Document:

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                                                                   EXHIBIT 10.05

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                          GUILFORD PHARMACEUTICALS INC.

                            2002 STOCK PURCHASE PLAN

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                                TABLE OF CONTENTS
                                                                            Page

1.  Definitions..............................................................1
2.  Shares Subject to the Plan...............................................2
3.  Administration...........................................................2
4.  Interpretation...........................................................2
5.  Eligible Participant.....................................................2
6.  Participation in the Plan................................................3
7.  Offerings................................................................3
8.  Offering Periods and purchase periods....................................3
9.  Rights to Purchase Common Stock; Purchase Price..........................3
10. Timing of Purchase.......................................................3
11. Purchase Limitation......................................................4
12. Issuance of Stock Certificates and sale of plan shares...................4
13. Withholding of Taxes.....................................................5
14. Account Statements.......................................................5
15. Participation Adjustment.................................................5
16. Changes in Elections to Purchase.........................................5
    a.  Ceasing Payroll Deductions or Periodic Payments......................5
    b.  Decreasing Payroll Deductions During a Purchase Period...............6
    c.  Modifying Payroll Deductions or Periodic Payments at the
        Start of an Offering Period..........................................6
17. Termination of services..................................................6
18. Lay-Off, Authorized Leave oF Absence or Disability.......................6
19. Failure to Make Periodic Cash Payments...................................7
20. Termination of Participation.............................................7
21. Assignment...............................................................7
22. Application of Funds.....................................................8
23. No Right to Continued Employment or provision of services................8
24. Amendment of Plan........................................................8
25. Term and Termination of the Plan.........................................8
26. Effect of Changes in Capitalization......................................9
    a.  Changes in Stock.....................................................9
    b.  Reorganization in Which the Company Is the Surviving
        Corporation..........................................................9
    c.  Reorganization in Which the Company Is Not the Surviving
        Corporation, Sale of Assets or Stock, and other Corporate
        Transactions.........................................................9
    d.  Adjustments..........................................................10
    e.  No Limitations on Company............................................10

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27. Governmental Regulation..................................................10
28. Stockholder Rights.......................................................10
29. RULE 16b-3...............................................................10
30. Payment of Plan Expenses.................................................11

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                          GUILFORD PHARMACEUTICALS INC.

                            2002 STOCK PURCHASE PLAN

     The Board of Directors of the Company has adopted this 2002 Stock Purchase
Plan to enable eligible employees of and service providers to the Company and
its Participating Affiliates, through payroll deductions or other cash
contributions, to purchase shares of the Company's Common Stock. The Plan is for
the benefit of the employees and service providers of the Company and any
Participating Affiliates. The Plan is intended to benefit the Company by
increasing the participants' interest in the Company's growth and success and
encouraging participants to continue to provide services the Company or its
Participating Affiliates. The provisions of the Plan are set forth below: 1.
DEFINITIONS

1.   DEFINITIONS

     1.1. "BOARD" means the Board of Directors of the Company.

     1.2. "CODE" means the Internal Revenue Code of 1986, as amended.

     1.3. "COMMITTEE" means a committee of, and designated from time to time by
resolution of, the Board.

     1.4. "COMMON STOCK" means the Company's common stock, par value $0.01 per
share.

     1.5. "COMPANY" means Guilford Pharmaceuticals Inc.

     1.6. "EFFECTIVE DATE" means February 20, 2002.

     1.7. "FAIR MARKET VALUE" means the value of each share of Common Stock
subject to the Plan on a given date determined as follows: if on such date the
shares of Common Stock are listed on an established national or regional stock
exchange, are admitted to quotation on The Nasdaq Stock Market, or are publicly
traded on an established securities market, the fair market value of the shares
of Common Stock shall be the closing price of the shares of Common Stock on such
exchange or in such market (the exchange or market selected by the Board if
there is more than one such exchange or market) on such date or, if there is no
such reported closing price, the fair market value shall be the mean between the
highest bid and lowest asked prices or between the high and low sale prices on
such day or, if no sale of the shares of Common Stock is reported for such day,
on the next preceding day on which any sale shall have been reported. If the
shares of Common Stock are not listed on such an exchange, quoted on such System
or traded on such a market, fair market value shall be determined by the Board
in good faith.

     1.8. "OFFERING PERIOD" means the period determined by the Committee
pursuant to SECTION 8 during which payroll deductions or other cash payments are
accumulated for the purpose of purchasing Common Stock under the Plan.

                                      -1-

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     1.9. "PARTICIPATING AFFILIATE" means any company or other trade or business
that is a subsidiary of the Company (determined in accordance with the
principles of Sections 424(e) and (f) of the Code and the regulations
thereunder).

     1.10. "PLAN" means the Guilford Pharmaceuticals Inc. 2002 Stock Purchase
Plan.

     1.11. "PURCHASE PERIOD" means the period designated by the Committee on the
last trading day of which purchases of Common Stock are made under the Plan.

     1.12. "PURCHASE PRICE" means the purchase price of each share of Common
Stock purchased under the Plan.

2.   SHARES SUBJECT TO THE PLAN.

     Subject to adjustment as provided in SECTION 26 below, the aggregate number
of shares of Common Stock that may be made available for purchase by
participants under the Plan is 300,000. The shares issuable under the Plan may,
in the discretion of the Board, be authorized but unissued shares, treasury
shares, or shares purchased on the open market.

3.   ADMINISTRATION.

     The Plan shall be administered under the direction of the Committee. No
member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan.

4.   INTERPRETATION.

     The Committee shall have authority to interpret the Plan, to prescribe,
amend and rescind rules relating to it, and to make all other determinations
necessary or advisable in administering the Plan, all of which determinations
will be final and binding upon all persons.

5.   ELIGIBLE PARTICIPANT.

     Any employee of or service provider to the Company or any of its
Participating Affiliates ("eligible participant") may participate in the Plan,
except with respect to employees the following, who are ineligible to
participate: (a) an employee who has been employed by the Company or any of its
Participating Affiliates for less than three months as of the beginning of an
Offering Period; (b) an employee whose customary employment is for less than
five months in any calendar year; (c) an employee whose customary employment is
20 hours or less per week; and (d) an employee who, after exercising his or her
rights to purchase shares under the Plan, would own shares of Common Stock
(including shares that may be acquired under any outstanding options)
representing five percent or more of the total combined voting power of all
classes of stock of the Company. Notwithstanding the foregoing, the Board may at
any time in its sole discretion determine that certain employees or service
providers are not eligible to participate in the Plan.

                                      -2-

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6.   PARTICIPATION IN THE PLAN.

     An eligible participant may become a participant in the Plan by completing
an election to participate in the Plan on a form provided by the Company and
submitting that form to the Payroll Department of the Company. The form will
authorize: (i) payment of the Purchase Price by payroll deductions, and if
authorized by the Committee, payment of the Purchase Price by means of periodic
cash payments from participants, and (ii) the purchase of shares of Common Stock
for the participant's account in accordance with the terms of the Plan.
Enrollment will become effective upon the first day of an Offering Period.

7.   OFFERINGS.

     At the time an eligible participant submits his or her election to
participate in the Plan (as provided in SECTION 6 above), the participant shall
elect to have deductions made from his or her pay on each pay day following his
or her enrollment in the Plan, and for as long as he or she shall participate in
the Plan. The deductions will be credited to the participant's account under the
Plan. No interest shall accrue on the payroll deductions of a participant.
Pursuant to SECTION 6 above, the Committee shall also have the authority to
authorize in the election form the payment for shares of Common Stock through
cash payments from participants. A participant may not during any Offering
Period change his or her percentage of payroll deduction for that Offering
Period, nor may a participant withdraw any contributed funds, other than in
accordance with SECTIONS 16 through 20 below.

8.   OFFERING PERIODS AND PURCHASE PERIODS.

     The Offering Periods and Purchase Periods shall be determined by the
Committee. The first Offering Period under the Plan shall commence on the date
determined by the Committee. Each Offering Period shall consist of one or more
Purchase Periods, as determined by the Committee.

9.   RIGHTS TO PURCHASE COMMON STOCK; PURCHASE PRICE.

     Rights to purchase shares of Common Stock will be deemed granted to
participants as of the first trading day of each Offering Period. The Purchase
Price of each share of Common Stock shall be determined by the Committee;
PROVIDED, HOWEVER, that the Purchase Price shall not be less than the lesser of
85 percent of the Fair Market Value of the Common Stock (i) on the first trading
day of the Offering Period or (ii) on the last trading day of the Purchase
Period; PROVIDED, FURTHER, that in no event shall the Purchase Price be less
than the par value of the Common Stock.

10.  TIMING OF PURCHASE

     Unless a participant has given prior written notice terminating
participation in the Plan, or participation in the Plan has otherwise been
terminated as provided in SECTIONS 16 through 20 below, such participant will be
deemed to have exercised automatically his or her right to purchase Common Stock
on the last trading day of the Purchase Period (except as provided in SECTION 16
below) for the number of shares of

                                      -3-

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Common Stock which the accumulated funds in the participant's account at that
time will purchase at the Purchase Price, subject to the participation
adjustment provided for in SECTION 15 below and subject to adjustment under
SECTION 26 below. Notwithstanding the foregoing, no shares shall be sold
pursuant to the Plan unless the Plan is approved by the Company's stockholders
in accordance with SECTION 25 below.

11.  PURCHASE LIMITATION

     Notwithstanding any other provision of the Plan, no participant may
purchase in any one calendar year under the Plan shares of Common Stock having
an aggregate Fair Market Value in excess of $25,000, determined as of the first
trading date of the Offering Period as to shares purchased during such period.
Effective upon the last trading day of the Purchase Period, a participant will
become a stockholder with respect to the shares purchased during such period,
and will thereupon have all dividend, voting and other ownership rights incident
thereto. In addition, the Committee or the Board may impose a limit on the
number of shares or the value of shares that a participant may purchase in each
Offering or Purchase Period; provided, that, such limitations shall be imposed
prior to the start of the relevant Offering or Purchase Period.

12.  ISSUANCE OF STOCK CERTIFICATES AND SALE OF PLAN SHARES.

     On the last trading day of the Purchase Period, a participant will be
credited with the number of shares of Common Stock purchased for his or her
account under the Plan during such Purchase Period. Shares purchased under the
Plan will be held in the custody of an agent (the "Agent") appointed by the
Board of Directors. The Agent may hold the shares purchased under the Plan in
stock certificates in nominee names and may commingle shares held in its custody
in a single account or stock certificate without identification as to individual
participants. The Committee shall have the right to require any or all of the
following with respect to shares of Common Stock purchased under the Plan:

          (i)  that a participant may not request that all or part of the shares
of Common Stock be reissued in the participant's own name and the stock
certificates delivered to the participant until two years (or such shorter
period of time as the Committee may designate) have elapsed since the first day
of the Offering Period in which the shares were purchased and one year has
elapsed since the day the shares were purchased (the "Holding Period");

          (ii) that all sales of shares during the Holding Period applicable to
such shares be performed through a licensed broker acceptable to the Company;
and

          (iii) that participants abstain from selling or otherwise transferring
shares of Common Stock purchased pursuant to the Plan for a period lasting up to
two years from the date the shares were purchased pursuant to the Plan.

                                      -4-

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13.  WITHHOLDING OF TAXES.

     To the extent that a participant realizes ordinary income in connection
with a sale or other transfer of any shares of Common Stock purchased under the
Plan, the Company may withhold amounts needed to cover such taxes from any
payments otherwise due and owing to the participant or from shares that would
otherwise be issued to the participant hereunder. Any participant who sells or
otherwise transfers shares purchased under the Plan within two years after the
beginning of the Offering Period in which the shares were purchased must within
30 days of such transfer notify the Payroll Department of the Company in writing
of such transfer.

14.  ACCOUNT STATEMENTS.

     The Company will cause the Agent to deliver to each participant a statement
for each Purchase Period during which the participant purchases Common Stock
under the Plan, reflecting the amount of payroll deductions during the Purchase
Period, the number of shares purchased for the participant's account, the price
per share of the shares purchased for the participant's account and the number
of shares held for the participant's account at the end of the Purchase Period.

15.  PARTICIPATION ADJUSTMENT.

     If in any Purchase Period the number of unsold shares that may be made
available for purchase under the Plan pursuant to SECTION 1 above is
insufficient to permit exercise of all rights deemed exercised by all
participants pursuant to SECTION 10 above, a participation adjustment will be
made, and the number of shares purchasable by all participants will be reduced
proportionately. Any funds then remaining in a participant's account after such
exercise will be refunded to the participant.

16.  CHANGES IN ELECTIONS TO PURCHASE.

     a.   CEASING PAYROLL DEDUCTIONS OR PERIODIC PAYMENTS

          A participant may, at any time prior to the last trading day of the
Purchase Period, by written notice to the Company, direct the Company to cease
payroll deductions (or, if the payment for shares is being made through periodic
cash payments, notify the Company that such payments will be terminated), in
accordance with the following alternatives:

          (i)  The participant's option to purchase shall be reduced to the
number of shares which may be purchased, as of the last day of the Purchase
Period, with the amount then credited to the participant's account; or

          (ii) Withdraw the amount in such participant's account and terminate
such participant's option to purchase.

                                      -5-

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     b.   DECREASING PAYROLL DEDUCTIONS DURING A PURCHASE PERIOD

          A participant may decrease his or her rate of contribution once during
a Purchase Period (but not below one percent (1%) of regular earnings) by
delivering to the Company a new form regarding election to participate in the
Plan under SECTION 6 above.

     c.   MODIFYING PAYROLL DEDUCTIONS OR PERIODIC PAYMENTS AT THE START OF AN
          OFFERING PERIOD

          Any participant may increase or decrease his or her payroll deduction
or periodic cash payments, to take effect on the first day of the next Offering
Period, by delivering to the Company a new form regarding election to
participate in the Plan under SECTION 6 above.

17.  TERMINATION OF SERVICES.

     In the event a participant ceases providing services to the Company or a
Participating Affiliate for any reason prior to the last day of the Purchase
Period except under circumstances described in SECTION 18 below, the amount in
the participant's account will be distributed to the participant (or to the
participant's beneficiary (or estate in the case a beneficiary is not named) in
the case of the participant's death) and the participant's option to purchase
will terminate.

18.  LAY-OFF, AUTHORIZED LEAVE OF ABSENCE OR DISABILITY.

     Payroll deductions for shares for which a participant has an option to
purchase may be suspended during any period of absence of the participant from
work due to lay-off, authorized leave of absence or disability or, if the
participant so elects, periodic payments for such shares may continue to be made
in cash.

     If such participant returns to active service prior to the last day of the
Purchase Period, the participant's payroll deductions will be resumed and if
said participant did not make periodic cash payments during the participant's
period of absence, the participant shall, by written notice to the Company's
Payroll Department within 10 days after the participant's return to active
service, but not later than the last day of the Purchase Period, elect:

     (a)  To make up any deficiency in the participant's account resulting from
a suspension of payroll deductions by an immediate cash payment;

     (b)  Not to make up such deficiency, in which event the number of shares to
be purchased by the participant shall be reduced to the number of whole shares
which may be purchased with the amount, if any, then credited to the
participant's account plus the aggregate amount, if any, of all payroll
deductions to be made thereafter; or

     (c)  Withdraw the amount in the participant's account and terminate the
participant's option to purchase.

                                      -6-

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     A participant on lay-off, authorized leave of absence or disability on the
last day of the Purchase Period shall deliver written notice to the Company on
or before the last day of the Purchase Period, electing one of the alternatives
provided in the foregoing clauses (a), (b) and (c) of this SECTION 18. If any
participant fails to deliver such written notice within 10 days after the
participant's return to active service or by the last day of the Purchase
Period, whichever is earlier, the participant shall be deemed to have elected
subsection 18(c) above.

     If the period of a participant's lay-off, authorized leave of absence or
disability shall terminate on or before the last day of the Purchase Period, and
the participant shall not resume providing services to the Company or a
Participating Affiliate, the participant shall receive a distribution in
accordance with the provisions of SECTION 17 of this Plan.

19.  FAILURE TO MAKE PERIODIC CASH PAYMENTS.

     Under any of the circumstances contemplated by this Plan, where the
purchase of shares is to be made through periodic cash payments in lieu of
payroll deductions, the failure to make any such payments shall reduce, to the
extent of the deficiency in such payments, the number of shares purchasable
under this Plan by the participant.

20.  TERMINATION OF PARTICIPATION.

     A participant will be refunded all moneys in his or her account, and his or
her participation in the Plan will be terminated if either (a) the Board elects
to terminate the Plan as provided in SECTION 25 below, or (b) the participant
ceases to be eligible to participate in the Plan under SECTION 5 above. As soon
as practicable following termination of participation in the Plan, the Company
will deliver to the participant a check representing the amount in the
participant's account and a stock certificate representing the number of whole
shares held in the participant's account. Once terminated, participation may not
be reinstated for the then current Offering Period, but, if otherwise eligible,
the participant may elect to participate in any subsequent Offering Period.

21.  ASSIGNMENT.

     No participant may assign his or her rights to purchase shares of Common
Stock under the Plan, whether voluntarily, by operation of law or otherwise. Any
payment of cash or issuance of shares of Common Stock under the Plan may be made
only to the participant (or, in the event of the participant's death, to the
participant's beneficiary (or estate in the case a beneficiary is not named)).
Once a stock certificate has been issued to the participant or for his or her
account, such certificate may be assigned the same as any other stock
certificate.

                                      -7-

<PAGE>

22.  APPLICATION OF FUNDS.

     All funds received or held by the Company under the Plan may be used for
any corporate purpose until applied to the purchase of Common Stock and/or
refunded to participants. Participants' accounts will not be segregated.

23.  NO RIGHT TO CONTINUED EMPLOYMENT OR PROVISION OF SERVICES.

     Neither the Plan nor any right to purchase Common Stock under the Plan
confers upon any participant any right to continued employment with the Company
or any of its Participating Affiliates, nor will participation in the Plan
restrict or interfere in any way with the right of the Company or any of its
Participating Affiliates to terminate the participant's employment or provision
of services at any time.

24.  AMENDMENT OF PLAN.

     The Board may, at any time, amend the Plan in any respect (including an
increase in the percentage specified in SECTION 9 above used in calculating the
Purchase Price). No amendment may be made that impairs the vested rights of
participants.

25.  TERM AND TERMINATION OF THE PLAN.

     The Plan shall be effective as of the date of adoption by the Board, which
date is set forth below, subject to approval of the Plan by a majority of the
votes present and entitled to vote at a duly held meeting of the shareholders of
the Company at which a quorum representing a majority of all outstanding voting
stock is present, either in person or by proxy; PROVIDED, HOWEVER, that upon
approval of the Plan by the shareholders of the Company as set forth above, all
rights to purchase shares granted under the Plan on or after the effective date
shall be fully effective as if the shareholders of the Company had approved the
Plan on the effective date. If the shareholders fail to approve the Plan on or
before one year after the effective date, the Plan shall terminate, any rights
to purchase shares granted hereunder shall be null and void and of no effect,
and all contributed funds shall be refunded to participating employees. The
Board may terminate the Plan at any time and for any reason or for no reason,
provided that such termination shall not impair any rights of participating
employees that have vested at the time of termination. In any event, the Plan
shall, without further action of the Board, terminate ten (10) years after the
date of adoption of the Plan by the Board or, if earlier, at such time as all
shares of Common Stock that may be made available for purchase under the Plan
pursuant to SECTION 1 above have been issued.

                                      -8-

<PAGE>

26.  EFFECT OF CHANGES IN CAPITALIZATION.

     a.   CHANGES IN STOCK.

          If the number of outstanding shares of Common Stock is increased or
decreased or the shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of any recapitalization, reclassification, stock split, reverse split,
combination of shares, exchange of shares, stock dividend, or other distribution
payable in capital stock, or other increase or decrease in such shares effected
without receipt of consideration by the Company occurring after the Effective
Date, the number and kinds of shares that may be purchased under the Plan shall
be adjusted proportionately and accordingly by the Company. In addition, the
number and kind of shares for which rights are outstanding shall be similarly
adjusted so that the proportionate interest of a participant immediately
following such event shall, to the extent practicable, be the same as
immediately prior to such event. Any such adjustment in outstanding rights shall
not change the aggregate Purchase Price payable by a participant with respect to
shares subject to such rights, but shall include a corresponding proportionate
adjustment in the Purchase Price per share. Notwithstanding the foregoing, in
the event of a spin-off that results in no change in the number of outstanding
shares of the Common Stock of the Company, the Company may, in such manner as
the Company deems appropriate, adjust (i) the number and kind of shares for
which rights are outstanding under the Plan, and (ii) the Purchase Price per
share.

     b.   REORGANIZATION IN WHICH THE COMPANY IS THE SURVIVING CORPORATION.

          Subject to SECTION C, if the Company shall be the surviving
corporation in any reorganization, merger or consolidation of the Company with
one or more other corporations, all outstanding rights under the Plan shall
pertain to and apply to the securities to which a holder of the number of shares
of Common Stock subject to such rights would have been entitled immediately
following such reorganization, merger or consolidation, with a corresponding
proportionate adjustment of the Purchase Price per share so that the aggregate
Purchase Price thereafter shall be the same as the aggregate Purchase Price of
the shares subject to such rights immediately prior to such reorganization,
merger or consolidation.

     c.   REORGANIZATION IN WHICH THE COMPANY IS NOT THE SURVIVING CORPORATION,
          SALE OF ASSETS OR STOCK, AND OTHER CORPORATE TRANSACTIONS.

          Upon any dissolution or liquidation of the Company, or upon a merger,
consolidation or reorganization of the Company with one or more other
corporations in which the Company is not the surviving corporation, or upon a
sale of all or substantially all of the assets of the Company to another
corporation, or upon any transaction (including, without limitation, a merger or
reorganization in which the Company is the surviving corporation) approved by
the Board that results in any person or entity owning more than 80 percent of
the combined voting power of all classes of stock of the Company, the Plan and
all rights outstanding hereunder shall terminate, except to the extent provision
is made in writing in connection with such transaction for the continuation of
the Plan and/or

                                      -9-

<PAGE>

the assumption of the rights theretofore granted, or for the substitution for
such rights of new rights covering the stock of a successor corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to the number and
kinds of shares and exercise prices, in which event the Plan and rights
theretofore granted shall continue in the manner and under the terms so
provided. In the event of any such termination of the Plan, the Offering Period
and the Purchase Period shall be deemed to have ended on the last trading day
prior to such termination, and in accordance with SECTION 12 above the rights of
each participant then outstanding shall be deemed to be automatically exercised
on such last trading day. The Board shall send written notice of an event that
will result in such a termination to all participants at least ten (10) days
prior to the date upon which the Plan will be terminated.

     d.   ADJUSTMENTS.

          Adjustments under this SECTION 26 related to stock or securities of
the Company shall be made by the Committee, whose determination in that respect
shall be final, binding, and conclusive.

     e.   NO LIMITATIONS ON COMPANY.

          The grant of a right pursuant to the Plan shall not affect or limit in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.

27.  GOVERNMENTAL REGULATION.

          The Company's obligation to issue, sell and deliver shares of Common
Stock pursuant to the Plan is subject to such approval of any governmental
authority and any national securities exchange or other market quotation system
as may be required in connection with the authorization, issuance or sale of
such shares.

28.  STOCKHOLDER RIGHTS.

          Dividends paid with respect to shares credited to each participant's
account will be themselves credited to such account. The Company will deliver to
each participant who purchases shares of Common Stock under the Plan, as
promptly as practicable by mail or otherwise, all notices of meetings, proxy
statements, proxies and other materials distributed by the Company to its
stockholders. Any shares of Common Stock held by the Agent for an participant's
account will be voted in accordance with the participant's duly delivered and
signed proxy instructions. There will be no charge to participants in connection
with such notices, proxies and other materials.

29.  RULE 16B-3.

     Transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or any successor provision under the Securities
Exchange Act of 1934, as amended. If any provision of the Plan or action by the
Board fails to so comply, it shall be

                                      -10-

<PAGE>

deemed null and void to the extent permitted by law and deemed advisable by the
Board. Moreover, in the event the Plan does not include a provision required by
Rule 16b-3 to be stated herein, such provision (other than one relating to
eligibility requirements, or the price and amount of awards) shall be deemed
automatically to be incorporated by reference into the Plan.

30.  PAYMENT OF PLAN EXPENSES.

     The Company will bear all costs of administering and carrying out the Plan.

                                      * * *

                                      -11-exv10w06

 

Exhibit 10.06

Appendix A

GUILFORD PHARMACEUTICALS INC.

2002 STOCK AWARD AND INCENTIVE PLAN

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
					Page
					

	
        
        1.
        

        	 	
        PURPOSE
        	 	 	1	 
	
	
	
	

	
        
        2.
        

        	 	
        DEFINITIONS
        	 	 	1	 
	
	
	
	

	
        
        3.
        

        	 	
        ADMINISTRATION OF THE PLAN
        	 	 	4	 
	
	
	
	

	 	 	
        3.1. Board
        	 	 	4	 
	
	
	
	

	 	 	
        3.2. Committee
        	 	 	4	 
	
	
	
	

	 	 	
        3.3. Terms of Awards
        	 	 	5	 
	
	
	
	

	 	 	
        3.4. Deferral Arrangement
        	 	 	6	 
	
	
	
	

	 	 	
        3.5. No Liability
        	 	 	6	 
	
	
	
	

	
        
        4.
        

        	 	
        STOCK SUBJECT TO THE PLAN
        	 	 	6	 
	
	
	
	

	 	 	
        4.1. Overall Number of Shares Available for
        Delivery
        	 	 	6	 
	
	
	
	

	 	 	
        4.2. Shares Available for Future Grants
        	 	 	6	 
	
	
	
	

	
        
        5.
        

        	 	
        EFFECTIVE DATE, DURATION AND AMENDMENTS
        	 	 	7	 
	
	
	
	

	 	 	
        5.1. Effective Date
        	 	 	7	 
	
	
	
	

	 	 	
        5.2. Term
        	 	 	7	 
	
	
	
	

	 	 	
        5.3. Amendment and Termination of the Plan
        	 	 	7	 
	
	
	
	

	
        
        6.
        

        	 	
        AWARD ELIGIBILITY AND LIMITATIONS
        	 	 	7	 
	
	
	
	

	 	 	
        6.1. Company or Subsidiary Employees;
        Service Providers; Other Persons
        	 	 	7	 
	
	
	
	

	 	 	
        6.2. Successive Awards
        	 	 	7	 
	
	
	
	

	 	 	
        6.3. Limitation on Shares of Stock Subject
        to Awards and Cash Awards
        	 	 	8	 
	
	
	
	

	 	 	
        6.4. Limitations on Incentive Stock Options
        	 	 	8	 
	
	
	
	

	 	 	
        6.5. Stand-Alone, Additional, Tandem, and
        Substitute Awards
        	 	 	8	 
	
	
	
	

	
        
        7.
        

        	 	
        AWARD AGREEMENT
        	 	 	9	 
	
	
	
	

	
        
        8.
        

        	 	
        TERMS AND CONDITIONS OF OPTIONS
        	 	 	9	 
	
	
	
	

	 	 	
        8.1. Option Price
        	 	 	9	 
	
	
	
	

	 	 	
        8.2. Vesting
        	 	 	9	 
	
	
	
	

	 	 	
        8.3. Term
        	 	 	9	 
	
	
	
	

	 	 	
        8.4. Termination of Service
        	 	 	9	 
	
	
	
	

	 	 	
        8.5. Limitations on Exercise of Option
        	 	 	10	 
	
	
	
	

	 	 	
        8.6. Method of Exercise
        	 	 	10	 
	
	
	
	

	 	 	
        8.7. Rights of Holders of Options
        	 	 	10	 
	
	
	
	

	 	 	
        8.8. Delivery of Stock Certificates
        	 	 	10	 
	
	
	
	

	 	 	
        8.9. Reload Options
        	 	 	10	 
	
	
	
	

	
        
        9.
        

        	 	
        TRANSFERABILITY OF OPTIONS
        	 	 	11	 
	
	
	
	

	 	 	
        9.1. Transferability of Options
        	 	 	11	 
	
	
	
	

	 	 	
        9.2. Family Transfers
        	 	 	11	 
	
	
	
	

	
        
        10.
        

        	 	
        STOCK APPRECIATION RIGHTS
        	 	 	11	 
	
	
	
	

	 	 	
        10.1. Right to Payment
        	 	 	11	 
	
	
	
	

	 	 	
        10.2. Other Terms
        	 	 	11	 

i

 

	 	 	 	 	 	 	 	 
					Page
					

	
        
        11.
        

        	 	
        BONUS STOCK, RESTRICTED STOCK AND STOCK UNITS
        	 	 	12	 
	
	
	
	

	 	 	
        11.1. 
        	Bonus Stock and Awards in Lieu of
        Obligations	 	 	12	 
	
	
	
	

	 	 	
        11.2. Grant of Restricted Stock or Stock
        Units
        	 	 	12	 
	
	
	
	

	 	 	
        11.3. Restrictions
        	 	 	12	 
	
	
	
	

	 	 	
        11.4. Restricted Stock Certificates
        	 	 	12	 
	
	
	
	

	 	 	
        11.5. Rights of Holders of Restricted Stock
        	 	 	12	 
	
	
	
	

	 	 	
        11.6. Rights of Holders of Stock Units
        	 	 	13	 
	
	
	
	

	 	 	 	
        11.6.1. Voting and Dividend Rights
        	 	 	13	 
	
	
	
	

	 	 	 	
        11.6.2. Creditor’s Rights
        	 	 	13	 
	
	
	
	

	 	 	
        11.7. Termination of Service
        	 	 	13	 
	
	
	
	

	 	 	
        11.8. Purchase of Restricted Stock
        	 	 	13	 
	
	
	
	

	 	 	
        11.9. Delivery of Stock
        	 	 	13	 
	
	
	
	

	
        
        12.
        

        	 	
        FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK
        	 	 	14	 
	
	
	
	

	 	 	
        12.1. General Rule
        	 	 	14	 
	
	
	
	

	 	 	
        12.2. Surrender of Stock
        	 	 	14	 
	
	
	
	

	 	 	
        12.3. Cashless Exercise
        	 	 	14	 
	
	
	
	

	 	 	
        12.4. Promissory Note
        	 	 	14	 
	
	
	
	

	 	 	
        12.5. Other Forms of Payment
        	 	 	14	 
	
	
	
	

	
        
        13.
        

        	 	
        DIVIDEND EQUIVALENT RIGHTS
        	 	 	14	 
	
	
	
	

	 	 	
        13.1. Dividend Equivalent Rights
        	 	 	14	 
	
	
	
	

	 	 	
        13.2. Termination of Service
        	 	 	15	 
	
	
	
	

	
        
        14.
        

        	 	
        PERFORMANCE AND ANNUAL INCENTIVE AWARDS
        	 	 	15	 
	
	
	
	

	 	 	
        14.1. Performance Conditions
        	 	 	15	 
	
	
	
	

	 	 	
        14.2.         	
        Performance or Annual Incentive Awards
        Granted to Designated Covered Employees
        	 	 	15	 
	
	
	
	

	 	 	 	
        14.2.1. Performance Goals Generally
        	 	 	15	 
	
	
	
	

	 	 	 	
        14.2.2. Business Criteria
        	 	 	16	 
	
	
	
	

	 	 	 	
        14.2.3. Timing For Establishing Performance
        Goals
        	 	 	16	 
	
	
	
	

	 	 	 	
        14.2.4. Performance or Annual Incentive
        Award Pool
        	 	 	16	 
	
	
	
	

	 	 	 	
        14.2.5. Settlement of Performance or Annual
        Incentive Awards; Other Terms
        	 	 	16	 
	
	
	
	

	 	 	
        14.3. Written Determinations
        	 	 	16	 
	
	
	
	

	 	 	
        14.4. Status of Section 14.2 Awards Under
        Code Section 162(m)
        	 	 	17	 
	
	
	
	

	
        
        15.
        

        	 	
        PARACHUTE LIMITATIONS
        	 	 	17	 
	
	
	
	

	
        
        16.
        

        	 	
        REQUIREMENTS OF LAW
        	 	 	18	 
	
	
	
	

	 	 	
        16.1. General
        	 	 	18	 
	
	
	
	

	 	 	
        16.2. Rule 16b-3.
        	 	 	18	 
	
	
	
	

	
        
        17.
        

        	 	
        EFFECT OF CHANGES IN CAPITALIZATION
        	 	 	19	 
	
	
	
	

	 	 	
        17.1. Changes in Stock
        	 	 	19	 
	
	
	
	

	 	 	
        17.2. 
        	
        Reorganization in Which the Company Is
        the Surviving Entity Which does not Constitute a Corporate
        Transaction
        	 	 	19	 
	
	
	
	

	 	 	
        17.3. Corporate Transaction
        	 	 	20	 
	
	
	
	

	 	 	
        17.4. Adjustments
        	 	 	20	 
	
	
	
	

	 	 	
        17.5. No Limitations on Company
        	 	 	21	 

ii

 

	 	 	 	 	 	 	 
					Page
					

	
        
        18.
        

        	 	
        ADDITIONAL AWARD FORFEITURE PROVISIONS
        	 	 	 	 
	
	
	
	

	 	 	
        18.1 Forfeiture of Options and Other Awards
        and Gains Realized Upon Prior Option Exercises or Award
        Settlements
        	 	 	21	 
	
	
	
	

	 	 	
        18.2 Events Triggering Forfeiture
        	 	 	21	 
	
	
	
	

	 	 	
        18.3 Agreement Does Not Prohibit Competition
        or Other Grantee Activities
        	 	 	22	 
	
	
	
	

	 	 	
        18.4 Board Discretion
        	 	 	23	 
	
	
	
	

	
        
        19.
        

        	 	
        GENERAL PROVISIONS
        	 	 	23	 
	
	
	
	

	 	 	
        19.1. Disclaimer of Rights
        	 	 	23	 
	
	
	
	

	 	 	
        19.2. Nonexclusivity of the Plan
        	 	 	23	 
	
	
	
	

	 	 	
        19.3. Withholding Taxes
        	 	 	23	 
	
	
	
	

	 	 	
        19.4. Captions
        	 	 	24	 
	
	
	
	

	 	 	
        19.5. Other Provisions
        	 	 	24	 
	
	
	
	

	 	 	
        19.6. Number And Gender
        	 	 	24	 
	
	
	
	

	 	 	
        19.7. Severability
        	 	 	24	 
	
	
	
	

	 	 	
        19.8. Governing Law
        	 	 	24	 

iii

 

GUILFORD PHARMACEUTICALS INC.

 

2002 STOCK AWARD AND INCENTIVE PLAN

      
Guilford Pharmaceuticals Inc., a Delaware corporation (the
“Company”), sets forth herein the terms of its 2002
Stock Award and Incentive Plan (the “Plan”), as
follows:

1.     PURPOSE

     
The Plan is intended to enhance the Company’s and its
Affiliates’ (as defined herein) ability to attract and
retain highly qualified officers, directors, key employees, and
other persons, and to motivate such officers, directors, key
employees, and other persons to serve the Company and its
Affiliates and to expend maximum effort to improve the business
results and earnings of the Company, by providing to such
officers, directors, key employees and other persons an
opportunity to acquire or increase a direct proprietary interest
in the operations and future success of the Company. To this
end, the Plan provides for the grant of stock options, stock
appreciation rights, restricted stock, stock units and dividend
equivalent rights. Any of these awards may, but need not, be
made as performance incentives to reward attainment of annual or
long-term performance goals in accordance with the terms hereof.
Stock options granted under the Plan may be non-qualified stock
options or incentive stock options, as provided herein.

2.     DEFINITIONS

     
For purposes of interpreting the Plan and related documents
(including Award Agreements), the following definitions shall
apply:

     
2.1     “Affiliate”
means, with respect to the Company, any company or other
trade or business that controls, is controlled by or is under
common control with the Company within the meaning of
Rule 405 of Regulation C under the Securities Act,
including, without limitation, any Subsidiary.

     
2.2     “Annual Incentive
Award” means an Award made subject to attainment of
performance goals (as described in Section 14) over
a performance period of up to one year (the fiscal year, unless
otherwise specified by the Committee).

     
2.3     “Award” means
a grant of an Option, Stock Appreciation Right, Restricted
Stock, Stock granted as a bonus or in lieu of another award,
Stock Unit or Dividend Equivalent Rights, other Stock-based
Award, Performance Award or Annual Incentive Award, together
with any related right or interest under the Plan.

     
2.4     “Award Agreement”
means the written agreement between the Company and a
Grantee that evidences and sets out the terms and conditions of
an Award.

     
2.5     “Benefit
Arrangement” shall have the meaning set forth in
Section 15 hereof.

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

     
2.7     “Cause” means,
as determined by the Board and unless otherwise provided in an
applicable agreement with the Company or an Affiliate,
(i) gross negligence or willful misconduct in connection
with the performance of duties; (ii) conviction of a
criminal offense (other than minor traffic offenses); or
(iii) material breach of any term of any employment,
consulting or other services, confidentiality, intellectual
property or non-competition agreements, if any, between the
Service Provider and the Company or an Affiliate.

1

 

     
2.8     “Code” means
the Internal Revenue Code of 1986, as now in effect or as
hereafter amended.

     
2.9     “Committee”
means a committee of, and designated from time to time by
resolution of, the Board, which shall be constituted as provided
in Section 3.2.

     
2.10     “Company”
means Guilford Pharmaceuticals Inc.

     
2.11     “Corporate
Transaction” means (i) the dissolution or
liquidation of the Company or a merger, consolidation, or
reorganization of the Company with one or more other entities in
which the Company is not the surviving entity, (ii) a sale
of substantially all of the assets of the Company to another
person or entity, or (iii) any transaction (including
without limitation a merger or reorganization in which the
Company is the surviving entity) which results in any person or
entity (other than persons who are shareholders or Affiliates
immediately prior to the transaction) owning 50% or more of the
combined voting power of all classes of stock of the Company.

     
2.12     “Covered
Employee” means a Grantee who is a Covered Employee
within the meaning of Section 162(m)(3) of the Code.

     
2.13     “Disability”
means the Grantee is unable to perform each of the essential
duties of such Grantee’s position by reason of a medically
determinable physical or mental impairment which is potentially
permanent in character or which can be expected to last for a
continuous period of not less than 12 months; provided,
however, that, with respect to rules regarding expiration of an
Incentive Stock Option following termination of the
Grantee’s Service, Disability shall mean the Grantee is
unable to engage in any substantial gainful activity by reason
of a medically determinable physical or mental impairment which
can be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than
12 months.

     
2.14     “Dividend
Equivalent” means a right, granted to a Grantee under
Section 13 hereof, to receive cash, Stock, other
Awards or other property equal in value to dividends paid with
respect to a specified number of shares of Stock, or other
periodic payments.

     
2.15     Effective Date”
means February 20, 2002, the date the Plan was approved
by the Board.

     
2.16     “Exchange Act”
means the Securities Exchange Act of 1934, as now in effect
or as hereafter amended.

     
2.17     “Fair Market
Value” means the value of a share of Stock, determined
as follows: if on the Grant Date or other determination date the
Stock is listed on an established national or regional stock
exchange, is admitted to quotation on The Nasdaq Stock Market,
Inc. or is publicly traded on an established securities market,
the Fair Market Value of a share of Stock shall be the closing
price of the Stock on such exchange or in such market (if there
is more than one such exchange or market the Board shall
determine the appropriate exchange or market) on the Grant Date
or such other determination date (or if there is no such
reported closing price, the Fair Market Value shall be the mean
between the highest bid and lowest asked prices or between the
high and low sale prices on such trading day) or, if no sale of
Stock is reported for such trading day, on the next preceding
day on which any sale shall have been reported. If the Stock is
not listed on such an exchange, quoted on such system or traded
on such a market, Fair Market Value shall be the value of the
Stock as determined by the Board in good faith.

     
2.18     “Family Member”
means a person who is a spouse, former spouse, child,
stepchild, grandchild, parent, stepparent, grandparent, niece,
nephew, mother-in-law,

2

 

father-in-law, son-in-law, daughter-in-law, brother, sister,
brother-in-law, or sister-in-law, including adoptive
relationships, of the Grantee, any person sharing the
Grantee’s household (other than a tenant or employee), a
trust in which any one or more of these persons have more than
fifty percent of the beneficial interest, a foundation in which
any one or more of these persons (or the Grantee) control the
management of assets, and any other entity in which one or more
of these persons (or the Grantee) own more than fifty percent of
the voting interests.

     
2.19     “Grant Date”
means, as determined by the Board or authorized Committee,
the latest to occur of (i) the date as of which the Board
approves an Award, (ii) the date on which the recipient of
an Award first becomes eligible to receive an Award under
Section 6 hereof, or (iii) such other date as
may be specified by the Board.

     
2.20     “Grantee”
means a person who receives or holds an Award under the Plan.

     
2.21     “Incentive Stock
Option” means an “incentive stock option”
within the meaning of Section 422 of the Code, or the
corresponding provision of any subsequently enacted tax statute,
as amended from time to time.

     
2.22     “Non-qualified Stock
Option” means an Option that is not an Incentive Stock
Option.

     
2.23     “Option”
means an option to purchase one or more shares of Stock
pursuant to the Plan.

     
2.24     “Option Price”
means the purchase price for each share of Stock subject to
an Option.

     
2.25     “Other Agreement”
shall have the meaning set forth in Section 15
hereof.

     
2.26     “Outside
Director” means a member of the Board who is not an
officer or employee of the Company.

     
2.27     “Performance
Award” means an Award made subject to the attainment of
performance goals (as described in Section 14) over
a performance period of up to ten (10) years.

     
2.28     “Plan” means
this Guilford Pharmaceuticals Inc. 2002 Stock Award and
Incentive Plan.

     
2.29     “Preexisting
Plans” means the following Company Plans: the 1998
Employee Share Option and Restricted Share Plan, as amended, the
1993 Employee Share Option and Restricted Share, as amended and
the Directors’ Stock Option Plan, as amended.

     
2.30     “Purchase Price”
means the purchase price for each share of Stock pursuant to
a grant of Restricted Stock.

     
2.31     “Reporting
Person” means a person who is required to file reports
under Section 16(a) of the Exchange Act.

     
2.32     “Restricted
Stock” means shares of Stock, awarded to a Grantee
pursuant to Section 11 hereof.

     
2.33     “SAR Exercise
Price” means the per share exercise price of an SAR
granted to a Grantee under Section 10 hereof.

     
2.34     “Securities Act”
means the Securities Act of 1933, as now in effect or as
hereafter amended.

3

 

     
2.35     “Service”
means service as an employee, officer, director or other
Service Provider of the Company or an Affiliate. Unless
otherwise stated in the applicable Award Agreement, a
Grantee’s change in position or duties shall not result in
interrupted or terminated Service, so long as such Grantee
continues to be an employee, officer, director or other Service
Provider of the Company or an Affiliate. Subject to the
preceding sentence, whether a termination of Service shall have
occurred for purposes of the Plan shall be determined by the
Board, which determination shall be final, binding and
conclusive.

     
2.36     “Service
Provider” means an employee, officer or director of the
Company or an Affiliate, or a consultant or adviser currently
providing services to the Company or an Affiliate.

     
2.37     “Stock” means
the common stock, par value $.01 per share, of the Company.

     
2.38     “Stock Appreciation
Right” or “SAR” means a right granted
to a Grantee under Section 10 hereof.

     
2.39     “Stock Unit”
means a bookkeeping entry representing the equivalent of
shares of Stock, awarded to a Grantee pursuant to
Section 11 hereof.

     
2.40     “Subsidiary”
means any “subsidiary corporation” of the Company
within the meaning of Section 424(f) of the Code.

     
2.41     “Termination
Date” means the date upon which an Option shall
terminate or expire, as set forth in Section 8.3
hereof.

     
2.42     “Ten Percent
Stockholder” means an individual who owns more than ten
percent (10%) of the total combined voting power of all classes
of outstanding stock of the Company, its parent or any of its
Subsidiaries. In determining stock ownership, the attribution
rules of Section 424(d) of the Code shall be applied.

3.     ADMINISTRATION OF THE PLAN

          3.1.     Board.

     
The Board shall have such powers and authorities related to the
administration of the Plan as are consistent with the
Company’s certificate of incorporation and by-laws and
applicable law. The Board shall have full power and authority to
take all actions and to make all determinations required or
provided for under the Plan, any Award or any Award Agreement,
and shall have full power and authority to take all such other
actions and make all such other determinations not inconsistent
with the specific terms and provisions of the Plan that the
Board deems to be necessary or appropriate to the administration
of the Plan, any Award or any Award Agreement. All such actions
and determinations shall be by the affirmative vote of a
majority of the members of the Board present at a meeting or by
unanimous consent of the Board executed in writing in accordance
with the Company’s certificate of incorporation and by-laws
and applicable law. The interpretation and construction by the
Board of any provision of the Plan, any Award or any Award
Agreement shall be final and conclusive.

          3.2.     Committee.

     
The Board from time to time may delegate to the Committee such
powers and authorities related to the administration and
implementation of the Plan, as set forth in

4

 

Section 3.1 above and other applicable provisions,
as the Board shall determine, consistent with the certificate of
incorporation and by-laws of the Company and applicable law.

		
	 	     
        (i) Except as provided in Subsection (ii) and except
        as the Board may otherwise determine, the Committee, if any,
        appointed by the Board to administer the Plan shall consist of
        two or more Outside Directors of the Company who:
        (a) qualify as “outside directors” within the
        meaning of Section 162(m) of the Code and who (b) meet
        such other requirements as may be established from time to time
        by the Securities and Exchange Commission for plans intended to
        qualify for exemption under Rule 16b–3 (or its
        successor) under the Exchange Act.
	 
	 	     
        (ii) The Board may also appoint one or more separate
        committees of the Board, each composed of one or more directors
        of the Company who need not be Outside Directors, who may
        administer the Plan with respect to employees or other Service
        Providers who are not officers or directors of the Company, may
        grant Awards under the Plan to such employees or other Service
        Providers, and may determine all terms of such Awards.

In the event that the Plan, any Award or any Award Agreement
entered into hereunder provides for any action to be taken by or
determination to be made by the Board, such action may be taken
or such determination may be made by the Committee if the power
and authority to do so has been delegated to the Committee by
the Board as provided for in this Section. Unless otherwise
expressly determined by the Board, any such action or
determination by the Committee shall be final, binding and
conclusive. To the extent permitted by law, the Committee may
delegate its authority under the Plan to a member of the Board.

          3.3.     Terms
of Awards.

     
Subject to the other terms and conditions of the Plan, the Board
shall have full and final authority to:

		
	 	     
        (i)  designate Grantees,
	 
	 	     
        (ii)  determine the type or types of Awards to be made
        to a Grantee,
	 
	 	     
        (iii) determine the number of shares of Stock to be subject
        to an Award,
	 
	 	     
        (iv)  establish the terms and conditions of each Award
        (including, but not limited to, the exercise price of any
        Option, the nature and duration of any restriction or condition
        (or provision for lapse thereof) relating to the vesting,
        exercise, transfer, or forfeiture of an Award or the shares of
        Stock subject thereto, and any terms or conditions that may be
        necessary to qualify Options as Incentive Stock Options),
	 
	 	     
        (v)  prescribe the form of each Award Agreement
        evidencing an Award, and
	 
	 	     
        (vi)  amend, modify, or supplement the terms of any
        outstanding Award. Such authority specifically includes the
        authority, in order to effectuate the purposes of the Plan but
        without amending the Plan, to modify Awards to eligible
        individuals who are foreign nationals or are individuals who are
        employed outside the United States to recognize differences in
        local law, tax policy, or custom.

     
As a condition to any subsequent Award, the Board shall have the
right, at its discretion, to require Grantees to return to the
Company Awards previously made under the Plan. Subject to the
terms and conditions of the Plan, any such new Award shall be
upon such terms and conditions as are specified by the Board at
the time the new Award

5

 

is made. The Board shall have the right, in its discretion, to
make Awards in substitution or exchange for any other award
under another plan of the Company, any Affiliate, or any
business entity to be acquired by the Company or an Affiliate.
The Company may retain the right in an Award Agreement to cause
a forfeiture of the gain realized by a Grantee on account of
actions taken by the Grantee in violation or breach of or in
conflict with any non-competition agreement, any agreement
prohibiting solicitation of employees or clients of the Company
or any Affiliate thereof or any confidentiality obligation with
respect to the Company or any Affiliate thereof or otherwise in
competition with the Company or any Affiliate thereof, to the
extent specified in such Award Agreement applicable to the
Grantee. Furthermore, the Company may annul an Award if the
Grantee is an employee of the Company or an Affiliate thereof
and is terminated for Cause as defined in the applicable Award
Agreement or the Plan, as applicable. The grant of any Award
shall be contingent upon the Grantee executing the appropriate
Award Agreement.

          3.4.     Deferral
Arrangement.

     
The Board may permit or require the deferral of any Award into a
deferred compensation arrangement, subject to such rules and
procedures as it may establish, which may include provisions for
the payment or crediting of interest or dividend equivalents,
including converting such credits into deferred Stock
equivalents and restricting deferrals to comply with hardship
distribution rules affecting 401(k) plans.

          3.5.     No
Liability.

     
No member of the Board or of the Committee shall be liable for
any action or determination made in good faith with respect to
the Plan or any Award or Award Agreement.

4.     STOCK SUBJECT TO THE PLAN

          4.1.     Overall
Number of Shares Available for Delivery.

     
Subject to adjustment as provided in Section 17
hereof, the number of shares of Stock available for issuance
under the Plan shall be Eight Hundred Seventy Four Thousand Six
Hundred and Two (874,602), plus 4.9% of the number of
shares issued or delivered by the Company during the term of the
Plan other than issuances or deliveries under the Plan or other
incentive compensation plans of the Company; provided, however,
that the total number of shares with respect to which ISOs may
be granted shall not exceed Five Hundred Thousand (500,000); and
provided further, that the total number of shares which may be
issued and delivered in connection with Awards other than
Options and SARs shall not exceed Five Hundred Thousand
(500,000). Stock issued or to be issued under the Plan shall be
authorized but unissued shares; or, to the extent permitted by
applicable law, issued shares that have been reacquired by the
Company and are held as treasury shares.

          4.2.     Shares
Available for Future Grants.

     
Shares subject to an Award or an award under the Pre-existing
Plans that is cancelled, expired, forfeited, settled in cash or
otherwise terminated without a delivery of shares to the Grantee
will again be available for Awards, and shares withheld in
payment of the exercise price or taxes relating to an Award or
Preexisting Plan award shall be deemed to constitute shares not
delivered to the Grantee and shall be deemed to again be
available for Awards under the Plan. In addition, any Award
granted in assumption of or in substitution for an award of a
company or business acquired by the Company shall not

6

 

be counted against the number of shares reserved under the Plan.
This Section 4.2 shall apply to the number of shares
reserved and available for ISOs only to the extent consistent
with applicable regulations relating to ISOs under the Code.

5.     EFFECTIVE DATE, DURATION AND
AMENDMENTS

          5.1.     Effective
Date.

     
The Plan shall be effective as of the Effective Date, subject to
approval of the Plan by the Company’s stockholders within
one year of the Effective Date. Upon approval of the Plan by the
stockholders of the Company as set forth above, all Awards made
under the Plan on or after the Effective Date shall be fully
effective as if the stockholders of the Company had approved the
Plan on the Effective Date. If the stockholders fail to approve
the Plan within one year after the Effective Date, any Awards
made hereunder shall be null and void and of no effect.

          5.2.     Term.

     
The Plan shall terminate automatically ten (10) years after
its adoption by the Board and may be terminated on any earlier
date as provided in Section 5.3.

          5.3.     Amendment
and Termination of the Plan

     
The Board may, at any time and from time to time, amend,
suspend, or terminate the Plan as to any shares of Stock as to
which Awards have not been made. An amendment shall be
contingent on approval of the Company’s stockholders to the
extent stated by the Board or required by applicable law. No
Awards shall be made after termination of the Plan. No
amendment, suspension, or termination of the Plan shall, without
the consent of the Grantee, impair rights or obligations under
any Award theretofore awarded under the Plan.

6.     AWARD ELIGIBILITY AND
LIMITATIONS

 

		
	          6.1.	
        Company or Subsidiary Employees; Service Providers; Other
        Persons

     
Subject to this Section 6, Awards may be made under
the Plan to: (i) any employee of, or other Service Provider
to, the Company or of any Affiliate, including any such employee
or other Service Provider who is an officer or director of the
Company, or of any Affiliate, as the Board shall determine and
designate from time to time, (ii) any Outside Director, and
(iii) any other individual whose participation in the Plan
is determined to be in the best interests of the Company by the
Board.

          6.2.     Successive
Awards.

     
An eligible person may receive more than one Award, subject to
such restrictions as are provided herein.

7

 

          6.3.     Limitation
on Shares of Stock Subject to Awards and Cash Awards.

     
During any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act, but only
after such time as the reliance period described in Treas. Reg.
Section 1.162-27(f)(2) has expired:

		
	 	     
        (i)  the maximum number of shares of Stock subject to
        Options that can be awarded under the Plan to any person
        eligible for an Award under Section 6 hereof is Five
        Hundred Thousand (500,000) per year;
	 
	 	     
        (ii)  the maximum number of shares that can be awarded
        under the Plan, other than pursuant to an Option to any person
        eligible for an Award under Section 6 hereof is Five
        Hundred Thousand (500,000) per year; and
	 
	 	     
        (iii) the maximum amount that may be earned as an Annual
        Incentive Award or other cash Award in any fiscal year by any
        one Grantee shall be Two Million Dollars ($2,000,000) and the
        maximum amount that may be earned as a Performance Award or
        other cash Award in respect of a performance period by any one
        Grantee shall be Two Million Dollars ($2,000,000).

     
The preceding limitations in this Section 6.3 are
subject to adjustment as provided in Section 17
hereof.

          6.4.     Limitations
on Incentive Stock Options.

     
An Option shall constitute an Incentive Stock Option only
(i) if the Grantee of such Option is an employee of the
Company or any Subsidiary of the Company; (ii) to the
extent specifically provided in the related Award Agreement; and
(iii) to the extent that the aggregate Fair Market Value
(determined at the time the Option is granted) of the shares of
Stock with respect to which all Incentive Stock Options held by
such Grantee become exercisable for the first time during any
calendar year (under the Plan and all other plans of the
Grantee’s employer and its Affiliates) does not exceed
$100,000. This limitation shall be applied by taking Options
into account in the order in which they were granted.

          6.5.     Stand-Alone,
Additional, Tandem, and Substitute Awards

     
Awards granted under the Plan may, in the discretion of the
Board, be granted either alone or in addition to, in tandem
with, or in substitution or exchange for, any other Award or any
award granted under another plan of the Company, any Affiliate,
or any business entity to be acquired by the Company or an
Affiliate, or any other right of a Grantee to receive payment
from the Company or any Affiliate. Such additional, tandem, and
substitute or exchange Awards may be granted at any time. If an
Award is granted in substitution or exchange for another Award,
the Board shall require the surrender of such other Award in
consideration for the grant of the new Award. In addition,
Awards may be granted in lieu of cash compensation, including in
lieu of cash amounts payable under other plans of the Company or
any Affiliate, in which the value of Stock subject to the Award
is equivalent in value to the cash compensation (for example,
Stock Units or Restricted Stock), or in which the Option Price,
grant price or purchase price of the Award in the nature of a
right that may be exercised is equal to the Fair Market Value of
the underlying Stock minus the value of the cash compensation
surrendered (for example, Options granted with an Option Price
“discounted” by the amount of the cash compensation
surrendered).

8

 

7.     AWARD AGREEMENT

     
Each Award granted pursuant to the Plan shall be evidenced by an
Award Agreement, in such form or forms as the Board shall from
time to time determine. Award Agreements granted from time to
time or at the same time need not contain similar provisions but
shall be consistent with the terms of the Plan. Each Award
Agreement evidencing an Award of Options shall specify whether
such Options are intended to be Non-qualified Stock Options or
Incentive Stock Options, and in the absence of such
specification such options shall be deemed Non-qualified Stock
Options.

8.     TERMS AND CONDITIONS OF
OPTIONS

          8.1.     Option
Price

     
The Option Price of each Option shall be fixed by the Board and
stated in the Award Agreement evidencing such Option. The Option
Price of each Option shall be at least the Fair Market Value on
the Grant Date of a share of Stock; provided, however,
that in the event that a Grantee is a Ten Percent Stockholder,
the Option Price of an Option granted to such Grantee that is
intended to be an Incentive Stock Option shall be not less than
110 percent of the Fair Market Value of a share of Stock on
the Grant Date. In no case shall the Option Price of any Option
be less than the par value of a share of Stock.

          8.2.     Vesting.

     
Subject to Sections 8.3 and 17.3 hereof, each
Option granted under the Plan shall become exercisable at such
times and under such conditions as shall be determined by the
Board and stated in the Award Agreement. For purposes of this
Section 8.2, fractional numbers of shares of Stock
subject to an Option shall be rounded down to the next nearest
whole number. The Board may provide, for example, in the Award
Agreement for (i) accelerated exercisability of the Option
in the event the Grantee’s Service terminates on account of
death, Disability or another event, (ii) expiration of the
Option prior to its term in the event of the termination of the
Grantee’s Service, (iii) immediate forfeiture of the
Option in the event the Grantee’s Service is terminated for
Cause or (iv) unvested Options to be exercised subject to
the Company’s right of repurchase with respect to unvested
shares of Stock. No Option shall be exercisable in whole or in
part prior to the date the Plan is approved by the Stockholders
of the Company as provided in Section 5.1 hereof.

          8.3.     Term.

     
Each Option granted under the Plan shall terminate, and all
rights to purchase shares of Stock thereunder shall cease, upon
the expiration of ten years from the date such Option is
granted, or under such circumstances and on such date prior
thereto as is set forth in the Plan or as may be fixed by the
Board and stated in the Award Agreement relating to such Option
(the “Termination Date”); provided, however,
that in the event that the Grantee is a Ten Percent Stockholder,
an Option granted to such Grantee that is intended to be an
Incentive Stock Option shall not be exercisable after the
expiration of five years from its Grant Date.

          8.4.     Termination
of Service.

     
Each Award Agreement shall set forth the extent to which the
Grantee shall have the right to exercise the Option following
termination of the Grantee’s Service. Such provisions shall
be determined in the sole discretion of the Board, need not be
uniform among all

9

 

Options issued pursuant to the Plan, and may reflect
distinctions based on the reasons for termination of Service.

          8.5.     Limitations
on Exercise of Option.

     
Notwithstanding any other provision of the Plan, in no event may
any Option be exercised, in whole or in part, prior to the date
the Plan is approved by the stockholders of the Company as
provided herein, or after ten years following the Grant Date, or
after the occurrence of an event referred to in
Section 17 hereof which results in termination of
the Option.

          8.6.     Method
of Exercise.

     
An Option that is exercisable may be exercised by the
Grantee’s delivery to the Company of written notice of
exercise on any business day, at the Company’s principal
office, on the form specified by the Company. Such notice shall
specify the number of shares of Stock with respect to which the
Option is being exercised and shall be accompanied by payment in
full of the Option Price of the shares for which the Option is
being exercised. The minimum number of shares of Stock with
respect to which an Option may be exercised, in whole or in
part, at any time shall be the lesser of (i) 100 shares or
such lesser number set forth in the applicable Award Agreement
and (ii) the maximum number of shares available for
purchase under the Option at the time of exercise.

          8.7.     Rights
of Holders of Options

     
Unless otherwise stated in the applicable Award Agreement, an
individual holding or exercising an Option shall have none of
the rights of a stockholder (for example, the right to receive
cash or dividend payments or distributions attributable to the
subject shares of Stock or to direct the voting of the subject
shares of Stock ) until the shares of Stock covered thereby are
fully paid and issued to him. Except as provided in
Section 17 hereof, no adjustment shall be made for
dividends, distributions or other rights for which the record
date is prior to the date of such issuance.

          8.8.     Delivery
of Stock Certificates.

     
Promptly after the exercise of an Option by a Grantee and the
payment in full of the Option Price, such Grantee shall be
entitled to the issuance of a stock certificate or certificates
evidencing his or her ownership of the shares of Stock subject
to the Option.

          8.9.     Reload
Options.

     
At the discretion of the Board and subject to such restrictions,
terms and conditions as the Board may establish, Options granted
under the Plan may include a “reload” feature pursuant
to which a Grantee exercising an Option by the delivery of a
number of shares of Stock in accordance with Section 8.6
hereof would automatically be granted an additional Option
(with an Option Price equal to the Fair Market Value of the
Stock on the date the additional Option is granted and with such
other terms as the Board may provide) to purchase that number of
shares of Stock equal to the number delivered to exercise the
original Option with an Option term equal to the remainder of
the original Option term unless the Board otherwise determines
in the Option Award Agreement for the original grant.

10

 

9.     TRANSFERABILITY OF OPTIONS

          9.1.     Transferability
of Options

     
Except as provided in Section 9.2, during the
lifetime of a Grantee, only the Grantee (or, in the event of
legal incapacity or incompetency, the Grantee’s guardian or
legal representative) may exercise an Option. Except as provided
in Section 9.2, no Option shall be assignable or
transferable by the Grantee to whom it is granted, other than by
will or the laws of descent and distribution.

          9.2.     Family
Transfers.

     
If authorized in the applicable Award Agreement, a Grantee may
transfer, not for value, all or part of an Option which is not
an Incentive Stock Option to any Family Member. For the purpose
of this Section 9.2, a “not for value”
transfer is a transfer which is (i) a gift, (ii) a
transfer under a domestic relations order in settlement of
marital property rights; or (iii) a transfer to an entity
in which more than fifty percent of the voting interests are
owned by Family Members (or the Grantee) in exchange for an
interest in that entity. Following a transfer under this
Section 9.2, any such Option shall continue to be
subject to the same terms and conditions as were applicable
immediately prior to transfer. Subsequent transfers of
transferred Options are prohibited except to Family Members of
the original Grantee in accordance with this Section 9.2
or by will or the laws of descent and distribution. The
events of termination of Service of Section 8.4
hereof shall continue to be applied with respect to the
original Grantee, following which the Option shall be
exercisable by the transferee only to the extent, and for the
periods specified, in Section 8.4.

10.     STOCK APPRECIATION RIGHTS

     
The Board is authorized to grant Stock Appreciation Rights
(“SARs”) to Grantees on the following terms and
conditions:

          10.1.     Right
to Payment.

     
A SAR shall confer on the Grantee to whom it is granted a right
to receive, upon exercise thereof, the excess of (A) the
Fair Market Value of one share of Stock on the date of exercise
over (B) the grant price of the SAR as determined by the
Board. The Award Agreement for an SAR shall specify the grant
price of the SAR, which may be fixed at the Fair Market Value of
a share of Stock on the date of grant or may vary in accordance
with a predetermined formula while the SAR is outstanding.

          10.2.     Other
Terms.

     
The Board shall determine at the date of grant or thereafter,
the time or times at which and the circumstances under which a
SAR may be exercised in whole or in part (including based on
achievement of performance goals and/or future service
requirements), the time or times at which SARs shall cease to be
or become exercisable following termination of Service or upon
other conditions, the method of exercise, method of settlement,
form of consideration payable in settlement, method by or forms
in which Stock will be delivered or deemed to be delivered to
Grantees, whether or not a SAR shall be in tandem or in
combination with any other Award, and any other terms and
conditions of any SAR.

11

 

11.     BONUS STOCK, RESTRICTED
STOCK AND STOCK UNITS

          11.1.     Bonus
Stock and Awards in Lieu of Obligations.

     
The Board may from time to time grant stock as a bonus, or to
grant Stock or other Awards in lieu of obligations of the
Company to pay cash or deliver other property under the Plan or
under other plans or compensatory arrangements, subject to such
terms as shall be determined by the Board.

          11.2.     Grant
of Restricted Stock or Stock Units.

     
The Board may from time to time grant Restricted Stock or Stock
Units to persons eligible to receive Awards under
Section 6 hereof, subject to such restrictions,
conditions and other terms, if any, as the Board may determine.
Awards of Restricted Stock may be made for no consideration
(other than par value of the shares which is deemed paid by
Services already rendered).

          11.3.     Restrictions.

     
At the time a grant of Restricted Stock or Stock Units is made,
the Board may, in its sole discretion, establish a period of
time (a “restricted period”) applicable to such
Restricted Stock or Stock Units. Each Award of Restricted Stock
or Stock Units may be subject to a different restricted period.
The Board may, in its sole discretion, at the time a grant of
Restricted Stock or Stock Units is made, prescribe restrictions
in addition to or other than the expiration of the restricted
period, including the satisfaction of corporate or individual
performance objectives, which may be applicable to all or any
portion of the Restricted Stock or Stock Units in accordance
with Section 14.1 and 14.2. Neither
Restricted Stock nor Stock Units may be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of during
the restricted period or prior to the satisfaction of any other
restrictions prescribed by the Board with respect to such
Restricted Stock or Stock Units.

          11.4.     Restricted
Stock Certificates.

     
The Company shall issue, in the name of each Grantee to whom
Restricted Stock has been granted, stock certificates
representing the total number of shares of Restricted Stock
granted to the Grantee, as soon as reasonably practicable after
the Grant Date. The Board may provide in an Award Agreement that
either (i) the Secretary of the Company shall hold such
certificates for the Grantee’s benefit until such time as
the Restricted Stock is forfeited to the Company or the
restrictions lapse, or (ii) such certificates shall be
delivered to the Grantee, provided, however, that such
certificates shall bear a legend or legends that comply with the
applicable securities laws and regulations and makes appropriate
reference to the restrictions imposed under the Plan and the
Award Agreement.

          11.5.     Rights
of Holders of Restricted Stock.

     
Unless the Board otherwise provides in an Award Agreement,
holders of Restricted Stock shall have the right to vote such
Stock and the right to receive any dividends declared or paid
with respect to such Stock. The Board may provide that any
dividends paid on Restricted Stock must be reinvested in shares
of Stock, which may or may not be subject to the same vesting
conditions and restrictions applicable to such Restricted Stock.
All distributions, if any, received by a Grantee with respect to
Restricted Stock as a result

12

 

of any stock split, stock dividend, combination of shares, or
other similar transaction shall be subject to the restrictions
applicable to the original Grant.

          11.6.     Rights
of Holders of Stock Units.

                     11.6.1.     Voting
and Dividend Rights.

     
Unless the Board otherwise provides in an Award Agreement,
holders of Stock Units shall have no rights as stockholders of
the Company. The Board may provide in an Award Agreement
evidencing a grant of Stock Units that the holder of such Stock
Units shall be entitled to receive, upon the Company’s
payment of a cash dividend on its outstanding Stock, a cash
payment for each Stock Unit held equal to the per-share dividend
paid on the Stock. Such Award Agreement may also provide that
such cash payment will be deemed reinvested in additional Stock
Units at a price per unit equal to the Fair Market Value of a
share of Stock on the date that such dividend is paid.

                     11.6.2.     Creditor’s
Rights.

     
A holder of Stock Units shall have no rights other than those of
a general creditor of the Company. Stock Units represent an
unfunded and unsecured obligation of the Company, subject to the
terms and conditions of the applicable Award Agreement.

          11.7.     Termination
of Service.

     
Unless the Board otherwise provides in an Award Agreement or in
writing after the Award Agreement is issued, upon the
termination of a Grantee’s Service, any Restricted Stock or
Stock Units held by such Grantee that have not vested, or with
respect to which all applicable restrictions and conditions have
not lapsed, shall immediately be deemed forfeited. Upon
forfeiture of Restricted Stock or Stock Units, the Grantee shall
have no further rights with respect to such Award, including but
not limited to any right to vote Restricted Stock or any right
to receive dividends with respect to shares of Restricted Stock
or Stock Units.

          11.8.     Purchase
of Restricted Stock.

     
The Grantee shall be required, to the extent required by
applicable law, to purchase the Restricted Stock from the
Company at a Purchase Price equal to the greater of (i) the
aggregate par value of the shares of Stock represented by such
Restricted Stock or (ii) the Purchase Price, if any,
specified in the Award Agreement relating to such Restricted
Stock. The Purchase Price shall be payable in a form described
in Section 12 or, in the discretion of the Board, in
consideration for past Services rendered to the Company or an
Affiliate.

          11.9.     Delivery
of Stock.

     
Upon the expiration or termination of any restricted period and
the satisfaction of any other conditions prescribed by the
Board, the restrictions applicable to shares of Restricted Stock
or Stock Units settled in Stock shall lapse, and, unless
otherwise provided in the Award Agreement, a stock certificate
for such shares shall be delivered, free of all such
restrictions, to the Grantee or the Grantee’s beneficiary
or estate, as the case may be.

13

 

12.     FORM OF PAYMENT FOR OPTIONS
AND RESTRICTED STOCK

          12.1.     General
Rule.

     
Payment of the Option Price for the shares purchased pursuant to
the exercise of an Option or the Purchase Price for Restricted
Stock shall be made in cash or in cash equivalents acceptable to
the Company.

          12.2.     Surrender
of Stock.

     
To the extent the Award Agreement so provides, payment of the
Option Price for shares purchased pursuant to the exercise of an
Option or the Purchase Price for Restricted Stock may be made
all or in part through the tender to the Company of shares of
Stock, which shares, if acquired from the Company, shall have
been held for at least six months at the time of tender and
which shall be valued, for purposes of determining the extent to
which the Option Price or Purchase Price has been paid thereby,
at their Fair Market Value on the date of exercise.

          12.3.     Cashless
Exercise.

     
With respect to an Option only (and not with respect to
Restricted Stock), to the extent the Award Agreement so
provides, payment of the Option Price for shares purchased
pursuant to the exercise of an Option may be made all or in part
by delivery (on a form acceptable to the Board) of an
irrevocable direction to a licensed securities broker acceptable
to the Company to sell shares of Stock and to deliver all or
part of the sales proceeds to the Company in payment of the
Option Price and any withholding taxes described in Section
19.3.

          12.4.     Promissory
Note.

     
To the extent the Award Agreement so provides, payment of the
Option Price for shares purchased pursuant to the exercise of an
Option or the Purchase Price for Restricted Stock may be made
all or in part with a full recourse promissory note executed by
the Grantee. The interest rate and other terms and conditions of
such note shall be determined by the Board. The Board may
require that the Grantee pledge the Stock subject to the Award
for the purpose of securing payment of the note. Unless the
Board determines otherwise, the stock certificate(s)
representing the Stock shall not be released to the Grantee
until such note is paid in full.

          12.5.     Other
Forms of Payment.

     
To the extent the Award Agreement so provides, payment of the
Option Price for shares purchased pursuant to exercise of an
Option or the Purchase Price for Restricted Stock may be made in
any other form that is consistent with applicable laws,
regulations and rules.

13.     DIVIDEND EQUIVALENT
RIGHTS

          13.1.     Dividend
Equivalent Rights.

     
A Dividend Equivalent Right is an Award entitling the recipient
to receive credits based on cash distributions that would have
been paid on the shares of Stock specified in the Dividend
Equivalent Right (or other award to which it relates) if such
shares had been issued to and held by the recipient. A Dividend
Equivalent Right may be granted hereunder to any Grantee as a
component of another Award or as a freestanding award.

14

 

The terms and conditions of Dividend Equivalent Rights shall be
specified in the grant. Dividend Equivalents credited to the
holder of a Dividend Equivalent Right may be paid currently or
may be deemed to be reinvested in additional shares of Stock,
which may thereafter accrue additional equivalents. Any such
reinvestment shall be at Fair Market Value on the date of
reinvestment. Dividend Equivalent Rights may be settled in cash
or Stock or a combination thereof, in a single installment or
installments, all determined in the sole discretion of the
Board. A Dividend Equivalent Right granted as a component of
another Award may provide that such Dividend Equivalent Right
shall be settled upon exercise, settlement, or payment of, or
lapse of restrictions on, such other award, and that such
Dividend Equivalent Right shall expire or be forfeited or
annulled under the same conditions as such other award. A
Dividend Equivalent Right granted as a component of another
Award may also contain terms and conditions different from such
other award.

          13.2.     Termination
of Service.

     
Except as may otherwise be provided by the Board either in the
Award Agreement or in writing after the Award Agreement is
issued, a Grantee’s rights in all Dividend Equivalent
Rights or interest equivalents shall automatically terminate
upon the Grantee’s termination of Service for any reason.

14.     PERFORMANCE AND ANNUAL
INCENTIVE AWARDS

          14.1.     Performance
Conditions

     
The right of a Grantee to exercise or receive a grant or
settlement of any Award, and the timing thereof, may be subject
to such performance conditions as may be specified by the Board.
The Board may use such business criteria and other measures of
performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to
reduce the amounts payable under any Award subject to
performance conditions, except as limited under
Sections 14.2 hereof in the case of a Performance
Award or Annual Incentive Award intended to qualify under Code
Section 162(m). If and to the extent required under Code
Section 162(m), any power or authority relating to a
Performance Award or Annual Incentive Award intended to qualify
under Code Section 162(m), shall be exercised by the
Committee and not the Board.

 

		
	          14.2.	
        Performance or Annual Incentive Awards Granted to Designated
        Covered Employees

     
If and to the extent that the Committee determines that a
Performance or Annual Incentive Award to be granted to a Grantee
who is designated by the Committee as likely to be a Covered
Employee should qualify as “performance-based
compensation” for purposes of Code Section 162(m), the
grant, exercise and/or settlement of such Performance or Annual
Incentive Award shall be contingent upon achievement of
pre-established performance goals and other terms set forth in
this Section 14.2.

                     14.2.1.     Performance
Goals Generally.

     
The performance goals for such Performance or Annual Incentive
Awards shall consist of one or more business criteria and a
targeted level or levels of performance with respect to each of
such criteria, as specified by the Committee consistent with
this Section 14.2. Performance goals shall be
objective and shall otherwise meet the requirements of Code
Section 162(m) and regulations thereunder including the
requirement that the level or levels of performance targeted by
the Committee result in the

15

 

achievement of performance goals being “substantially
uncertain.” The Committee may determine that such
Performance or Annual Incentive Awards shall be granted,
exercised and/or settled upon achievement of any one performance
goal or that two or more of the performance goals must be
achieved as a condition to grant, exercise and/or settlement of
such Performance or Annual Incentive Awards. Performance goals
may differ for Performance or Annual Incentive Awards granted to
any one Grantee or to different Grantees.

                     14.2.2.     Business
Criteria.

     
One or more of the following business criteria for the Company,
on a consolidated basis, and/or specified subsidiaries or
business units of the Company (except with respect to the total
stockholder return and earnings per share criteria), shall be
used exclusively by the Committee in establishing performance
goals for such Performance or Annual Incentive Awards:
(1) total stockholder return; (2) such total
stockholder return as compared to total return (on a comparable
basis) of a publicly available index such as, but not limited
to, the Standard & Poor’s 500 Stock Index; (3) net
income; (4) pretax earnings; (5) earnings before
interest expense, taxes, depreciation and amortization;
(6) pretax operating earnings after interest expense and
before bonuses, service fees, and extraordinary or special
items; (7) operating margin; (8) earnings per share;
(9) return on equity; (10) return on capital;
(11) return on investment; (12) operating earnings;
(13) working capital; (14) ratio of debt to
stockholders’ equity; (15) revenue;
(16) commencement of certain clinical trial;
(17) closing of corporate partnering transactions; and
(18) closing of financing transactions.

 

		
	                     14.2.3.	
        Timing For Establishing Performance Goals.

     
Performance goals shall be established not later than
90 days after the beginning of any performance period
applicable to such Performance or Annual Incentive Awards, or at
such other date as may be required or permitted for
“performance-based compensation” under Code
Section 162(m).

 

		
	                     14.2.4.	
        Performance or Annual Incentive Award Pool.

     
The Committee may establish a Performance or Annual Incentive
Award pool, which shall be an unfunded pool, for purposes of
measuring Company performance in connection with Performance or
Annual Incentive Awards.

 

		
	                     14.2.5.	
        Settlement of Performance or Annual Incentive Awards; Other
        Terms.

     
Settlement of such Performance or Annual Incentive Awards shall
be in cash, Stock, other Awards or other property, in the
discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be
made in connection with such Performance or Annual Incentive
Awards. The Committee shall specify the circumstances in which
such Performance or Annual Incentive Awards shall be paid or
forfeited in the event of termination of Service by the Grantee
prior to the end of a performance period or settlement of
Performance Awards.

          14.3.     Written
Determinations.

     
All determinations by the Committee as to the establishment of
performance goals, the amount of any Performance Award pool or
potential individual Performance Awards

16

 

and as to the achievement of performance goals relating to
Performance Awards, and the amount of any Annual Incentive Award
pool or potential individual Annual Incentive Awards and the
amount of final Annual Incentive Awards, shall be made in
writing in the case of any Award intended to qualify under Code
Section 162(m). To the extent required to comply with Code
Section 162(m), the Committee may delegate any
responsibility relating to such Performance Awards or Annual
Incentive Awards.

          14.4.     Status
of Section 14.2 Awards Under Code Section 162(m)

     
It is the intent of the Company that Performance Awards and
Annual Incentive Awards under Section 14.2 hereof
granted to persons who are designated by the Committee as likely
to be Covered Employees within the meaning of Code
Section 162(m) and regulations thereunder shall, if so
designated by the Committee, constitute “qualified
performance-based compensation” within the meaning of Code
Section 162(m) and regulations thereunder. Accordingly, the
terms of Section 14.2, including the definitions of
Covered Employee and other terms used therein, shall be
interpreted in a manner consistent with Code Section 162(m)
and regulations thereunder. The foregoing notwithstanding,
because the Committee cannot determine with certainty whether a
given Grantee will be a Covered Employee with respect to a
fiscal year that has not yet been completed, the term Covered
Employee as used herein shall mean only a person designated by
the Committee, at the time of grant of Performance Awards or an
Annual Incentive Award, as likely to be a Covered Employee with
respect to that fiscal year. If any provision of the Plan or any
agreement relating to such Performance Awards or Annual
Incentive Awards does not comply or is inconsistent with the
requirements of Code Section 162(m) or regulations thereunder,
such provision shall be construed or deemed amended to the
extent necessary to conform to such requirements.

15.     PARACHUTE LIMITATIONS

     
Notwithstanding any other provision of this Plan or of any other
agreement, contract, or understanding heretofore or hereafter
entered into by a Grantee with the Company or any Affiliate,
except an agreement, contract, or understanding hereafter
entered into that expressly modifies or excludes application of
this paragraph (an “Other Agreement”), and
notwithstanding any formal or informal plan or other arrangement
for the direct or indirect provision of compensation to the
Grantee (including groups or classes of Grantees or
beneficiaries of which the Grantee is a member), whether or not
such compensation is deferred, is in cash, or is in the form of
a benefit to or for the Grantee (a “Benefit
Arrangement”), if the Grantee is a “disqualified
individual,” as defined in Section 280G(c) of the
Code, any Option, Restricted Stock or Stock Unit held by that
Grantee and any right to receive any payment or other benefit
under this Plan shall not become exercisable or vested
(i) to the extent that such right to exercise, vesting,
payment, or benefit, taking into account all other rights,
payments, or benefits to or for the Grantee under this Plan, all
Other Agreements, and all Benefit Arrangements, would cause any
payment or benefit to the Grantee under this Plan to be
considered a “parachute payment” within the meaning of
Section 280G(b)(2) of the Code as then in effect (a
“Parachute Payment”) and (ii) if, as a
result of receiving a Parachute Payment, the aggregate after-tax
amounts received by the Grantee from the Company under this
Plan, all Other Agreements, and all Benefit Arrangements would
be less than the maximum after-tax amount that could be received
by the Grantee without causing any such payment or benefit to be
considered a Parachute Payment. In the event that the receipt of
any such right to exercise, vesting, payment, or benefit under
this Plan, in conjunction with all other

17

 

rights, payments, or benefits to or for the Grantee under any
Other Agreement or any Benefit Arrangement would cause the
Grantee to be considered to have received a Parachute Payment
under this Plan that would have the effect of decreasing the
after-tax amount received by the Grantee as described in clause
(ii) of the preceding sentence, then the Grantee shall have
the right, in the Grantee’s sole discretion, to designate
those rights, payments, or benefits under this Plan, any Other
Agreements, and any Benefit Arrangements that should be reduced
or eliminated so as to avoid having the payment or benefit to
the Grantee under this Plan be deemed to be a Parachute Payment.

16.     REQUIREMENTS OF LAW

          16.1.     General.

     
The Company shall not be required to sell or issue any shares of
Stock under any Award if the sale or issuance of such shares
would constitute a violation by the Grantee, any other
individual exercising an Option, or the Company of any provision
of any law or regulation of any governmental authority,
including without limitation any federal or state securities
laws or regulations. If at any time the Company shall determine,
in its discretion, that the listing, registration or
qualification of any shares subject to an Award upon any
securities exchange or under any governmental regulatory body is
necessary or desirable as a condition of, or in connection with,
the issuance or purchase of shares hereunder, no shares of Stock
may be issued or sold to the Grantee or any other individual
exercising an Option pursuant to such Award unless such listing,
registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to
the Company, and any delay caused thereby shall in no way affect
the date of termination of the Award. Specifically, in
connection with the Securities Act, upon the exercise of any
Option or the delivery of any shares of Stock underlying an
Award, unless a registration statement under such Act is in
effect with respect to the shares of Stock covered by such
Award, the Company shall not be required to sell or issue such
shares unless the Board has received evidence satisfactory to it
that the Grantee or any other individual exercising an Option
may acquire such shares pursuant to an exemption from
registration under the Securities Act. Any determination in this
connection by the Board shall be final, binding, and conclusive.
The Company may, but shall in no event be obligated to, register
any securities covered hereby pursuant to the Securities Act.
The Company shall not be obligated to take any affirmative
action in order to cause the exercise of an Option or the
issuance of shares of Stock pursuant to the Plan to comply with
any law or regulation of any governmental authority. As to any
jurisdiction that expressly imposes the requirement that an
Option shall not be exercisable until the shares of Stock
covered by such Option are registered or are exempt from
registration, the exercise of such Option (under circumstances
in which the laws of such jurisdiction apply) shall be deemed
conditioned upon the effectiveness of such registration or the
availability of such an exemption.

     16.2. Rule 16b-3.

     
During any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act, it is the
intent of the Company that Awards pursuant to the Plan and the
exercise of Options granted hereunder will qualify for the
exemption provided by Rule 16b-3 under the Exchange Act. To
the extent that any provision of the Plan or action by the Board
does not comply with the requirements of Rule 16b-3, it
shall be deemed inoperative to the extent permitted by law and
deemed advisable by the Board, and shall not affect the validity
of the Plan. In the event that Rule 16b-3 is revised or
replaced, the Board may exercise its discretion to modify this
Plan in any respect necessary

18

 

to satisfy the requirements of, or to take advantage of any
features of, the revised exemption or its replacement.

17. EFFECT OF CHANGES IN CAPITALIZATION

     17.1. Changes in Stock.

     
If the number of outstanding shares of Stock is increased or
decreased or the shares of Stock are changed into or exchanged
for a different number or kind of shares or other securities of
the Company on account of any recapitalization,
reclassification, stock split, reverse split, combination of
shares, exchange of shares, stock dividend or other distribution
payable in capital stock, or other increase or decrease in such
shares effected without receipt of consideration by the Company
occurring after the Effective Date, the number and kinds of
shares for which grants of Options and other Awards may be made
under the Plan shall be adjusted proportionately and accordingly
by the Company. In addition, the number and kind of shares for
which Awards are outstanding shall be adjusted proportionately
and accordingly so that the proportionate interest of the
Grantee immediately following such event shall, to the extent
practicable, be the same as immediately before such event. Any
such adjustment in outstanding Options or SARs shall not change
the aggregate Option Price or SAR Exercise Price payable with
respect to shares that are subject to the unexercised portion of
an outstanding Option or SAR, as applicable, but shall include a
corresponding proportionate adjustment in the Option Price or
SAR Exercise Price per share. The conversion of any convertible
securities of the Company shall not be treated as an increase in
shares effected without receipt of consideration.
Notwithstanding the foregoing, in the event of any distribution
to the Company’s stockholders of securities of any other
entity or other assets (other than dividends payable in cash or
stock of the Company) without receipt of consideration by the
Company, the Company may, in such manner as the Company deems
appropriate, adjust (i) the number and kind of shares subject to
outstanding Awards and/or (ii) the exercise price of
outstanding Options and Stock Appreciation Rights to reflect
such distribution.

 

		
	     17.2. 	
        Reorganization in Which the Company Is the Surviving Entity
        Which does not Constitute a Corporate Transaction.

     
Subject to Section 17.3 hereof, if the Company shall
be the surviving entity in any reorganization, merger, or
consolidation of the Company with one or more other entities
which does not constitute a Corporate Transaction, any Option or
SAR theretofore granted pursuant to the Plan shall pertain to
and apply to the securities to which a holder of the number of
shares of Stock subject to such Option or SAR would have been
entitled immediately following such reorganization, merger, or
consolidation, with a corresponding proportionate adjustment of
the Option Price or SAR Exercise Price per share so that the
aggregate Option Price or SAR Exercise Price thereafter shall be
the same as the aggregate Option Price or SAR Exercise Price of
the shares remaining subject to the Option or SAR immediately
prior to such reorganization, merger, or consolidation. Subject
to any contrary language in an Award Agreement evidencing an
Award, any restrictions applicable to such Award shall apply as
well to any replacement shares received by the Grantee as a
result of the reorganization, merger or consolidation.

19

 

     17.3. Corporate
Transaction.

     
Subject to the exceptions set forth in the last sentence of this
Section 17.3 and the last sentence of
Section 17.4:

		
	 	     
        (i) upon the occurrence of a Corporate Transaction, all
        outstanding shares of Restricted Stock shall be deemed to have
        vested, and all restrictions and conditions applicable to such
        shares of Restricted Stock shall be deemed to have lapsed,
        immediately prior to the occurrence of such Corporate
        Transaction, and
	 
	 	     
        (ii) either of the following two actions shall be taken:

		
	 	     
        (A) fifteen days prior to the scheduled consummation of a
        Corporate Transaction, all Options and SARs outstanding
        hereunder shall become immediately exercisable and shall remain
        exercisable for a period of fifteen days, or
	 
	 	     
        (B) the Board may elect, in its sole discretion, to cancel
        any outstanding Awards of Options, Restricted Stock, and/or SARs
        and pay or deliver, or cause to be paid or delivered, to the
        holder thereof an amount in cash or securities having a value
        (as determined by the Board acting in good faith), in the case
        of Restricted Stock, equal to the formula or fixed price per
        share paid to holders of shares of Stock and, in the case of
        Options or SARs, equal to the product of the number of shares of
        Stock subject to the Option or SAR (the “Award
        Shares”) multiplied by the amount, if any, by which
        (I) the formula or fixed price per share paid to holders of
        shares of Stock pursuant to such transaction exceeds
        (II) the Option Price or SAR Exercise Price applicable to
        such Award Shares.

     
With respect to the Company’s establishment of an exercise
window, (i) any exercise of an Option or SAR during such
fifteen-day period shall be conditioned upon the consummation of
the event and shall be effective only immediately before the
consummation of the event, and (ii) upon consummation of
any Corporate Transaction the Plan, and all outstanding but
unexercised Options and SARs shall terminate. The Board shall
send written notice of an event that will result in such a
termination to all individuals who hold Options and SARs not
later than the time at which the Company gives notice thereof to
its stockholders. This Section 17.3 shall not apply
to any Corporate Transaction to the extent that provision is
made in writing in connection with such Corporate Transaction
for the assumption or continuation of the Options, SARs and
Restricted Stock theretofore granted, or for the substitution
for such Options, SARs and Restricted Stock for new common stock
options and stock appreciation rights and new common stock
restricted stock relating to the stock of a successor entity, or
a parent or subsidiary thereof, with appropriate adjustments as
to the number of shares (disregarding any consideration that is
not common stock) and option and stock appreciation right
exercise prices, in which event the Plan, Options, SARs and
Restricted Stock theretofore granted shall continue in the
manner and under the terms so provided.

     17.4. Adjustments.

     
Adjustments under this Section 17 related to shares
of Stock or securities of the Company shall be made by the
Board, whose determination in that respect shall be final,
binding and conclusive. No fractional shares or other securities
shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated
in each case by rounding downward to the nearest whole share.
The Board shall determine the effect of a Corporate Transaction
upon Awards other than Options, SARs, and Restricted Stock, and
such effect shall be set forth in the appropriate Award

20

 

Agreement. The Board may provide in the Award Agreements at the
time of grant, or any time thereafter with the consent of the
Grantee, for different provisions to apply to an Award in place
of those described in Sections 17.1, 17.2 and
17.3.

     17.5. No Limitations on
Company.

     
The making of Awards pursuant to the Plan shall not affect or
limit in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations, or changes of
its capital or business structure or to merge, consolidate,
dissolve, or liquidate, or to sell or transfer all or any part
of its business or assets.

18. ADDITIONAL AWARD FORFEITURE PROVISIONS.

 

		
	     18.1. 	
        Forfeiture of Options and Other Awards and Gains Realized
        Upon Prior Option Exercises or Award Settlements.

     
Unless otherwise determined by the Board, each Award granted
hereunder, other than Awards granted to non-employee directors,
shall be subject to the following additional forfeiture
conditions, to which the Grantee, by accepting an Award
hereunder, agrees. If any of the events specified in
Section 18.2 (i), (ii), or (iii) occurs (a
“Forfeiture Event”), all of the following forfeitures
will result:

		
	 	     
        (i) The unexercised portion of the Option, whether or not
        vested, and any other Award not then settled (except for an
        Award that has not been settled solely due to an elective
        deferral by the Grantee and otherwise is not forfeitable in the
        event of any termination of service of the Grantee) will be
        immediately forfeited and canceled upon the occurrence of the
        Forfeiture Event; and
	 
	 	     
        (ii) The Grantee will be obligated to repay to the Company,
        in cash, within five (5) business days after demand is made
        therefor by the Company, the total amount of Award Gain (as
        defined herein) realized by the Grantee upon each exercise of an
        Option or settlement of an Award (regardless of any elective
        deferral) that occurred on or after (A) the date that is
        six (6) months prior to the occurrence of the Forfeiture Event,
        if the Forfeiture Event occurred while the Grantee was employed
        by the Company or a subsidiary or affiliate, or (B) the
        date that is six months prior to the date the Grantee’s
        employment by the Company or a subsidiary or affiliate
        terminated, if the Forfeiture Event occurred after the Grantee
        ceased to be so employed. For purposes of this Section, the term
        “Award Gain” shall mean (i), in respect of a
        given Option exercise, the product of (X) the Fair Market
        Value per share of Stock at the date of such exercise (without
        regard to any subsequent change in the market price of shares)
        minus the exercise price times (Y) the number of shares as
        to which the Option was exercised at that date, and
        (ii), in respect of any other settlement of an Award
        granted to the Grantee, the Fair Market Value of the cash or
        Stock paid or payable to Grantee (regardless of any elective
        deferral) less any cash or the Fair Market Value of any Stock or
        property (other than an Award or award which would have itself
        then been forfeitable hereunder and excluding any payment of tax
        withholding) paid by the Grantee to the Company as a condition
        of or in connection such settlement.

     18.2. Events Triggering
Forfeiture.

     
The forfeitures specified in Section 18.1 will be
triggered upon the occurrence of any one of the following
Forfeiture Events at any time during the Grantee’s
employment by the Company or a subsidiary or affiliate and
resulting in his or her termination of

21

 

employment, or during the one-year (1-year) period following
termination of such employment:

		
	 	     
        (i) The Grantee, acting alone or with others, directly or
        indirectly, prior to a Change in Control, (A) engages,
        either as employee, employer, consultant, advisor, or director,
        or as an owner, investor, partner, or stockholder unless the
        Grantee’s interest is insubstantial, in any business in an
        area or region in which the Company conducts business at the
        date the event occurs, which is directly in competition with a
        business then conducted by the Company or a subsidiary or
        affiliate; (B) induces any customer or supplier of the
        Company or a subsidiary or affiliate with which the Company or a
        subsidiary or affiliate has a business relationship, to curtail,
        cancel, not renew, or not continue his or her or its business
        with the Company or any subsidiary or affiliate; or
        (C) induces, or attempts to influence, any employee of or
        service provider to the Company or a subsidiary or affiliate to
        terminate such employment or service. The Board shall, in its
        discretion, determine which lines of business the Company
        conducts on any particular date and which third parties may
        reasonably be deemed to be in competition with the Company. For
        purposes of this Section 18.2 (i), a Grantee’s
        interest as a stockholder is insubstantial if it represents
        beneficial ownership of less than two (2) percent of the
        outstanding class of stock, and a Grantee’s interest as an
        owner, investor, or partner is insubstantial if it represents
        ownership, as determined by the Board in its discretion, of less
        than two (2) percent of the outstanding equity of the
        entity;
	 
	 	     
        (ii) The Grantee discloses, uses, sells, or otherwise
        transfers, except in the course of employment with or other
        service to the Company or any subsidiary or affiliate, any
        confidential or proprietary information of the Company or any
        subsidiary or affiliate, including but not limited to
        information regarding the Company’s current and potential
        customers, organization, employees, finances, and methods of
        operations and investments, so long as such information has not
        otherwise been disclosed to the public or is not otherwise in
        the public domain, except as required by law or pursuant to
        legal process, or the Grantee makes statements or
        representations, or otherwise communicates, directly or
        indirectly, in writing, orally, or otherwise, or takes any other
        action which may, directly or indirectly, disparage or be
        damaging to the Company or any of its subsidiaries or affiliates
        or their respective officers, directors, employees, advisors,
        businesses or reputations, except as required by law or pursuant
        to legal process; or
	 
	 	     
        (iii) The Grantee fails to cooperate with the Company or
        any subsidiary or affiliate in any way, including, without
        limitation, by making himself or herself available to testify on
        behalf of the Company or such subsidiary or affiliate in any
        action, suit, or proceeding, whether civil, criminal,
        administrative, or investigative, or otherwise fails to assist
        the Company or any subsidiary or affiliate in any way,
        including, without limitation, in connection with any such
        action, suit, or proceeding by providing information and meeting
        and consulting with members of management of, other
        representatives of, or counsel to, the Company or such
        subsidiary or affiliate, as reasonably requested.

 

		
	     18.3. 	
        Agreement Does Not Prohibit Competition or Other Grantee
        Activities.

     
Although the conditions set forth in this Article 18 shall
be deemed to be incorporated into an Award, a Grantee is not
thereby prohibited from engaging in any activity, including but
not limited to competition with the Company and its subsidiaries

22

 

and affiliates. Rather, the non-occurrence of the Forfeiture
Events set forth in Section 18.2 is a condition to
the Grantee’s right to realize and retain value from his or
her compensatory Options and Awards, and the consequence under
the Plan if the Grantee engages in an activity giving rise to
any such Forfeiture Event are the forfeitures specified herein.
The Company and the Grantee shall not be precluded by this
provision or otherwise from entering into other agreements
concerning the subject matter of Sections 18.1 and 18.2.

 

		
	     18.4. 	
        Board Discretion.

     
The Board may, in its discretion, waive in whole or in part the
Company’s right to forfeiture under this Article 18,
but no such waiver shall be effective unless evidenced by a
writing signed by a duly authorized officer of the Company. In
addition, the Board may impose additional conditions on Awards,
by inclusion of appropriate provisions in the document
evidencing or governing any such Award.

19. GENERAL PROVISIONS

     19.1. Disclaimer of
Rights

     
No provision in the Plan or in any Award or Award Agreement
shall be construed to confer upon any individual the right to
remain in the employ or service of the Company or any Affiliate,
or to interfere in any way with any contractual or other right
or authority of the Company either to increase or decrease the
compensation or other payments to any individual at any time, or
to terminate any employment or other relationship between any
individual and the Company. In addition, notwithstanding
anything contained in the Plan to the contrary, unless otherwise
stated in the applicable Award Agreement, no Award granted under
the Plan shall be affected by any change of duties or position
of the Grantee, so long as such Grantee continues to be a
director, officer, consultant or employee of the Company or an
Affiliate. The obligation of the Company to pay any benefits
pursuant to this Plan shall be interpreted as a contractual
obligation to pay only those amounts described herein, in the
manner and under the conditions prescribed herein. The Plan
shall in no way be interpreted to require the Company to
transfer any amounts to a third party trustee or otherwise hold
any amounts in trust or escrow for payment to any Grantee or
beneficiary under the terms of the Plan.

     19.2. Nonexclusivity of
the Plan

     
Neither the adoption of the Plan nor the submission of the Plan
to the stockholders of the Company for approval shall be
construed as creating any limitations upon the right and
authority of the Board to adopt such other incentive
compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or
specifically to a particular individual or particular
individuals) as the Board in its discretion determines
desirable, including, without limitation, the granting of stock
options otherwise than under the Plan.

     19.3. Withholding Taxes

     
The Company or an Affiliate, as the case may be, shall have the
right to deduct from payments of any kind otherwise due to a
Grantee any Federal, state, or local taxes of any kind required
by law to be withheld with respect to the vesting of or other
lapse of restrictions applicable to an Award or upon the
issuance of any shares of Stock upon the exercise of an Option
or pursuant to an Award. At the time of such vesting, lapse, or

23

 

exercise, the Grantee shall pay to the Company or the Affiliate,
as the case may be, any amount that the Company or the Affiliate
may reasonably determine to be necessary to satisfy such
withholding obligation. Subject to the prior approval of the
Company or the Affiliate, which may be withheld by the Company
or the Affiliate, as the case may be, in its sole discretion,
the Grantee may elect to satisfy such obligations, in whole or
in part, (i) by causing the Company or the Affiliate to
withhold shares of Stock otherwise issuable to the Grantee or
(ii) by delivering to the Company or the Affiliate shares
of Stock already owned by the Grantee. The shares of Stock so
delivered or withheld shall have an aggregate Fair Market Value
equal to such withholding obligations. The Fair Market Value of
the shares of Stock used to satisfy such withholding obligation
shall be determined by the Company or the Affiliate as of the
date that the amount of tax to be withheld is to be determined.
A Grantee who has made an election pursuant to this
Section 19.3 may satisfy his or her withholding
obligation only with shares of Stock that are not subject to any
repurchase, forfeiture, unfulfilled vesting, or other similar
requirements.

     19.4. Captions

     
The use of captions in this Plan or any Award Agreement is for
the convenience of reference only and shall not affect the
meaning of any provision of the Plan or such Award Agreement.

     19.5. Other Provisions

     
Each Award granted under the Plan may contain such other terms
and conditions not inconsistent with the Plan as may be
determined by the Board, in its sole discretion.

     19.6. Number And Gender

     
With respect to words used in this Plan, the singular form shall
include the plural form, the masculine gender shall include the
feminine gender, etc., as the context requires.

     19.7. Severability

     
If any provision of the Plan or any Award Agreement shall be
determined to be illegal or unenforceable by any court of law in
any jurisdiction, the remaining provisions hereof and thereof
shall be severable and enforceable in accordance with their
terms, and all provisions shall remain enforceable in any other
jurisdiction.

     19.8. Governing Law

     
The validity and construction of this Plan and the instruments
evidencing the Award hereunder shall be governed by the laws of
the State of Maryland, other than any conflicts or choice of law
rule or principle that might otherwise refer construction or
interpretation of this Plan and the instruments evidencing the
Awards granted hereunder to the substantive laws of any other
jurisdiction.

*          *          *

24

 

     
To record adoption of the Plan by the Board as
of                                ,
2002, and approval of the Plan by the stockholders
on                                ,
2002, the Company has caused its authorized officer to execute
the Plan.

		
	 	
        GUILFORD PHARMACEUTICALS INC.
	 
	 	
        By:   

	 	
        Title: 

25

 

Guilford Pharmaceuticals Inc.

2002 Stock Award and Incentive Plan

Non-Incentive Stock Option
Statement

     In connection with your 2002 performance, on February 13, 2003 (the “Grant
Date”), Guilford Pharmaceuticals Inc., a Delaware corporation (the “Company”)
granted you an option (the “Option”) to purchase
<<Number_of_Options>>  shares of the Company’s common stock, par value $0.01 per
share, at the option price of $3.00, per share, which is at least 100% of the
fair market value, per share, of the Company’s common stock. The Option is
subject to the terms and conditions set forth in (i) this Non-Incentive Stock
Option Statement (this “Statement”), (ii) the Bonus Terms and Conditions
(Revised February 2003), located on the Company’s intranet site at
http://guilford.guilfordpharm.com/files/legalip/BonusRevFeb03.pdf and (iii) the
2002 Stock Award and Incentive Plan (the “Plan”), located on the Company’s
intranet site at http://guilford.guilfordpharm.com/files/legalip/2002Stock.pdf.

	 	 	 	 
	ATTEST:	 	
GUILFORD PHARMACEUTICALS INC.
	 
	 

	 	
{SIGNATURE 1}
	 
	 	 	
BY:	 

	 
	 

     In order to accept the Option, you must sign in the space below. By
accepting the Option, you agree that the Option has been granted to you subject
to this Statement, the Bonus Terms and Conditions (Revised February 2003) and
the Plan (collectively, the “Plan Documents”). You acknowledge that you have
carefully reviewed the Plan Documents. You further acknowledge and agree that if
there is an inconsistency between the Plan and any other Plan Document, the
terms of the Plan will control.

	 	 	 
	 	OPTIONEE:
	 
	 	 

<<First Name>>        
          
<<Last Name>>
	 
	 	SSN: 
	 	 	
<<Optionee SSN>>
	 
	 	Address:
	 	 	 

	 
	 	 	 

This is not a stock certificate
or a negotiable instrument.

 

Guilford Pharmaceuticals Inc.

2002 Stock Award and Incentive Plan

Non-Incentive Stock Option Statement

     In connection with your reelection as a director of Guilford
Pharmaceuticals Inc., a Delaware corporation (the “Company”), on 05/14/02 (the
“Grant Date”), the Company grants you an option (the “Option”) to purchase 7,500
shares of the Company’s common stock, par value $0.01 per share, at the option
price of $6.85, per share, which is at least 100% of the fair market value, per
share, of the Company’s common stock. The Option is subject to the terms and
conditions set forth in (i) this Non-Incentive Stock Option Statement (this
“Statement”), (ii) the Director Stock Option Terms and Conditions (2002 Plan -
Revised May 2002), located on the Company’s intranet site at
http://guilford/pdf/DirStockOptionTermsConditions.pdf, and (iii) the 2002 Stock
Award and Incentive Plan (the “Plan”), located on the Company’s intranet site at
http://guilford/pdf/2002Stock.pdf.

	 	 	 	 
	ATTEST:	 	
GUILFORD PHARMACEUTICALS INC.
	 
	 
	
	 	
BY:	 

	 
	 

     In order to accept the Option, you must sign in the space below. By
accepting the Option, you agree that the Option has been granted to you subject
to this Statement, the Director Stock Option Terms and Conditions (2002 Plan -
Revised May 2002) and the Plan (collectively, the “Plan Documents”). You
acknowledge that you have carefully reviewed the Plan Documents. You further
acknowledge and agree that if there is an inconsistency between the Plan and any
other Plan Document, the terms of the Plan will control.

	 	 	 
	 	OPTIONEE:
	 
	 	 

This is not a stock
certificate or a negotiable instrument.

 

Guilford Pharmaceuticals Inc.

2002 Stock Award and Incentive Plan

Executive Non-Incentive Stock Option Statement

     In connection with your 2002 performance, on February 18, 2003 (the
“Grant Date”), Guilford Pharmaceuticals Inc., a Delaware corporation (the
“Company”) granted you an option (the “Option”) to purchase
<<Number_of_Options>> shares of the Company’s common stock, par value $0.01 per
share, at the option price of $2.99, per share, which is at least 100% of the
fair market value, per share, of the Company’s common stock. The Option is
subject to the terms and conditions set forth in (i) this Non-Incentive Stock
Option Statement (this “Statement”), (ii) the Executive Terms and Conditions
(Revised February 2003), located on the Company’s intranet site at
http://guilford.guilfordpharm.com/files/legalip/ExecTOCrevFeb03.pdf and (iii)
the 2002 Stock Award and Incentive Plan (the “Plan”), located on the Company’s
intranet site at http://guilford.guilfordpharm.com/files/legalip/2002Stock.pdf.

	 	 	 	 
	ATTEST:	 	
GUILFORD PHARMACEUTICALS INC.
	 
	 

	 	
(SIGNATURE 1)
	 
	 	 	
By:	 

	 
	 

     In order to accept the Option, you must sign in the space below. By
accepting the Option, you agree that the Option has been granted to you subject
to this Statement, the Executive Terms and Conditions (Revised February 2003)
and the Plan (collectively, the “Plan Documents”). You acknowledge that you have
carefully reviewed the Plan Documents. You further acknowledge and agree that if
there is an inconsistency between the Plan and any other Plan Document, the
terms of the Plan will control.

	 	 	 
	 	OPTIONEE:
	 
	 	 

<<First Name>>        
          
<<Last Name>>
	 
	 	SSN: 
	 	 	
<<Optionee SSN>>
	 
	 	Address:

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