicable.

 

1.3           “Applicable
Law” shall mean all laws applicable to the manufacturing, processing,
and distribution of the Products, including, without limitation, the Act and the
regulations promulgated thereunder; the Canadian Food and Drugs
Act (R.S., chapter F-27) and related regulations; European Directive 2003/94/EC
and 2001/83/EC, and related legislation; the Japanese Pharmaceutical Affairs
Law, 2003 (as amended); all applicable cGMP; and all other corresponding laws,
ordinances, rules and regulations of any other applicable jurisdiction.

 

1.4           “Bulk” or “Bulk Product(s)” shall mean the active ingredient of the
Products (as hereinafter defined) in bulk form that Genzyme shall deliver to
Hospira for incorporation into the Products (as hereinafter defined) and
meeting the applicable Bulk Specifications (as hereinafter defined).

 

1.5           “Bulk
Specifications” shall mean the detailed description and parameters
of the Bulk set forth on Exhibit 1.5.

 

1.6           “cGMP”  shall mean those principles and
guidelines of good manufacturing practices as set forth in  21 C.F.R. Parts 210 and Part 211; the good
manufacturing practices provisions contained in Part C, Division 2 of the Canadian Food and Drugs Regulations; EU Directive
2003/94/EC - guidelines of good manufacturing practices for medicinal products
for human use (EudraLex Vol. 4); Japanese GMP regulations, ordinances and
practice guidelines as contained in the Pharmaceutical Affairs Law; the ICH Guideline on Good
Manufacturing Practice for Active Pharmaceutical Ingredients (ICH Q7A), adopted
by EU Directive 2004/27; and the corresponding requirements of each other
applicable jurisdiction; and all other relevant rules, regulations or
guidelines of global good manufacturing practices adopted and in effect in any
other regulatory jurisdiction.

 

1.7           “Confidential
Information” shall mean all information disclosed hereunder,
except that which:

 

(a)           is lawfully known to the
recipient at the time of the disclosure, as evidenced by its written records or
other competent evidence;

 

(b)           is disclosed to the
recipient by a third person lawfully in possession of such information and not
under an obligation of nondisclosure;

 

[**] = Portions of
this exhibit have been omitted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.

 

2

 

(c)           is or becomes published or
otherwise part of the public domain through no fault of the recipient;

 

(d)           is developed by or for the
recipient independently of Confidential Information disclosed hereunder as
evidenced by the recipient’s written records or other competent evidence; or

 

(e)           is required by law to be
disclosed by the recipient, provided that the recipient gives the other Party
hereto prompt notice of such legal requirement such that such other Party shall
have the opportunity to apply for confidential treatment of such Confidential
Information.

 

1.8           “Dedicated
Equipment” shall have the meaning set forth in Section 5.4.

 

1.9           “Development
Supplies”  shall have the meaning set
forth in Section 3.4.

 

1.10         “DMFs”  shall mean Drug Master Files as set forth in Section 4.3.

 

1.11         “FDA” shall mean the
U.S. Food and Drug Administration.

 

1.12         “Firm
Order Period” shall have the meaning set forth in Section 6.2.

 

1.13         “Initial Term”
shall
have the meaning set forth in Section 10.1.

 

1.14         “Letters
of Authorization” shall mean documentation which shall be prepared
and delivered by Hospira to the appropriate Regulatory Authorities permitting
such Regulatory Authorities to consult Hospira’s DMFs in their review of
Genzyme’s Product marketing applications (as set forth in Section 4.3).

 

1.15         “MSDS” shall have the
meaning set forth in Section 5.6.

 

1.16         “Parties” shall mean
Genzyme and Hospira together, with each individual entity being a “Party”.

 

1.17         “Products” shall mean
Cerezyme® (imiglucerase for injection), Fabrazyme® (agalsidase beta for injection) and Thyrogen® (thyrotropin alpha for injection) and Myozyme® (alglucosidase alfa for injection) that is
filled on the [**], each in final dosage form, packaged in a flip top vial, filled and finished in
accordance with the Product Specifications (as hereinafter defined), and
each individually shall be a “Product”.

 

1.18         “Product
Supply Commitment” shall have the meaning set forth in Section 6.1.

 

1.19         “Product
Specifications” shall mean those product, labeling and performance
specifications for the Products filed with the FDA or other appropriate
Regulatory Authorities,

 

[**] = Portions of
this exhibit have been omitted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.

 

3

 

including Product formula, labeling, and
materials required for the manufacture of the Product that is to be purchased
and supplied under this Agreement, as such are set forth on Exhibit 1.19,
which specifications may be amended from time to time by the written agreement
of the Parties.

 

1.20         “Project”  shall mean the technical transfer from Genzyme to
Hospira (as further detailed in Section 2.1 and Exhibit 2.1)
and development activities necessary for regulatory approval and commercial
manufacture of the Products.

 

1.21         “Project
Inventions” shall have the meaning set forth in Section 9.1.

 

1.22         “Regulatory
Authority” shall mean any federal, state or local or
international regulatory agency, department, bureau or other governmental
entity including the FDA which is responsible for issuing approvals, licenses,
registrations or authorizations necessary for the manufacture, use, storage,
import, transport or sale of Product in a regulatory jurisdiction.

 

1.23         “Specially
Regulated Waste” shall mean any hazardous waste, toxic waste,
medical waste, nuclear waste, mixed waste, or other waste materials or
by-products, including waste water, which may be subject to or require special
handling, treatment, storage, or disposal under any federal, state or local
laws or regulations intended to address such types of waste materials that
arise from the manufacture of Product.

 

1.24         “Technical
Contact” shall have the meaning set forth in Section 3.3.

 

1.25         “Technology
Transfer Fee” shall have the meaning set forth in Section 3.1
and further detailed in Exhibit 3.1.

 

1.26         “Third
Party” shall mean a Party other than Hospira or Genzyme and their respective
Affiliates.

 

1.27         “Waste” shall mean all
rejects, improper goods, garbage, refuse, remainder, residue, waste water or
other discarded material, including solid, liquid, semisolid, or contained
gaseous material that arises from the manufacture of the Products including,
but not limited to, rejected or unsuitable materials, Bulk or Products.  The term Waste shall not include any
Specially Regulated Waste.

 

Article
2.                TECHNOLOGY
TRANSFER PROJECT

 

2.1           General.  Promptly following the Effective Date, the
Parties shall undertake a technical transfer consisting of the development
activities set forth in Exhibit 2.1 (the “Project”).  The objective of the Project shall be for
Hospira to assist in the technical transfer and fill finish of the Product
pursuant to Genzyme’s instructions and to assist Genzyme in obtaining an
approved regulatory filing
(and/or foreign equivalents) covering the Products.  Hospira then shall

 

[**] = Portions of
this exhibit have been omitted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.

 

4

 

manufacture and deliver Products to Genzyme
for sale by Genzyme as a human pharmaceutical product, as herein provided.

 

2.2           Commercially
Reasonable Efforts.  Each Party
shall exercise good faith and use its commercially reasonable efforts to
successfully complete the Project. 
However, the Parties agree and understand that neither Party hereto
guarantees that the Project will be successful.

 

Article
3.                TECHNOLOGY
TRANSFER EFFORTS

 

3.1        Technology
Transfer Fee.  To
reimburse Hospira for its participation in the Project, Genzyme shall pay to
Hospira a nonrefundable technology transfer fee (the “Technology Transfer
Fee”).  The Technology Transfer Fee
shall be paid to Hospira in accordance with the payment terms and schedule set
forth in Exhibit 3.1.

 

3.2           Changes in
Project Scope.  If changes
occur in the Project or Product Specifications, or if technical difficulties
require that Hospira perform either additional work or repeat work, and such
additional work or repeat work is not required due to Hospira’s fault,
negligence or failure to comply with the terms and conditions of this
Agreement, Hospira shall provide Genzyme with cost estimates for such work. If
Genzyme approves such costs, Hospira shall perform such work and Genzyme shall
pay Hospira’s costs for such work within thirty (30) days of completion of such
work. Reimbursement for such additional work or repeat work shall be at the
rate of [**] per hour per
person, plus [**].

 

3.3           Technical
Contact.  Each Party will appoint a
contact person having primary responsibility for day-to-day interactions with
the other Party for the activities under the Project (“Technical Contact”).  Any change to a Technical Contact will be
identified in writing to the other Party. 
Each Party will use reasonable efforts to provide the other Party with
at least thirty (30) days prior written notice of any change in that Party’s
Technical Contact.  All communications
between Hospira and Genzyme regarding the conduct of the activities under the
Project will be addressed to the Party’s relevant Technical Contact.

 

3.4           Technology
Transfer Supplies.  Based on
Genzyme’s final Product formulations, concentration, fill volumes, and the
Parties’ agreement to the final Product Specifications, Hospira will
manufacture the Products in engineering runs and for process validation
purposes (“Development Supplies”) at the prices set forth in the
Batch Pricing Table in Exhibit 5.8. 
Smaller batches will be quoted individually based on batch size.  Genzyme shall issue a purchase order for any
such Development Supplies at least [**] days before
the requested delivery date. Genzyme and Hospira shall agree mutually to the
formulation, concentration, fill volume and the components for each lot of
Development Supplies.

 

Article
4.                GENZYME’S
REGULATORY SUBMISSIONS

 

4.1           Hospira’s Right
to Review.  Hospira
shall have the right to review and consult on those portions of Genzyme’s
proposed regulatory submissions relating to Hospira’s packaging or

 

[**] = Portions of
this exhibit have been omitted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.

 

5

 

manufacturing procedures before the
submissions are filed with the appropriate Regulatory Authorities.  Hospira shall complete its review of the
submissions within [**]
days for submissions in English, or within [**] days for submissions not in English, following
receipt of a proposed regulatory submission. 
Hospira shall consult with and advise Genzyme in responding to questions
from Regulatory Authorities regarding Genzyme’s submission(s) for
Products.  Genzyme shall be the sole
owner of any regulatory submission filed pursuant to this Agreement. Genzyme
shall reimburse Hospira for Hospira’s review and consultation under this Section 4.1
at the rate of [**] per hour.  Genzyme shall provide to Hospira for its
files a final copy of the CMC section of any such regulatory submission(s).

 

4.2           Supplemental
International Regulatory Filings.  Hospira shall quote a price for supplemental
international regulatory, packaging and development work to support
international filings (excluding the U.S. and (European countries)) separately
and on a country-by-country basis.

 

4.3           Access to Drug
Master Files.  Hospira
shall grant Genzyme reference rights to all Drug Master Files (“DMFs”)
necessary to support Genzyme’s applications for marketing authorizations of
Products.  To affect this, Hospira shall
execute Letters of Authorization which shall be delivered to the appropriate
Regulatory Authorities permitting such Regulatory Authorities to consult
Hospira’s DMFs in their review of Genzyme’s Product marketing applications.  Hospira shall send copies of such Letters of
Authorization to Genzyme.  Hospira shall
update its DMFs annually and shall inform Genzyme prior to any modifications
thereto in order to permit Genzyme to amend or supplement any affected
regulatory applications and filings for the Products.

 

4.4           User Fees.  Genzyme shall pay any FDA (or foreign
equivalent) user fees which may become payable for the Products.

 

Article
5.                MANUFACTURE AND
SUPPLY OF PRODUCTS

 

5.1           Purchase and
Sale of Products.  Pursuant to
the terms and conditions of this Agreement and for the duration of this
Agreement, Hospira shall manufacture, sell and deliver the Products to Genzyme,
and Genzyme shall purchase and take delivery of the Products from Hospira that
is ordered pursuant to a purchase order issued by Genzyme to Hospira.  Hospira shall manufacture the Products in
accordance with the Product Specifications. 
The Parties may alter from time to time the Product Specifications by
written agreement without amending this Agreement.

 

5.2           Government
Approvals. Notwithstanding any other provision of this
Agreement, Hospira shall have no obligation to manufacture, sell or deliver the
Products to Genzyme and Genzyme shall have no obligation to purchase and take
delivery of the Products until Genzyme has obtained all necessary Regulatory
Authorities’ approvals required to manufacture the Products.  However, Hospira agrees to [**] by Genzyme, and Genzyme shall be required to
[**].

 

[**] = Portions of
this exhibit have been omitted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.

 

6

 

5.3           Bulk.

 

(a)           Supply.  Hospira shall manufacture the Products for
Genzyme from Bulk that Genzyme shall supply to Hospira at no cost.  Genzyme shall supply Bulk to Hospira in
quantities sufficient to satisfy Hospira’s gross manufacturing requirements of
the Products.  Hospira’s use of Bulk
received from Genzyme shall be limited to development contemplated by this
Agreement and the manufacture of the Products for Genzyme.  Genzyme shall ship all required quantities of
Bulk:  (i) [**] for deliveries originating
in the United States; or (ii) [**] for deliveries
originating outside the United States, to Hospira’s manufacturing plant in [**] (the “Facility”), pursuant to
no-cost purchase orders that Hospira issues to Genzyme.  Genzyme shall be responsible for all costs of
transport and carriage insurance.  Within
[**] days of Hospira’s receipt of
any Bulk, excluding [**]
Bulk in which case within [**]
days, supplied by Genzyme hereunder, Hospira shall:  (i) perform an identification test on
the Bulk and confirm the shipment quantity; and (ii) notify Genzyme of any
inaccuracies with respect to quantity, or of any claim that any portion of the
shipment fails the identification test. 
Hospira shall manufacture the Products from the Bulk in accordance with
the Product Specifications, generally within [**] days after receipt thereof; provided, however,
that Hospira will manufacture the [**]
Product(s) within [**]
days after receipt of [**]
Bulk or prior to Genzyme’s stated expiry date for such Bulk.  In the event Hospira notifies Genzyme of any
deficiency in the quantity of Bulk received, Genzyme shall promptly ship to
Hospira, [**], the quantity
of Bulk necessary to complete the Bulk shipment.  In the event Hospira notifies Genzyme that
the Bulk shipment does not conform to the Bulk Specifications, Genzyme shall
have the right to confirm such findings at Hospira’s manufacturing
location.  If Genzyme determines that
such shipment of Bulk conformed to the Bulk Specifications, the Parties shall
submit samples of such shipment to a mutually acceptable independent laboratory
for testing.  If such independent
laboratory determines that the shipment conformed to the Bulk Specifications,
Hospira shall bear all expenses of shipping and testing such shipment
samples.  If Genzyme or such independent
laboratory confirms that such shipment did not meet the Bulk Specifications,
Genzyme shall replace, at no cost to Hospira, the portion of the Bulk shipment
which does not conform to the Bulk Specifications and bear all expenses of
shipping and testing the shipment samples.

 

(b)           Title.  Notwithstanding the [**] and [**] shipping terms set forth in Section 5.3(a),
Genzyme shall at all times retain title to and risk of loss of the Bulk;
provided, however, that subject to the limitation in Section 5.3(c);
provided, however, that Hospira shall assume full responsibility and risk for
the safekeeping, storage and handling for all Bulk in its possession and all
shipments of Bulk delivered hereunder and accepted by Hospira.

 

(c)           Replacement.

 

(i)            In the event of
any loss or damage of any Bulk delivered hereunder or the failure of a Product
or Products to meet Product Specifications, Genzyme shall supply to Hospira at
no cost replacement Bulk according to the terms set forth in Section 5.3(a).
If any loss, damage or replacement of such Bulk results from a negligent act or
omission by Hospira in the manufacture, handling or storage of the Bulk or the
Products, Hospira shall [**]. The 

 

[**] = Portions of
this exhibit have been omitted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.

 

7

 

consumption of Bulk for the manufacture of
the Products shall be in accordance with [**] that Hospira and Genzyme agree upon mutually in writing as promptly as
practicable, which [**].

 

(ii)           If, during any [**] month period, consumption of
Bulk to produce a given quantity of a Product exceeds [**] for such quantity of
Product, Hospira shall promptly [**]
as evidenced by [**].

 

(iii)          In no event
shall Hospira’s aggregate liability for replacement of Bulk exceed [**] per occurrence.  This section states [**]; provided, however, that the Parties hereby
agree to [**], as described
in Article 12 of this Agreement.

 

5.4           Dedicated
Equipment Costs.  If
non-standard, specialized equipment is required to manufacture the Products for
Genzyme (“Dedicated Equipment”), Hospira shall pay the cost of such equipment,
subject to Genzyme’s prior approval of such costs, which approval shall not be
unreasonably withheld.  Hospira shall
advise Genzyme of specialized equipment required and the estimated costs
associated with the purchase, installation and validation of such
equipment.  After Genzyme approves such
costs, Hospira shall install and validate the equipment and bill Genzyme for
the associated costs.  Genzyme shall make
payment to Hospira no later than [**]
days after Genzyme receives an invoice from Hospira.  Title to the equipment shall be in Genzyme’s  name.  If Hospira
wishes to use the specialized equipment for manufacture of a product other than
the Products for Genzyme, Hospira and Genzyme shall meet and discuss the
technical and practical ramifications of such use and appropriate compensation
to Genzyme.

 

5.5           Product
Labeling.  Except as
otherwise specified in Section 5.7, Genzyme shall be solely
responsible for the labeling and finished-form packaging of the Products.  All such labeling and packaging shall be in
accordance with the Product Specifications.

 

5.6           Off-Site Waste.  If necessary, Hospira shall hire, direct and
pay all costs for a waste contractor to remove all Waste from Hospira’s
manufacturing facility for the Products, consistent with each Product’s
Material Safety Data Sheets (“MSDS”). 
The costs associated with the removal of Specially Regulated Waste shall
be borne by Genzyme.  Hospira shall only dispose of Specially
Regulated Waste at sites and through waste management vendors that have been approved
in writing by Genzyme, whose
approval shall not be withheld unreasonably. 
Hospira shall document the destruction of any Specially Regulated Waste
in writing and provide copies of such written documentation to an authorized
representative of Genzyme.  Genzyme
maintains the right, but not the obligation, to witness the actual disposal of
Specially Regulated Waste.  Genzyme shall,
upon request by Hospira, provide the MSDS for the Bulk and the MSDS for each
Product to Hospira.

 

5.7           Delivery.  Hospira shall ship the Products to Genzyme, [**]. 
Title and risk of loss shall pass to Genzyme [**].  Shipment shall be via a
carrier designated by Genzyme.  Hospira
will label and package the Products in unmarked vials (“Brite Stock”)
for bulk shipment to Genzyme, as may be specified in further detail in the
Technical and Quality Agreement, attached hereto as Exhibit 7.2; provided, however, that Hospira shall not ship any Product
until both

 

[**] = Portions of
this exhibit have been omitted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.

 

8

 

Hospira and Genzyme have released such
Product pursuant to the Product Specifications and/or the Technical and Quality
Agreement.  Genzyme will be responsible
for procuring carriage and insurance in an amount sufficient to cover the value
of the contents, for all shipments.  All
freight, handling, insurance, duties, taxes and shipping expense will be borne
by Genzyme. For any shipments outside the United States, Genzyme shall be the
exporter of record.

 

5.8           Price and
Payment.

 

(a)           Price.  Hospira shall invoice Genzyme for the
Products delivered by Hospira at the prices set forth on Exhibit 5.8.  Prices are firm through [**]. 
Beginning [**] and on each
succeeding  [**] during the term hereof, prices may be increased by Hospira.  Price increases shall be effective for
deliveries beginning [**] of each
calendar year.  Notwithstanding the
foregoing, such increases shall not [**], and shall be subject to the prior written consent of
Genzyme.

 

(b)           Payment.  Hospira shall invoice Genzyme upon shipment
of the Products.  Genzyme shall make
payment net [**] days from the
date of receipt of Hospira’s invoice.

 

(c)           Taxes.  Any federal, state, county or municipal sales
or use tax, excise, customs charges, duties or similar charge, or any other tax
assessment (other than that assessed against income), license, fee or other
charge lawfully assessed or charged on the manufacture, sale or transportation
of the Products sold pursuant to this Agreement, and all government license
filing fees and Prescription Drug User (“PDUFA”) annual establishment
fees with respect to all of the Products shall be paid by Genzyme.

 

(d)           Sub-lots.  Should Genzyme desire Hospira to split a
manufacturing lot of the Products into several sub-lots during packaging, there
will be a split fee of [**]
for each sub-lot packaged.

 

(e)           Cold Storage
Fee.  A cold storage fee shall be
due and payable to Hospira if Genzyme stores the Products at Hospira’s plant
for more than [**] days after each
individual Product’s final release by Genzyme. 
The fee shall be [**]
per pallet per month or any part thereof.

 

5.9                           Replacement of
Nonconforming Shipment.

 

(a)  Genzyme shall have a period
of [**] days from the
date of its receipt of a shipment of any Product or Product samples to inspect
and reject such shipment for nonconformance with the Product
Specifications.  If Genzyme rejects such
shipment, it shall promptly so notify Hospira and if necessary provide to
Hospira samples of such shipment for testing. 
If Hospira tests such shipment and determines that it did conform to the
Product Specifications, the Parties shall submit samples of such shipment to a
mutually acceptable independent laboratory for testing.  If such independent laboratory determines
that the shipment 

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

9

 

conformed to the Product Specifications,
Genzyme shall bear all expenses of shipping and testing such shipment samples.  If Hospira or such independent laboratory
confirms that such shipment did not meet the Product Specifications, Hospira
shall replace, at no cost to Genzyme, that portion of the Product shipment
which does not conform to the Product Specifications provided Genzyme provides
sufficient Bulk to Hospira, and shall bear all expenses of shipping and testing
the shipment samples. Genzyme’s duty to pay all amounts payable to Hospira in
respect of the rejected Product shall be suspended until Hospira replaces all
nonconforming Product in accordance with this Section 5.9.  Hospira shall reimburse Genzyme for Bulk in
an amount equal to [**]
per occurrence; provided, however, that the Parties hereby agree to [**], as described in Article 12 of this
Agreement.

 

(b)     Any nonconforming portion of
any shipment shall be disposed of as directed by Hospira, at Hospira’s
expense.  In lieu of receiving
replacement Product, Genzyme may request that Hospira provide a credit to Genzyme
for the amount, if any, previously paid by Genzyme to Hospira on account of the
Product in question.  Any Product that
Genzyme does not reject pursuant to this Section 5.9 shall be
deemed accepted, and all claims with respect to Product not conforming with
Product Specifications shall be deemed waived by Genzyme, except as to latent
defects which are not reasonably discoverable, render the Product not
conforming to Product Specifications, and are solely caused by Hospira.  The
Parties shall consult to confirm the cause of the latent defect.  If it is confirmed that the cause of the
defect is solely attributable to Hospira, then Hospira will replace at no cost
to Genzyme all such defective Products with Products that meet the Product
Specifications.

 

5.10     Alliance Team
and Dedicated Personnel. 
Hospira and Genzyme will form a team (“Alliance Team”) comprised
of at least two members from each Party which will meet at least twice annually
to review performance metrics, address issues and oversee the relationship
between Genzyme and Hospira.  The
Alliance Team will be a working committee that will have as its goal the quick
and mutually agreeable resolution of financial, technical and quality issues,
thus preserving throughout the term of this Agreement the relationship
established by Genzyme and Hospira. 
Either Party may change its representatives on the Alliance Team at any
time by written notice to the other. 
Promptly following the Effective Date, Hospira shall hire, at its own
expense, two dedicated personnel at the Facility to solely support the
relationship between Genzyme and Hospira. 
These personnel, a Contract Manufacturing Analyst and a Contract
Manufacturing Specialist, shall support the ordering, manufacturing, release
and supply of the Products for Genzyme.

 

5.11     [**].  Subject to the terms of this
Agreement, Hospira shall have the [**], unless there
is a failure by Hospira of its obligations under Sections 5.3(c), 5.9
or 7.1 of this Agreement.

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

10

 

Article
6.                ORDERS AND
FORECASTS

 

6.1           [**] Year Product Supply Forecast.  For capacity planning purposes, by [**] Genzyme shall provide
Hospira with a non-binding written forecast of Genzyme’s annual batch
requirements of each Product for the first three calendar years of this
Agreement.  Thereafter, by [**] of each calendar year
Genzyme shall update such rolling non-binding [**]-year forecast of its batch requirements of the
Products for the period commencing on [**] of the next calendar year.  Upon receipt of each rolling three-year
non-binding estimate, Hospira shall within [**] days, provide Genzyme with a written acceptance of
the estimate and accordingly plan to allocate its annual capacity to
manufacture the Products for Genzyme, or a written rejection of the [**]-year forecast.  Any such written acceptance shall constitute
Hospira’s product supply commitment for each of the calendar years covered by
the forecast (“Product Supply Commitment”) but shall not be binding on
Genzyme.  If Genzyme issues, and Hospira
accepts, a subsequent [**]-year forecast
covering one or more previously covered calendar years, such subsequent
forecast shall constitute Hospira’s Product Supply Commitment for such calendar
year(s).  In the event Hospira rejects a [**]-year forecast, Hospira and Genzyme shall
meet as soon as possible to discuss in good faith the batch quantities of the
Products that Hospira could provide during each of the [**] calendar years covered by the forecast.  Any such amount shall be agreed to in
writing.

 

6.2           First Firm
Order.  Hospira and Genzyme shall
cooperate fully in estimating and scheduling production for the first
commercial order of the Products to be placed by Genzyme with Hospira in
anticipation of regulatory approval of the Facility.

 

6.3           Rolling
Forecast.  Concurrent with
the placing of its first commercial order, and on the [**] thereafter, Genzyme shall provide to Hospira
a good faith, estimated rolling forecast of the quantity of Products that
Genzyme expects to order for the coming [**] period of time (each, a “Rolling Forecast”).  The first [**] months of each Rolling Forecast shall be considered
a binding commitment upon Genzyme to purchase quantities described therein and
a binding commitment upon Hospira to produce and deliver such quantities on the
delivery dates described therein (“Firm Order Period”).  The last [**] months of each Rolling Forecast shall be non-binding
upon the parties.

 

6.4           Minimum
Purchase Requirement.

 

(a)     During the term, Genzyme
agrees to purchase from Hospira and Hospira agrees to manufacture and supply to
Genzyme the following minimum aggregate quantities of the Products (the “Minimum
Purchase Requirement”) up to its Product Supply Commitment as follows: (a) in
calendar year 2010, not less than [**] of the year one annual forecast in
batches of the Products in the three-year Product supply forecast (“Annual
Forecast”) accepted by Hospira in accordance with Section 6.1; (b) in
calendar years 2011 and 2012, not less than [**] of the Annual Forecast for
each year respectively; and (c) in 2013 through 2015 (and in any calendar
year during

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

11

 

any Renewal Term, as defined herein) no less
than [**], in any
Product mix as determined by Genzyme; provided, however, that
in no case shall there be [**].  For purposes of illustration, Genzyme may
decide to have Hospira manufacture for [**].  If, however, Genzyme decides
to have Hospira manufacture [**].

 

(b)     In lieu of Genzyme taking
delivery of each year’s Minimum Purchase Requirements of the Products, Genzyme
shall have the option to [**].  In the
latter event, Hospira shall invoice Genzyme for the amount payable, and Genzyme
shall pay Hospira within [**] days after receipt of Hospira’s invoice.

 

6.5           Purchase Order
Acceptance.  Within [**] days after receipt of Genzyme’s firm
purchase orders for the Products ordered in accordance with Section 6.1
and 6.2, Hospira shall confirm to Genzyme its acceptance of the purchase
order, delivery date and quantity of the Products ordered by Genzyme.

 

6.6           Best Efforts to
Supply.  Should Genzyme order
additional quantities of the Products in excess of [**] over the previously forecasted amount, Hospira shall not be obligated
to supply said additional quantities; provided, however, that Hospira shall,
until Genzyme’s orders in the aggregate reach the applicable annual Product
Supply Commitment, use reasonable commercial efforts to produce and deliver to
Genzyme said additional quantities within [**] days of issuance of the purchase order for such additional quantities.

 

6.7           Firm Order
Changes or Cancellations.  If,
due to significant unforeseen circumstances, Genzyme requests changes to firm
purchase orders of the Products within the [**] month firm purchase order timeframe, Hospira shall attempt to
accommodate the changes within reasonable manufacturing capabilities and
efficiencies. If Hospira can accommodate such
change, Hospira shall advise Genzyme of the costs associated with making
any such change and Genzyme shall be deemed to have accepted the obligation to
pay Hospira for such costs if Genzyme indicates in writing to Hospira that
Hospira should proceed to make the change. 
If Hospira cannot accommodate such
change, Genzyme shall be bound to the
original firm purchase order.  If
Genzyme cancels a firm purchase order, Hospira shall be relieved of its
obligation relating to such order but Genzyme will not be relieved of its
obligation of payment unless Hospira agrees to such cancellation in writing. If
Genzyme does not supply sufficient Bulk to manufacture the Products requested
in such order which shall be deemed to be a breach of this Agreement, Genzyme
shall remain liable for the full amount of the firm purchase order regardless
of whether such Products are manufactured by Hospira or whether Genzyme takes
delivery of any such manufactured Products. 
Notwithstanding anything to the contrary contained herein, all Products
paid for by Genzyme shall count toward the Minimum Purchase Requirement of
Product including, without limitation, any payments made in the event of a
cancellation.

 

6.8           Purchase Order
Terms.  Each purchase order or any
acknowledgment thereof, whether printed, stamped, typed, or written shall be
governed by the terms of this Agreement and

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

12

 

none of the provisions of such purchase order
or acknowledgment shall be applicable except those specifying the Products,
quantity ordered, delivery dates, special shipping instructions and invoice
information.

 

Article
7.                QUALITY

 

7.1           Quality Control.  Hospira shall apply its quality control
procedures and in-plant quality control checks to the manufacture of the
Products for Genzyme in the same manner as Hospira applies such procedures and
checks to products of similar nature manufactured for sale by Hospira.  In addition, Hospira will test and release
the Products in accordance with the test methods described in Exhibit 7.1
to ensure that the Products conform to the Product Specifications.  The Parties may change the test methods from
time to time by mutual written agreement.

 

7.2           Quality
Agreement.  The Parties
shall enter into a quality agreement substantially in the form of the agreement
attached hereto as Exhibit 7.2 within one-hundred and twenty (120)
days following the Effective Date.

 

7.3           Audit Rights.

 

(a)     General Audit.  Upon [**] days prior written notice to
Hospira, Genzyme shall have the right to visit the Facility during normal
business hours to review Hospira’s manufacturing operations related to the
Products and assess its compliance with cGMP and quality assurance standards
and to discuss any related issues with Hospira’s manufacturing and management
personnel.  Hospira shall provide Genzyme
with copies of Hospira’s manufacturing records relating to the Products for the
purposes of assuring the quality of the Products and compliance with
agreed-upon manufacturing procedures. 
Such general audits shall:  (a) be
limited to not more than [**] auditors designated by or representing Genzyme; (b) last
for not more than [**] days; and (c) may be conducted not more than [**] per
calendar year.

 

(b)     For Cause
Audits.  Genzyme shall also have the
right to conduct “for-cause” audits to address significant Product or safety
concerns as discovered through Product failures related to Hospira’s
manufacture of the Products.  Product
failures would include issues related to stability out of specification,
sterility, labeling, container integrity, or any other issues or concerns
related to Bulk.  Genzyme shall notify
Hospira in writing in advance of the audit and thereafter, Genzyme and Hospira
shall mutually determine the timing of the audit.  Each for-cause audit shall be limited to [**] auditors for no more than [**] days, except if the Parties
mutually agree that a longer for-cause audit period is necessary.

 

(c)     Regulatory Authority Audits.  Hospira also agrees to allow audits conducted
by the FDA which are related to the manufacture of the Products which may be
required by the FDA and Hospira agrees to reasonably cooperate with the FDA in
connection with such audit.  Hospira will
provide Genzyme with notice of any such FDA inspection as soon as
practicable.  However, if any additional
inspections are requested or required by or for any other Regulatory

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

13

 

Authority, Hospira shall be entitled to an
additional fee of [**] per each such
Regulatory Authority inspection; provided, however, that Hospira shall use
reasonable efforts to schedule any additional inspections concurrently so as to
avoid any additional fees.  In the event
there is more than one inspection occurring at the same time, one fee shall be
assessed.

 

(d)     Confidential
Information in Audits. 
Audits by Genzyme or its designees may involve the transfer of
Confidential Information, and any such Confidential Information shall be
subject to the terms of Article 11 hereof.  The results of such audits and inspections
shall be considered Confidential Information under Article 11 and
shall not be disclosed to Third Parties, excluding the FDA, unless required by
law and only then upon prior written notice to Hospira.

 

7.4           Notification of
Complaints.  Genzyme
shall notify Hospira promptly of any complaints involving Hospira’s
manufacturing or packaging in sufficient time to allow Hospira to evaluate the
complaints and assist Genzyme in responding to such complaints.

 

7.5           Product Recalls.  Genzyme shall direct and control responses to
all Product recalls, and Hospira shall provide reasonable cooperation to
Genzyme in connection with any such responses. 
In the event:  (a) any
Regulatory Authority or other national government authority issues a request,
directive or order that any Product be recalled; (b) a court of competent
jurisdiction orders a recall of any Product; or (c) Genzyme reasonably
determines that any Product should be recalled, the Parties shall take all
appropriate corrective actions, and shall cooperate in any governmental
investigations surrounding the recall. 
In the event that such recall results from Hospira’s breach of this
Agreement; or Hospira’s negligence or willful misconduct, Hospira shall be
responsible for the expenses of the recall up to a maximum of [**]; provided, however, that the Parties agree
to negotiate an alternative liability provision as part of the Master Services
Agreement, as described in Article 12 of this Agreement.  For purposes of this Agreement, the expenses
of the recall shall include, but not be limited to, the expenses of
notification and destruction or return of the recalled Product, and any costs
associated with the distribution of the replacement Product, but shall not
include lost profits of either party, nor the cost to replace Product and Bulk
as per Section 5.9.

 

Article
8.                WARRANTIES;
COVENANTS AND INDEMNIFICATION

 

8.1           Genzyme’s
Warranties.

 

(a)           Genzyme represents and
warrants to Hospira that all Bulk delivered to Hospira pursuant to this
Agreement shall, at the time of delivery, not be adulterated or misbranded
within the meaning of the Act or within the meaning of any Applicable Law in
which the definitions of adulteration and misbranding are substantially the
same as those contained in the Act, as the Act and such laws are constituted
and effective at the time of delivery and will not be an article which may not
under the provisions of Sections 404 and 505 of the Act be introduced into
interstate commerce.

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

14

 

(b)           Genzyme further warrants to
Hospira that Bulk supplied to Hospira hereunder shall have been manufactured in
accordance with all applicable cGMP and shall meet the Bulk Specifications set
forth on Exhibit 1.5.

 

(c)           Genzyme further warrants
that all specifications including Bulk Specifications and Product
Specifications that Genzyme provides to Hospira shall conform to the applicable
regulatory filing  Genzyme files with the appropriate
Regulatory Authorities.

 

(d)           Genzyme further represents
and warrants to Hospira that Genzyme’s performance of its obligations under
this Agreement will not result in a material violation or breach of any
agreement, contract, commitment or obligation to which Genzyme is a Party or by
which it is bound and will not conflict with or constitute a default under its
corporate charter or bylaws.

 

(e)           Genzyme further represents
and warrants that it will not sell the Products into any jurisdiction unless
and until it receives the necessary Regulatory Authority approvals.

 

8.2           Hospira’s
Warranties and Covenants.

 

(a)           Hospira represents and
warrants to Genzyme that all Products Hospira delivers to Genzyme pursuant to
this Agreement shall, at the time of delivery, not be adulterated or misbranded
within the meaning of the Act or within the meaning of any Applicable Law in
which the definitions of adulteration and misbranding are substantially the
same as those contained in the Act, as the Act and such laws are constituted
and effective at the time of delivery and will not be an article which may not
under the provisions of Sections 404 and 505 of the Act be introduced into
interstate commerce.

 

(b)           Hospira further represents
and warrants to Genzyme that all Products Hospira delivers to Genzyme pursuant
to this Agreement shall, at the time of delivery and for the shelf life of the
Products, be free from defects in material and workmanship and shall be
manufactured: (a) in accordance and conformity with the Product
Specifications; and (b) in compliance with all Applicable Laws including those
relating to the environment, food or drugs and occupational health and safety,
including, without limitation, those enforced or promulgated by the FDA
(including, without limitation, compliance with cGMPs).

 

(c)           Hospira further represents
and warrants to Genzyme that Hospira’s performance of its obligations under
this Agreement will not result in a material violation or breach of any
agreement, contract, commitment or obligation to which Hospira is a Party or by
which it is bound and will not conflict with or constitute a default under its
Certificate of Incorporation or corporate bylaws.

 

(d)           The foregoing warranties
shall not extend to any nonconformity or defect which relates to or is caused
by Bulk supplied by Genzyme to Hospira. Subject to Section 8.3, the
replacement provisions of Sections 5.3(c) shall be Genzyme’s sole
and exclusive remedy for nonconforming or defective Products.

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

15

 

EACH
PARTY MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO
PRODUCT.  ALL OTHER WARRANTIES, EXPRESS
OR IMPLIED, INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY DISCLAIMED.

 

8.3           Indemnification
by Hospira.  Hospira
shall indemnify and hold harmless Genzyme, its Affiliates, officers, directors
and employees from and against all claims, causes of action, suits, costs and
expenses (including reasonable attorney’s fees), losses or liabilities of any
kind related to this Agreement and asserted by Third Parties to the extent such
arise out of or are attributable to:  (a) Hospira’s
breach of this Agreement or any representation or warranty set forth herein; (b) any
violation of any proprietary right of any Third Party relating to Hospira’s
manufacturing processes used in the manufacture of the Products pursuant to this
Agreement (excluding the Bulk Specifications, Product Specifications, Bulk or
Products); (c) any breach of Section 11.4 hereunder; or (d) any
negligent or wrongful act or omission on the part of Hospira, its employees,
agents or representatives and which relates to Hospira’s performance hereunder,
provided that, this indemnification shall not apply to the extent that such
claim results from Genzyme’s breach of this Agreement or any warranty herein or
its negligence or willful misconduct.

 

8.4           Indemnification
by Genzyme.  Genzyme
shall indemnify and hold harmless Hospira, its Affiliates, officers, directors
and employees harmless from and against all claims, causes of action, suits,
costs and expenses (including reasonable attorney’s fees), losses or liabilities
of any kind related to this Agreement and asserted by Third Parties to the
extent such arise out of or are attributable to (a) Genzyme’s breach of
this Agreement or any representation or warranty set forth in Section 8.1;
(b) any violation of any proprietary right of any Third Party relating to
the those portions of the Bulk Specifications or Product Specifications
provided to Hospira by Genzyme, and expressly excluding all other Third Party
proprietary rights, including those incorporated in Hospira’s manufacturing
processes used in the manufacture of the Products pursuant to this Agreement; (c) any
use of or lack of safety or efficacy of Bulk or the Products that is attributed
to Genzyme’s actions or failure to act; and (d) any negligent or wrongful
act or omission on the part of Genzyme, its employees, agents or
representatives and which relate to Genzyme’s performance hereunder, provided
that, this indemnification shall not apply to the extent that such claim
results from Hospira’s (or its agents’, employees’ or representatives’) breach
of this Agreement or breach of any warranty herein or Hospira’s (or its agents’,
employees’ or representatives’) negligence or willful misconduct.

 

8.5           Conditions of
Indemnification.  If either
Party seeks indemnification from the other hereunder, it shall promptly give
notice to the other Party of any such claim or suit threatened, made or filed
against it which forms the basis for such claim of indemnification and shall
cooperate fully with the other Party in the investigation and defense of all
such claims or suits.  The indemnifying
Party shall have the option to assume the other Party’s defense in any

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

16

 

such claim or suit with counsel reasonably
satisfactory to the other Party. No settlement or compromise shall be binding
on a Party hereto without its prior written consent, such consent not to be
unreasonably withheld.

 

8.6           No
Consequential Damages. NEITHER PARTY SHALL BE LIABLE TO THE OTHER
FOR INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
RESULTING FROM ANY BREACH OF THIS AGREEMENT EVEN IF THE PARTY HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES. THIS LIMITATION ON LIABILITY SHALL NOT
APPLY TO ANY DAMAGES OR CLAIMS ARISING FROM A VIOLATION OF ARTICLE 11
HEREOF, OR OUT OF ANY INDEMNITY PURSUANT TO THIS SECTION 8, PROVIDED, HOWEVER, THAT SUCH DAMAGES OR
CLAIMS DO NOT ARISE AS A RESULT OF A BREACH OF ANY WARRANTY HEREIN, OR
NEGLIGENCE OR WILLFUL MISCONDUCT BY THE PARTY SEEKING INDEMNIFICATION.

 

Article
9.                INTELLECTUAL
PROPERTY RIGHTS

 

9.1           Hospira’s
Proprietary Rights. Hospira has granted no license, express or
implied, to Genzyme to use Hospira’s proprietary technology, know-how or other
proprietary rights: (i) existing as of the Effective Date other than for
the purposes of this Agreement; or (ii) developed by or for Hospira on or
after the Effective Date other than for the purposes of this Agreement. Genzyme
has granted no license, express or implied, to Hospira to use Genzyme’s
proprietary technology, know-how or other proprietary rights other than for the
purposes of this Agreement. Notwithstanding Hospira’s rights, the Parties agree
that Genzyme shall be the sole owner of any proprietary technology, know-how or
other proprietary rights developed by or for Hospira pursuant to any Project
undertaken by Hospira (the “Project Inventions”). Hospira shall notify
Genzyme of all Project Inventions and shall use all reasonable efforts to
cooperate with Genzyme in any related patent filing and prosecution (each at
Genzyme’s expense) and shall assign all right, title and interest in any such
Project Inventions to Genzyme.

 

Article
10.              TERM AND
TERMINATION

 

10.1         Term. This
Agreement shall commence on the Effective Date and, unless earlier terminated
as provided below, shall expire on December 31, 2015 (the “Initial Term”).
Unless otherwise terminated in accordance with this Article 10,
this Agreement shall be automatically extended for additional terms of two
years and (each, a “Renewal Term”) and may be terminated anytime after
the Initial Term by either Party providing the other with at least [**] months prior written notice
of termination.

 

10.2         Termination of
the Project. Either Party wishing to terminate the Project (or
any portion of it as it relates to any one or more of the Products) shall
request in writing a pre-termination consultation with the other Party to
review potential concerns and to make reasonable efforts to continue with this
Agreement. Upon [**] days following
said consultation,

 

[**] = Portions of
this exhibit have been omitted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.

 

17

 

either Party may terminate the Project upon [**] days prior written notice to
the other Party if the terminating Party determines in good faith that the
technical transfer of the Product(s) is at issue is not technically
feasible using commercially reasonable efforts. If the Project is terminated in
whole or in part, Hospira shall advise Genzyme of Hospira’s actual technology
transfer costs on the Project (or the relevant portion thereof) incurred prior
to such termination. Genzyme shall pay Hospira for all reasonable and
documented technology transfer costs incurred to the date the termination
notice is received. In the event of complete termination of the Project, this
Agreement shall automatically terminate.

 

10.3         Termination.

 

(a)           Special
Termination Rights. Either Party shall have the right to terminate
this Agreement as it relates to the Products or any individual Product by
giving the other Party no less than [**] days prior written notice if the Facility has not
received regulatory approval from the FDA in connection with any Product by July 1,
2011.

 

(b)           For Cause Termination Rights.

 

(i)    Either Party may immediately
terminate this Agreement by providing written notice upon the bankruptcy or the
insolvency of the other Party.

 

(ii)   Hospira may terminate this
Agreement by giving Genzyme [**]
days’ prior written notice upon Genzyme’s breach of any warranty or any
other material provision of this Agreement if the breach is not cured within [**] days after written notice
thereof to Genzyme.

 

(c)           Termination for Convenience.
Genzyme may terminate this Agreement, without cause, upon [**] days prior notice following the loss or
damage to Bulk Product(s) and/or Product(s) with an aggregate value
of more than $[**] within any [**] month period, while such
Bulk Product(s) and/or Product(s) are in Hospira’s custody; provided,
however, that during such [**]
day notice period the parties shall meet to discuss whether there is
any ability to implement procedures which would avoid future losses; and
further provided that, in the event the parties reach a written agreement on
such procedures prior to the expiration of the [**] day notice period (or any agreed extension thereof), such termination
shall not be effective.

 

10.4         Accrued Payment
Obligations. Upon termination pursuant to this Article 10,
Genzyme shall reimburse Hospira for Hospira’s cost of all supplies purchased
and on hand or on order, to the extent such supplies were ordered by Hospira
based on firm purchase orders or Genzyme’s estimates of its requirements of the
Products, and such supplies cannot be reasonably

 

[**] = Portions of
this exhibit have been omitted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.

 

18

 

used by Hospira for other purposes. Hospira
shall invoice Genzyme for all amounts due hereunder. Payment shall be made
pursuant to Section 5.8.

 

10.5         Return of
Inventory, Dedicated Equipment and Product. In the event of any
termination, Hospira shall return any remaining inventory of Bulk, all
Dedicated Equipment, and any Product to Genzyme at Genzyme’s expense, unless
such termination shall have been as a result of a breach of this Agreement by
Hospira, in which case such inventory, Dedicated Equipment and any Product
shall be returned at Hospira’s expense.

 

10.6         Survival. Expiration or
early termination of this Agreement shall not relieve either Party of any
obligations that it may have incurred prior to expiration or early termination
and all covenants and agreements contained in this Agreement, which by their
terms or context are intended to survive and will continue in full force and
effect for a period of five (5) years unless a different time period is
indicated in this Agreement.

 

Article 11.              CONFIDENTIAL INFORMATION

 

11.1         Nondisclosure. It is
contemplated that in the course of the performance of this Agreement each Party
may, from time to time, disclose Confidential Information to the other. Hospira
agrees that, except as expressly provided herein, it shall not disclose
Confidential Information received from Genzyme, and shall not use Confidential
Information disclosed to it by Genzyme, for any purpose other than to fulfill
Hospira’s obligations hereunder. Genzyme agrees that, except as expressly
provided herein, it shall not disclose Confidential Information received from
Hospira, and shall not use Confidential Information disclosed to it by Hospira,
for any purpose other than to fulfill Genzyme’s obligations hereunder.

 

11.2         Exceptions to
Duty of Nondisclosure. Notwithstanding the above, nothing
contained in this Agreement shall preclude (a) Genzyme from utilizing
Confidential Information as may be necessary in prosecuting patent rights related
to Project Inventions as set forth in pursuant Article 9; or (b) either
Party from (i) obtaining governmental marketing approvals, (ii) manufacturing
the Products pursuant to the terms and conditions of this Agreement, (iii) complying
with other Applicable Laws (provided that the Party disclosing such
Confidential Information uses reasonable efforts to seek confidential treatment
of such Confidential Information, except as information included in any Project
Invention patent applications), or (iv) corresponding with any Regulatory
Authority in connection with this Agreement, or on any relevant matter. The
obligations of the Parties relating to Confidential Information shall expire
ten (10) years after the termination of this Agreement.

 

11.3         Public
Announcements. Neither Party shall make any public announcement
concerning the transactions contemplated herein, or make any public statement
which includes the name of the other Party or any of its Affiliates, or
otherwise use the name of the other Party or any of its Affiliates in any
public statement or document, except as may be required by law or judicial
order, without the written consent of the other Party, which consent shall not
be

 

[**] = Portions of
this exhibit have been omitted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.

 

19

 

unreasonably withheld. Subject to any legal
or judicial disclosure obligation, any such public announcement proposed by a
Party that names the other Party shall first be provided in draft to the other
Party for the other Party’s review and approval.

 

11.4         Pricing
Information. Any information [**] provided by Genzyme to Hospira shall be provided on a need to know
basis, as determined by Genzyme, and in any case only disclosed to the Hospira
Vice President and General Manager of Contract Manufacturing Services, Director
of Business Development, and Manager of Business Development (the “Relationship
Managers”). Any disclosure by Hospira to individuals other than to the
Relationship Managers, must be approved in writing by the Genzyme Senior Vice
President of Materials Management, and is otherwise expressly prohibited. Notwithstanding
the foregoing, any such disclosure to the Relationship Managers, or any other
authorized individual, shall be used exclusively for the purpose of calculating
any loss pursuant to Section 10.3(b)(iii) hereof.

 

11.5         Injunctive
Relief. The Parties acknowledge that either Party’s breach of this Article 11
may cause the other Party irreparable injury for which it would not have an
adequate remedy at law. In the event of such breach, the non-breaching Party
may be entitled to seek injunctive relief in addition to any other remedies it
may have at law or in equity.

 

Article
12.    [**]

 

12.1         [**]. Within [**] days following the Effective Date of this Agreement,
the Parties shall [**].

 

Article 13.              MISCELLANEOUS

 

13.1         Force Majeure
and Failure of Suppliers.

 

(a)           Excusable Delay. Any delay in
the performance of any of the duties or obligations of either Party hereto
(except the payment of money) shall not be considered a breach of this
Agreement and the time required for performance shall be extended for a period
equal to the period of such delay, provided that such delay has been caused by
or is the result of any acts of God, acts of the public enemy, insurrections,
riots, embargoes, labor disputes, including strikes, lockouts, job actions,
boycotts, fires, explosions, floods, shortages of material or energy, or other
unforeseeable causes beyond the control and without the fault or negligence of
the Party so affected. The affected Party shall give prompt notice to the other
Party of such cause, and shall take promptly whatever reasonable steps are
necessary to relieve the effect of such cause.

 

(b)           Transfer of Production. If Hospira
becomes subject to an event of force majeure which interferes with production
of the Products at the Facility, the Parties shall mutually agree on
implementation of an agreed-upon action plan to transfer production of the
Products to another Hospira facility, or to a Genzyme facility. The Parties
shall, after the execution of this Agreement and at the request of either
Party, meet to discuss and define such an action plan.

 

[**] = Portions of
this exhibit have been omitted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.

 

20

 

(c)           Failure of Suppliers. The Parties
understand and agree that Genzyme has chosen the excipient and primary
container packaging component suppliers listed in the Product Specifications. Under
no circumstances shall Hospira have any liability to Genzyme, nor shall Hospira
be deemed to be in breach of this Agreement, if Hospira is unable to supply the
Products or any Product to Genzyme due to a failure of such suppliers to
provide such excipients and/or primary container packaging components to
Hospira.

 

13.2         Notices. All notices
hereunder shall be delivered as follows: (a) personally; (b) by
facsimile and confirmed by first class mail (postage prepaid); (c) by
registered or certified mail (postage prepaid); or (d) by overnight
courier service, to the following addresses of the respective Parties:

 

	
  If to
  Genzyme:

  	
   

  	
  If to
  Hospira:

  
	
   

  	
   

  	
   

  
	
  Genzyme
  Corporation

  	
   

  	
  Hospira, Inc.

  
	
  200 Crossing
  Boulevard

  	
   

  	
  275
  North Field Drive

  
	
  Framingham, MA
  01701-9322

  	
   

  	
  Lake
  Forest, Illinois 60045

  
	
  Attention:

  	
   

  	
  Attention:

  
	
  Senior
  Vice President, Materials Management

  	
   

  	
  Vice
  President and General Manager, Contract

  
	
  Facsimile:
  (508) 661-8538

  	
   

  	
  Manufacturing

  
	
   

  	
   

  	
  Facsimile:
  (224) 212-3210

  
	
  Genzyme
  Therapeutics Products, L.P.

  	
   

  	
   

  
	
  500 Kendall
  Street

  	
   

  	
   

  
	
  Cambridge, MA 02139

  	
   

  	
  With
  copy to:

  
	
  Attention:

  	
   

  	
   

  
	
   

  	
   

  	
  Hospira, Inc.

  
	
  With
  a copy to:

  	
   

  	
  275 North Field Drive

  
	
   

  	
   

  	
  Lake Forest, Illinois
  60045

  
	
  Genzyme
  Corporation

  	
   

  	
  Attention: General
  Counsel, Building H1;

  
	
  500 Kendall
  Street

  	
   

  	
  Department NLEG

  
	
  Cambridge, MA
  02139

  	
   

  	
  Facsimile:
  (224) 212-2086

  
	
  Attention:
  General Counsel

  	
   

  	
   

  
	
  Facsimile: (617)
  252-7553

  	
   

  	
   

  

 

Notices
shall be effective upon receipt if personally delivered or delivered by
facsimile and confirmed by first class mail, on the third business day
following the date of registered or certified mailing or on the first business
day following the date of or delivery to the overnight courier. A Party may
change its address listed above by written notice to the other Party.

 

13.3         Choice of Law. This
Agreement shall be construed, interpreted and governed by the laws of the State
of Delaware, excluding its choice of law provisions. The United Nations
Convention on the International Sale of Goods is hereby expressly excluded.

 

[**] = Portions of
this exhibit have been omitted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.

 

21

 

13.4         Assignment. Neither Party
shall assign this Agreement nor any part thereof without the prior written
consent of the other Party; provided, however: (a) either Party may assign
this Agreement to one of its wholly-owned subsidiaries or its parent
corporation without such consent; and (b) either Party, without such
consent, may assign this Agreement in connection with the transfer, sale or
divestiture of substantially all of its business to which this Agreement
pertains or in the event of its merger or consolidation with another entity. Any
permitted assignee shall assume all obligations of its assignor under this
Agreement. No assignment shall relieve any Party of responsibility for the
performance of any accrued obligation which such Party then has hereunder.

 

13.5         Entire
Agreement. This Agreement, together with the Exhibits
referenced and incorporated herein, constitute the entire agreement between the
Parties concerning the subject matter hereof and supersede all written or oral
prior agreements or understandings with respect thereto.

 

13.6         Severability. This
Agreement is subject to the restrictions, limitations, terms and conditions of
all applicable governmental regulations, approvals and clearances. If any term
or provision of this Agreement shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other term or provision hereof, and this Agreement shall
be interpreted and construed as if such term or provision, to the extent the
same shall have been held to be invalid, illegal or unenforceable, had never been
contained herein.

 

13.7         Waiver-Modification
of Agreement. No waiver or modification of any of the terms of
this Agreement shall be valid unless in writing and signed by authorized
representatives of both Parties. Failure by either Party to enforce any such
rights under this Agreement shall not be construed as a waiver of such rights,
nor shall a waiver by either Party in one or more instances be construed as
constituting a continuing waiver or as a waiver in other instances.

 

13.8         Insurance. Each Party will
procure and maintain, at its own expense, for the duration of the Agreement,
and for five (5) years thereafter if written on a claims made or
occurrence reported form, the types of insurance specified below with carriers
rated A- VII or better with A. M. Best or like rating agencies:

 

(a)           Workers’
Compensation accordance with applicable statutory requirements and shall
provide a waiver of subrogation in favor of the other Party;

 

(b)           Employer’s
Liability with a limit of liability in an amount of not less than $[**];

 

(c)           Commercial
General Liability including premises operations, products & completed
operations, blanket contractual liability, personal injury and advertising
injury

 

[**] = Portions of
this exhibit have been omitted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.

 

22

 

including fire legal liability for bodily
injury and property damage in an amount not less than $[**] per occurrence and $[**] in the aggregate;

 

(d)           Commercial
Automobile Liability for owned, hired and non-owned motor vehicles with a
combined single limit in an amount not less than $[**] each occurrence;

 

(e)           Excess
Liability including products liability with a combined single limit in an
amount of not less than $[**] per occurrence
and in the aggregate;

 

(f)            Professional
Liability with a limit of liability in an amount of not less than $[**] per claim and in the
aggregate and shall remain in effect for 2 years after the expiration of said
Agreement;

 

(g)           Commercial
Crime or Fidelity Bond in an amount of not less than $[**] per occurrence and in the
aggregate including an endorsement for Third Party liability without the
requirement of a conviction.

 

(h)           Marine
Insurance covering all shipments from warehouse to warehouse as described on
the bill of lading at a full replacement cost.

 

Each
Party shall include the other Party and its Affiliates, directors, officers,
employees and agents as additional insureds with respect to Commercial General
Liability, Commercial Automobile Liability and Excess Liability but only as
their interest may appear by written contract. Prior to commencement of
services, and annually thereafter, each Party shall furnish to the other Party
certificates of insurance evidencing the insurance coverages stated above and
shall require at least thirty (30) days written notice to the other Party prior
to any cancellation, non-renewal or material change in said coverage. In the
case of cancellation, non-renewal or material change in said coverage, each
Party shall promptly provide the other Party with a new certificate of
insurance evidencing that the coverage meets the requirements in this Section.
Each Party agrees that its insurance shall act as primary and noncontributory
from any other valid and collectible insurance maintained by the other Party. Each
Party may, at its option, satisfy, in whole or in part, its obligation under
this Section through its self- insurance program.

 

12.9         Exhibits. All Exhibits
referred to herein are hereby incorporated by reference.

 

12.10       Debarment
Warranty. Hospira and Genzyme represent and warrant that
neither Party uses nor will use in the future use in any capacity the services
of any person debarred under Section (a) or (b) of 21 U.S.C. Section 335a.

 

[**] = Portions of
this exhibit have been omitted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.

 

23

 

IN
WITNESS WHEREOF, the Parties intending to be bound by the terms and conditions
hereof have caused this Agreement to be signed by their duly authorized
representatives as of the date first above written.

 

	
  HOSPIRA WORLDWIDE, INC.

  	
   

  	
  GENZYME
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Anthony Cacich

  	
   

  	
  By: 

  	
  /s/ Henri A. Termeer

  
	
  Name:
  

  	
  Anthony
  Cacich

  	
   

  	
  Name:

  	
  Henri
  A. Termeer

  
	
  Title: 

  	
  Vice
  President & General Manager of Contract Manufacturing

  	
   

  	
  Title: 

  	
  President &
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By: 

  	
  /s/ Michael S. Wyzga

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Michael
  S. Wyzga

  
	
   

  	
   

  	
   

  	
  Title: 

  	
  Executive
  Vice President & Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  GENZYME THERAPEUTIC PRODUCTS LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By: 
  Genzyme Therapeutic Products Corporation, its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By: 

  	
  /s/ Henri A. Termeer

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Henri
  A. Termeer

  
	
   

  	
   

  	
   

  	
  Title: 

  	
  President

  

[**] = Portions of
this exhibit have been omitted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission

 

24

 

 

Exhibit 1.5

 

Bulk Specifications

 

Genzyme
shall use all reasonable efforts to prepare and submit to Hospira the Bulk
Specifications no later than ninety (90) days after the Effective Date.  Upon submission, the Bulk Specifications
shall be attached to this Exhibit 1.5 and shall be made an integral
part of this Agreement.

 

Exhibit 1.19

 

Product Specifications

 

Genzyme
and Hospira will consult and use all reasonable efforts to prepare and complete
the Product Specifications no later than ninety (90) days after the Effective
Date.  Upon completion, the Product
Specifications shall be attached to this Exhibit 1.19 and shall be
made an integral part of this Agreement.

 

Exhibit 2.1

 

Project Activities

 

Project
Activities

 

Milestone
I: Project Initiation and Tech Transfer

 

[**]

 

Milestone
II: Conformance Batch Production

 

[**]

 

Milestone
III: REGULATORY FILINGS

 

[**]

 

[**] = Portions of
this exhibit have been omitted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.

 

25

 

Exhibit 3.1

 

Payment Schedule

 

Payment
of the Technology Transfer Fee shall be in accordance with the following
schedule:

 

(a)           [**] upon
execution of this Amendment and receipt of Hospira’s invoice for the amount
due;

 

(b)           [**] (i) within
[**] days after Hospira completes the final Product Specifications and receipt
of Hospira’s invoice for the amount due, or (ii) [**], whichever is later;
and

 

(c)           [**] within
[**] days after completion of all identified validation protocols and the
invoice for the amount due from Hospira.

 

Exhibit 5.8

 

Product Prices

 

[**]

 

Exhibit 7.1

 

Product Test Methods

 

In
consultation with Genzyme, no later than forty-five (45) days after the Effective
Date, Hospira will use all reasonable efforts to prepare and complete
documentation describing the procedures, methods and protocols by which the
Products will be tested and released, as specified in Section 7.1
of the Agreement.  Upon completion, such
documentation shall be attached to this Exhibit 7.1 and shall be
made an integral part of this Agreement.

 

Exhibit 7.2

 

Form of Quality Agreement

 

Genzyme
and Hospira agree to consult and use all reasonable efforts to prepare and
complete the Quality Agreement no later than one hundred and twenty (120) days
after the Effective Date.  Upon
completion, the Quality Agreement shall be attached to this Exhibit 7.2
and shall be made an integral part of this Agreement.

 

[**] = Portions of this exhibit have been omitted
pursuant to a confidential treatment request. An unredacted version of this
exhibit has been filed separately with the Commission.

 

26Exhibit 10.12

 

CITY NATIONAL CORPORATION

1999 OMNIBUS PLAN

 

(AS APPROVED BY CITY
NATIONAL CORPORATION SHAREHOLDERS AT ANNUAL MEETING OF

APRIL 21,
1999; AS AMENDED BY CITY NATIONAL CORPORATION BOARD OF DIRECTORS, APRIL 21,
1999)

 

CITY NATIONAL CORPORATION

1999 OMNIBUS PLAN

 

TABLE OF CONTENTS

 

	
  I.

  	
   

  	
  THE PLAN

  	
   

  
	
   

  	
   

  	
  1.1.

  	
  PURPOSE

  	
   

  
	
   

  	
   

  	
  1.2.

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
  1.3.

  	
  ADMINISTRATION
  AND AUTHORIZATION; POWER AND PROCEDURE

  	
   

  
	
   

  	
   

  	
  1.4.

  	
  PARTICIPATION

  	
   

  
	
   

  	
   

  	
  1.5.

  	
  SHARES AVAILABLE FOR
  AWARDS

  	
   

  
	
   

  	
   

  	
  1.6.

  	
  GRANT
  OF AWARDS

  	
   

  
	
   

  	
   

  	
  1.7.

  	
  AWARD
  PERIOD

  	
   

  
	
   

  	
   

  	
  1.8.

  	
  LIMITATIONS
  ON EXERCISE AND VESTING OF AWARDS

  	
   

  
	
   

  	
   

  	
  1.9.

  	
  ACCEPTANCE
  OF NOTES TO FINANCE EXERCISE

  	
   

  
	
   

  	
   

  	
  1.10.

  	
  NO TRANSFERABILITY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  II.

  	
   

  	
  EMPLOYEE
  OPTIONS

  	
   

  
	
   

  	
   

  	
  2.1.

  	
  GRANTS

  	
   

  
	
   

  	
   

  	
  2.2.

  	
  OPTION
  PRICE

  	
   

  
	
   

  	
   

  	
  2.3.

  	
  LIMITATIONS
  ON GRANT AND TERMS OF INCENTIVE STOCK OPTIONS

  	
   

  
	
   

  	
   

  	
  2.4.

  	
  LIMITS ON 10% HOLDERS

  	
   

  
	
   

  	
   

  	
  2.5.

  	
  NO OPTION REPRICING

  	
   

  
	
   

  	
   

  	
  2.6.

  	
  DIVIDEND EQUIVALENTS

  	
   

  
	
   

  	
   

  	
  2.7.

  	
  SURRENDER OF STOCK
  OPTIONS

  	
   

  
	
   

  	
   

  	
  2.8.

  	
  SPECIAL
  REQUIREMENTS FOR DIRECTOR STOCK OPTIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  III.

  	
   

  	
  STOCK APPRECIATION
  RIGHTS

  	
   

  
	
   

  	
   

  	
  3.1.

  	
  GRANTS

  	
   

  
	
   

  	
   

  	
  3.2.

  	
  EXERCISE OF
  STOCK APPRECIATION RIGHTS

  	
   

  
	
   

  	
   

  	
  3.3.

  	
  PAYMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV.

  	
   

  	
  RESTRICTED STOCK AWARDS

  	
   

  
	
   

  	
   

  	
  4.1.

  	
  GRANTS

  	
   

  
	
   

  	
   

  	
  4.2.

  	
  RESTRICTIONS

  	
   

  
	
   

  	
   

  	
  4.3.

  	
  RETURN TO THE COMPANY

  	
   

  

 

(AS APPROVED BY CITY
NATIONAL CORPORATION SHAREHOLDERS AT ANNUAL MEETING OF

APRIL 21,
1999; AS AMENDED BY CITY NATIONAL CORPORATION BOARD OF DIRECTORS, APRIL 21,
1999)

 

 

	
  V.

  	
   

  	
  PERFORMANCE
  SHARE AWARDS AND STOCK BONUSES

  	
   

  
	
   

  	
   

  	
  5.1.

  	
  GRANTS OF
  PERFORMANCE SHARE AWARDS

  	
   

  
	
   

  	
   

  	
  5.2.

  	
  GRANTS OF STOCK BONUSES

  	
   

  
	
   

  	
   

  	
  5.3.

  	
  DEFERRED PAYMENTS

  	
   

  
	
   

  	
   

  	
  5.4.

  	
  RESTRICTIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  VI.

  	
   

  	
  TAX OFFSET BONUS RIGHTS

  	
   

  
	
   

  	
   

  	
  6.1.

  	
  GRANTS

  	
   

  
	
   

  	
   

  	
  6.2.

  	
  TAX OFFSET BONUS
  RIGHTS PERIOD

  	
   

  
	
   

  	
   

  	
  6.3.

  	
  EXERCISE OF RIGHTS

  	
   

  
	
   

  	
   

  	
  6.4.

  	
  PAYMENTS

  	
   

  
	
   

  	
   

  	
  6.5.

  	
  TERMINATION OF
  EMPLOYMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  VII.

  	
   

  	
  OTHER
  PROVISIONS

  	
   

  
	
   

  	
   

  	
  7.1.

  	
  RIGHTS
  OF ELIGIBLE EMPLOYEES, PARTICIPANTS AND BENEFICIARIES

  	
   

  
	
   

  	
   

  	
  7.2.

  	
  ADJUSTMENTS;
  ACCELERATIONS

  	
   

  
	
   

  	
   

  	
  7.3.

  	
  EFFECT OF
  TERMINATION OF EMPLOYMENT

  	
   

  
	
   

  	
   

  	
  7.4.

  	
  COMPLIANCE WITH LAWS

  	
   

  
	
   

  	
   

  	
  7.5.

  	
  TAX
  WITHHOLDING

  	
   

  
	
   

  	
   

  	
  7.6.

  	
  PLAN
  AMENDMENT; TERMINATION AND SUSPENSION

  	
   

  
	
   

  	
   

  	
  7.7.

  	
  PRIVILEGES OF STOCK
  OWNERSHIP

  	
   

  
	
   

  	
   

  	
  7.8.

  	
  EFFECTIVE DATE OF THE
  PLAN

  	
   

  
	
   

  	
   

  	
  7.9.

  	
  TERM
  OF THE PLAN

  	
   

  
	
   

  	
   

  	
  7.10.

  	
  GOVERNING
  LAW; CONSTRUCTION; SEVERABILITY

  	
   

  
	
   

  	
   

  	
  7.11.

  	
  CAPTIONS

  	
   

  
	
   

  	
   

  	
  7.12.

  	
  NON-EXCLUSIVITY OF PLAN

  	
   

  

 

 

(AS APPROVED BY CITY
NATIONAL CORPORATION SHAREHOLDERS AT ANNUAL MEETING OF

APRIL 21,
1999; AS AMENDED BY CITY NATIONAL CORPORATION BOARD OF DIRECTORS, APRIL 21,
1999)

 

CITY NATIONAL CORPORATION

1999 OMNIBUS PLAN

 

I. THE PLAN

 

1.1. PURPOSE

 

The purpose of this Plan is
to promote the success of the Corporation by providing an additional means
through the grant of Awards to attract, motivate, retain and reward key employees,
including officers, whether or not directors, of the Corporation with awards
and incentives for high levels of individual performance and improved financial
performance of the Corporation.

 

1.2. DEFINITIONS

 

(a) “Award” shall mean an
award of any Option, Stock Appreciation Right, Restricted Stock Award,
Performance Share Award, Stock Bonus, Dividend Equivalent, Tax Offset Bonus or
other right or security that would constitute a “derivative security” under
Rule 16a-l(c) of the Exchange Act, or any combination thereof, whether
alternative or cumulative, authorized by and granted under this Plan.

 

 

(b) “Award Agreement” shall
mean any writing setting forth the terms of an Award that has been authorized
by the Committee.

 

(c) “Award Date” shall mean
the date upon which the Committee took the action granting an Award or such
later date as the Committee designates as the Award Date at the time of the
Award.

 

(d) “Award Period” shall
mean the period beginning on an Award Date and ending on the expiration date of
such Award.

 

(e) “Beneficiary” shall mean
the person, persons, trust or trusts entitled by will or the laws of descent
and distribution to receive the benefits specified in the Award Agreement and
under this Plan in the event of a Participant’s death, and shall mean the
Participant’s executor or administrator if no other Beneficiary is identified
and able to act under the circumstances.

 

(f) “Board” shall mean the
Board of Directors of the Corporation.

 

(g) “Change in Control Event”
shall mean:

 

(1) The acquisition by any
individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) (a “Person”) of 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 Corporation (the “Outstanding
Common Stock”) or (ii) the combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in the election of
directors (the “Outstanding Voting Securities”); provided, however, that for
purposes of this sub-section (1), the following acquisitions shall not
constitute a Change in Control: (i) any acquisition directly from the
Corporation; (ii) any acquisition by the Corporation; (iii) any acquisition by
any employee benefit plan (or related trust) sponsored or maintain by the
Corporation or any corporation controlled by the Corporation, (iv) any
acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (3) of this section (g), or
(v) any acquisition by the Goldsmith Family or any director or partnership for
the benefit of any member of the Goldsmith Family; or

 

(2) Individuals who, as of
the date hereof, constitute the Board of Directors (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Corporation’s shareholders,
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of either an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or contest by
or on behalf of a person other than the board; or

 

(3) Consummation of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Corporation (a “Business Combination”),
in each case, unless, following such Business Combination (i) all or
substantially all of the individuals and entities who were the beneficial
owners respectively, of the Outstanding Corporation Voting Securities
immediately prior to such Business Combination beneficially owned, directly or
indirectly, more than 50% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns
the Corporation or all or substantially all of the Corporation’s assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such

 

2

 

Business Combination, of the
Outstanding Corporation Common Stock and outstanding Corporation voting
securities, as the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan or
related trust of the Corporation or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement or of the
action of the Board, providing for such Business Combination; or

 

(4) Approval by the
shareholders of the Corporation of a complete liquidation or dissolution of the
Corporation.

 

(h) “Code” shall mean the
Internal Revenue Code of 1986, as amended from time to time.

 

(i) “Commission” shall mean
the Securities and Exchange Commission.

 

(j) “Committee” shall mean
the Compensation and Directors Nominating Committee of the Board, or other
Committee, regardless of name, that acts on matters of compensation for
eligible employees, which Committee shall be comprised only of two or more
directors or such greater number of directors as may be required under
applicable law, each of whom, during such time as one or more Participants may
be subject to Section 16 of the Exchange Act, shall be a Disinterested and
Outside director.

 

(k) “Common Stock” shall
mean the common stock of the Corporation, $1.00 par value per share, and such
other securities or property as may become the subject of Awards, or become
subject to Awards, pursuant to an adjustment made under Section 6.2 of
this Plan.

 

(l) “Corporation” shall mean
City National Corporation and its Subsidiaries.

 

(m) “Disinterested and
Outside” shall mean “disinterested” within the meaning of any applicable
regulatory requirements, including Rule 16b-3, and “outside” within the meaning
of Section 162(m) of the Code.

 

(n) “Dividend Equivalent”
shall mean an amount equal to the amount of cash dividends or other cash
distributions paid (or such portion of such dividend or other distribution as
may be designated by the Committee) with respect to each Share after the date
of an Award of a Dividend Equivalent.

 

3

 

(o) “Eligible Employee”
shall mean an officer at a level of Vice President or the equivalent (whether
or not a director) of the Corporation, or any Other Eligible Person, as
determined by the Committee in its discretion. In no event may any member of
the Committee or a committee administering any other stock option, stock
appreciation, stock bonus or other stock plan of the Corporation be an Eligible
Employee.

 

(p) “ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended.

 

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

 

(r) “Fair Market Value”
shall mean, with respect to Common Stock, the price at which the Stock sold on
the last normal transaction of the trading day on a specified date, or if no
trading occurs on such specified date, on the most recent preceding business
day on which trading occurred, as quoted on the National Market System of the
National Association of Securities Dealers or on any exchange upon which the
stock may be traded.

 

(s) “Incentive Stock Option”
shall mean an Option which is designated as an incentive stock option within
the meaning of Section 422 of the Code and which contains such provisions
as are necessary to comply with that section.

 

(t) “Nonqualified Stock
Option” shall mean an Option that is designated as a Nonqualified Stock Option
and shall include any Option intended as an Incentive Stock Option that fails
to meet the applicable legal requirements thereof. Any Option granted hereunder
that is not designated as an incentive stock option shall be deemed to be
designated a nonqualified stock option under this Plan and not an incentive
stock option under the Code.

 

(u) “Non-Employee Director”
shall mean a member of the Board who is not an officer or employee of the
Corporation.

 

(v) “Option” shall mean an
option to purchase Shares under this Plan. The Committee shall designate any
Option granted to an Eligible Employee as a Nonqualified Stock Option or an
Incentive Stock Option.

 

(w) “Other Eligible Person”
shall mean any other person (including significant agents and consultants) who
performs substantial services for the Corporation of a nature similar to those
performed by key employees, selected to participate in this Plan by the
Committee from time to time; provided that in no event shall a Non-Employee
Director be selected as an Other Eligible Person.

 

4

 

(x) “Participant” shall mean
an Eligible Employee who has been granted an Award under this Plan.

 

(y) “Performance Share Award”
shall mean an Award made pursuant to the provisions, and subject to the terms
and conditions, of Article V of the Plan.

 

(z) “Personal Representative”
shall mean the person or persons who, upon the Total Disability or incompetence
of a Participant, shall have acquired on behalf of the Participant, by legal
proceeding or otherwise, the power to exercise the rights or receive benefits
under this Plan and who shall have become the legal representative of the
Participant.

 

(aa) “Plan” shall mean this
1999 Omnibus Plan.

 

(bb) “QDRO” shall mean a
qualified domestic relations order as defined in Section 414 (p) of the
Code or Title I, Section 206(d) (3) of ERISA (to the same extent as if
this Plan were subject thereto), or the applicable rules thereunder.

 

(cc) “Restricted Stock” shall
mean Shares awarded to a Participant subject to payment of such consideration,
if any, and such conditions on vesting and such transfer and other restrictions
as are established in or pursuant to this Plan, for so long as such shares
remain unvested under the terms of the applicable Award Agreement.

 

(dd) “Retirement” shall mean
retirement from active service as an employee or officer of the Corporation on
or after attaining age 65.

 

(ee) “Rule 16b-3” shall mean
Rule 16b-3, as amended from time to time, as promulgated by the Commission
pursuant to the Exchange Act.

 

(ff) “Section 16 Person”
shall mean a person subject to Section 16(a) of the Exchange Act.

 

(gg) “Securities Act” shall
mean the Securities Act of 1933, as amended from time to time.

 

(hh) “Shares” shall mean
shares of Common Stock of the Corporation.

 

(ii) “Stock Appreciation
Right” shall mean a right to receive a number of Shares or an amount of cash,
or a combination of shares and cash, the aggregate amount or value of which is
determined by reference to a change in the Fair Market Value of the Shares that
is authorized under this Plan.

 

(jj) “Subsidiary” shall mean
any corporation or other entity a majority of whose outstanding voting stock or
voting power is beneficially owned directly or indirectly by the Corporation.

 

5

 

(kk) “Total Disability”
shall mean a “permanent and total disability” within the meaning of Section 22(e)
(3) of the Code and such other disabilities, infirmities, afflictions or
conditions as the Committee by rule may include.

 

1.3.
ADMINISTRATION AND AUTHORIZATION; POWER AND PROCEDURE

 

(a) Committee. This Plan
shall be administered by, and all Awards to Eligible Employees shall be
authorized by, the Committee. Action of the Committee with respect to the
administration of this Plan shall be taken pursuant to a majority vote or by
unanimous written consent of its members.

 

(b) Plan Awards;
Interpretation; Powers of Committee. Subject to the express provisions of this
Plan, the Committee shall have the authority:

 

(i) To determine, from among
those persons eligible, the particular Eligible Employees who will receive any
Awards;

 

(ii) To grant Awards to
Eligible Employees, determine the price at which securities will be offered or
awarded and the amount of securities to be offered or awarded to any of such
persons, and determine the other specific terms and conditions of such Awards
consistent with the express limits of this Plan, and establish the installments
(if any) in which such Awards shall become exercisable or shall vest, or
determine that no delayed exercisability or vesting is required, and establish
the events of termination or reversion (if any) of such Awards;

 

(iii) To approve the forms
of Award Agreements (which need not be identical either as to type of Award or
among Participants);

 

(iv) To construe and
interpret this Plan and any agreements defining the rights and obligations of
the Corporation and Participants under this Plan, further define the terms used
in this Plan, and prescribe, amend and rescind rules and regulations relating
to the administration of this Plan;

 

(v) To cancel, modify, or
waive the Corporation’s rights with respect to, or modify, discontinue,
suspend, or terminate, any or all outstanding Awards held by Participants,
subject to any required consent under Section 7.6;

 

(vi) To accelerate or extend
the exercisability or vesting extend the term of any or all such outstanding
Awards within the maximum ten-year term of Awards under Section 1.7; and

 

6

 

(vii) To make all other
determinations and take such other action as contemplated by this Plan or as
may be necessary or advisable for the administration of this Plan and the
effectuation of its purposes.

 

(c) Binding Determinations.
Any action taken by, or inaction of, the Corporation, the Board or the
Committee relating or pursuant to this Plan shall be within the absolute
discretion of that entity or body and shall be conclusive and binding upon all
persons. No member of the Board or Committee, or officer of the Corporation,
shall be liable for any such action or inaction of the entity or body, of
another person or, except in circumstances involving bad faith, of himself or
herself. Subject only to compliance with the express provisions hereof, the
Board and Committee may act in their absolute discretion in matters within
their authority related to this Plan.

 

(d) Reliance on Experts. In
making any determination or in taking or not taking any action under this Plan,
the Committee or the Board, as the case may be, may obtain and may rely upon
the advice of experts, including professional advisors to the Corporation. No
director, officer or agent of the Corporation shall be liable for any such
action or determination taken or made or omitted in good faith.

 

(e) Delegation. The
Committee may delegate ministerial, non-discretionary functions to individuals
who are officers or employees of the Corporation.

 

1 .4. PARTICIPATION

 

Awards may be granted by the
Committee only to those persons that the Committee determines to be Eligible
Employees. An Eligible Employee who has been granted an Award may, if otherwise
eligible, be granted additional Awards if the Committee shall so determine.
Non-Employee Directors shall be eligible to receive Awards under this Plan only
as specified in Section 2.8.

 

1.5. SHARES AVAILABLE FOR
AWARDS

 

Subject to the provisions of
Section 7.2, the capital stock that may be delivered under this Plan shall
be shares of the Corporation’s authorized but unissued Common Stock. The shares
may be delivered for any lawful consideration.

 

(a) Number of Shares. The
maximum number of shares of Common Stock that may be delivered pursuant to
Awards granted to Eligible Employees under this Plan shall not exceed 3,500,000
Shares subject to subsection (c) below and the adjustments contemplated by
Section 7.2. The maximum number of Options and Stock Appreciation Rights
(whether payable in Shares, cash or any combination thereof) that may be
granted to an Eligible Employee during any one-year period shall not exceed
500,000, subject to adjustment as contemplated in Section 7.2. The
aggregate number of shares designated under the Plan as Restricted Stock, stock
subject to Performance Share Awards and Stock Bonuses, shall never exceed
1,000,000.

 

7

 

(b) Reservation of Shares.
Common Stock subject to outstanding Awards of derivative securities (as defined
in Rule 16a-l(c) under the Exchange Act) shall be reserved for issuance. If a
Stock Appreciation Right or similar right based on the increased market value
of a specified number of Shares is exercised or a Performance Share Award is
paid, the number of Shares to which such exercise or payment relates under the
applicable Award shall be charged against the maximum amount of Shares that may
be delivered pursuant to Awards under this Plan and, if applicable, such Award.
If the Corporation withholds Shares pursuant to Section 2.2(b) or 7.5, the
number of shares that would have been deliverable with respect to an Award
shall be reduced by the number of shares withheld and such shares shall not be
available for additional Awards under this Plan. To the extent a Performance
Share Award constitutes an equity security (as this phrase is defined in Rule
16a-1 under the Exchange Act) issued by the Corporation and is paid in Shares
the number of Shares (if any) subject to such Performance Share Award shall be
charged (but in the case of tandem or substituted Awards, without duplication)
against the maximum number of Shares that may be delivered pursuant to Awards
under this Plan.

 

(c) Cash Only Award Limit.
Awards payable solely in cash under the Plan and Awards payable either in cash
or shares that are actually paid in cash shall constitute and be referred to as
“Cash Only Awards”. The number of Cash Only Awards shall be determined by
reference to the number of Shares by which the Award is measured. The maximum
number of Cash Only Awards that may be paid shall not, together with the aggregate
number of Shares that may be delivered under subsection (a), exceed
5,000,000, subject to adjustments under Section 7.2. Awards payable either
in cash or shares shall not be counted against the Cash Only Award limit if
charged against the share limit in subsection (a). Notwithstanding the
foregoing, if an Award paid or payable solely in cash satisfies the
requirements for the exclusion from the definition of a derivative security in
Rule 16a-l(c) that does not require that the award be made under a Rule 16b-3
plan, the Award shall not be counted against any of the limits of this Section.

 

(d) Reissue of Awards.
Subject to any restrictions under Rule 16b-3, the shares which are subject to
any unexercised, unconverted, unvested or undistributed portion of any expired,
canceled, terminated or forfeited Award, or any alternative form of
consideration under an Award that is not paid in connection with the settlement
of an Award or any portion of an Award shall again be available for Award under
subsection (a) or (c) above, as applicable, provided the Participant has
not received dividends or Dividend Equivalents during the period in which the
Participant’s ownership was restricted or otherwise not vested. Shares that are
issued pursuant to Awards and subsequently reacquired by the Corporation
pursuant to the terms and conditions of the Awards also shall be available for
reissuance under the Plan. Nothing in this paragraph shall be interpreted to
allow shares which are in the possession of the Corporation pursuant to either Section 2.2(b)
or 7.5 to be available for reissuance under the Plan.

 

8

 

(e) Interpretive Issues.
Additional rules for determining the number of shares or Cash Only Awards
authorized under the Plan may be adopted by the Committee as it deems necessary
or appropriate; provided that such rules are consistent with Rule 16b.

 

1.6. GRANT OF AWARDS

 

Subject to the express
provisions of this Plan, the Committee shall determine the number of Shares subject
to each Award, and the price (if any) to be paid for the Shares or the Award
and, in the case of Performance Share Awards, in addition to matters addressed
in Section 1.3(b), the specific objectives, goals and performance criteria
(such as an increase in revenues, market value, earnings or book value over a
base period, the years of service before vesting, the relevant job
classification or level of responsibility or other factors) that further define
the terms of the Performance Share Award. Each Award shall be evidenced by an
Award Agreement signed by the Corporation and, if required by the Committee, by
the Participant.

 

1.7. AWARD PERIOD

 

Each Award and all executory
rights or obligations under the related Award Agreement shall expire on such
date (if any) as shall be determined by the Committee, but, in the case of
Options or other rights to acquire Shares, not later than ten (10) years after
the Award Date.

 

1.8.
LIMITATIONS ON EXERCISE AND VESTING OF AWARDS

 

(a) Provisions for Exercise.
Except as may otherwise be provided in an Award Agreement or herein, no Award
shall be exercisable or shall vest until at least six months after the initial
Award Date. Once exercisable an Award shall remain exercisable until the
expiration or earlier termination of the Award, unless the Committee otherwise
provides.

 

(b) Procedure. Any
exercisable Award shall be deemed to be exercised when the Secretary of the
Corporation receives written notice of such exercise from the Participant,
together with any required payment made in accordance with Section 2.2(b).

 

(c) Fractional
Shares/Minimum Issue. Fractional share interests shall be disregarded, but may
be accumulated. The Committee, however, may determine that cash, other
securities or other property will be paid or transferred in lieu of any
fractional share interests. No fewer than 100 Shares may be purchased on
exercise of any Award at one time unless the number purchased is the total
number at the time available for purchase under the Award.

 

9

 

1.9.
ACCEPTANCE OF NOTES TO FINANCE EXERCISE

 

The Corporation may, with
the Committee’s approval, accept one or more notes from any Participant in
connection with the exercise or receipt of any outstanding Award; provided that
any such note shall be subject to the following terms and conditions:

 

(a) The principal of the
note shall not exceed the amount required to be paid to the Corporation upon
the exercise or receipt of one or more Awards under the Plan and the note shall
be delivered directly to the Corporation in consideration of such exercise or
receipt.

 

(b) The initial term of the
note shall be determined by the Committee; provided that the term of the note,
including extensions, shall not exceed a period of 10 years.

 

(c) The note shall provide
for full recourse to the Participant and shall bear interest at a rate
determined by the Committee but not less than the applicable imputed interest
rate specified by the Code.

 

(d) Except as otherwise
provided by the Committee, if the employment of the Participant terminates, the
unpaid principal balance of the note shall become due and payable on the 10th
business day after such termination; provided, however, that if a sale of any
Shares acquired by the Participant in connection with an Award to which the
note relates would cause such Participant to incur liability under Section 16(b)
of the Exchange Act, the unpaid balance shall become due and payable on the
10th business day after the first day on which a sale of such shares could have
been made without incurring such liability assuming for these purposes that
there are no other transactions by the Participant subsequent to such
termination.

 

(e) If required by the
Committee or by applicable law, the note shall be secured by a pledge of any
shares or rights financed thereby or any other collateral determined by the
Committee in compliance with applicable law.

 

(f) The terms, repayment
provisions, and collateral release provisions of the note and the pledge
securing the note shall conform with applicable rules and regulations of the
Federal Reserve Board as then in effect and any other applicable banking rules
and regulations.

 

10

 

1.10. NO TRANSFERABILITY

 

(a) Awards may be exercised only
by the Participant or, if the Participant has died, the Participant’s
Beneficiary or, if the Participant has suffered a Total Disability, the
Participant’s Personal Representative, if any, or if there is none, the
Participant, or (to the extent permitted by applicable law and Rule 16b-3) a
third party pursuant to such conditions and procedures as the Committee may
establish. Other than by will or the laws of descent and distribution or
pursuant to a QDRO or other exception to transfer restrictions under Rule 16b-3
(except to the extent not permitted in the case of an Incentive Stock Option),
no right or benefit under this Plan or any Award, including, without
limitation, any Option or shares of Restricted Stock, that has not vested shall
be transferable by the Participant or shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge (other than to the Corporation) and any such attempted action shall be
void. The Corporation shall disregard any attempt at transfer, assignment or
other alienation prohibited by the preceding sentences and shall pay or deliver
such cash or Shares in accordance with the provisions of this Plan.

 

(b) The restrictions on
exercise and transfer above shall not be deemed to prohibit the authorization
by the Committee of “cashless exercise” procedures with unaffiliated third
parties who provide financing for the purpose of (or who otherwise facilitate)
the exercise of Awards consistent with applicable legal restrictions and Rule
16b-3, nor, to the extent permitted by the Committee, transfers for estate and
financial planning purposes, notwithstanding that the inclusion of such
features may render the particular Awards ineligible for the benefits of Rule
16b-3, nor, in the case of Participants who are not Section 16 Persons,
transfers to such other persons or in such other circumstances as the Committee
may in the Award Agreement or other writing expressly permit.

 

II. EMPLOYEE OPTIONS

 

2.1. GRANTS

 

One or more Options may be
granted under this Article to any Eligible Employee, subject to the
provisions of Section 1.5. Each Option granted may be either an Option
intended to be an Incentive Stock Option or an Option not so intended, and such
intent shall be indicated in the applicable Award Agreement.

 

2.2. OPTION PRICE

 

(a) Pricing Limits. Subject
to Section 2.4, the purchase price per share of the Common Stock covered
by each Option shall be determined by the Committee at the time the Option is
granted, but shall not be less than 100% of the Fair Market Value of the Common
Stock on the date of grant.

 

11

 

(b) Payment Provisions. The
purchase price of any shares purchased on exercise of an Option granted under
this Article shall be paid in full at the time of each purchase in one or
a combination of the following methods: (i) in cash or by electronic funds
transfer; (ii) by check payable to the order of the Company; (iii) if
authorized by the Committee or specified in the applicable Award Agreement, in
cash in an amount equal to the par value of the shares being purchased, and, in
the form of a promissory note (consistent with the requirements of Section 1.9)
of the Participant in an amount equal to the difference between said cash amount
and the purchase price of such shares; (iv) by notice and third party payment
in such manner as may be authorized by the Committee; (v) by the delivery of
Shares already owned by the Participant, provided, however, that the Committee
may in its absolute discretion limit the Participant’s ability to exercise an
Award by delivering such Shares; or (vi) if authorized by the Committee or
specified in the applicable Award Agreement, by reduction in the number of
Shares otherwise deliverable upon exercise by that number of Shares which have
a then Fair Market Value equal to such purchase price. Previously owned Shares
used to satisfy the exercise price of an Option under clause (v) shall be
valued at their Fair Market Value on the date of exercise.

 

2.3.
LIMITATIONS ON GRANT AND TERMS OF INCENTIVE STOCK OPTIONS

 

(a) $100,000 Limit. To the
extent that the aggregate “fair market value” of Common Stock with respect to
which Incentive Stock Options first become exercisable by a Participant in any
calendar year exceeds $100,000, taking into account both Common Stock subject
to Incentive Stock Options under this Plan and stock subject to incentive stock
options under all other plans of the Corporation, such options shall be treated
as Nonqualified Stock Options. For this purpose, the “fair market value” of the
Common Stock subject to Options shall be determined as of the date the Options
were awarded. In reducing the number of Options treated as Incentive Stock
Options to meet the $100,000 limit, the most recently granted Options shall be
reduced first. To the extent a reduction of simultaneously granted Options is
necessary to meet the $100,000 limit, the Committee may, in the manner and to
the extent permitted by law, designate which shares of Common Stock are to be treated
as shares acquired pursuant to the exercise of an Incentive Stock Option.

 

(b) Option Period. Subject
to Section 2.4, each Option and all rights thereunder shall expire no
later than ten years after the Award Date.

 

(c) Other Code Limits. There
shall be imposed in any Award Agreement relating to Incentive Stock Options
such terms and conditions as from time to time are required in order that the
Option be an “incentive stock option” as that term is defined in Section 422
of the Code.

 

12

 

2.4. LIMITS ON 10% HOLDERS

 

No Incentive Stock Option
may be granted to any person who, at the time the Option is granted, owns (or
is deemed to own under Section 424(d) of the Code) shares of outstanding
Common Stock possessing more than 10% of the total combined voting power of all
classes of stock of the Corporation, unless the exercise price of such Option
with respect to the Common Stock covered by the Option is at least 110% of the
Fair Market Value of the Common Stock subject to the Option and such Option by
its terms is not exercisable after the expiration of five years from the date
such Option is granted.

 

2.5. NO OPTION REPRICING

 

Subject to Section 7.2
and Section 7.6 and the specific limitations on Awards granted in this
Plan, the Committee may not reduce the exercise price of any Option or Stock
Appreciation Right granted pursuant to the Plan following the date of the Award
or to accept the surrender of outstanding Options or Stock Appreciation Rights
as consideration for the grant of a new Award with a lower per-share exercise
price.

 

2.6. DIVIDEND EQUIVALENTS

 

The Committee may, at the
time of granting an Option, grant Dividend Equivalents attributable to Shares
subject to the Option. Dividend Equivalents shall be paid in cash only to the
extent the Option is unexercised as of the dividend record date, as specified
in the Award Agreement, as follows: the Dividend Equivalent per Share shall be
multiplied by the number of Shares subject to Option and an amount equal to the
product so derived shall be paid in cash to the Participant on the dividend
payment date. The Committee may, in the Award, specify that Dividend
Equivalents shall be paid only for a specified time period or only as to that
portion of the Option that has vested.

 

2.7. SURRENDER OF STOCK
OPTIONS

 

The Committee, in its sole
discretion, shall have the authority under the circumstances set forth herein
to agree mutually with a Participant to grant such Participant the right on
such terms and conditions as the Committee may prescribe, to surrender such
Participant’s Options to the Corporation for cancellation and to receive upon
such surrender a cash payment equal to the Spread applicable to such
surrendered Option. Such right shall be made available only in the event of an
Offer (as defined in the following paragraph).

 

13

 

The term “Offer” as used in
this Section means any tender offer or exchange offer for Shares, other
than one made by the Corporation, provided that the corporation, person or
other entity making the offer acquires Shares pursuant to such offer.

 

The term “Offer Price per
Share” as used in this Section means the highest price per share paid on
any Offer which is in effect at any time during the period beginning on the
sixtieth day prior to the date on which the Option is surrendered pursuant to
this Section and ending on such date of surrender. Any securities or
property which are part or all of the consideration paid for shares in the Offer
shall be valued in determining the Offer Price per Share at the higher of (a)
the valuation placed on such securities or property by any other corporation,
person or entity making the Offer or (b) the valuation placed on such
securities or property by the Committee.

 

The term “Spread” as used in
this Section means with respect to any surrendered Option and associated
right, if any, an amount equal to the product computed by multiplying (i) the
excess of (A) the Offer Price per Share or the highest market price per share
of the Corporation’s Common Stock during the period beginning on the sixtieth
day prior to the date on which the Stock Option is surrendered pursuant to this
Section and ending on such date of surrender over (B) the purchase price
per share at which the surrendered Option is then exercisable, by (ii) the
number of shares subject to such Option with respect to which it has not
theretofore been exercised.

 

2.8.
SPECIAL REQUIREMENTS FOR DIRECTOR STOCK OPTIONS

 

(a) Eligibility. All
directors of the Corporation who are not employees of the Corporation shall be
eligible to receive Director Stock Options, as set forth in this Section 2.8.
Notwithstanding the foregoing, any director who is, or who during the preceding
calendar year was, a member of the Committee or any committee administering any
other stock option, stock appreciation, stock bonus or other stock plan of the
Corporation or any Subsidiary will not be eligible to receive Director Stock
Options hereunder if, in the opinion of counsel for the Corporation, the
receipt of Director Stock Options will cause such director to be a “disinterested
person” with respect to the Plan or any other stock option, stock appreciation,
stock bonus or other stock plan of the Corporation or any subsidiary pursuant
to Rule 16b-3 of the Securities and Exchange Commission, or will otherwise
disqualify the Plan or any other such Plan from compliance with said rule.

 

(b) Grant of Director
Options. Every eligible director will receive five hundred (500) Director Stock
Options on the date of each annual meeting of shareholders. Director Stock
Options shall be granted automatically to each such eligible director on the
business day following such annual meeting of stockholders, without further
action of the Committee or the Board.

 

(c) Stock Option Price. The
purchase price of the stock pursuant to a Director Stock Option shall be $1.00
per share.

 

14

 

(d) Other Terms of Director
Stock Options. Each Director Stock Option shall become exercisable six (6)
months after the date of grant. Unless otherwise determined by the Committee,
if the holder of Director Stock Options ceases to serve as a director of the
Corporation for any reason other than for cause, the Director Stock Options
shall expire at the end of their fixed term or three months after the date of
such termination, and until then shall be exercisable in full, regardless of
any vesting schedule otherwise applicable. Except as set forth in this Section 2.8,
all terms and provisions of the Director Stock Options shall be as set forth in
the Plan with respect to options which are not Director Stock Options.

 

III. STOCK APPRECIATION
RIGHTS

 

3.1. GRANTS

 

In its discretion, the
Committee may grant to any Eligible Employee Stock Appreciation Rights either
concurrently with the grant of another Award or in respect of an outstanding
Award, in whole or in part, or independently of any other Award. Any Stock
Appreciation Right granted in connection with an Incentive Stock Option shall
contain such terms as may be required to comply with the provisions of Section 422
of the Code and the regulations promulgated thereunder.

 

3.2.
EXERCISE OF STOCK APPRECIATION RIGHTS

 

(a) Exercisability. A Stock
Appreciation Right related to another Award shall be exercisable at such time
or times, and to the extent, that the related Award shall be exercisable,
provided, however, that any exercise of any Stock Appreciation Right hereunder
shall be made beginning on the third business day following the date of release
of the financial data specified in paragraph (e)(1)(ii) of Rule 16b-3 of the
regulations promulgated under the Securities Exchange Act of 1934 and ending on
the twelfth business day following such date or at such other time as may be permitted
under an agreement or successor rule.

 

(b) Effect on Available
Shares. In the event that a Stock Appreciation Right is exercised, the number
of Shares subject to the Award shall be charged against the number of Shares
subject to the Stock Appreciation Right and the related Option of the
Participant.

 

(c) Stand-Alone SARs. A
Stock Appreciation Right granted independently of any other Award shall be
exercisable pursuant to the terms of the Award Agreement but, unless the
Committee determines otherwise, in no event earlier than six months after the
Award Date.

 

3.3. PAYMENT

 

(a) Amount. Unless the
Committee otherwise provides, upon exercise of a Stock Appreciation Right, the
Participant shall be entitled to receive payment of an amount determined by
multiplying

 

15

 

(i) The difference obtained
by subtracting the exercise price per Share under the related Award (if
applicable) or the initial share value specified in the Award from the Fair
Market Value of a Share on the date of exercise of the Stock Appreciation
Right, by

 

(ii) The number of Shares
with respect to which the Stock Appreciation Right shall have been exercised.

 

Notwithstanding the above,
the Committee may place a maximum limitation on the amount payable upon
exercise of a Stock Appreciation Right. Such limitation, however, must be
determined as of the date of the grant and noted on the instrument evidencing
the Stock Appreciation Right granted hereunder.

 

(b) Form of Payment. The
Committee, in its sole discretion, shall determine the form in which payment
shall be made of the amount determined under paragraph (a) above, either solely
in cash, solely in Shares (valued at Fair Market Value on the date of exercise
of the Stock Appreciation Right), or partly in such Shares and partly in cash,
provided that the Committee shall have determined that such exercise and
payment are consistent with applicable law. If the Committee permits the
Participant to elect to receive cash or Shares (or a combination thereof) on
such exercise, any such election shall be subject to such conditions as the
Committee may impose and, in the case of any Section 16 Person, any
election to receive cash shall be subject to any applicable limitations under
Rule 16b-3.

 

IV. RESTRICTED STOCK AWARDS

 

4.1. GRANTS

 

The Committee may, in its
discretion, grant one or more Restricted Stock Awards to any Eligible Employee.
Each Restricted Stock Award Agreement shall specify the number of Shares to be
issued, the date of such issuance, the consideration for such Shares (but not
less than the minimum lawful consideration) to be paid, if any, by the
Participant and the restrictions imposed on such Shares and the conditions of
release or lapse of such restrictions. Such restrictions shall not lapse
earlier than six months after the Award Date, except to the extent the
Committee may otherwise provide. Stock certificates evidencing shares of
Restricted Stock pending the lapse of the restrictions (“restricted shares”)
shall bear a legend making appropriate reference to the restrictions imposed
hereunder and shall be held by the Corporation or by a third party designated
by the Committee until the restrictions on such shares shall have lapsed and
the shares shall have vested in accordance with the provisions of the Award and
Section 1.8. Upon issuance of the Restricted Stock Award, the Participant
may be required to provide such further assurance and documents as the
Committee may require to enforce the restrictions.

 

16

 

4.2. RESTRICTIONS

 

(a) Pre-Vesting Restraints.
Except as provided in Section 1.10 and 4.1, restricted shares comprising
any Restricted Stock Award may not be sold, assigned, transferred, pledged or
otherwise disposed of or encumbered either voluntarily or involuntarily, until
such shares have vested.

 

(b) Dividend and Voting
Rights. Unless otherwise provided in the applicable Award Agreement, a
Participant receiving a Restricted Stock Award shall be entitled to cash
dividend and voting rights for all shares issued even though they are not
vested, provided that such rights shall terminate immediately as to any
restricted shares which cease to be eligible for vesting.

 

(c) Cash Payments. If the
Participant shall have paid or received cash (including any dividends) in
connection with the Restricted Stock Award, the Award Agreement shall specify
whether and to what extent such cash shall be returned (with or without an
earnings factor) as to any restricted shares which cease to be eligible for vesting.

 

(d) The maximum number of
shares issued in the form of Restricted Stock Awards, when added to the number
of shares reserved for issuance pursuant to Performance Share Awards and the
number of shares awarded in the form of Stock Bonuses, may never exceed
1,000,000.

 

4.3. RETURN TO THE
CORPORATION

 

Unless the Committee
otherwise expressly provides, shares of Restricted Stock that are subject to
restrictions at the time of termination of employment or are subject to other
conditions to vest that have not been satisfied by the time specified in the
applicable Award Agreement shall not vest and shall be returned to the
Corporation in such manner and on such terms as the Committee shall therein
provide.

 

V.
PERFORMANCE SHARE AWARDS AND STOCK BONUSES

 

5.1.
GRANTS OF PERFORMANCE SHARE AWARDS

 

The Committee may, in its
discretion, grant one or more Performance Share Awards to any Eligible Employee
based upon such factors, which in the case of any Award to a Section 16
Person shall include but not be limited to the contributions, responsibilities
and other compensation of the person, as the Committee shall deem relevant in
light of the specific type and terms of the Award. An Award Agreement shall
specify the maximum number of Shares (if any) subject to the Performance Share
Award, the consideration (but not less than the minimum lawful consideration)
to be paid for any such Shares as may be issuable to the Participant, the
duration of the Award and the conditions upon which delivery of any Shares or
cash to the Participant shall be based. The amount of Shares that may be
deliverable pursuant to such Award shall

 

17

 

be based upon the degree of
attainment over a specified period (a “performance cycle”) as may be established
by the Committee of such measure(s) of the performance of the Corporation (or
any part thereof) or the Participant as may be established by the Committee.
The Committee may provide for full or partial credit, prior to completion of
such performance cycle or the attainment of the performance achievement
specified in the Award, in the event of the Participant’s death, Retirement, or
Total Disability, a Change in Control Event or in such other circumstances as
the Committee, consistent with Section 7.10(c)(2), if applicable, may
determine.

 

5.2. GRANTS OF STOCK BONUSES

 

The Committee may grant a
stock bonus to any Eligible Employee to reward exceptional or special services,
contributions or achievements in the manner and on such terms and conditions
(including any restrictions on such shares) as determined from time to time by
the Committee.

 

The number of Shares so
awarded shall be determined by the Committee. The stock bonus may be granted
independently or in lieu of a cash bonus.

 

5.3. DEFERRED PAYMENTS

 

The Committee may authorize
for the benefit of any Eligible Employee the deferral of any payment of cash or
Shares that may become due or of cash otherwise payable under this Plan, and
provide for accreted benefits thereon based upon such deferment, at the
election or at the request of such Participant, subject to the other terms of
this Plan. Such deferral shall be subject to such further conditions,
restrictions or requirements as the Committee may impose, subject to any then
vested rights of Participants.

 

5.4 RESTRICTIONS

 

The maximum number of shares
reserved for issuance pursuant to Performance Share Awards, and the number of
shares awarded as Stock Bonuses, when aggregated with the number of shares
issued in the form of Restricted Stock may never exceed 1,000,000.

 

VI. TAX OFFSET BONUS RIGHTS

 

6.1. GRANTS

 

The Committee may, in its
discretion, grant Tax Offset Bonus Rights to selected Participants. Such rights
shall be evidenced by Tax Offset Bonus Rights agreements on the terms and
conditions set forth in the Plan, which agreements shall specify the amount or
method of calculating the amount of the rights being granted and may contain
such other terms and conditions as are not inconsistent with the purposes and
provisions of the Plan. Each Tax Offset Bonus Right must relate to a specific
Nonqualified Stock Option granted under Section II of the Plan. Tax Offset
Bonus Rights granted in relation to a specific Nonqualified Stock Option shall
be granted either concurrently or at such later time as determined by the
Committee. The amount of any Tax Offset Bonus Right may be, but is not required
to be, calculated as a specified percentage of the excess of the Fair Market
Value of a share of the Corporation’s Common Stock on the date when the right
is exercised over the price per share under the Option exercised concurrently
with the exercise of such right.

 

18

 

6.2.
TAX OFFSET BONUS RIGHTS PERIOD

 

Each Tax Offset Bonus Right
and all rights or obligations thereunder shall expire upon the expiration of
the related Nonqualified Stock Option. In no event may a Tax Offset Bonus Right
be exercised later than the tenth anniversary of the date on which the Tax
Offset Bonus Right is granted, and shall be subject to earlier termination as
hereinafter provided.

 

6.3. EXERCISE OF RIGHTS

 

Tax Offset Bonus Rights
shall be exercisable to the extent, and only to the extent, the related
Nonqualified Stock Option is exercisable. Tax Offset Bonus Rights shall only be
exercisable concurrently with the exercise of the related Nonqualified Stock
Option; any exercise of the Nonqualified Stock Option shall also be deemed an
exercise of the equivalent number of Tax Offset Bonus Rights.

 

Each holder of a Tax Offset
Bonus Right shall agree to give the Committee prompt written notice of an
election made by such holder to exercise said Tax Offset Bonus Rights subject
to the approval of the Committee.

 

Despite any other provision
of the Plan, the Committee may impose such conditions on exercise of Tax Offset
Bonus Rights as may be required to satisfy the requirements of Rule 16b-3 (or
any successor rule), promulgated by the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934.

 

Any exercise of a Tax Offset
Bonus Right hereunder shall be made beginning on the third business day
following the date of release of the financial data specified in paragraph
(e)(1)(ii) of Rule 16b-3 of the regulations promulgated under the Securities
Exchange Act of 1934 and ending on the twelfth business day following such date
or at such other time as may be permitted under an amendment or successor rule.

 

6.4. PAYMENTS

 

Upon the exercise of a Tax
Offset Bonus Right, the Corporation shall deliver to the person exercising such
right the amount of the right being exercised, calculated as specified in the
Tax Offset Bonus Right agreement with respect thereto. Payment shall be in
either cash, Common Stock or a combination thereof, as the Committees shall
determine. No fractional shares will be issued.

 

6.5. TERMINATION OF
EMPLOYMENT

 

Unless otherwise determined
by the Committee, in the event a Participant ceases to be an employee of the
Corporation for any reason, any Tax Offset Bonus Right will be exercisable only
to the extent that any related Nonqualified Stock Option is exercisable under
the applicable provisions of the Plan and related Award Agreement.

 

19

 

VII. OTHER PROVISIONS

 

7.1.
RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS AND BENEFICIARIES

 

(a) Employment Status.
Status as an Eligible Employee shall not be construed as a commitment that any
Award will be made under this Plan to an Eligible Employee or to Eligible
Employees generally.

 

(b) No Employment Contract.
Nothing contained in this Plan (or in any other documents related to this Plan
or to any Award) shall confer upon any Eligible Employee or Participant any
right to continue in the employ or other service of the Corporation or
constitute any contract or agreement of employment or other service, nor shall
interfere in any way with the right of the Corporation to change such person’s
compensation or other benefits or to terminate the employment of such person,
with or without cause, but nothing contained in this Plan or any document related
hereto shall adversely affect any independent contractual right of such person
without his or her consent thereto.

 

(c) Plan Not Funded. Awards
payable under this Plan shall be payable in Shares or from the general assets
of the Corporation, and no special or separate reserve, fund or deposit shall
be made to assure payment of such Awards. No Participant, Beneficiary or other
person shall have any right, title or interest in any fund or in any specific
asset (including shares of Common Stock except as expressly otherwise provided)
of the Corporation by reason of any Award hereunder. Neither the provisions of
this Plan (or of any related documents), nor the creation or adoption of this
Plan, nor any action taken pursuant to the provisions of this Plan shall
create, or be construed to create, a trust of any kind or a fiduciary
relationship between the Corporation and any Participant, Beneficiary or other
person. To the extent that a Participant, Beneficiary or other person acquires
a right to receive payment pursuant to any Award hereunder, such right shall be
no greater than the right of any unsecured general creditor of the Corporation.

 

7.2. ADJUSTMENTS;
ACCELERATIONS

 

(a) Adjustments. If the
outstanding shares of Common Stock are changed into or exchanged for cash,
other property or a different number or kind of shares or securities of the
Corporation, or if additional shares or new or different securities are
distributed with respect to the outstanding shares of Common Stock, through a
reorganization or merger in which the Corporation is the surviving entity, or
through a combination, consolidation, recapitalization, reclassification, stock
split, stock dividend, reverse stock split, stock consolidation, dividend or
distribution of cash or property to the shareholders of the Corporation or if
there shall occur any other extraordinary corporate transaction or event in
respect of the Common Stock or a sale of substantially all the assets of the
Corporation as an entirety which in the judgment of the Committee materially
affects the Common Stock, then the Committee shall, in such manner and to such
extent (if any) as it deems appropriate and equitable (1) proportionately
adjust any or all terms of outstanding Awards including, but not limited to (A)
the number and kind of shares of Common Stock or other consideration that is
subject to or may be delivered under this Plan and pursuant to outstanding
Awards, (B) the consideration payable with respect to Awards granted prior to

 

20

 

any such change and the
price, if any, paid in connection with Restricted Stock Awards or (C) the
performance standards appropriate to any outstanding Awards; or (2) in the case
of an extraordinary dividend or other distribution, merger, reorganization,
consolidation, combination, sale of assets, split up, exchange, or spin off,
make provision for a cash payment or for the substitution or exchange of any or
all outstanding Awards or the cash, securities or property deliverable to the
holder of any or all outstanding Awards based upon the distribution or
consideration payable to holders of Common Stock upon or in respect of such
event; provided, however, in each case, that with respect to Awards of
Incentive Stock Options, no such adjustment shall be made which would cause the
Plan to violate Section 422 or 424(a) of the Code or any successor
provisions thereto. Corresponding adjustments shall be made with respect to any
Stock Appreciation Rights based upon the adjustments made to the Options to
which they are related. In any of such events, the Committee may take such
action sufficiently prior to such event if necessary to permit the Participant
to realize the benefts intended to be conveyed with respect to the underlying
shares in the same manner as is available to shareholders generally.

 

(b) Acceleration of Awards
Upon Change in Control. As to any or all Participants, upon the occurrence of a
Change in Control Event (i) each Option and Stock Appreciation Right shall
become immediately exercisable, (ii) Restricted Stock shall immediately vest
free of restrictions, and (iii) each Performance Share Award shall become
payable to the Participant; provided, however, that in no event shall any Award
be accelerated as to any Section 16 Person to a date less than six months
after the Award Date of such Award. Notwithstanding the foregoing, prior to a
Change in Control Event, the Committee may determine that, upon its occurrence,
there shall be no acceleration of benefits under Awards or determine that only
certain or limited benefits under Awards shall be accelerated and the extent to
which they shall be accelerated, and/or establish a different time in respect
of such event for such acceleration. In that event, the Committee will make
provision in connection with such transaction for continuance of the Plan and
the assumption of Options and Awards theretofore granted, or the substitution
for such with new Options and Awards covering the stock of a successor employer
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to number and kind of shares and prices. In addition, the Committee may
override the limitations on acceleration in this Section 7.2(b) by express
provision in the Award Agreement and may accord any Participant a right to
refuse any acceleration, whether pursuant to the Award Agreement or otherwise,
in such circumstances as the Committee may approve. Any acceleration of Awards
shall comply with applicable regulatory requirements. including without
limitation Section 422 of the Code.

 

(c) Possible Early
Termination of Accelerated Awards. If any Option or other right to acquire
Shares under this Plan has not been exercised prior to (i) a dissolution of the
Corporation, (ii) a reorganization event described in Section 7.2(a) that
the Corporation does not survive, or (iii) the consummation of a reorganization
event described in Section 7.2(a) that results in a Change in Control
Event approved by the Board and no provision has been made for the survival,
substitution, exchange or other settlement of such Option or right, such Option
or right shall thereupon terminate.

 

21

 

7.3.
EFFECT OF TERMINATION OF EMPLOYMENT

 

The Committee shall
establish in respect of each Award granted to an Eligible Employee the effect
of a termination of employment on the rights and benefits thereunder and in so
doing may make distinctions based upon the cause of termination, e.g.,
retirement, early retirement, termination for cause, disability or death.
Notwithstanding any terms to the contrary in an Award Agreement or this Plan,
the Committee may decide in its complete discretion to extend the exercise
period of an Award (although not beyond the period described in Section 2.3(b))
and the number of shares covered by the Award with respect to which the Award
is exercisable or vested.

 

7.4. COMPLIANCE WITH LAWS

 

This Plan, the granting and
vesting of Awards under this Plan and the offer, issuance and delivery of
Shares and/or the payment of money under this Plan or under Awards granted
hereunder are subject to compliance with all applicable federal and state laws,
rules and regulations (including, but not limited to, state and federal
securities laws and federal margin requirements) and to such approvals by any
listing, regulatory or governmental authority as may, in the opinion of counsel
for the Corporation, be necessary or advisable in connection therewith. Any
securities delivered under this Plan shall be subject to such restrictions, and
the person acquiring such securities shall, if requested by the Corporation,
provide such assurances and representations to the Corporation as the
Corporation may deem necessary or desirable to assure compliance with all
applicable legal requirements.

 

7.5. TAX WITHHOLDING

 

(a) Cash or Shares. Upon any
exercise, vesting, or payment of any Award, the Corporation shall have the
right at its option to (i) require the Participant (or Personal Representative
or Beneficiary, as the case may be) to pay or provide for payment of the amount
of any taxes which the Corporation may be required to withhold with respect to
such transaction or (ii) deduct from any amount payable in cash the amount of
any taxes which the Corporation may be required to withhold with respect to
such cash amount. In any case where a tax is required to be withheld in
connection with the delivery of Shares under this Plan, the Committee may grant
(either at the time of the Award or thereafter) to the Participant the right to
elect, or the Committee may require (either at the time of the Award or
thereafter), pursuant to such rules and subject to such conditions as the
Committee may establish, to have the Corporation reduce the number of shares to
be delivered by the appropriate number of shares valued at their then Fair
Market Value, to satisfy such withholding obligation.

 

(b) Tax Loans. The Committee
may, in its discretion, authorize a loan to an Eligible Employee in the amount
of any taxes which the Corporation may be required to withhold with respect to
Shares received (or disposed of, as the case may be) pursuant to a transaction
described in subsection (a) above. Such a loan shall be for a term, at a
rate of interest and pursuant to such other terms and conditions as the
Committee, under applicable law, may establish and such loan need not comply
with the provisions of Section 1.9.

 

22

 

7.6.
PLAN AMENDMENT, TERMINATION AND SUSPENSION

 

(a) Board Authorization. The
Board may, at any time, terminate or, from time to time, amend, modify or
suspend this Plan, in whole or in part. No Awards may be granted during any
suspension of this Plan or after termination of this Plan, but the Committee
shall retain jurisdiction as to Awards then outstanding in accordance with the
terms of this Plan. Any suspension will not affect the expiration of the Plan
set forth in Section 7.9.

 

(b) Shareholder Approval. If
any amendment would materially increase the aggregate number of securities that
may be issued under this Plan or materially modify the requirements as to
eligibility for participation in this Plan, then to the extent then required by
Rule 16b-3 to secure benefits thereunder or to avoid liability under Section 16
of the Exchange Act (and Rules thereunder) or required under Section 424
of the Code or any other applicable law, or deemed necessary or advisable by
the Board, such amendment shall be subject to shareholder approval.

 

(c) Amendments to Awards.
Without limiting any other express authority of the Committee under, but
subject to the express limits of, this Plan, the Committee by agreement or
resolution may waive conditions of or limitations on Awards that the Committee
in the prior exercise of its discretion has imposed, without the consent of the
Participant, and may make other changes to the terms and conditions of Awards
that do not affect in any manner materially adverse to the Participant his or
her rights and benefits under an Award.

 

(d) Limitations on
Amendments to Plan and Awards. No amendment, suspension or termination of the
Plan or change of or affecting any outstanding Award shall, without written
consent of the Participant, affect in any manner materially adverse to the
Participant any rights or benefits of the Participant or obligations of the
Corporation under any Award granted under this Plan prior to the effective date
of such change. Changes contemplated by Section 7.2 shall not be deemed to
constitute changes or amendments for purposes of this Section 7.6.

 

7.7.
PRIVILEGES OF STOCK OWNERSHIP

 

Except as otherwise
expressly authorized by the Committee or this Plan, a Participant shall not be
entitled to any privilege of stock ownership as to any Shares not actually
delivered to and held of record by him or her. No adjustment will be made for
dividends or other rights as a shareholder for which a record date is prior to
such date of delivery.

 

7.8. EFFECTIVE DATE OF THE
PLAN

 

This Plan shall be effective
as of January 26, 1999, the date of Board approval, subject to shareholder
approval within 12 months thereafter.

 

23

 

7.9. TERM OF THE PLAN

 

No Award shall be granted
more than ten years after the effective date of this Plan (the “termination
date”). Unless otherwise expressly provided in this Plan or in an applicable
Award Agreement, any Award thereto granted may extend beyond such date, and all
authority of the Committee with respect to Awards hereunder shall continue
during any suspension of this Plan and in respect of outstanding Awards on such
termination date.

 

7.10.
GOVERNING LAW; CONSTRUCTION; SEVERABILITY

 

(a) Choice of Law. This
Plan, the Awards, all documents evidencing Awards and all other related
documents shall be governed by, and construed in accordance with the laws of
the State of California applicable to contracts made and performed within such
State, except as such laws may be supplanted by the laws of the United States
of America, which laws shall then govern its effect and its construction to the
extent they supplant California law.

 

(b) Severability. If any
provision shall be held by a court of competent jurisdiction to be invalid and
unenforceable, the remaining provisions of this Plan shall continue in effect.

 

(c) Plan Construction.

 

(i) It is the intent of the
Corporation that this Plan and Awards hereunder satisfy and be interpreted in a
manner that in the case of Participants who are or may be subject to Section 16
of the Exchange Act satisfies the applicable requirements of Rule 16b-3 so that
such persons will be entitled to the benefits of Rule 16b-3 or other exemptive
rules under Section 16 of the Exchange Act and will not be subjected to
avoidable liability thereunder. If any provision of this Plan or of any Award
or any prior action by the Committee would otherwise frustrate or conflict with
the intent expressed above, that provision to the extent possible shall be
interpreted and deemed amended so as to avoid such conflict, but to the extent
of any remaining irreconcilable conflict with such intent as to such persons in
the circumstances, such provision shall be deemed void.

 

(ii) It is the further
intent of the Corporation that options or Stock Appreciation Rights with an
exercise or base price not less than Fair Market Value on the date of grant,
that are granted to or held by a Section 16 Person, shall qualify as
performance-based compensation under Section 162(m) of the Code, and this
Plan shall be interpreted consistent with such intent.

 

24

 

7.11. CAPTIONS

 

Captions and headings are
given to the sections and subsections of this Plan solely as a convenience to
facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of the Plan or any provision
thereof.

 

7.12. NON-EXCLUSIVITY OF
PLAN

 

Nothing in this Plan shall
limit or be deemed to limit the authority of the Board or the Committee to
grant awards or authorize any other compensation, with or without reference to
the Common Stock under any other plan or authority.

 

25

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