Document:

Exhibit 4.2

 Exhibit 4.2 
  
 MAINSTREET BANKSHARES, INC. 
 2004 KEY EMPLOYEE STOCK OPTION PLAN 
  
 ARTICLE I 
 Establishment, Purpose and Duration 
  
 1.1 Establishment of the Plan. MainStreet Bankshares, Inc., a Virginia
corporation (the “Company”), hereby establishes an incentive compensation plan for the Company to be known as the “2004 Key Employee Stock Option Plan” (the “Plan”), as set forth in this document. Unless otherwise
defined herein, all capitalized terms shall have the meanings set forth in Section 2.1 herein. The Plan permits the grant of Non-Qualified Stock Options and, when approved by vote of shareholders of the Company, Incentive Stock Options. 

 
 The Plan was adopted by the Board of Directors of the Company on January
21, 2004, (“Effective Date”), but Incentive Stock Options may not be awarded hereunder unless and until the Plan has been approved by vote of the Company’s shareholders. 
  
 1.2 Purpose of the Plan. The purpose of the Plan is to promote the success of the Company by providing incentives to
Key Employees that will promote the identification of their personal interest with the long-term financial success of the Company and with growth in shareholder value. The Plan is designed to provide flexibility to the Company in its ability to
motivate, attract and retain the services of Key Employees upon whose judgment, interest and special effort the successful conduct of its operation is largely dependent. 
  
 1.3 Duration of the Plan. The Plan shall commence on the Effective Date, as described in Section 1.1 herein and shall
remain in effect, subject to the right of the Board of Directors to terminate the Plan at any time pursuant to Article IX herein, until the fifth anniversary of the Effective Date, at which time it shall terminate except with respect to Awards made
prior to and outstanding on that date which shall remain valid in accordance with their terms. 
  
 ARTICLE II 
 Definitions 
  
 2.1 Definitions. Except as otherwise defined in the Plan, the following terms shall have the meanings set forth
below: 
  
 (a) “Affiliate” shall have
the meaning ascribed to it in Rule 12b-2 under the Exchange Act. 
  
 (b) “Agreement” means a written agreement implementing the grant of each Award signed by an authorized officer of the Company and by the Participant. 
  

 (c) “Award” means, individually or collectively, a grant under this Plan of
Incentive Stock Options or Non-Qualified Stock Options. 
  
 (d) “Award Date” or “Grant Date” means the date on which an Award is made by the Committee under this Plan. 
  

(e) “Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 under the Exchange Act. 
  
 (f) “Board” or “Board of Directors”
means the Board of Directors of the Company, unless otherwise indicated. 
  
 (g) “Change in Control” shall be deemed to have occurred if the conditions set forth in any one of the following paragraphs shall have been satisfied: 
  
 (i) any Person (other than the Company, a trustee or other
fiduciary holding securities under any employee benefit plan of the Company), who or which, together with all Affiliates and Associates of such Person, is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company’s then outstanding securities; or 
  
 (ii) if, at any time after the Effective Date, the composition of the Board of Directors of the Company shall change such that a majority
of the Board of the Company shall no longer consist of Continuing Directors; or 
  
 (iii) if at any time, (1) the Company shall consolidate with, or merge with, any other Person and the Company shall not be the continuing
or surviving corporation, (2) any Person shall consolidate with or merge with the Company and the Company shall be the continuing or surviving corporation and, in connection therewith, all or part of the outstanding Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other property, (3) the Company shall be a party to a statutory share exchange with any other Person after which the Company is a subsidiary of any other Person, or (4) the
Company shall sell or otherwise transfer 50% or more of the assets or earning power of the Company to any Person or Persons. 
  
 (h) “Code” means the Internal Revenue Code of 1986, as amended from time to time. 
  
 (i) “Committee” means the committee of the Board
of Directors of the Company appointed by the Company to administer the Plan pursuant to Article III herein, all of the members of which shall be “disinterested persons” as defined in Rule 16b-3, as amended, under the Exchange Act or any
similar or successor rule. Unless otherwise determined by the Board of Directors of the Company, the members of the committee 

  

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responsible for executive compensation who are not employees of the Company shall constitute the Committee. 
  
 (j) “Continuing Director” means an individual who
was a member of the Board of Directors on the Effective Date or whose subsequent nomination for election or re-election to the Board of Directors was recommended or approved by the affirmative vote of two-thirds of the Continuing Directors then in
office. 
  
 (k) “Exchange Act” means
the Securities Exchange Act of 1934, as amended. 
  
 (l) “Fair Market Value” of a Share means the fair market value as quoted on a recognized stock quotation system, exchange or bulletin board or, in the alternative, as determined pursuant to a reasonable method adopted by the
Committee in good faith for such purpose. 
  
 (m)
“Incentive Stock Option” or “ISO” means an option to purchase Stock, granted under Article VI herein, after the approval of this Plan by vote of the Company’s shareholders which is designated as an incentive stock option and
is intended to meet the requirements of Section 422(a) of the Code. 
  
 (n) “Key Employee” means an officer or other key employee of the Company or of a Parent, Subsidiary or an Affiliate, who, in the opinion of the Committee, can contribute significantly to the growth and
profitability of, or perform services of major importance to the Company. 
  
 (o) “Non-Qualified Stock Option” or “NQSO” means an option to purchase Stock, granted under Article VI herein, which is not intended to be an Incentive Stock Option. 
  
 (p) “Option” means an Incentive Stock Option or a
Non-Qualified Stock Option. 
  
 (q) “Option
Price” shall have the meaning given thereto in 6.3 hereof. 
  
 (r) “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations, other than the Company, owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of Parent on a date after Effective Date shall be considered a Parent commencing on that later
date. 
  
 (s) “Participant” means a Key
Employee who is granted an Award under the Plan. 
  

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 (t) “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of
the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d). 
  
 (u) “Plan” means the MainStreet Bankshares, Inc. 2004 Key Employee Stock Option Plan, as described and as hereafter from time to
time amended. 
  
 (v) “Stock” or
“Shares” means the common stock of the Company. 
  
 (w) “Subsidiary” shall mean a corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations, other than the last corporation, in the
unbroken chain owns stock possession at least 50% of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a subsidiary on a date after the Effective Date
shall be considered a Subisidary commencing on that later date. 
  
 ARTICLE III 
 Administration 
  

3.1 The Committee. The Plan shall be administered by the Committee which shall have all powers necessary or desirable for such administration.
The express grant in this Plan of any specific power to the Committee shall not be construed as limiting any power or authority of the Committee. In addition to any other powers and, subject to the provisions of the Plan, the Committee shall have
the following specific powers: (i) to determine the terms and conditions upon which the Awards may be made and exercised; (ii) to determine all terms and provisions of each Agreement, which need not be identical; (iii) to construe and interpret the
Agreements and the Plan; (iv) to establish, amend or waive rules or regulations for the Plan’s administration; (v) to accelerate the exercisability of any Award or the termination of any Period of Restriction; and (vi) to make all other
determinations and take all other actions necessary or advisable for the administration of the Plan. 
  
 3.2 Selection of Participants. The Committee shall have the authority to grant Awards under the Plan, from time to time, to such Key Employees as
may be selected by it. Each Award shall be evidenced by an Agreement. 
  
 3.3 Decisions Binding. All determinations and decisions made by the Board or the Committee pursuant to the provisions of the Plan shall be final, conclusive and binding. 
  
 3.4 Rule 16b-3 Requirements. Notwithstanding any other provision of the Plan, the Board or the Committee may impose
such conditions on any Award and amend the Plan in any such respects, as may be required to satisfy the requirements of Rule 16b-3, as amended (or any successor or similar rule), under the Exchange Act. 
  
 3.5 Indemnification of Committee. In addition to such other rights of
indemnification as they may have as directors or as members of the Committee, the members of the Committee 

  

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shall have the indemnity rights and the Company shall have the indemnity obligations provided in the Company’s Articles of Incorporation and Bylaws with
respect to the conduct of the Committee. In carrying out its responsibilities, the Committee shall also have the right to consult lawyers, experts and other consultants of its choosing at the Company’s expense. 
  
 ARTICLE IV 
 Stock Subject to the Plan 
  
 4.1 Number of Shares. Subject to adjustment as provided in Section 4.3 herein, the maximum aggregate number of Shares that may be issued pursuant to Awards made under the Plan shall not exceed 137,000. Except
as provided in Sections 4.2 herein, the issuance of Shares in connection with the exercise of Awards under the Plan shall reduce the number of Shares available for future Awards under the Plan. 
  
 4.2 Lapsed Awards or Forfeited Shares. If any Award granted under this
Plan (for which no material benefits of ownership have been received, including dividends) terminates, expires, or lapses for any reason other than by virtue of exercise of the Award, any Stock subject to such Award again shall be available for the
grant of an Award under the Plan. 
  
 4.3 Adjustments. In
the event of a subdivision of the outstanding Shares, a declaration of a dividend payable in Shares or a combination or consolidation of the outstanding Shares (by reclassification or otherwise) into a lesser number of Shares, corresponding
adjustments shall automatically be made in each of the following: 
  

	 	(a)	the number of Options for future Awards; 

  

	 	(b)	the number of Shares covered by each outstanding Option; or 

  

	 	(c)	the Exercise Price of each outstanding Option. 

  
 In the event of a declaration of an extraordinary dividend payable in a form other than Shares in an amount that has a material effect on the price of
Shares, a recapitalization, a spin-off or a similar occurrence, the Committee may make such adjustments as it, in its sole discretion, deems appropriate in one or more of the foregoing. Except as provided in this Article, a Participant shall have no
rights by reason of any issuance by the Company of stock of any class or securities convertible into stock of any class, any subdivision or consolidation of any shares of stock of any class or securities convertible into stock of any class, any
subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class. 
  
 4.4 Dissolution or Liquidation. To the extent not previously exercised or settled, Options shall terminate
immediately prior to the dissolution or liquidation of the Company. 
  
 4.5 Reorganization. In the event that the Company is a party to a merger or other reorganization, outstanding Awards shall be subject to the agreement of merger or reorganization. Subject to the rights of the Committee under Article
VII, such agreement shall 

  

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provide for: (a) the continuation of the outstanding Awards by the Company, if the Company is a surviving corporation; (b) the assumption of the outstanding
Awards by the surviving corporation or its parent or subsidiary; or (c) the substitution by the surviving corporation or its parent or subsidiary of its own awards for the outstanding Awards. 
  
 ARTICLE V 
 Eligibility 
  
 Persons eligible to participate in the Plan include all employees of the Company and its Parent, Subsidiaries and Affiliates who, in the opinion of the Committee, are Key Employees. Key Employees may not include directors of the Company who
are not employees of the Company. 
  
 ARTICLE VI 

Stock Options 
  
 6.1 Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted to Key Employees at any time and from time to time as
shall be determined by the Committee. The Committee shall have complete discretion in determining the number of Shares subject to Options granted to each Participant, provided, however, that the aggregate Fair Market Value (determined at the time
the Award is made) of Shares with respect to which any Participant may first exercise ISOs granted under the Plan during any calendar year may not exceed $100,000 or such amount as shall be specified in Section 422(a) of the Code and rules and
regulation thereunder. 
  
 6.2 Option Agreement. Each
Option grant shall be evidenced by an Option Agreement that shall specify the type of Option granted, the Option Price (as hereinafter defined), the duration of the Option, the number of Shares to which the Option pertains, any conditions imposed
upon the exercisability of Options in the event of retirement, death, disability or other termination of employment and such other provisions as the Committee shall determine. The Option Agreement may have additional provisions as the Committee
shall determine, not inconsistent with this Plan. The provisions of Option Agreements need not be identical. The Option Agreement shall specify whether the Option is intended to be an Incentive Stock Option within the meaning of Section 422(a) of
the Code, or Non-Qualified Stock Option not intended to be within the provisions of Section 422(a) of the Code. The provisions of such Option Agreements under the Plan need not be identical. 
  
 6.3 Option Price. The exercise price per share of Stock covered by an
Option (“Option Price”) shall be determined by the Committee subject to the following limitations. The Option Price of an ISO shall not be less than 100% of the Fair Market Value of such Stock on the Grant Date. An ISO granted to an
employee who, at the time of grant, owns (within the meaning of Section 425(d) of the Code) Stock possessing more than 10% of the total combined voting power of all classes of Stock of the Company, shall have an Option Price which is at least equal
to 110% of the Fair Market Value of the Stock. 
  

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 6.4 Duration of Options. Each Option shall expire at such time as the Committee shall determine at
the time of grant provided, however, that no ISO shall be exercisable later than the tenth (10th) anniversary date of its Award Date. 
  
 6.5 Exercisability. Options granted under the Plan shall be exercisable at such times and be subject to such restrictions and conditions as the
Committee shall determine, which need not be the same for all Participants. No Option, however, shall be exercisable until the expiration of at least six months after the Award Date, except that such limitation shall not apply in the case of death
or disability of the Participant. 
  
 6.6 Method of
Exercise. Options shall be exercised by the delivery of a written notice to the Company in the form prescribed by the Committee setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment
for the Shares. The Option Price shall be payable to the Company in full either in cash, by delivery of Shares of Stock valued at Fair Market Value at the time of exercise (in the Committee’s sole discretion), delivery of a promissory note (in
the Committee’s sole discretion) or by a combination of the foregoing (in the Committee’s sole discretion). As soon as practicable, after receipt of written notice and payment, the Company shall deliver to the Participant, stock
certificates in an appropriate amount based upon the number of Options exercised, issued in the Participant’s name. No Participant who is awarded Options shall have rights as a shareholder in connection with the Shares subject to such Options
until the date of exercise of the Options. 
  
 6.7 Restrictions
on Stock Transferability. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option under the Plan as it may deem advisable, including, without limitation, restrictions under the applicable Federal
securities law, under the requirements of the National Association of Securities Dealers, Inc. or any stock exchange upon which such Shares are then listed and under any blue sky or state securities laws applicable to such Shares. 
  
 6.8 Nontransferability of Options. No Option granted under the Plan
may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, otherwise than by will or by the laws of descent and distribution. Further, all Options granted to a Participant under the Plan shall be exercisable during his
lifetime only by such Participant or his guardian or legal representative. 
  
 ARTICLE VII 
 Change in Control 
  
 The Committee, as constituted before a Change in Control, in its sole discretion may, as to any outstanding Award, either at
the time the Award is made or any time thereafter, take any one or more of the following actions in respect to a Change in Control of the Company: (i) provide for the acceleration of any time periods relating to the exercise or realization of any
such Award so that such Award may be exercised or realized in full on or before a date initially fixed by the Committee; (ii) provide for the purchase or settlement of any such Award by the Company, upon a Participant’s request, for an amount
of cash equal to the amount which could 

  

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have been obtained upon the exercise of such Award or realization of such Participant’s rights had such Award been currently exercisable or payable; or
(iii) make such adjustment to any such Award then outstanding as the Committee deems appropriate to reflect such Change in Control. 
  
 ARTICLE VIII 
 Modification, Extension
and Renewals of Awards 
  
 Subject to the terms and conditions
and within the limitations of the Plan, the Committee may modify, extend or renew outstanding Awards, or, if authorized by the Board, accept the surrender of outstanding Awards (to the extent not yet exercised) granted under the Plan and authorize
the granting of new Awards pursuant to the Plan in substitution therefor and the substituted Awards may specify a lower exercise price than the surrendered Awards, a longer term than the surrendered Awards or may contain any other provisions that
are authorized by the Plan. The Committee may also modify the terms of any outstanding Agreement. Notwithstanding the foregoing, however, no modification of an Award, shall, without the consent of the Participant, adversely affect the rights or
obligations of the Participant. 
  
 ARTICLE IX 

Amendment, Modification and Termination of the Plan 
  
 9.1 Amendment, Modification and Termination. At any time and from time to time, the Board may terminate, amend or modify the Plan. Such amendment
or modification may be without shareholder approval except to the extent that such approval is required by the Code, pursuant to the rules under Section 16 of the Exchange Act, by any national securities exchange or system on which the Stock is then
listed or reported, by any regulatory body having jurisdiction with respect thereto or under any other applicable laws, rules or regulations. 
  
 9.2 Awards Previously Granted. No termination, amendment or modification of the Plan other than pursuant to Section 4.4 herein shall in any manner
adversely affect any Award theretofore granted under the Plan, without the written consent of the Participant. 
  
 ARTICLE X 
 Withholding 
  
 10.1 Tax Withholding. The Company shall have the power and the right
to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy Federal, State and local taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to any grant,
exercise or payment made under or as a result of this Plan. 
  
 10.2 Stock Withholding. With respect to withholding required upon the exercise of Nonqualified Stock Options, or upon the occurrence of any other similar taxable event with respect to any Award, Participants may elect, subject to the
approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares of Stock having a Fair Market Value equal to the amount required to be withheld. The value of the Shares to be withheld
shall be based on Fair Market Value of the Shares on the date that the 

  

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amount of tax to be withheld is to be determined. All elections shall be irrevocable and be made in writing, signed by the Participant on forms approved by
the Committee in advance of the day that the transaction becomes taxable. 
  
 ARTICLE XI 
 Successors 
  
 All obligations of the Company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor
to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business and/or assets of the Company. 
  
 ARTICLE XII 
 Awards under Other Plans 
  
 The Company may grant awards under other plans or programs. Such awards may be settled in the form of Shares issued under this Plan. Such Shares shall, when issued, reduce the number of Shares available under this
Plan. 
  
 ARTICLE XIII 
 Deferrral of Awards 
  
 The Committee (in its sole discretion) may permit or require a Participant to have Shares that otherwise would be delivered to such Participant as a
result of the exercise of an Option converted into amounts credited to a deferred compensation account established for such Committee as an entry on the Company’s books. Such amounts shall be determined by reference to the Fair Market Value of
such Shares as of the date when they otherwise would have been delivered to such Participant. 
  
 A deferred compensation account established under this Articles may be credited with interest or other forms of investment returns, as determined by the Committee. A Participant for whom such an account is established
shall have no rights other than those of a general creditor of the Company. Such account shall represent an unfunded and unsecured obligation of the Company and shall be subject to the terms and conditions of the applicable agreement between the
Participant and the Company. If the deferral or conversion of Awards is permitted or required, the Committee (in its sole discretion) may establish rules, procedures, and forms pertaining to such Awards, including (without limitation) the settlement
of deferred compensation accounts established under this Article. 
  

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 ARTICLE XIV 
 Limitation on Payments 
  
 14.1 Scope of Limitation. This Article shall apply to an Award only if: 
  
 (a) The independent auditors most recently selected by the Board (the “Auditors”) determine that the after-tax value of such
Award to the Participant, taking into account the effect of all federal, state and local income taxes, employment taxes and excise taxes applicable to the Participant (including the excise tax under section 4999 of the Code), will be greater after
the application of this Article XIV than it was before the application of this Article XIV; or 
  
 (b) The Committee, at the time of making an Award under the Plan or at any time thereafter, specifies in writing that such Award shall be
subject to this Article XIV (regardless of the after-tax value of such Award to the Participant). 
  
 If this Article applies to an Award, it shall supersede any contrary provision of the Plan or of any Award granted under the Plan.

  
 14.2 Basic Rule. In the event that the Auditors
determine that any payment or transfer by the Company under the Plan to or for the benefit of a Participant (a “Payment”) would be nondeductible by the Company for federal income tax purposes because of the provisions concerning
“excess parachute payments” in section 280G of the Code, then the aggregate present value of all Payments shall be reduced (but not below zero) to the Reduced Amount. For purposes of this Article XIV, the “Reduced Amount” shall
be the amount, expressed as a present value, which maximizes the aggregate present value of the Payments without causing any Payment to be nondeductible by the Company because of section 280G of the Code. 
  
 14.3 Reduction of Payments. If the Auditors determine that any Payment
would be nondeductible by the Company because of section 280G of the Code, then the Company shall promptly give the Participant notice to that effect and a copy of the detailed calculation thereof and of the Reduced Amount, and the Participant may
then elect, in his or her sole discretion, which and how much of the Payments shall be eliminated or reduced (as long as after such election the aggregate present value of the Payments equals the Reduced Amount) and shall advise the Company in
writing of his or her election within 10 days of receipt of notice. If no such election is made by the Participant within such 10-day period, then the Company may elect which and how much of the Payments shall be eliminated or reduced (as long as
after such election the aggregate present value of the Payments equals the Reduced Amount) and shall notify the Participant promptly of such election. For purposes of this Article XIV, present value shall be determined in accordance with section
280G(d)(4) of the Code. All determinations made by the Auditors under this Article XIV shall be binding upon the Company and the Participant and shall be made within 60 days of the date when a Payment becomes payable or transferable. As promptly as
practicable following such determination and the elections hereunder, the Company shall pay or transfer to or for the benefit of the Participant such amounts as are then due to him or her under the Plan and shall promptly pay or transfer to or for
the benefit of the Participant in the future such amounts as become due to him or her under the Plan. 
  
 14.4 Overpayments and Underpayments. As a result of uncertainty in the application of section 280G of the Code at the time of an initial
determination by the Auditors hereunder, it is possible that Payments will have been made by the Company which should not have been 

  

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made (an “Overpayment”) or that additional Payments which will not have been made by the Company could have been made (an
“Underpayment”), consistent in each case with the calculation of the Reduced Amount hereunder. In the event that the Auditors, based upon the assertion of a deficiency by the Internal Revenue Service against the Company or the Participant
that the Auditors believe has a high probability of success, determine that an Overpayment has been made, such Overpayment shall be treated for all purposes as a loan to the Participant that he or she shall repay to the Company, together with
interest at the applicable federal rate provided in section 7872(f)(2) of the Code; provided, however, that no amount shall be payable by the Participant to the Company if and to the extent that such payment would not reduce the amount that is
subject to taxation under section 4999 of the Code. In the event that the Auditors determine that an Underpayment has occurred, such Underpayment shall promptly be paid or transferred by the Company to or for the benefit of the Participant, together
with interest at the applicable federal rate provided in section 7872(f)(2) of the Code. 
  
 14.5 Related Corporations. For purposes of this Article XIV, the term “Company” shall include affiliated corporations to the extent determined by the Auditors in accordance with section 280G(d)(5) of
the Code. 
  
 ARTICLE XV 
 General 
  
 15.1 Requirements of Law. The granting of Awards and the issuance of Shares of Stock under this Plan shall be subject to all applicable laws, rules
and regulations and to such approvals by any governmental agencies as may be required. Nothing herein shall require the issuance of any Shares pursuant to any Award prior to the satisfaction of all legal requirements relating to the issuance of such
Shares, to their registration, qualification or listing or to any exemption from their registration, qualification oar listing. 
  
 15.2 Effect of Plan. The establishment of the Plan shall not confer upon any Key Employee any legal or equitable right against the Company or the
Committee, except as expressly provided in the Plan. 
  
 15.3
Creditors. The interests of any Participant under the Plan or any Agreement are not subject to the claims of creditors and may not, in any way, be assigned, alienated or encumbered. 
  
 15.4 Governing Law. The Plan and all Agreements hereunder shall be
governed, construed and administered in accordance with and governed by the laws of the Commonwealth of Virginia and the intention of the Company is that ISOs granted under the Plan qualify as such under Section 422(a) of the Code. 
  
 15.5 Severability. In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. 
  

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 15.6 Retention Rights. Neither the Plan nor any Award granted under the Plan shall be deemed to
give any individual a right to remain an employee. The Company and its Parents, Subsidiaries and Affiliates reserve the right to terminate the service of any Employee, at any time, with or without cause, subject to applicable laws, the
Company’s certificate of incorporation and bylaws and a written employment agreement (if any). 
  
 15.7 Stockholders’ Rights. Except as expressly provided in or permitted by the Plan, a Participant shall have no dividend rights, voting
rights or other rights as a stockholder with respect to any Shares covered by his or her Award prior to the time when a stock certificate for such Shares is issued or, if applicable, the time when he or she becomes entitled to receive such Shares by
filing any required notice of exercise and paying any required Exercise Price. No adjustment shall be made for cash dividends or other rights for which the record date is prior to such time, except as expressly provided in the Plan. 
  
 15.8 Regulatory Requirements. Any other provision of the Plan
notwithstanding, the obligation of the Company to issue Shares under the Plan shall be subject to all applicable laws, rules and regulations and such approval by any regulatory body as may be required. The Company reserves the right to restrict, in
whole or in part, the delivery of Common Shares pursuant to any Award prior to the satisfaction of all legal requirements relating to the issuance of such Common Shares, to their registration, qualification or listing or to an exemption from
registration, qualification or listing. 
  

 122003 Global Crossing Limited (formerly GC Acquisition Ltd.) Stock Incentive Plan

 Exhibit 10.5 
  
 2003 GLOBAL CROSSING LIMITED 
 STOCK INCENTIVE PLAN, AS AMENDED 

	1.	Purpose of the Plan 

  
 The purpose of the Plan is to aid the Company and its Subsidiaries in recruiting and retaining key individuals of outstanding ability and to motivate such
individuals to exert their best efforts on behalf of the Company and its Subsidiaries by providing incentives through the granting of Awards. The Company expects that it will benefit from the added interest which such key individuals will have in
the welfare of the Company as a result of their proprietary interest in the Company’s success. 
  

	2.	Definitions 

  
 The following capitalized terms used in the Plan have the respective meanings set forth in this Section: 
  

	(a)	Affiliate: With respect to any Person, any entity (i) that directly or indirectly controls, is controlled by or is under common control with such Person or (ii) in which such
Person has a significant equity interest, in either case as determined by the Committee. 

  

	(b)	Award: An Option, Stock Appreciation Right or Other Stock-Based Award granted pursuant to the Plan. 

  

	(c)	Board: The Board of Directors of the Company. 

  

	(d)	Capital Stock: (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers
on a Person the right to receive a share of the profits and losses of, or distributions of property of, the issuing Person. 

  

	(e)	Cause: The Company or a Subsidiary having “cause” to terminate a Participant’s employment or service, as determined in accordance with the provisions of any
existing employment, consulting or any other agreement between the Participant and the Company or a Subsidiary or, in the absence of such an employment, consulting or other agreement, upon (i) the reasonable determination by the Committee that the
Participant has ceased to perform his duties to the Company or a Subsidiary (other than as a result of his incapacity due to physical or mental illness or injury), which failure amounts to an intentional and extended neglect of his duties to such
party, (ii) the Committee’s reasonable determination that the Participant has engaged or is about to engage 

  

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	    	in conduct materially injurious to the Company or an Affiliate, (iii) the Participant having been convicted of, or pleaded guilty or no contest to, a felony or any crime involving
dishonesty or moral turpitude, (iv) the willful failure of the Participant to follow instruction of the Board or his direct superiors, (v) the Participant’s unauthorized use or disclosure of confidential information or trade secrets of the
Company or an Affiliate, other than inadvertent use or disclosure that does not cause injury to the Company, (vi) the Participant’s gross negligence in the performance of his or her duties on a recurring basis or under circumstances resulting
in material injury to the Company or an Affiliate, (vii) the Participant’s willful misconduct in the performance of his or her duties, (viii) an act of fraud or dishonesty (excluding acts of dishonesty that are both immaterial and
non-recurring) committed by the Participant against the Company or an Affiliate, (ix) the willful engaging by a Participant in any conduct which results in a suspension or other sanction by any governmental or other regulatory entity, excluding
traffic violations and other minor civil offenses, or (x) a material violation by the Participant of any written policies of the Company or an Affiliate with regards to performance, conduct on the job or integrity, which violation is reasonably
determined by the Committee to justify a termination of employment for Cause in accordance with the Company’s past practice and after providing the Participant with notice thereof and an opportunity to effectuate a cure of any violation capable
of being cured. 

  

	(f)	Change in Control: The occurrence of any of the following: (a) any “person” (as such term is used in Section 13(d)(3) of the Exchange Act), other than a Permitted
Holder, is or becomes the beneficial owner, directly or indirectly, of 35% or more of the Voting Stock on a fully diluted basis (measured by voting power rather than number of shares) of the Company, and the Permitted Holders own, in the aggregate,
a lesser percentage of the total Voting Stock on a fully diluted basis (measured by voting power rather than by number of shares) of the Company than such person and do not have the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the board of directors of the Company, (b) during a period of two consecutive years, Continuing Directors cease for any reason to constitute a majority of the Board of Directors of the Company, (c) the Company
consolidates or merges with or into any other Person, other than pursuant to a transaction in which the outstanding Voting Stock of the Company is changed into or exchanged for cash, securities or other property with the effect that the beneficial
owners of the outstanding Voting Stock of the Company immediately prior to such transaction, beneficially own, directly or indirectly, more than 50% of the Voting Stock (measured by voting power rather than number of shares) of the surviving
corporation immediately following such transaction or (d) the sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of
the Company and its Subsidiaries taken as a whole to any person other than an Affiliate, a Permitted Holder or a person more than 50% of the Voting Stock (measured by voting power rather than by the number of shares) of which is

  

 2 

	    	owned, directly or indirectly, following such transaction or transaction by the Permitted Holders; provided, however, that sales, transfers, conveyances or other dispositions
in the ordinary course of business of capacity on cable systems owned, controlled or operated by the Company or any Subsidiary or of telecommunications capacity or transmission rights acquired by the Company or any Subsidiary for use in business,
including, without limitation, for sale, lease, transfer, conveyance or other disposition to any customer of the Company or any Subsidiary shall not be deemed a disposition of assets for purposes of this clause (d). 

  

	(g)	Code: The Internal Revenue Code of 1986, as amended, or any successor thereto. 

  

	(h)	Committee: The compensation committee of the Board established under the Bye-Laws of the Company, or if no such committee has yet been established, the Board. The Committee
shall consist of at least two people as the Board may appoint to administer the Plan or, if no such committee has been appointed by the Board, the Board. On and after the earlier of the Section 16 Effective Date or the 162(m) Effective Date, unless
the Board is acting as the Committee or the Board or the Committee determines otherwise, each member of the Committee, if any, shall, at the time he takes any action with respect to an Option under the Plan, be an Eligible Director; provided that
the participation in deliberations or discussions and abstention from voting on any action with respect to an Option under the Plan shall not be deemed to be the taking of any such action; and provided, further, that the mere fact that a Committee
member shall fail to qualify as an Eligible Director shall not invalidate any Option granted by the Committee which Option is otherwise validly made under the Plan, even if such a Committee member takes action in respect of such Option.

  

	(i)	Company: Global Crossing Limited, a Bermuda company incorporated under the name GC Acquisition Limited on August 23, 2002. 

  

	(j)	Continuing Directors: Individuals who on the Effective Date constituted the Board, together with any new directors whose (i) election by such Board or whose nomination for
election by the shareholders of the Company, was approved by a vote of at least a majority of the directors of the Company then still in office who were either directors on the Effective Date or whose election or nomination for election was
previously so approved or (ii) were designated by any one of the Permitted Holders or any combination thereof or were nominated or elected by any such Permitted Holder(s) or any of their designees. 

  

	(k)	Disability: The Company or a Subsidiary having cause to terminate a Participant’s employment or service on account of “disability,” as defined in any existing
employment, consulting or any other agreement between the Participant and the Company or a Subsidiary or, in the absence of such an employment, consulting or other agreement, upon a Participant’s inability to engage in any substantial gainful
activity by reason of a medically determinable physical or 

  

 3 

	    	mental impairment which constitutes a permanent and total disability, as defined in Section 22(e)(3) of the Code (or any successor section thereto). The determination whether a
Participant has suffered a Disability shall be made by the Committee based upon such evidence as it deems necessary and appropriate. A Participant shall not be considered disabled unless he or she furnishes such medical or other evidence of the
existence of the Disability as the Committee, in its sole discretion, may require. 

  

	(l)	Effective Date: The date on which the “Closing” occurs under the Purchase Agreement, dated as of August 9, 2002, among the corporation then known as Global Crossing
Ltd., the corporation then known as Global Crossing Holdings Ltd., Singapore Technologies Telemedia Pte Ltd. and Hutchison Telecommunications Limited, as amended from time to time. 

  

	(m)	Eligible Director: A person who is (i) a “non-employee director” within the meaning of Rule 16b-3 promulgated under the Exchange Act, or a person meeting any
similar requirement under any successor rule or regulation and (ii) an “outside director” within the meaning of Section 162(m) of the Code and the Treasury Regulations promulgated thereunder; provided, however, that clause (i) shall apply
only on and after the Section 16 Effective Date and clause (ii) shall apply only on and after the 162(m) Effective Date. 

  

	(n)	Exchange Act: The Securities Exchange Act of 1934, as amended. 

  

	(o)	Fair Market Value: on a given date, the closing price of the Shares as reported on such date on the composite tape of the principal national securities exchange on which such
Shares are listed or admitted to trading, or, if no composite tape exists for such national securities exchange on such date, then on the principal national securities exchange on which such Shares are listed or admitted to trading, or, if the
Shares are not listed or admitted on a national securities exchange, the per Share closing bid price on such date as quoted on the National Association of Securities Dealers Automated Quotation System (or such market in which such prices are
regularly quoted), or, if there is no market on which the Shares are regularly quoted, the Fair Market Value shall be the value established by the Committee in good faith. If no sale of Shares shall have been reported on such composite tape or such
national securities exchange on such date or quoted on the National Association of Securities Dealer Automated Quotation System on such date, then the immediately preceding date on which sales of the Shares have been so reported or quoted shall be
used. 

  

	(p)	ISO: An Option that is also an incentive stock option (within the meaning of Section 422 of the Code) granted pursuant to Section 6(d) of the Plan. 

 

	(q)	LSAR: A limited stock appreciation right granted pursuant to Section 7(d) of the Plan. 

  

 4 

	(r)	162(m) Effective Date: The first date on which Awards granted under the Plan do not qualify for an exemption from the deduction limitations of Section 162(m) of the Code on
account of an exemption, or a transition or grandfather rule. 

  

	(s)	Other Stock-Based Awards: Awards granted pursuant to Section 8 of the Plan. 

  

	(t)	Option: A stock option granted pursuant to Section 6 of the Plan. 

  

	(u)	Option Price: The purchase price per Share of an Option, as determined pursuant to Section 6(a) of the Plan. 

  

	(v)	Participant: An individual who is selected by the Committee to participate in the Plan; provided that such individual must be (i) a common law employee of the Company or any
of its Subsidiaries, (ii) a director of the Company or any of its Subsidiaries, or (iii) a consultant or advisor to the Company or any of its Subsidiaries who is entitled to participate in an “employee benefit plan” within the meaning of
17 CFR § 230.405 (which, as of the Effective Date, includes those who (A) are natural persons and (B) provide bona fide services to the Company or any of its Subsidiaries other than in connection with the offer or sale of
securities in a capital-raising transaction, and do not directly or indirectly promote or maintain a market for the Company’s securities). 

  

	(w)	Performance-Based Awards: Certain Other Stock-Based Awards granted pursuant to Section 8(b) of the Plan. 

  

	(x)	Permitted Holder: Singapore Technologies Telemedia Pte Ltd., a company organized under the laws of Singapore, and its Subsidiaries and Affiliates. 

 

	(y)	Person: Any individual, corporation, partnership, joint venture, limited liability company, incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or other agency or political subdivision thereof or other entity of any kind. 

  

	(z)	Plan: The 2003 Global Crossing Limited Stock Incentive Plan. 

  

	(aa)	Section 16 Effective Date: The first date on which the executive officers and directors of the Company become subject to Section 16 of the Exchange Act.

  

	(bb)	Securities Act: The Securities Act of 1933, as amended. 

  

	(cc)	Shares: Shares of the Company’s common stock, par value U.S.$0.01 per Share. 

  

	(dd)	Stock Appreciation Right: A stock appreciation right granted pursuant to Section 7 of the Plan. 

  

 5 

	(ee)	Subsidiary: A subsidiary corporation, as defined in Section 424(f) of the Code (or any successor section thereto). 

  

	(ff)	Voting Stock: As of any date means the Capital Stock of any such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

  

	3.	Shares Subject to the Plan 

  
 Subject to Section 9(a), the total number of Shares that may be issued under the Plan is 4,878,261. Subject to Section 9(a), the maximum number of Shares
for which [Options and Stock Appreciation Rights] may be granted during a calendar year to any Participant shall be 1,000,000. The Shares may consist, in whole or in part, of unissued Shares or treasury Shares. The issuance of Shares or the payment
of cash upon the exercise of an Award shall reduce the total number of Shares available under the Plan, as applicable. Shares which are subject to Awards which terminate or lapse without the Participant having received any benefit therefrom may be
granted again under the Plan. For purposes of the foregoing sentence, a Participant shall not be deemed to have received any “benefit” in the case of forfeited restricted Shares by reason of having enjoyed voting rights and dividend rights
prior to the date of forfeiture. 
  

	4.	Administration 

  
 (a) The Plan shall be administered by the Committee, which may delegate its duties and powers in whole or in part to any subcommittee thereof. Awards may,
in the discretion of the Committee, be made under the Plan in assumption of, or in substitution for, outstanding awards previously granted by the Company or its Affiliates or a company acquired by the Company or with which the Company combines. The
number of Shares underlying such substitute awards shall be counted against the aggregate number of Shares available for Awards under the Plan. The Committee is authorized to interpret the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan, and to make any other determinations that it deems necessary or desirable for the administration of the Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan in
the manner and to the extent the Committee deems necessary or desirable. Any decision of the Committee in the interpretation and administration of the Plan, as described herein, shall lie within its sole and absolute discretion and shall be final,
conclusive and binding on all parties concerned (including, but not limited to, Participants and their beneficiaries or successors). The Committee shall have the full power and authority to establish the terms and conditions of any Award consistent
with the provisions of the Plan and to waive any such terms and conditions at any time (including, without limitation, accelerating or waiving any vesting conditions). 
  
 (b) The Committee shall require a Participant to pay to the Company or any Subsidiary and the Company or any Subsidiary
shall have the right and is hereby authorized to withhold from any Shares or other property deliverable under any Award 
  

 6 

 or from any compensation or other amounts owing to a Participant the amount (in cash, Shares or other property) of any
required tax withholding and payroll taxes in respect of an Award, its exercise, or any payment or transfer under an Award or under the Plan and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations
for the payment of such taxes. Without limiting the generality preceding sentence, unless otherwise provided in an Award agreement, a Participant may satisfy, in whole or in part, the foregoing withholding liability (but no more than the minimum
required withholding liability) by (i) delivery of Shares owned by the Participant with a Fair Market Value equal to such withholding liability; provided such Shares meet such criteria as the Committee shall from time to time establish in light of
accounting and other considerations (e.g., (x) that such Shares have been held by the Participant free and clear for at least six months prior to their use to pay the exercise price, (y) that they have been purchased by the Participant in
other than a compensatory transaction, or (z) that they meet any other requirements for “mature” shares under generally acceptable accounting principles as may exist on the exercise date, as determined by the Committee) or (ii) having the
Company withhold from the number of Shares otherwise issuable pursuant to the exercise or settlement of the Award a number of Shares with a Fair Market Value equal to such withholding liability. 
  
 (c) Unless the Committee expressly provides otherwise in an Award agreement,
in connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act, for such period as the Company or its underwriters may request and subject to
such other provisions as the Committee may deem necessary or desirable, the Participant shall not, directly or indirectly, voluntarily sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the
purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any Shares acquired under this Plan without the prior written consent
of the Company or its underwriters. 
  

	5.	Limitations 

  
 (a) No Award may be granted under the Plan after the tenth anniversary of the Effective Date, but Awards theretofore granted may extend beyond that date;
provided, however, that the administration of the Plan shall continue in effect until all matters relating to the payment of Awards previously granted have been settled. 
  
 (b) Notwithstanding any provision of the Plan to the contrary, no Award shall be granted to a Participant with a purchase
price of less than U.S.$10.16 per share prior to the date on which the Shares are listed on a U.S. national stock exchange or on the Nasdaq National Market or Nasdaq Small Cap Market. 
  

 7 

	6.	Terms and Conditions of Options 

  
 Options granted under the Plan shall be, as determined by the Committee, nonqualified or incentive stock options for federal income tax purposes, as
evidenced by the related Award agreements, and shall be subject to the foregoing and the following terms and conditions and to such other terms and conditions, not inconsistent therewith, as the Committee shall determine: 
  

	(a)	Option Price. The Option Price per Share shall be determined by the Committee, but shall not be less than 100% of the Fair Market Value of the Shares on the date an Option is
granted; provided, however, that that in no event shall an Emergence Option be granted under the Plan with an Option Price per Share of less than U.S.$10.16 For purposes hereof, “Emergence Option” shall mean one of the Options
issued on or about the Effective Date covering approximately 2.2 million Shares. 

  

	(b)	Exercisability. Options granted under the Plan shall be exercisable at such time and upon such terms and conditions as may be determined by the Committee, but in no event
shall an Option be exercisable more than ten years after the date it is granted. 

  

	(c)	Exercise of Options. Except as otherwise provided in the Plan or in an Award agreement, an Option may be exercised for all, or from time to time any part, of the Shares for
which it is then exercisable. For purposes of Section 6 of the Plan, the exercise date of an Option shall be the later of the date a notice of exercise is received by the Company and, if applicable, the date payment is received by the Company. The
purchase price for the Shares as to which an Option is exercised shall be paid to the Company in full at the time of exercise at the election of the Participant in cash or its equivalent (e.g., by check). Notwithstanding the preceding sentence, if
the applicable Award agreement so provides, the purchase price for the Shares as to which an Option is exercised may be satisfied by (i) Shares having a Fair Market Value equal to the aggregate Option Price for the Shares being purchased and
satisfying such other requirements as may be imposed by the Committee; provided such Shares meet such criteria as the Committee shall from time to time establish in light of accounting and other considerations (e.g., (x) that such Shares have
been held by the Participant free and clear for at least six months prior to their use to pay the exercise price, (y) that they have been purchased by the Participant in other than a compensatory transaction, or (z) that they meet any other
requirements for “mature” shares under generally acceptable accounting principles as may exist on the exercise date, as determined by the Committee); (ii) a combination of cash or its equivalent and “mature” Shares; or (iii) the
delivery of irrevocable instructions to a broker to deliver promptly to the Company an amount equal to the aggregate Option Price for the shares being purchased in accordance with any rules as the Committee may establish in its sole discretion.
Notwithstanding the foregoing, payment in the manner prescribed by the preceding sentence shall not be permitted to the extent that the Committee determines that payment in such manner may result in an extension or maintenance of credit in the form

  

 8 

	    	of a personal loan to or for any director or executive officer of the Company that is prohibited by Section 13(k) of the Exchange Act or other applicable law. No Participant shall
have any rights to dividends or other rights of a stockholder with respect to Shares subject to an Option until the Participant has given written notice of exercise of the Option, paid in full for such Shares and, if applicable, has satisfied any
other conditions imposed by the Committee pursuant to the Plan. If and to the extent permitted by the Committee, a Participant may elect to defer receipt of the Shares in respect of which an Option is exercised pursuant to any deferred compensation
plan of the Company which contemplates such deferral. 

  

	(d)	ISOs. The Committee may grant Options under the Plan that are intended to be ISOs. Such ISOs shall comply with the requirements of Section 422 of the Code (or any successor
section thereto). No ISO may be granted to any Participant who, at the time of such grant, owns more than ten percent of the total combined voting power of all classes of stock of the Company or of any “parent corporation” (within the
meaning of Section 424(e) of the Code) or any Subsidiary, unless (i) the Option Price per Share for such ISO is no less than 110% of the Fair Market Value of a Share on the date the ISO is granted and (ii) the date on which such ISO terminates is a
date not later than the day preceding the fifth anniversary of the date on which the ISO is granted. Any Participant who disposes of Shares acquired upon the exercise of an ISO either (i) within two years after the date of grant of such ISO or (ii)
within one year after the transfer of such Shares to the Participant, shall notify the Company of such disposition and of the amount realized upon such disposition. To the extent the aggregate Fair Market Value (determined as of the date of grant)
of Shares for which ISO is exercisable for the first time by any Participant during any calendar year (under all plans of the Company) exceeds U.S.$100,000, such excess ISOs shall be treated as non-qualified stock options to the extent required by
the Code. Notwithstanding any other provision of this Plan to the contrary, to the extent required by the Code no Option shall be treated as an ISO unless the Plan has been approved by the shareholders of the Company in a manner intended to comply
with the shareholder approval requirements of Section 422(b)(i) of the Code; provided that any Option intended to be an ISO shall not fail to be effective solely on account of a failure to obtain such approval, but rather such Option shall be
treated as a nonqualified stock option unless and until such approval is obtained. 

  

	(e)	Attestation. Wherever in this Plan or any agreement evidencing an Award a Participant is permitted to pay the exercise price of an Option or taxes relating to the exercise of
an Option by delivering Shares, the Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery requirement by presenting proof of beneficial ownership of such Shares, in which case the Company shall treat the Option
as exercised without further payment and shall withhold such number of Shares sufficient to fully satisfy the obligation from the Shares acquired by the exercise of the Option. 

  

 9 

	7.	Terms and Conditions of Stock Appreciation Rights 

  

	(a)	Grants. The Committee also may grant (i) a Stock Appreciation Right independent of an Option or (ii) a Stock Appreciation Right in connection with an Option, or a portion
thereof. A Stock Appreciation Right granted pursuant to clause (ii) of the preceding sentence (A) may be granted at the time the related Option is granted or, except in the case of an ISO, at any time after the related Option is granted but prior to
the exercise or cancellation of the related Option, (B) shall cover the same Shares covered by an Option (or such lesser number of Shares as the Committee may determine) and (C) shall be subject to the same terms and conditions as such Option except
for such additional limitations as are contemplated by this Section 7 (or such additional limitations as may be included in an Award agreement). 

  

	(b)	Terms. The exercise price per Share of a Stock Appreciation Right shall be an amount determined by the Committee but in no event shall such amount be less than the greater of
(i) the Fair Market Value of a Share on the date the Stock Appreciation Right is granted or, in the case of a Stock Appreciation Right granted in conjunction with an Option, or a portion thereof, the Option Price of the related Option or (ii) the
minimum amount permitted by applicable laws, rules, bye-laws or policies of regulatory authorities or stock exchanges. Each Stock Appreciation Right granted independent of an Option shall entitle a Participant upon exercise to an amount equal to (i)
the excess of (A) the Fair Market Value on the exercise date of one Share over (B) the exercise price per Share, times (ii) the number of Shares covered by the Stock Appreciation Right. Each Stock Appreciation Right granted in conjunction with an
Option, or a portion thereof, shall entitle a Participant to surrender to the Company the unexercised Option, or any portion thereof, and to receive from the Company in exchange therefor an amount equal to (i) the excess of (A) the Fair Market Value
on the exercise date of one Share over (B) the Option Price per Share, times (ii) the number of Shares covered by the Option, or portion thereof, which is surrendered. The date a notice of exercise is received by the Company shall be the exercise
date. Payment by the Company shall be made in Shares or in cash or its equivalent, or partly in Shares and partly in cash or its equivalent (any such Shares valued at such Fair Market Value), all as shall be determined by the Committee. Stock
Appreciation Rights may be exercised from time to time upon actual receipt by the Company of written notice of exercise stating the number of Shares with respect to which the Stock Appreciation Right is being exercised. No fractional Shares will be
issued in payment for Stock Appreciation Rights, but instead cash will be paid for a fraction or, if the Committee should so determine, the number of Shares will be rounded downward to the next whole Share. 

  

	(c)	Limitations. The Committee may impose, in its sole discretion, such conditions upon the exercisability or transferability of Stock Appreciation Rights as it may deem fit.
Except as otherwise provided in the case of Stock Appreciation Rights 

  

 10 

	    	granted in connection with Options, a Stock Appreciation Right shall expire on a date designated by the Committee which is not later than ten years after the date of grant of the
Stock Appreciation Right. 

  

	(d)	Limited Stock Appreciation Rights. The Committee may grant LSARs that are exercisable upon the occurrence of specified contingent events. Such LSARs may provide for a
different method of determining appreciation, may specify that payment will be made only in cash and may provide that any related Awards are not exercisable while such LSARs are exercisable. Unless the context otherwise requires, whenever the term
“Stock Appreciation Right” is used in the Plan, such term shall include LSARs. 

  

	8.	Other Stock-Based Awards 

  

	(a)	Generally. The Committee, in its sole discretion, may grant Awards of Shares, Awards of restricted Shares and Awards that are valued in whole or in part by reference to, or
are otherwise based on the Fair Market Value of, Shares (“Other Stock-Based Awards”). Such Other Stock-Based Awards shall be in such form, and dependent on such conditions, as the Committee shall determine, including, without limitation,
the right to receive one or more Shares (or the equivalent cash value of such Shares) upon the completion of a specified period of service, the occurrence of an event and/or the attainment of performance objectives. Other Stock-Based Awards may be
granted alone or in addition to any other Awards granted under the Plan. Subject to the provisions of the Plan, the Committee shall determine to whom and when other Stock-Based Awards will be made, the number of Shares to be awarded under (or
otherwise related to) such Other Stock-Based Awards; whether such Other Stock-Based Awards shall be settled in cash, Shares or a combination of cash and Shares; and all other terms and conditions of such Awards (including, without limitation, the
vesting provisions thereof and provisions ensuring that all Shares so awarded and issued shall be fully paid and non-assessable). The terms and conditions of all Other Stock-Based Awards shall be reflected in a written Award agreement.

  

	(b)	Restricted Shares. Each Participant who receives an Other Stock-Based Award in the form of restricted Shares (“Restricted Shares”) shall execute and deliver to the
Company an Award agreement with respect to the Restricted Shares which sets forth the restrictions applicable to such Restricted Shares. If the Committee determines that the Restricted Shares shall be held in escrow rather than delivered to the
Participant pending the release of the applicable restrictions, the Committee may require the Participant to additionally execute and deliver to the Company (i) an escrow agreement satisfactory to the Committee and (ii) the appropriate blank stock
powers with respect to the Restricted Shares covered by such agreement. If a Participant shall fail to execute a Restricted Share agreement and, if applicable, an escrow agreement and stock powers, the Award shall be null and void. Subject to the
restrictions imposed by the Committee, the Participant generally shall have the rights and privileges of a stockholder as to 

  

 11 

	    	such Restricted Shares, including the right to vote such Restricted Shares. At the discretion of the Committee, cash dividends and stock dividends with respect to the Restricted
Shares may be either currently paid to the Participant or withheld by the Company for the Participant’s account, and interest may be credited on the amount of cash dividends withheld at a rate and subject to such terms as determined by the
Committee. The cash dividends or stock dividends so withheld by the Committee and attributable to any particular Restricted Share (and earnings thereon, if applicable) shall be distributed to the Participant upon the release of restrictions on such
Share and, if such Share is forfeited, the Participant shall have no right to such cash dividends or stock dividends. 

  
 Each certificate representing Restricted Shares awarded under the Plan shall bear the following legend (or a legend to the effect of the
following) until the lapse of all restrictions with respect to such Restricted Shares: 
  
 Transfer of this certificate and the shares represented hereby is restricted pursuant to the terms of the 2003 Global Crossing Limited. Stock Incentive Plan and a Restricted Share Award Agreement, dated as of
                    , between Global Crossing Limited and
                        . A copy of such Agreement is on file at the offices of Global Crossing Limited. 
  
 Stop transfer orders shall be entered with the Company’s transfer agent
and registrar against the transfer of legended securities. 
  

	(c)	Performance-Based Awards. Notwithstanding anything to the contrary herein, certain Other Stock-Based Awards granted by the Committee on or after the 162(m) Effective Date
under this Section 8 may be granted in a manner which is deductible by the Company under Section 162(m) of the Code (or any successor section thereto) (“Performance-Based Awards”). A Participant’s Performance-Based Award shall be
determined based on the attainment of written performance goals approved by the Committee for a performance period established by the Committee (i) while the outcome for that performance period is substantially uncertain and (ii) no more than 90
days after the commencement of the performance period to which the performance goal relates or, if less, the number of days which is equal to 25 percent of the relevant performance period. The performance goals, which must be objective, shall be
based upon one or more of the following criteria: (i) consolidated earnings before or after taxes (including earnings before interest, taxes, depreciation and amortization); (ii) net income; (iii) operating income; (iv) earnings per Share; (v) book
value per Share; (vi) return on shareholders’ equity; (vii) expense management; (viii) return on investment; (ix) improvements in capital structure; (x) profitability of an identifiable business unit or product; (xi) maintenance or improvement
of profit margins; (xii) stock price; (xiii) market share; (xiv) revenues or sales; (xv) costs; (xvi) cash flow; (xvii) working capital; (xviii) return on assets; and (xix) cash on hand. The foregoing criteria may relate to the Company, one or more
of its Subsidiaries or one or more of its divisions or units, or any combination of the 

  

 12 

	    	foregoing, and may be applied on an absolute basis and/or be relative to one or more peer group companies or indices, or any combination thereof, all as the Committee shall
determine. In addition, to the degree consistent with Section 162(m) of the Code (or any successor section thereto), the performance goals may be calculated without regard to extraordinary items. The maximum amount of a Performance-Based Award
during a calendar year to any Participant shall be (x) with respect to Performance-Based Awards that are granted in shares, 500,000 shares and (y) with respect to Performance-Based Awards that are not granted in shares, U.S.$10,000,000. The
Committee shall determine whether, with respect to a performance period, the applicable performance goals have been met with respect to a given Participant and, if they have, to so certify and ascertain the amount of the applicable Performance-Based
Award. No Performance-Based Awards will be paid for such performance period until the Committee makes such certification. The amount of the Performance-Based Award actually paid to a given Participant may be less than the amount determined by the
applicable performance goal formula, at the discretion of the Committee. The amount of the Performance-Based Award determined by the Committee for a performance period shall be paid to the Participant at such time as determined by the Committee in
its sole discretion after the end of such performance period; provided, however, that a Participant may, if and to the extent permitted by the Committee and consistent with the provisions of Section 162(m) of the Code and the applicable Award
agreement, elect to defer payment of a Performance-Based Award. 

  

	9.	Adjustments Upon Certain Events 

  
 Notwithstanding any other provisions in the Plan to the contrary, the following provisions shall apply to all Awards granted under the Plan: 

 

	(a)	Generally. Awards granted under the Plan and any agreements evidencing such Awards, the maximum number of Shares subject to all Awards stated in Section 3 and the maximum
number of Shares with respect to which any one person may be granted Options or Stock Appreciation Rights during any period stated in Section 3 or any one person may be granted Performance-Based Awards during any period stated in Section 8(c) shall
be subject to adjustment or substitution, as determined by the Committee in its sole discretion, as to the number, price or kind of a Share or other consideration subject to such Awards or as otherwise determined by the Committee to be equitable (i)
in the event of changes in the outstanding Shares or in the capital structure of the Company by reason of stock or extraordinary cash dividends, stock splits, reverse stock splits, recapitalization, reorganizations, mergers, consolidations,
combinations, exchanges, or other relevant changes in capitalization occurring after the date of grant of any such Award or (ii) in the event of any change in applicable laws or any change in circumstances which results in or would result in any
substantial dilution or enlargement of the rights granted to, or available for, Participants, or which otherwise warrants equitable adjustment because it interferes with the intended operation of the Plan. 

  

 13 

	(b)	Change in Control. Except as otherwise provided in an Award agreement, in the event of a Change in Control, the Committee in its sole discretion and without liability to any
person may take such actions, if any, as it deems necessary or desirable with respect to any Award (including, without limitation, (i) the acceleration of an Award, (ii) the payment of cash, Shares or any combination thereof, in exchange for the
cancellation of an Award and/or (iii) the requiring of the issuance of substitute Awards that will substantially preserve the value, rights and benefits of any affected Awards previously granted hereunder) as of the date of the consummation of the
Change in Control. 

  

	10.	No Right to Employment or Awards 

  
 The granting of an Award under the Plan shall impose no obligation on the Company or any Subsidiary to continue the employment or service or consulting
relationship of a Participant and shall not lessen or affect the Company’s or Subsidiary’s right to terminate the employment or service or consulting relationship of such Participant. No Participant or other person shall have any claim to
be granted any Award, and there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries of Awards. The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto
need not be the same with respect to each Participant (whether or not such Participants are similarly situated). 
  

	11.	Successors and Assigns 

  
 The Plan shall be binding on all successors and assigns of the Company and a Participant, including without limitation, the estate of such Participant and
the executor, administrator or trustee of such estate, or any receiver or trustee in bankruptcy or representative of the Participant’s creditors. 
  

	12.	Nontransferability of Awards 

  
 (a) Each Award shall be exercisable only by the Participant during the Participant’s lifetime, or, if permissible under applicable law, by the
Participant’s legal guardian or representative. No Award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant otherwise than by will or by the laws of descent and distribution and any such
purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company, a Subsidiary or an Affiliate; provided that the designation of a beneficiary shall not constitute an assignment,
alienation, pledge, attachment, sale, transfer or encumbrance. 
  
 (b) Notwithstanding Section 12(a), the Committee may in the applicable Award agreement or at any time after the date of grant of an Award in an amendment to an Award agreement provide that an Award (other than an Award of an Option which is

  

 14 

 intended to qualify as an ISO) may be transferred by a Participant without consideration, subject to such rules as the
Committee may adopt consistent with any applicable Award agreement to preserve the purposes of the Plan, to: 
  

	 	(i)	any person who is a “family member” of the Participant, as such term is used in the instructions to Form S-8 (collectively, the “Immediate Family Members”);

  

	 	(ii)	a trust solely for the benefit of the Participant and his or her Immediate Family Members; 

  

	 	(iii)	a partnership or limited liability company whose only partners or shareholders are the Participant and his or her Immediate Family Members; or 

  

	 	(iv)	any other transferee as may be approved either (x) by the Board or the Committee in its sole discretion, or (y) as provided in the applicable Award agreement;

  
 (each transferee described in clauses (i), (ii), (iii) and (iv)
above is hereinafter referred to as a “Permitted Transferee”); provided that the Participant gives the Committee advance written notice describing the terms and conditions of the proposed transfer and the Committee notifies the
Participant in writing that such a transfer would comply with the requirements of the Plan and any applicable Award agreement. 
  
 (c) The terms of any Award transferred in accordance with the immediately Section 12(b) shall apply to the Permitted Transferee and any reference in the
Plan or in an Award agreement to an optionee or Participant shall be deemed to refer to the Permitted Transferee, except that (i) Permitted Transferees shall not be entitled to transfer any Awards, other than by will or the laws of descent and
distribution; (ii) Permitted Transferees shall not be entitled to exercise any transferred Awards which are Options unless there shall be in effect a registration statement on an appropriate form covering the shares to be acquired pursuant to the
exercise of such Option if the Committee determines, consistent with any applicable Award agreement, that such a registration statement is necessary or appropriate, (iii) the Committee or the Company shall not be required to provide any notice to a
Permitted Transferee, whether or not such notice is or would otherwise have been required to be given to the Participant under the Plan or otherwise, and (iv) the consequences of termination of the Participant’s employment by, or services to,
the Company or a Subsidiary under the terms of the Plan and the applicable Award agreement shall continue to be applied with respect to the Participant, following which Awards which are Options or Stock Appreciation Rights shall be exercisable by
the Permitted Transferee only to the extent, and for the periods, specified in the Plan and the applicable Award agreement. 
  

 15 

	13.	Amendments or Termination 

  
 (a) The Board may amend, alter, suspend, discontinue, or terminate the Plan or any portion thereof at any time; provided that no such amendment,
alteration, suspension, discontinuation or termination shall be made without shareholder approval if such approval is necessary to comply with any tax, regulatory, exchange or other listing requirements applicable to the Plan (including as necessary
to prevent Options, Stock Appreciation Rights or Performance-Based Awards granted under the Plan on or after the 162(m) Effective Date from failing to qualify as “performance-based compensation” for purposes of Section 162(m) of the Code);
and provided further that any such amendment, alteration, suspension, discontinuance or termination that would impair the rights of any Participant or any holder or beneficiary of any Award theretofore granted shall not to that extent
be effective without the consent of the affected Participant, holder or beneficiary. Notwithstanding anything to the contrary herein, the Board may not amend, alter or discontinue the provisions relating to Section 9(b) of the Plan after the
occurrence of a Change in Control. 
  
 (b) The Committee may, to
the extent consistent with the terms of any applicable Award agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Award theretofore granted, prospectively or retroactively;
provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would impair the rights of any Participant or any holder or beneficiary of any Award theretofore granted shall not to that extent be
effective without the consent of the affected Participant, holder or beneficiary. Notwithstanding any other provisions in the Plan to the contrary, in no event shall the Committee reprice or regrant options or Stock Appreciation Rights at an
exercise price below the original exercise price applicable to such Award. 
  

	14.	International Participants 

  
 Notwithstanding any provisions of the Plan to the contrary, Awards may be granted to Participants who reside or are employed outside of the United States
of America on such terms and conditions as the Committee determines, in its sole discretion, are necessary or advisable to achieve the purposes of the Plan or to comply with foreign law, including, without limitation, the establishment of subplans
under this Plan. Any subplans or other modifications to Plan terms, conditions or procedures established under or adopted pursuant to this Section 14 by the Committee shall be attached to this Plan document as Appendices. 
  

	15.	Choice of Law 

  
 The Plan shall be governed by and construed in accordance with the laws of the State of New York without regard to conflicts of laws. 
  

 16 

	16.	Effectiveness of the Plan 

  
 The Plan shall be effective as of the Effective Date. On and after the 162(m) Effective Date the validity and exercisability of any and all Awards granted
thereafter pursuant to the Plan are contingent upon approval of the Plan by the shareholders of the Company in a manner intended to comply with the shareholder approval requirements of (i) Section 162(m) of the Code (unless an exception or
grandfather rule applies, or Awards are otherwise exempt from the application of Section 162(m) of the Code). 
  

	17.	Government and Other Regulation 

  
 The obligation of the Company to make payment of Awards in Shares or otherwise or to issue Shares upon the exercise of Options or other Awards shall be
subject to all applicable laws, rules, and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions of any Award to the contrary, the Company shall be under no obligation to offer to
sell or to sell and shall be prohibited from offering to sell or selling any Shares pursuant to an Award unless such Shares have been properly registered for sale pursuant to the Securities Act with the Securities and Exchange Commission or unless
the Company has received an opinion of counsel, satisfactory to the Company, that such shares may be offered or sold without such registration pursuant to an available exemption therefrom and the terms and conditions of such exemption have been
fully complied with. The Company shall be under no obligation to register for sale under the Securities Act any of the Shares to be offered or sold under the Plan. If the Shares offered for sale or sold under the Plan are offered or sold pursuant to
an exemption from registration under the Securities Act, the Company may restrict the transfer of such Shares and may legend the stock certificates representing such Shares in such manner as it deems advisable to ensure the availability of any such
exemption. 
  

	18.	Miscellaneous 

  
 (a) Awards to a Participant under the Plan also may be subject to such other provisions (whether or not applicable to the benefit awarded to any other
Participant) as the Committee determines appropriate including, without limitation, provisions for the forfeiture of or restrictions on resale or other disposition of Shares acquired under any Award, provisions giving the Company the right to
repurchase Shares acquired under any Award in the event the Participant elects to dispose of such Shares, provisions allowing the Participant to elect to defer the receipt of payment in respect of Awards for a specified period or until a specified
event, and provisions to comply with Federal and state securities laws and Federal and state tax withholding requirements. Any such provisions shall be reflected in the applicable Award agreement. 
  
 (b) Each Participant may file with the Committee a written designation of one
or more persons as the beneficiary who shall be entitled to receive the amounts payable with respect to an Award, if any, due under the Plan upon his death. A Participant may, from time to time, revoke or change his beneficiary designation without
the consent of any prior beneficiary by filing a new designation with the Committee. 
  

 17 

 The last such designation received by the Committee shall be controlling; provided, however, that no
designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the Participant’s death, and in no event shall it be effective as of a date prior to such receipt. If no beneficiary designation is filed
by a Participant, the beneficiary shall be deemed to be his or her spouse or, if the Participant is unmarried at the time of death, his or her estate. 
  
 (c) If the Committee shall find that any person to whom any amount is payable under the Plan is unable to care for his affairs because of illness
or accident, or is a minor, or has died, then any payment due to such person or his estate (unless a prior claim therefor has been made by a duly appointed legal representative) may, if the Committee so directs the Company, be paid to his spouse,
child, relative, an institution maintaining or having custody of such person, or any other person deemed by the Committee to be a proper recipient on behalf of such person otherwise entitled to payment. Any such payment shall be a complete discharge
of the liability of the Committee and the Company therefor. 
  
 (d) No member of the Committee shall be personally liable by reason of any contract or other instrument executed by such member or on his behalf in his capacity as a member of the Committee nor for any mistake of judgment made in
good faith, and the Company shall indemnify and hold harmless each member of the Committee and each other employee, officer or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be
allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim) arising out of any act or omission to act in connection with the Plan unless arising out of such
person’s own fraud or willful bad faith; provided, however, that approval of the Board shall be required for the payment of any amount in settlement of a claim against any such person. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Articles of Incorporation or Bye-Laws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them
or hold them harmless. 
  
 (e) No provision of the Plan shall
require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor shall the Company maintain
separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for such purposes. Holders shall have no rights under the Plan other than as unsecured general creditors of the
Company, except that insofar as they may have become entitled to payment of additional compensation by performance of services, they shall have the same rights as other employees under general law. 
  
 (f) Neither the adoption of this Plan by the Board nor the submission of this
Plan to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock
options 
  

 18 

 otherwise than under this Plan, and such arrangements may be either applicable generally or only in specific cases.

  
 (g) Each member of the Committee and each member of the Board
shall be fully justified in relying, acting or failing to act, and shall not be liable for having so relied, acted or failed to act in good faith, upon any report made by the independent public accountant of the Company and its Affiliates and upon
any other information furnished in connection with the Plan by any person or persons other than himself. 
  
 (h) No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, profit sharing, group
insurance or other benefit plan of the Company or any Subsidiary except as otherwise specifically provided in such other plan. 
  
 (i) The expenses of administering the Plan shall be borne by the Company and its Affiliates. 
  
 (j) Masculine pronouns and other words of masculine gender shall refer
to both men and women. 
  
 (k) The titles and headings of
the sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings shall control. 
  
 (l) If any provision of the Plan or any Award agreement is or becomes or is deemed to be invalid, illegal, or
unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if
it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award and the remainder of the Plan
and any such Award shall remain in full force and effect. 
  
 As Adopted By the
Board of Directors of 
 Global Crossing Limited at a Meeting Held 
 on December 8, 2003, Amended by the 
 Board of Directors at a Meeting Held on April 7, 2004 and 
 Approved at a Meeting of the Shareholders on December 14, 2004. 
  

 19

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