Document:

Exhibit 4.1

    

    Exhibit
      4.1

    

    STOCK
      FOR SERVICES COMPENSATION PLAN 2006

    

    UraniumCore
      Company

    a
      DELAWARE corporation

    

    The
      Board of Directors
      of
UraniumCore
      Company.
      hereby
      adopts the following plan for compensation of service providers with common
      stock in lieu of cash. This Plan is adopted as of this date of August 3,
      2006.

    

    1.
      Purposes of the Plan.
      This
      Corporation requires the services of its officers and consultants to assist
      in
      the transition from development stage to operational stage of its corporate
      business, and further in the early operational stage with a view to achieving
      profitability; however, this Corporation does not enjoy the ability to provide
      cash compensation for all of its needs. It may be necessary, appropriate and
      desirable, from time to time, to offer shares of common stock to officers and
      services providers, either initially, to secure necessary services, or later,
      to
      settle employee salaries, invoices and billings with stock in lieu of cash.
      It
      may be necessary, appropriate and desirable, from time to time, to offer shares
      of common stock to services providers, as incentives to provide
      services.

    

    2.
      Definitions.
      As used
      herein, the following definitions shall apply: 

    

    (a)
      "The
      Act", and the "1933 Act", means the Securities Act of 1933.

    

    (b)
      "Administrator" means the Board of Directors, or any of its Committees as shall
      be designated by the Board to administer the Plan, in accordance with Section
      4
      of the Plan. 

    

    (c)
      "Applicable Laws" means the requirements relating to the administration of
      stock
      option plans under United States Federal and state corporate laws, Federal
      and
      state securities laws, the Internal Revenue Code or Rules of any stock exchange
      or quotation system on which the Common Stock of the issuer is listed or quoted
      and the applicable laws of any foreign country or jurisdiction where Options
      or
      Stock Purchase Rights are, or will be, granted under the Plan. 

    

    (d)
      "Board" means the Board of Directors of the Company. 

    

    (e)
      "Code" means the Internal Revenue Code of 1986, as amended. 

    

    (f)
      "Common Stock" means the common stock of the Company. 

    

    (g)
      "Company" means UraniumCore
      Company
      a
      Delaware Corporation. 

    

    (h)
      "Consultant" means any person, including attorneys, who: (1) advise the issuer
      on business strategy; (2) arranges a bank credit for the issuer; (3) who is
      retained to perform management functions traditionally performed by an employee;
      (4) an attorney who serves as counsel to the issuer, unless the participation
      involves a securities offering as part of promotional scheme of the issuer’s
      securities; (5) assists the issuer in identifying acquisition targets; (6)
      assists the issuer in structuring mergers or other acquisitions in which
      securities are issued as consideration, unless the acquisition involves a
      promotional scheme of the issuer’s securities. 

    

    (i)
      "Director" means a member of the Board.

    

    (j)
      "Employee" means any person, including Officers and Directors, employed by
      the
      Company or any Parent or Subsidiary of the Company. A Service Provider shall
      not
      cease to be an Employee in the case of (i) any leave of absence approved by
      the
      Company or (ii) transfers between locations of the Company or between the
      Company, its Parent, any Subsidiary, or any successor. 

    

    (k)
      "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     

    
      
         

      

      
        Page
          - 1

        
          

        

      

      
         

      

    

    
 

    (l)
      "Fair
      Market Value" means, as of any date, the value of Common Stock determined as
      follows: 

    

    (i)
      If
      the Common Stock is listed on any established stock exchange or a national
      market system, including without limitation the Nasdaq National Market or The
      Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall
      be the closing sales price for such stock (or the closing bid, if no sales
      were
      reported) as quoted on such exchange or system for the last market trading
      day
      prior to the time of determination, as reported in The Wall Street Journal
      or
      such other source as the Administrator deems reliable; 

    

    (ii)
      If
      the Common Stock is regularly quoted by a recognized securities dealer but
      selling prices are not reported, the Fair Market Value of a Share of Common
      Stock shall be the mean between the high bid and low asked prices for the Common
      Stock on the last market trading day prior to the day of determination, as
      reported in The Wall Street Journal or such other source as the Administrator
      deems reliable; or 

    

    (iii)
      In
      the absence of an established market for the Common Stock, the Fair Market
      Value
      shall be determined in good faith by the Administrator.

    

    (m)
      "Issuer" means UraniumCore
      Company
      a
      Delaware Corporation.

    

    (n)
      "Reporting Company" means either one with a class of securities registered
      under
      Sections 12(b) or 12(g), and also includes a company which reports in accordance
      with Section 15(d) of the Securities Exchange Act of 1934, and further, in
      any
      case, that such company is current in its annual and quarterly filing
      requirements, and is not at such time subject to Comments by the Staff of the
      Commission with respect to any such filing, or to any Registration
      Statement.

    

    (o)
      "Non-Reporting Company" means one which is not a Reporting Company as defined
      hereinabove.

    

    (p)
      "Officer" means a person who is an officer of the Company within the meaning
      of
      Section 16 of the Exchange Act and the rules and regulations promulgated there
      under. 

    

    (q)
      "Parent" means a "parent corporation," whether now or hereafter existing, as
      defined in Section 424(e) of the Code. 

    

    (r)
      "Plan" means this Stock for Services Plan. 

    

    (s)
      "Restricted Stock" means shares of stock acquired pursuant to a Restricted
      Stock
      Agreement, voluntarily, or Restricted Securities as defined by Rule 144(a),
      Reg.
      230.144(a).

     

    (t)
      "Service Provider" means an Employee, Officer, Director or Consultant of the
      Issuer, its parent or subsidiary. 

    

    (u)
      "Share" means a share of the Common Stock.

    

    (v)
      "Subsidiary" means a "subsidiary corporation", whether now or hereafter
      existing, owned or controlled by issuer defined in Section 424(f) of the Code.
      

    

    3.
      Stock Subject to the Plan. The
      stock
      subject to this Plan is Class A Common Stock.

    

    4.
      The Plan.
      Accordingly, the Administrator may recommend to the Board, and the Board may
      compensate actual Service Providers with stock, by agreement and in accordance
      with applicable law, in lieu of cash, and in accordance with the following
      provisions of this Plan, and all applicable law, and this Plan is adopted as
      corporate policy, until and unless amended or rescinded by the
      Board.

    

    
      	 	
              (a)
                Non-Reporting Issuer.
                If
                at the time of any proposed issuance pursuant to this Plan, Corporation
                be
                a non-reporting company, the Board of Directors shall offer shares
                only
                pursuant to Section 4(2) of the 1933 Act, as Restricted Securities
                and New
                Investment Shares, as defined by Rule 144(a). Offers or issuances
                pursuant
                to the exemption of Rule 701 (Reg.230.701)) are not within the scope
                of
                this Plan.

            

    

     

    
      
         

      

      
        Page
          - 2

        
          

        

      

      
         

      

    

     

    (b)
      Reporting Issuer.
      If at
      the time of any proposed issuance pursuant to this Plan, this Corporation be
      a
      reporting company, the Administrator may elect to offer shares pursuant to
      Registration under the Securities Act of 1933, or pursuant to Section 4(2)
      of
      the 1933 Act, or other applicable exemption from registration, with such
      restriction on resale as required by applicable law or rule of the Commission,
      or such greater restriction as may be agreed to by the parties.

    

    
      	 	
              (c)
                1933 Act Registration.
                In
                the event that shares are offered or issued pursuant to 1933 Act
                Registration, using From S-8 (or its equivalent as the Commission
                may from
                time to time provide, all requirements for the use of such form and
                procedure shall be observed and complied with; principally, among
                others:
                (i) The Corporation shall be a reporting company; (ii) Shares shall
                be
                offered and/or issued only to natural persons; and (iii) Capital
                formation
                or fund raising activities shall not be included in the concept of
                actual
                services provided, within this
                Plan.

            

    

    

    
      	 	
              (d)
                Valuation of Shares.
                If
                a real and liquid market exists for the issuance of shares, on any
                public
                trading medium or exchange, the shares shall be valued in reasonable
                relation to the market price at which the shares could be sold. If
                no
                public market exists for the shares offered or issued, or if only
                a
                technical but inactive or illiquid market exits, the reasonable value
                of
                the shares shall be determined by actual commercial conditions for
                private
                transactions in shares that cannot be resold in brokerage
                transactions.

            

    

    

    
      	 	
              (e)
                Full Compliance.
                Nothing contained herein shall authorize, and notwithstanding anything
                contained herein shall be deemed to authorize, anything other than
                full
                compliance with all applicable laws and regulations, as in force
                and
                effect at the time of any offer or issuance of
                securities.

            

    

    

    
      	 	
              (f)
                Non-Qualified Plan.
                This Plan is not intended to qualify for any special tax treatment
                under
                the Code. Shares issued pursuant to this Plan shall be the equivalent
                of
                payment in cash for services, at their fair market
                value.

            

    

    

    
      	 	
              (g)
                Services Invoiced.
                Services to be compensated by issuance of stock shall be specifically
                invoice and proper records of such services maintained in the corporate
                records. Future services for stock may be compensated according to
                a
                written agreement. 

            

    

    

    
      	 	
              (h)
                Voluntary Restriction.
                In
                any case, whether the Issuer be reporting or non-reporting, shares
                may
                offered pursuant to Restrictive Stock Agreement. Such voluntary or
                agreed
                restrictions may be greater than those imposed by applicable
                law.

            

    

    

    4.
      Administration of the Plan. The
      Plan
      shall be administered by the Board or such Committee as the Board may constitute
      or designate for such purposes. The Plan may be administered by different
      Committees with respect to different groups of Service Providers; provided
      that
      no shares shall be issued pursuant to this plan, and no Registration of shares
      shall be made pursuant to this Plan, with the final or ultimate action and
      direction of the Board. 

    

    Execution.
      This
      Plan
      is now signed by all of the Directors of this Corporation, on behalf of the
      Corporation, attesting to the adoption of this Plan.

    

    UraniumCore
      Company

    Dated:
      August 3, 2006 

    

    

    

    
      	
              /s/
                Michael Forster

            	 
	
              Michael
                Forster

              president

            	 

    

     

     

    
      
         

      

      
        Page
          - 3Exhibit 10.2

 

VERIGY LTD.

 

2006 EQUITY
INCENTIVE PLAN

(As Amended,
August 29, 2006)

 

TABLE OF CONTENTS

 

	
  

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 1.

  	
   

  	
  INTRODUCTION

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2.

  	
   

  	
  ADMINISTRATION

  	
  1

  
	
   

  	
  2.1

  	
  Committee Composition

  	
  1

  
	
   

  	
  2.2

  	
  Committee Responsibilities

  	
  1

  
	
   

  	
  2.3

  	
  Committee for Non-Officer Grants

  	
  1

  
	
   

  	
  2.4

  	
  Administration with Respect to Substitute Awards

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3.

  	
   

  	
  SHARES AVAILABLE FOR GRANTS

  	
  2

  
	
   

  	
  3.1

  	
  Basic Limitation

  	
  2

  
	
   

  	
  3.2

  	
  Shares Returned to Reserve

  	
  2

  
	
   

  	
  3.3

  	
  Substitute Awards

  	
  2

  
	
   

  	
  3.4

  	
  Dividend Equivalents

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4.

  	
   

  	
  ELIGIBILITY

  	
  2

  
	
   

  	
  4.1

  	
  Incentive Stock Options

  	
  2

  
	
   

  	
  4.2

  	
  Other Grants

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5.

  	
   

  	
  OPTIONS

  	
  3

  
	
   

  	
  5.1

  	
  Option Agreement

  	
  3

  
	
   

  	
  5.2

  	
  Number of Shares

  	
  3

  
	
   

  	
  5.3

  	
  Exercise Price

  	
  3

  
	
   

  	
  5.4

  	
  Exercisability and Term

  	
  3

  
	
   

  	
  5.5

  	
  Effect of Change in Control

  	
  4

  
	
   

  	
  5.6

  	
  Buyout Provisions

  	
  4

  
	
   

  	
  5.7

  	
  Payment for Option Shares

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6.

  	
   

  	
  SHARE APPRECIATION RIGHTS

  	
  4

  
	
   

  	
  6.1

  	
  SAR Agreement

  	
  4

  
	
   

  	
  6.2

  	
  Number of Shares

  	
  5

  
	
   

  	
  6.3

  	
  Exercise Price

  	
  5

  
	
   

  	
  6.4

  	
  Exercisability and Term

  	
  5

  
	
   

  	
  6.5

  	
  Effect of Change in Control

  	
  6

  
	
   

  	
  6.6

  	
  Exercise of SARs

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7.

  	
   

  	
  RESTRICTED SHARES

  	
  6

  
	
   

  	
  7.1

  	
  Restricted Share Agreement

  	
  6

  
	
   

  	
  7.2

  	
  Number of Shares

  	
  6

  
	
   

  	
  7.3

  	
  Payment for Awards

  	
  6

  
	
   

  	
  7.4

  	
  Vesting Conditions

  	
  6

  
	
   

  	
  7.5

  	
  Effect of Change in Control

  	
  7

  
	
   

  	
  7.6

  	
  Voting and Dividend Rights

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8.

  	
   

  	
  SHARE UNITS

  	
  7

  
	
   

  	
  8.1

  	
  Share Unit Agreement

  	
  7

  
	
   

  	
  8.2

  	
  Number of Shares

  	
  7

  
	
   

  	
  8.3

  	
  Payment for Awards

  	
  7

  
	
   

  	
  8.4

  	
  Vesting Conditions

  	
  8

  
	
   

  	
  8.5

  	
  Effect of Change in Control

  	
  8

  
	
   

  	
  8.6

  	
  Voting and Dividend Rights

  	
  8

  

 i
 

 

 

	
  

  	
  8.7

  	
  Form and Time of Settlement of Share Units

  	
  8

  
	
   

  	
  8.8

  	
  Creditors' Rights

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9.

  	
   

  	
  AUTOMATIC OPTION GRANTS TO OUTSIDE DIRECTORS

  	
  9

  
	
   

  	
  9.1

  	
  Initial Grants

  	
  9

  
	
   

  	
  9.2

  	
  Annual Grants

  	
  10

  
	
   

  	
  9.3

  	
  Cessation of Eligibility to Vest

  	
  10

  
	
   

  	
  9.4

  	
  Accelerated Exercisability

  	
  10

  
	
   

  	
  9.5

  	
  Exercise Price

  	
  10

  
	
   

  	
  9.6

  	
  Term

  	
  10

  
	
   

  	
  9.7

  	
  Affiliates of Outside Directors

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10.

  	
   

  	
  PROTECTION AGAINST DILUTION

  	
  10

  
	
   

  	
  10.1

  	
  Adjustments

  	
  10

  
	
   

  	
  10.2

  	
  Dissolution or Liquidation

  	
  11

  
	
   

  	
  10.3

  	
  Reorganizations

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11.

  	
   

  	
  PAYMENT OF DIRECTOR'S FEES IN SECURITIES

  	
  12

  
	
   

  	
  11.1

  	
  Effective Date

  	
  12

  
	
   

  	
  11.2

  	
  Elections to Receive NSOs, Restricted Shares or
  Share Units

  	
  12

  
	
   

  	
  11.3

  	
  Number and Terms of NSOs, Restricted Shares or Share
  Units

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12.

  	
   

  	
  LIMITATION ON RIGHTS

  	
  12

  
	
   

  	
  12.1

  	
  Retention Rights

  	
  12

  
	
   

  	
  12.2

  	
  Shareholders' Rights

  	
  12

  
	
   

  	
  12.3

  	
  Regulatory Requirements

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 13.

  	
   

  	
  WITHHOLDING TAXES

  	
  13

  
	
   

  	
  13.1

  	
  General

  	
  13

  
	
   

  	
  13.2

  	
  Share Withholding

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 14.

  	
   

  	
  LIMITATION ON PAYMENTS

  	
  13

  
	
   

  	
  14.1

  	
  Scope of Limitation

  	
  13

  
	
   

  	
  14.2

  	
  Basic Rule

  	
  13

  
	
   

  	
  14.3

  	
  Reduction of Payments

  	
  13

  
	
   

  	
  14.4

  	
  Overpayments and Underpayments

  	
  14

  
	
   

  	
  14.5

  	
  Related Corporations

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 15.

  	
   

  	
  FUTURE OF THE PLAN

  	
  14

  
	
   

  	
  15.1

  	
  Term of the Plan

  	
  14

  
	
   

  	
  15.2

  	
  Amendment or Termination

  	
  14

  
	
   

  	
  15.3

  	
  Shareholder Approval

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 16.

  	
   

  	
  DEFINITIONS

  	
  14

  

 

 ii

VERIGY LTD.

2006 EQUITY
INCENTIVE PLAN

ARTICLE 1. 
INTRODUCTION.

The purpose of the Plan is to promote the long-term
success of the Company and the creation of shareholder value by
(a) encouraging Employees, Outside Directors and Consultants to focus on
critical long-range objectives, (b) encouraging the attraction and
retention of Employees, Outside Directors and Consultants with exceptional
qualifications and (c) linking Employees, Outside Directors and
Consultants directly to shareholder interests through increased share
ownership. The Plan seeks to achieve this purpose by providing for Awards in
the form of Options (which may constitute ISOs or NSOs), SARs, Restricted
Shares or Share Units.

The Plan shall be governed by, and construed in
accordance with, the laws of the Republic of Singapore (except its
choice-of-law provisions).

ARTICLE 2. 
ADMINISTRATION.

2.1 
Committee Composition.  The Committee shall administer
the Plan. The Committee shall consist exclusively of two or more directors of
the Company, who shall be appointed by the Board. In addition, each member of
the Committee shall meet the following requirements:

(a)          Any listing standards prescribed by
the principal securities market on which the Company’s equity securities are
traded;

(b)         Such requirements as the Internal
Revenue Service may establish for outside directors acting under plans intended
to qualify for exemption under section 162(m)(4)(C) of the Code;

(c)          Such requirements as the Securities
and Exchange Commission may establish for administrators acting under plans
intended to qualify for exemption under Rule 16b-3 (or its successor)
under the Exchange Act; and

(d)         Any other requirements imposed by
applicable law, regulations or rules.

2.2 
Committee Responsibilities.  The Committee shall
(a) select the Employees, Outside Directors and Consultants who are to
receive Awards under the Plan, (b) determine the type, number, vesting
requirements and other features and conditions of such Awards,
(c) interpret the Plan, (d) make all other decisions relating to the
operation of the Plan and (e) carry out any other duties delegated to it
by the Board. The Committee may adopt such rules or guidelines as it deems
appropriate to implement the Plan, including rules and procedures relating to
the operation and administration of the Plan in order to accommodate the
specific requirements of local laws and procedures. Without limiting the
generality of the foregoing, the Committee is specifically authorized to adopt
(a) rules and procedures regarding the conversion of local currency,
withholding procedures and handling of stock certificates that vary with local
requirements and (b) such sub-plans and Plan addenda as the Committee
deems desirable to accommodate foreign tax laws, regulations and practice. The
Committee’s determinations under the Plan shall be final and binding on all
persons.

2.3 
Committee for Non-Officer Grants.  The Board
may also appoint a secondary committee of the Board, which shall be composed of
one or more directors of the Company who need not satisfy the requirements of
Section 2.1. Such secondary committee may administer the Plan with respect
to Employees and Consultants who are not Outside Directors and are not
considered executive officers of the Company under section 16 of the Exchange
Act, may grant Awards under the Plan to such Employees and Consultants and may
determine all features and conditions of such Awards. Within the limitations of
this Section 2.3, any reference in the Plan to the Committee shall include
such secondary committee.

2.4 
Administration with Respect to Substitute Awards. 
Notwithstanding any other provision of this Plan, in connection with
issuing Substitute Awards, the Committee may provide that the Substitute 

 

Awards shall be subject to the terms and conditions of the plan and/or
agreements under which the awards being assumed or substituted were originally
issued, even where such terms are in conflict or inconsistent with the terms of
this Plan.

ARTICLE 3. 
SHARES AVAILABLE FOR GRANTS.

3.1 
Basic Limitation.  Shares issued pursuant to the Plan may be
authorized but unissued shares or treasury shares. The aggregate number of
Shares issued under the Plan shall not exceed (a) 10,300,000 plus
(b) the additional Shares described in Section 3.3. The number of Shares
that are subject to Awards outstanding at any time under the Plan shall not
exceed the number of Shares that then remain available for issuance under the
Plan. Notwithstanding any other provision of this Plan, the maximum number of
Shares that may be issued upon the exercise of ISOs under this Plan is
10,300,000. The limitations of this Section 3.1 shall be subject to
adjustment pursuant to Article 10.

3.2 
Shares Returned to Reserve.  If Options, SARs or Share Units
(including Replacement Awards) are forfeited or terminate for any other reason
before being exercised or settled, then the Shares subject to such Options,
SARs or Share Units shall again become available for issuance under the Plan.
If SARs are exercised, then only the number of Shares (if any) actually issued
in settlement of such SARs shall reduce the number available under
Section 3.1 and the balance shall again become available for issuance
under the Plan. If Share Units are settled, then only the number of Shares (if
any) actually issued in settlement of such Share Units shall reduce the number
available under Section 3.1 and the balance shall again become available
for issuance under the Plan. If Restricted Shares or Shares issued upon the
exercise of Options are reacquired by the Company pursuant to a forfeiture
provision or for any other reason, then such Shares shall again become
available for issuance under the Plan.

3.3 
Substitute Awards.  Except with respect to Substitute Awards
issued with respect to awards previously issued by Agilent
Technologies, Inc., Substitute Awards shall not reduce the Shares
authorized for issuance under the Plan or authorized for grant to a Participant
in any calendar year. Additionally, in the event that a company acquired by the
Company or any Subsidiary, or with which the Company or any Subsidiary
combines, has shares available under a pre-existing plan approved by
shareholders and not adopted in contemplation of such acquisition or
combination, the shares available for grant pursuant to the terms of such
pre-existing plan (as adjusted, to the extent appropriate, using the exchange
ratio or other adjustment or valuation ratio or formula used in such
acquisition or combination to determine the consideration payable to the
holders of ordinary shares or common shares of the entities party to such
acquisition or combination) may be used for Awards under the Plan and shall not
reduce the Shares authorized for issuance under the Plan; provided that Awards
using such available Shares shall not be made after the date awards or grants
could have been made under the terms of the pre-existing plan, absent the
acquisition or combination, and shall only be made to individuals who were
employees, directors or consultants of such acquired or combined company before
such acquisition or combination.

3.4 
Dividend Equivalents.  Any dividend equivalents paid or credited
under the Plan shall be applied against the number of Shares that may be issued
under the Plan if such dividend equivalents are converted into Share Units.

ARTICLE 4. 
ELIGIBILITY.

4.1 
Incentive Stock Options.  Only Employees who are
common-law employees of the Company, a Parent or a Subsidiary shall be eligible
for the grant of ISOs. In addition, an Employee who owns more than 10% of the
total combined voting power of all classes of outstanding shares of the Company
or any of its Parents or Subsidiaries shall not be eligible for the grant of an
ISO unless the requirements set forth in section 422(c)(5) of the Code are
satisfied.

 2
 

 

4.2 
Other Grants.  Only Employees, Outside Directors and
Consultants shall be eligible for the grant of Restricted Shares, Share Units,
NSOs or SARs.

ARTICLE 5. 
OPTIONS.

5.1 
Option Agreement.  Each grant of an Option under the Plan shall
be evidenced by an Option Agreement between the Optionee and the Company. Such
Option shall be subject to all applicable terms of the Plan and may be subject
to any other terms that are not inconsistent with the Plan. The Option
Agreement shall specify whether the Option is an ISO or an NSO. The provisions
of the various Option Agreements entered into under the Plan need not be
identical. An Option Agreement may provide that a new Option will be granted
automatically to the Optionee when he or she exercises a prior Option and pays
the Exercise Price in the form described in Section 5.7(b).

5.2 
Number of Shares.  Each Option Agreement shall specify the
number of Shares subject to the Option and shall provide for the adjustment of
such number in accordance with Article 10. Options granted to any Optionee
in a single fiscal year of the Company shall not cover more than 750,000
Shares, except that Options granted to a new Employee in the fiscal year of the
Company in which his or her Service as an Employee first commences shall not
cover more than 1,500,000 Shares. The limitations set forth in the preceding
sentence shall be subject to adjustment in accordance with Article 10.

5.3 
Exercise Price.  Each Option Agreement shall specify the
Exercise Price; provided that the Exercise Price shall in no event be less than
100% of the Fair Market Value of a Share on the date of grant. Other than in
connection with an event or transaction described in Article 10, Options
may not be repriced, replaced, regranted through cancellation or modified
without shareholder approval if the effect of such repricing, replacement,
regrant or modification would be to reduce the exercise price of such Options.

5.4. 
Exercisability and Term.

(a)  General.  Each Option Agreement shall specify the date
or event when all or any installment of the Option is to become exercisable.
The Option Agreement shall also specify the term of the Option; provided that
the term of an ISO shall in no event exceed 10 years from the date of
grant. Options may be awarded in combination with SARs, and such an Award may
provide that the Options will not be exercisable unless the related SARs are
forfeited.

(b)  Cessation of
Eligibility to Vest.  Unless
otherwise provided by the Option Agreement, if an Optionee ceases to be an
Awardee Eligible to Vest, other than as a result of circumstances described in
Subsection (c) or (d) below, such Optionee’s Option shall terminate
immediately as to the unvested Shares and such unvested Shares shall revert to
the Plan, and such Optionee’s Option shall be exercisable as to the vested
Shares for three months after the date such individual ceases to be an Awardee
Eligible to Vest or, if earlier, the expiration of the term of such Option. If,
for any reason, the Optionee does not exercise his or her vested Option within
the appropriate exercise period set forth above, the Option shall automatically
terminate, and the Shares covered by such Option shall revert to the Plan.

(c)  Death,
Disability or Retirement of Optionee.  Unless otherwise provided by the Option
Agreement, if an Optionee ceases to be an Awardee Eligible to Vest as a result
of the Optionee’s death, total and permanent disability or retirement due to
age, in accordance with the Company’s or a Subsidiary’s or Affiliate’s
retirement policy, then (i) the vested portion of such Optionee’s Option
shall be determined by adding 12 months to the length of his or her actual
Service, (ii) such Optionee’s Option shall terminate immediately as to the
unvested Shares and such unvested Shares shall revert to the Plan, and
(iii) such Optionee’s Option shall be exercisable as to the vested Shares
for one year after the date such individual ceases to be an Awardee Eligible to

 3
 

 

Vest or, if earlier, the
expiration of the term of such Option. Where an individual ceases to be an
Awardee Eligible to Vest as a result of death, the Option may be exercised by
the beneficiary designated by the Optionee, the executor or administrator of
the Optionee’s estate or, if none, by the person(s) entitled to exercise the
Option under the Optionee’s will or the laws of descent or distribution. If,
for any reason, the Option is not so exercised within the time specified
herein, the Option shall automatically terminate, and the Shares covered by
such Option shall revert to the Plan.

(d)  Voluntary
Severance Incentive Program. 
If an Optionee ceases to be an Awardee Eligible to Vest as a result of
participation in a voluntary severance incentive program or workforce
management plan approved by the Board or a Committee, unvested Options shall
vest and Options shall remain exercisable, to the extent provided by the Board
or a Committee in such voluntary severance incentive program or workforce
management plan. Absent a specific provision for acceleration or extended
exercise period, the provisions of Subsection (b) above shall apply.

5.5 
Effect of Change in Control.  The Committee may determine, at
the time of granting an Option or thereafter, that such Option shall become
exercisable as to all or part of the Shares subject to such Option if a Change
in Control occurs with respect to the Company or if the Optionee’s Service is
terminated without Cause after a Change in Control. In addition, acceleration
of exercisability may be required under Section 10.3.

5.6 
Buyout Provisions.  The Committee may at any time (a) offer
to buy out for a payment in cash or cash equivalents an Option previously
granted or (b) authorize an Optionee to elect to cash out an Option
previously granted, in either case at such time and based upon such terms and
conditions as the Committee shall establish.

5.7 
Payment for Option Shares.

(a)  General Rule.  The entire Exercise Price of Shares issued
upon exercise of Options shall be payable in cash or cash equivalents at the
time when such Shares are purchased, except that the Committee at its sole
discretion may accept payment of the Exercise Price in any other form(s)
described in this Section 5.7. However, if the Optionee is an Outside
Director or executive officer of the Company, he or she may pay the Exercise
Price in a form other than cash or cash equivalents only to the extent
permitted by section 13(k) of the Exchange Act.

(b)  Surrender of
Shares.  With the Committee’s
consent, all or any part of the Exercise Price may be paid by surrendering, or
attesting to the ownership of, Shares that are already owned by the Optionee.
Such Shares shall be valued at their Fair Market Value on the date when the new
Shares are purchased under the Plan.

(c)  Exercise/Sale.  With the Committee’s consent, all or any part
of the Exercise Price and any withholding taxes may be paid by delivering (in a
manner prescribed by the Company) an irrevocable direction to a securities
broker approved by the Company to sell all or part of the Shares being
purchased under the Plan and to deliver all or part of the sales proceeds to
the Company.

(d)  Other Forms of
Payment.  With the Committee’s
consent, all or any part of the Exercise Price and any withholding taxes may be
paid in any other form that is consistent with applicable laws, regulations and
rules.

ARTICLE 6.  SHARE
APPRECIATION RIGHTS.

6.1 
SAR Agreement.  Each grant of a SAR under the Plan shall be
evidenced by a SAR Agreement between the Optionee and the Company. Such SAR
shall be subject to all applicable terms

 4
 

 

of the Plan and may be subject to any other terms that are not
inconsistent with the Plan. The provisions of the various SAR Agreements
entered into under the Plan need not be identical.

6.2 
Number of Shares.  Each SAR Agreement shall specify the number
of Shares to which the SAR pertains and shall provide for the adjustment of
such number in accordance with Article 10. SARs granted to any Optionee in
a single fiscal year shall in no event pertain to more than 750,000 Shares,
except that SARs granted to a new Employee in the fiscal year of the Company in
which his or her Service as an Employee first commences shall not pertain to
more than 1,500,000 Shares. The limitations set forth in the preceding sentence
shall be subject to adjustment in accordance with Article 10.

6.3 
Exercise Price.  Each SAR Agreement shall specify the Exercise
Price; provided that the Exercise Price shall in no event be less than 100% of
the Fair Market Value of a Share on the date of grant. Other than in connection
with an event or transaction described in Article 10, SARs may not be
repriced, replaced, regranted through cancellation or modified without
shareholder approval if the effect of such repricing, replacement, regrant or
modification would be to reduce the exercise price of such SARs.

6.4 
Exercisability and Term.

(a)  General.  Each SAR Agreement shall specify the date
when all or any installment of the SAR is to become exercisable. The SAR
Agreement shall also specify the term of the SAR. SARs may be awarded in
combination with Options, and such an Award may provide that the SARs will not
be exercisable unless the related Options are forfeited. An SAR may be included
in an ISO only at the time of grant but may be included in an NSO at the time
of grant or thereafter. An SAR granted under the Plan may provide that it will
be exercisable only in the event of a Change in Control.

(b)  Cessation of
Eligibility to Vest.  Unless
otherwise provided by the SAR Agreement, if an Optionee ceases to be an Awardee
Eligible to Vest, other than as a result of circumstances described in
Subsection (c) or (d) below, such Optionee’s SAR shall terminate
immediately as to the unvested Shares and such unvested Shares shall revert to
the Plan, and the SAR shall be exercisable as to the vested Shares for three
months after the date such individual ceases to be an Awardee Eligible to Vest
or, if earlier, the expiration of the term of such SAR. If, for any reason, the
Optionee does not exercise his or her vested SARs within the appropriate
exercise period set forth above, the SAR shall automatically terminate, and the
Shares covered by such SAR shall revert to the Plan.

(c)  Death,
Disability or Retirement of Optionee.  Unless otherwise provided by the SAR
Agreement, if an Optionee ceases to be an Awardee Eligible to Vest as a result
of the Optionee’s total and permanent disability or retirement due to age, in
accordance with the Company’s or a Subsidiary’s or Affiliate’s retirement
policy, then (i) the vested portion of such Optionee’s SAR shall be
determined by adding 12 months to the length of his or her actual Service,
(ii) such Optionee’s SAR shall terminate immediately as to the unvested
Shares and such unvested Shares shall revert to the Plan, and (iii) such
Optionee’s SAR shall be exercisable as to the vested Shares for one year after
the date such individual ceases to be an Awardee Eligible to Vest or, if
earlier, the expiration of the term of such SAR. Where an individual ceases to
be an Awardee Eligible to Vest as a result of death, the SAR may be exercised
by the beneficiary designated by the Optionee, the executor or administrator of
the Optionee’s estate or, if none, by the person(s) entitled to exercise the
SAR under the Optionee’s will or the laws of descent or distribution. If, for
any reason, the SAR is not so exercised within the time specified herein, the
SAR shall automatically terminate, and the Shares covered by such SAR shall
revert to the Plan.

 5
 

 

(d)  Voluntary
Severance Incentive Program. 
If an Optionee ceases to be an Awardee Eligible to Vest as a result of
participation in a voluntary severance incentive program or workforce
management plan approved by the Board or a Committee, unvested SARs shall vest
and SARs shall remain exercisable, to the extent provided by the Board or a
Committee in such voluntary severance incentive program or workforce management
plan. Absent a specific provision for acceleration or extended exercise period,
the provisions of Subsection (b) above shall apply.

6.5 
Effect of Change in Control.  The Committee may determine, at
the time of granting a SAR or thereafter, that such SAR shall become
exercisable as to all or part of the Shares subject to such SAR if a Change in
Control occurs with respect to the Company or if the Optionee’s Service is
terminated without Cause after a Change in Control. In addition, acceleration
of exercisability may be required under Section 10.3.

6.6 
Exercise of SARs.  Upon exercise of a SAR, the Optionee (or any
person having the right to exercise the SAR after his or her death) shall
receive from the Company consideration in the form of (a) Shares,
(b) cash or (c) a combination of Shares and cash, as the Committee
shall determine. Each SAR Agreement shall specify the amount and/or Fair Market
Value of the consideration that the Optionee will receive upon exercising the SAR;
provided that the aggregate consideration shall not exceed the amount by which
the Fair Market Value (on the date of exercise) of the Shares subject to the
SAR exceeds the Exercise Price of the SAR. If, on the date when a SAR expires,
the Exercise Price of the SAR is less than the Fair Market Value of the Shares
subject to the SAR on such date but any portion of the SAR has not been
exercised, then the SAR shall automatically be deemed to be exercised as of
such date with respect to such portion. An SAR Agreement may also provide for
an automatic exercise of the SAR on an earlier date.

ARTICLE 7. 
RESTRICTED SHARES.

7.7 
Restricted Share Agreement.  Each grant of Restricted Shares
under the Plan shall be evidenced by a Restricted Share Agreement between the
recipient and the Company. Such Restricted Shares shall be subject to all
applicable terms of the Plan and may be subject to any other terms that are not
inconsistent with the Plan. The provisions of the various Restricted Share
Agreements entered into under the Plan need not be identical.

7.2 
Number of Shares.  Each Restricted Share Agreement shall specify
the number of Shares to which the Agreement pertains. Such number shall be
subject to the limitation of Section 7.4(a), if applicable.

7.3 
Payment for Awards.  Restricted Shares may be sold or awarded
under the Plan for such consideration as the Committee may determine, including
(without limitation) cash, cash equivalents, property, past services and future
services. Within the limitations of the Plan, the Committee may accept the
cancellation of outstanding options in return for the grant of Restricted
Shares.

7.4 
Vesting Conditions.

(a)  General.  Each Award of Restricted Shares may or may
not be subject to vesting. Vesting shall occur, in full or in installments,
upon satisfaction of the conditions specified in the Restricted Share
Agreement. The Committee may include among such conditions continued
performance of Service and/or the requirement that the performance of the
Company (or a Subsidiary, Affiliate or business unit of the Company) for a
specified period of not less than one fiscal year equal or exceed a target
determined by the Committee. Such target shall be based on one or more of the
criteria set forth in Appendix A, and shall be determined not later than
the 90 days following commencement of the specified performance period. As
to Awards with respect to which the Company desires to secure an exemption from
section 162(m) of the Code, no Participant shall receive more than 400,000
Restricted Shares subject to performance-based vesting

 6
 

 

conditions in a single fiscal
year, except that a new Employee may receive up to 800,000 Restricted Shares
subject to performance-based vesting conditions in the fiscal year of the
Company in which his or her Service as an Employee first commences. The
limitations set forth in the preceding sentence shall be subject to adjustment
in accordance with Article 10.

(b)  Cessation of
Eligibility to Vest.  Unless
otherwise provided by the Restricted Share Agreement, if a Participant ceases
to be an Awardee Eligible to Vest, other than as a result of circumstances
described in Subsection (c) or (d) below, then:

(i)  To the extent that the Participant did not
purchase the Restricted Shares, all unvested Shares subject to a Restricted
Share Agreement shall immediately be forfeited and shall revert to the Plan;
and

(ii) To the extent that the Participant purchased
the Restricted Shares, the Company shall have a right to repurchase the
unvested Restricted Shares at the original price paid by the Participant upon
the Participant’s ceasing to be an Awardee Eligible to Vest.

(c)  Death,
Disability or Retirement of Participant.  Unless otherwise provided by the Restricted
Share Agreement, if a Participant ceases to be an Awardee Eligible to Vest as a
result of the Participant’s death, total and permanent disability or retirement
due to age, in accordance with the Company’s or a Subsidiary’s or Affiliate’s
retirement policy, the provisions of Subsection (b) above will apply except
that the vested portion of such Participant’s Restricted Shares shall be
determined by adding 12 months to the length of his or her actual Service.

(d)  Voluntary
Severance Incentive Program. 
If a Participant ceases to be an Awardee Eligible to Vest as a result of
participation in a voluntary severance incentive program or workforce
management plan approved by the Board or a Committee, unvested Restricted
Shares shall vest to the extent provided by the Board or a Committee in such
voluntary severance incentive program or workforce management plan. Absent a
specific provision for acceleration, the provisions of Subsection
(b) above shall apply.

7.5 
Effect of Change in Control.  The Committee may determine, at
the time of granting Restricted Shares or thereafter, that all or part of such
Restricted Shares shall become vested if a Change in Control occurs with
respect to the Company or if the Participant’s Service is terminated without
Cause after a Change in Control.

7.6 
Voting and Dividend Rights.  The holders of Restricted Shares
awarded under the Plan shall have the same voting, dividend and other rights as
the Company’s other shareholders. A Restricted Share Agreement, however, may
require that the holders of Restricted Shares invest any cash dividends
received in additional Restricted Shares. Such additional Restricted Shares
shall be subject to the same conditions and restrictions as the Award with
respect to which the dividends were paid.

ARTICLE 8.  SHARE
UNITS.

8.1 
Share Unit Agreement.  Each grant of Share Units under the Plan
shall be evidenced by a Share Unit Agreement between the recipient and the
Company. Such Share Units shall be subject to all applicable terms of the Plan
and may be subject to any other terms that are not inconsistent with the Plan.
The provisions of the various Share Unit Agreements entered into under the Plan
need not be identical.

8.2 
Number of Shares.  Each Share Unit Agreement shall specify the
number of Shares to which the Share Unit pertains and shall provide for the adjustment
of such number in accordance with Article 10. Such number shall be subject
to the limitation of Section 8.4(a), if applicable.

8.3 
Payment for Awards.  To the extent that an Award is granted in the
form of Share Units, no cash consideration shall be required of the Award
recipients.

 7
 

 

8.4  Vesting Conditions.

(a)  General.  Each Award of Share Units may or may not be
subject to vesting. Vesting shall occur, in full or in installments, upon
satisfaction of the conditions specified in the Share Unit Award. The Committee
may include among such conditions continued performance of Service and/or the
requirement that the performance of the Company (or a Subsidiary, Affiliate or
business unit of the Company) for a specified period of not less than one fiscal
year equal or exceed performance targets determined by the Committee. Such
targets shall be based on one or more of the criteria set forth in
Appendix A, and shall be determined not later than the 90 days
following commencement of the specified performance period. As to Awards with
respect to which the Company desires to secure an exemption from
section 162(m) of the Code, no Participant shall receive more than 400,000
Share Units subject to performance-based vesting conditions in a single
fiscal year, except that a new Employee may receive up to 800,000 Share Units
subject to performance-based vesting conditions in the fiscal year of the
Company in which his or her Service as an Employee first commences. The
limitations set forth in the preceding sentence shall be subject to adjustment
in accordance with Article 10.

(b)  Cessation of
Eligibility to Vest.  Unless
otherwise provided by the Share Unit Award, if a Participant ceases to be an
Awardee Eligible to Vest, other than as a result of circumstances described in
Subsection (c) or (d) below, then all unvested Share Units subject to
a Share Unit Agreement shall immediately be forfeited and shall revert to the
Plan.

(c)  Death,
Disability or Retirement of Participant.  Unless otherwise provided by the Share Unit
Award, if a Participant ceases to be an Awardee Eligible to Vest as a result of
the Participant’s death, total and permanent disability or retirement due to
age, in accordance with the Company’s or a Subsidiary’s or Affiliate’s
retirement policy, the provisions of Subsection (b) above will apply
except that the vested portion of such Participant’s Share Unit Award shall be
determined by adding 12 months to the length of his or her actual Service.

(d)  Voluntary
Severance Incentive Program. 
If a Participant ceases to be an Awardee Eligible to Vest as a result of
participation in a voluntary severance incentive program or workforce
management plan approved by the Board or a Committee, unvested Share Units
shall vest to the extent provided by the Board or a Committee in such voluntary
severance incentive program or workforce management plan. Absent a specific
provision for acceleration, the provisions of Subsection (b) above shall
apply.

8.5 
Effect of Change in Control.  The Committee may determine, at
the time of granting Share Units or thereafter, that all or part of such Share
Units shall become vested if a Change in Control occurs with respect to the
Company or if the Participant’s Service is terminated without Cause after a
Change in Control. In addition, acceleration of vesting may be required under
Section 10.3.

8.6 
Voting and Dividend Rights.  The holders of Share Units shall
have no voting rights. Prior to settlement or forfeiture, any Share Unit
awarded under the Plan may, at the Committee’s discretion, carry with it a
right to dividend equivalents. Such right entitles the holder to be credited
with an amount equal to all cash dividends paid on one Share while the Share
Unit is outstanding. Dividend equivalents may be converted into additional
Share Units. Settlement of dividend equivalents may be made in the form of
cash, in the form of Shares, or in a combination of both. Prior to
distribution, any dividend equivalents that are not paid shall be subject to
the same conditions and restrictions as the Share Units to which they attach.

8.7 
Form and Time of Settlement of Share Units.  Settlement
of vested Share Units may be made in the form of (a) cash, (b) Shares
or (c) any combination of both, as determined by the Committee. The actual
number of Share Units eligible for settlement may be larger or smaller than the
number included in the original Award, based on predetermined performance
factors. Methods of

 8
 

 

converting Share Units into cash may include (without limitation) a
method based on the average Fair Market Value of Shares over a series of
trading days. Vested Share Units may be settled in a lump sum or in
installments. The distribution may occur or commence when all vesting
conditions applicable to the Share Units have been satisfied or have lapsed, or
it may be deferred to any later date. The amount of a deferred distribution may
be increased by an interest factor or by dividend equivalents. Until an Award
of Share Units is settled, the number of such Share Units shall be subject to
adjustment pursuant to Article 10.

8.8 
Creditors’ Rights.  A holder of Share Units shall have no rights
other than those of a general creditor of the Company. Share Units represent an
unfunded and unsecured obligation of the Company, subject to the terms and conditions
of the applicable Share Unit Agreement.

ARTICLE 9. 
AUTOMATIC OPTION GRANTS TO OUTSIDE DIRECTORS.

9.1 
Initial Grants.  In connection with joining the Board, each
Outside Director shall receive:

(a)          A one-time grant of an NSO covering
Shares with an Accounting Value of $110,000. Such NSO shall be granted on the
date when such Outside Director first joins the Board, and shall vest and
become exercisable on the first anniversary of the date of grant; and

(b)         A one-time grant of Share Units with an
Accounting Value of $110,000. Such Share Units shall be granted on the date
when such Outside Director first joins the Board and shall vest on the first
anniversary of the date of grant. Settlement of vested Share Units shall be
made in a lump sum on the third anniversary of the date of grant. Such lump sum
shall consist of a number of Shares equal to the number of vested Share Units.

(c)          With respect to an Outside Director
who first becomes a member of the Board prior to completion of the Company’s
initial public offering, the initial grants referred to in subparagraphs
(a) and (b) above shall be granted on the date of the Company’s
initial public offering and the prices shall be calculated by reference to the
initial public offering price reflected in the final prospectus related to the
offering.

An Outside Director who was previously an Employee shall not receive
grants under this Section 9.1.

 9
 

 

9.2 
Annual Grants.  Upon the conclusion of each regular annual
meeting of the Company’s shareholders held in the year 2007 or thereafter, each
Outside Director who will continue serving as a member of the Board thereafter
shall receive:

(a)          A grant of an NSO covering Shares with
an Accounting Value of $55,000. Such NSO shall vest and become exercisable on
the first anniversary of the date of grant; and

(b)         A grant of Share Units with an
Accounting Value of $55,000. Such Share Units shall vest on the first
anniversary of the date of grant. Settlement of vested Share Units shall be
made in a lump sum on the third anniversary of the date of grant, unless
deferred to a later date. Such lump sum shall consist of a number of Shares
equal to the number of vested Share Units.

Notwithstanding the foregoing, no grants shall be made pursuant to this
Section 9.2 in the calendar year in which the same Outside Director
received grants described in Section 9.1. An Outside Director who
previously was an Employee shall be eligible to receive grants under this
Section 9.2.

9.3 
Cessation of Eligibility to Vest.  Unless
otherwise provided by the Award Agreement, if an Outside Director’s Service
terminates prior to the vesting date specified in such agreement other than as
a result of circumstances described in Section 9.4 below, then such
Director’s unvested Award shall immediately be forfeited and such unvested
Shares shall revert to the Plan.

9.4 
Accelerated Exercisability.  All Awards granted to an Outside
Director under this Article 9 shall also become exercisable in full, and
Restricted Shares and Share Units shall be distributed, in the event that:

(a)          Such Outside Director’s Service
terminates because of death, total and permanent disability, or retirement at
or after age 65;

(b)         The Company is subject to a Change in
Control before such Outside Director’s Service terminates; or

(c)          As otherwise required by
Section 10.3.

9.5 
Exercise Price.  The Exercise Price under all NSOs granted to
an Outside Director under this Article 9 shall be equal to 100% of the
Fair Market Value of a Share on the date of grant, payable in one of the forms
described in Section 5.7(a), (b) or (c).

9.6 
Term.  The Option Agreement shall specify the term
of the option, which shall not exceed 10 years form the date of grant.
Each NSO granted to an Outside Director under this Article 9 shall
terminate on the earlier of (a) the expiration of the term of such option
or (b) the date 12 months after the termination of such Outside
Director’s Service for any reason.

9.7 
Affiliates of Outside Directors.  The
Committee may provide that the NSOs that otherwise would be granted to an
Outside Director under this Article 9 shall instead be granted to an
affiliate of such Outside Director. Such affiliate shall then be deemed to be
an Outside Director for purposes of the Plan, provided that the Service-related
vesting and termination provisions pertaining to the NSOs shall be applied with
regard to the Service of the Outside Director.

ARTICLE 10. 
PROTECTION AGAINST DILUTION.

10.1 
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, SARs, Restricted Shares and Share Units available for future
Awards under Article 3;

 10

 

(b)           The limitations set forth in Sections 5.2, 7.2, 8.4(a) and
9.4(a);

(c)           The number of Shares covered by each outstanding Option
and SAR;

(d)           The Exercise Price under each outstanding Option and SAR;
or

(e)           The number of Share Units included in any prior Award that
has not yet been settled.

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
shall make such adjustments as it, in its sole discretion, deems appropriate in
one or more of the foregoing. Except as provided in this Article 10, a
Participant shall have no rights by reason of any issuance by the Company of
shares of any class or securities convertible into shares of any class, any
subdivision or consolidation of shares of any class, the payment of any share
dividend or any other increase or decrease in the number of shares of any
class.

10.2 
Dissolution or Liquidation.  To the extent not previously
exercised or settled, Options, SARs and Share Units shall terminate immediately
prior to the dissolution or liquidation of the Company.

10.3 
Reorganizations.  In the event that the Company is a party to a
merger or consolidation, all outstanding Awards shall be subject to the
agreement of merger or consolidation. Such agreement shall provide for one or
more of the following:

(a)          The continuation of such outstanding
Awards by the Company (if the Company is the surviving corporation).

(b)         The assumption of such outstanding
Awards by the surviving corporation or its parent, provided that the assumption
of Options or SARs shall comply with sections 409A and 424(a) of the Code
(whether or not the Options are ISOs).

(c)          The substitution by the surviving
corporation or its parent of new awards for such outstanding Awards, provided
that the substitution of Options or SARs shall comply with sections 409A and
424(a) of the Code (whether or not the Options are ISOs).

(d)         Full exercisability of outstanding
Options and SARs and full vesting of the Shares subject to such Options and
SARs, followed by the cancellation of such Options and SARs. The full
exercisability of such Options and SARs and full vesting of such Shares may be
contingent on the closing of such merger or consolidation. The Optionees shall
be able to exercise such Options and SARs during a period of not less than five
full business days preceding the closing date of such merger or consolidation,
unless (i) a shorter period is required to permit a timely closing of such
merger or consolidation and (ii) such shorter period still offers the
Optionees a reasonable opportunity to exercise such Options and SARs. Any
exercise of such Options and SARs during such period may be contingent on the
closing of such merger or consolidation.

(e)          The cancellation of outstanding
Options and SARs and a payment to the Optionees equal to the excess of
(i) the Fair Market Value of the Shares subject to such Options and SARs
(whether or not such Options and SARs are then exercisable or such Shares are
then vested) as of the closing date of such merger or consolidation over
(ii) their Exercise Price. Such payment shall be made in the form of cash,
cash equivalents, or securities of the surviving corporation or its parent with
a Fair Market Value equal to the required amount. Such payment may be made in
installments and may be deferred until the date or dates when such Options and
SARs would have become exercisable or such Shares would have vested. Such payment
may be subject to vesting based on the Optionee’s continuing Service, provided
that the vesting schedule shall not be less favorable to the Optionee than the
schedule under which such Options and SARs would have become exercisable or
such Shares would have vested. If the Exercise Price of the Shares subject

 11
 

 

to such Options and SARs exceeds
the Fair Market Value of such Shares, then such Options and SARs may be
cancelled without making a payment to the Optionees. For purposes of this
Subsection (e), the Fair Market Value of any security shall be determined
without regard to any vesting conditions that may apply to such security.

(f)          The cancellation of outstanding Share
Units and a payment to the Participants equal to the Fair Market Value of the
Shares subject to such Share Units (whether or not such Share Units are then
vested) as of the closing date of such merger or consolidation. Such payment
shall be made in the form of cash, cash equivalents, or securities of the
surviving corporation or its parent with a Fair Market Value equal to the
required amount. Such payment may be made in installments and may be deferred
until the date or dates when such Share Units would have vested. Such payment
may be subject to vesting based on the Participant’s continuing Service,
provided that the vesting schedule shall not be less favorable to the
Participant than the schedule under which such Share Units would have vested.
For purposes of this Subsection (f), the Fair Market Value of any security
shall be determined without regard to any vesting conditions that may apply to
such security.

ARTICLE 11. 
PAYMENT OF DIRECTOR’S FEES IN SECURITIES.

11.1 
Effective Date.  No provision of this Article 11 shall be
effective unless and until the Board has determined to implement such
provision.

11.2 
Elections to Receive NSOs, Restricted Shares or Share Units.  An Outside
Director may elect to receive his or her annual retainer payments and/or
meeting fees from the Company in the form of cash, NSOs, Restricted Shares or
Share Units, or a combination thereof, as determined by the Board. Such NSOs,
Restricted Shares and Share Units shall be issued under the Plan. An election
under this Article 11 shall be filed with the Company on the prescribed
form.

11.3 
Number and Terms of NSOs, Restricted Shares or Share Units.  The number
of NSOs, Restricted Shares or Share Units to be granted to Outside Directors in
lieu of annual retainers and meeting fees that would otherwise be paid in cash
shall be calculated in a manner determined by the Board. The Board shall also
determine the terms of such NSOs, Restricted Shares or Share Units.

ARTICLE 12. 
LIMITATION ON RIGHTS.

12.1 
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,
Outside Director or Consultant. The Company and its Parents, Subsidiaries and
Affiliates reserve the right to terminate the Service of any Employee, Outside
Director or Consultant at any time, with or without cause, subject to applicable
laws, the Company’s Articles of Association and a written employment agreement
(if any).

12.2 
Shareholders’ Rights.  A Participant shall have no dividend rights,
voting rights or other rights as a shareholder with respect to any Shares
covered by his or her Award prior to the time when such Shares are 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.

12.3 
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 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
an exemption from registration, qualification or listing.

 12
 

 

ARTICLE 13. 
WITHHOLDING TAXES.

13.1 
General.  To the extent required by applicable federal,
state, local or foreign law, a Participant or his or her successor shall make
arrangements satisfactory to the Company for the satisfaction of any
withholding tax obligations that arise in connection with the Plan. The Company
shall not be required to issue any Shares or make any cash payment under the
Plan until such obligations are satisfied.

13.2 
Share Withholding.  To the extent that applicable law subjects a
Participant to tax withholding obligations, the Committee may permit such
Participant to satisfy all or part of such obligations by having the Company
withhold all or a portion of any Shares that otherwise would be issued to him
or her or by surrendering all or a portion of any Shares that he or she
previously acquired. Such Shares shall be valued at their Fair Market Value on
the date when they are withheld or surrendered.

ARTICLE 14. 
LIMITATION ON PAYMENTS.

14.1 
Scope of Limitation.  This Article 14 shall apply to an Award
only if:

(a)          The independent auditors selected for
this purpose by the Committee (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 14
than it was before the application of this Article 14; 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 14 (regardless of the after-tax
value of such Award to the Participant).

If this Article 14 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 14, 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 14, present value shall be determined in accordance with
section 280G(d)(4) of the Code. All determinations made by the Auditors
under this Article 14 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 

 13
 

 

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 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 14, 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 15. 
FUTURE OF THE PLAN.

15.1 
Term of the Plan.  The Plan, as set forth herein, shall become
effective on the date of the Company’s initial public offering. The Plan shall
remain in effect until the earlier of (a) the date when the Plan is
terminated under Section 15.2 or (b) the 10th anniversary
of the date when the Board adopted the Plan.

15.2 
Amendment or Termination.  The Board may, at any time and
for any reason, amend or terminate the Plan. No Awards shall be granted under
the Plan after the termination thereof. The termination of the Plan, or any
amendment thereof, shall not affect any Award previously granted under the
Plan.

15.3 
Shareholder Approval.  An amendment of the Plan shall be subject to
the approval of the Company’s shareholders only to the extent required by
applicable laws, regulations or rules. However, section 162(m) of the Code
may require that the Company’s shareholders approve:

(a)          The Plan not later than the first
regular meeting of shareholders that occurs in the fourth calendar year following
the calendar year in which the Company’s initial public offering occurred; and

(b)         The performance criteria set forth in
Appendix A not later than the first meeting of shareholders that occurs in
the fifth year following the year in which the Company’s shareholders
previously approved such criteria.

ARTICLE 16. 
DEFINITIONS.

16.1    “Awardee Eligible to Vest”
means a Participant who is in active service with the Company or a Subsidiary
or Affiliate (or who is on an approved leave of absence or taking vacation or
otherwise approved flexible time off (“FTO”) in accordance with the Company’s
FTO policy) on the vesting date fixed in the Award Agreement, subject to the
exceptions provided in Articles 5, 7, 8 and 9. With the exception of an
individual who is on an approved leave of absence or taking FTO, in no event
shall an

 14
 

 

individual be considered an Awardee Eligible to Vest if and at the time
the individual ceases or has ceased to perform job duties for which he or she
is compensated directly by the Company or a Subsidiary or Affiliate. The
foregoing shall be true in the event that the individual, prior to ceasing to
perform job duties for which he or she is compensated directly by the Company
or a Subsidiary or Affiliate, received or provided notice of termination
(irrespective of any notice period or similar period prescribed under the laws
of a jurisdiction outside the United States) whether such notice of termination
or transfer is lawful or unlawful under applicable employment law or is in
breach of an employment contract. Continued affiliation or relationship with
the Company or a Subsidiary or Affiliate pursuant to a statutory or contractual
notice period shall not constitute continuation of an individual’s status as an
Awardee Eligible to Vest. In accordance with the definition above, status as an
Awardee Eligible to Vest will always cease upon termination of employment with
the Company or a Subsidiary or Affiliate except as provided in Articles 5, 7, 8
and 9.

16.2    “Accounting Value”
means, with respect to an Award, a value calculated using the same methodology
as was applied by the Company for purposes of determining the accounting charge
associated with similar Awards for the fiscal period immediately preceding the
date on which the subject Award is granted.

16.3    “Affiliate” means
any entity other than a Subsidiary, if the Company and/or one or more
Subsidiaries own not less than 50% of such entity.

16.4    “Award” means any
award of an Option, a SAR, a Restricted Share or a Share Unit under the Plan.

16.5    “Board” means the
Company’s Board of Directors, as constituted from time to time.

16.6    “Cause” means:

(a)          An unauthorized use or disclosure by
the Participant of the Company’s confidential information or trade secrets,
which use or disclosure causes material harm to the Company;

(b)         A material breach by the Participant of
any agreement between the Participant and the Company;

(c)          A material failure by the Participant
to comply with the Company’s written policies or rules;

(d)         The Participant’s conviction of, or
plea of “guilty” or “no contest” to, a felony under the laws of the United
States or any State thereof or the equivalent under the applicable laws outside
of the United States;

(e)          The Participant’s gross negligence or
willful misconduct;

(f)          A continuing failure by the
Participant to perform assigned duties after receiving written notification of
such failure; or

(g)         A failure by the Participant to
cooperate in good faith with a governmental or internal investigation of the
Company or its directors, officers or employees, if the Company has requested
the Participant’s cooperation.

16.7    “Change in Control”
means:

(a)          The consummation of a merger or
consolidation of the Company with or into another entity or any other corporate
reorganization, if persons who were not shareholders of the Company immediately
prior to such merger, consolidation or other reorganization own immediately
after such merger, consolidation or other reorganization 50% or more of the
voting power of the outstanding securities of each of (i) the continuing
or surviving entity and (ii) any direct or indirect parent corporation of
such continuing or surviving entity;

 15
 

 

(b)         The sale, transfer or other disposition
of all or substantially all of the Company’s assets;

(c)          A change in the composition of the
Board, as a result of which fewer than 50% of the incumbent directors are
directors who either:

(i)         Had been directors of the Company on
the date 24 months prior to the date of such change in the composition of
the Board (the “Original Directors”); or

(ii)        Were appointed to the Board, or
nominated for election to the Board, with the affirmative votes of at least a
majority of the aggregate of (A) the Original Directors who were in office
at the time of their appointment or nomination and (B) the directors whose
appointment or nomination was previously approved in a manner consistent with
this Paragraph (ii); or

(d)         Any transaction as a result of which
any person is the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing at least 30% of the total voting power represented by the Company’s
then outstanding voting securities. For purposes of this Subsection (d), the
term “person” shall have the same meaning as when used in sections 13(d) and
14(d) of the Exchange Act but shall exclude (i) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
of a Parent or Subsidiary and (ii) a corporation owned directly or indirectly
by the shareholders of the Company in substantially the same proportions as
their ownership of Shares.

A transaction shall not constitute a Change in Control if its sole
purpose is to change the jurisdiction of the Company’s incorporation or to
create a holding company that will be owned in substantially the same
proportions by the persons who held the Company’s securities immediately before
such transaction.

16.8       “Code”
means the U.S. Internal Revenue Code of 1986, as amended.

16.9       “Committee”
means a committee of the Board, as described in Article 2.

16.10     “Company”
means Verigy Ltd., a Singapore corporation.

16.11     “Consultant”
means a consultant or adviser who provides bona fide services to the Company, a
Parent, a Subsidiary or an Affiliate as an independent contractor.

16.12     “Employee”
means a full time or part time employee of the Company or any Subsidiary or
Affiliate, including Officers and Directors, who is treated as an employee in
the personnel records of the Company or a Subsidiary or Affiliate for the relevant
period, but shall exclude individuals who are classified by the Company or a
Subsidiary or Affiliate as (a) leased from or otherwise employed by a
third party, (b) independent contractors or (c) intermittent or
temporary, even if any such classification is changed retroactively as a result
of an audit, litigation or otherwise. A Participant shall not cease to be an
Employee in the case of (i) any vacation or sick time or otherwise
approved FTO in accordance with the Company’s (or a Subsidiary’s or Affiliate’s)
FTO policy or (ii) transfers between locations of the Company or between
the Company and/or any Subsidiary or Affiliate. Neither service as a Director
nor payment of a director’s fee by the Company shall be sufficient to
constitute “employment” by the Company.

16.13     “Exchange
Act” means the U.S. Securities Exchange Act of 1934, as amended.

16.14     “Exercise
Price,” in the case of an Option, means the amount for which one
Share may be purchased upon exercise of such Option, as specified in the applicable
Option Agreement. “Exercise Price,”
in the case of a SAR, means an amount, as specified in the applicable SAR
Agreement, which is subtracted from the Fair Market Value of one Share in
determining the amount payable upon exercise of such SAR.

 16
 

 

16.15     “Fair
Market Value” means the market price of Shares, determined by the
Committee as follows:

(a)          If the Shares are traded on Nasdaq or
on a stock exchange, then the Fair Market Value shall be equal to the last sale
price of the Shares on such market or exchange as of the date in question or,
if the market or exchange was closed on the date in question, then the Fair
Market Value will be equal to the last sale price on the last trading day
immediately preceding the day in question. If the Shares are traded on more
than one market or exchange, then the Fair Market Value shall be determined by
reference to the primary market or exchange where the Shares trade.

(b)          If foregoing provisions are not
applicable, then the Committee shall determine the Fair Market Value in good
faith on such basis as it deems appropriate. Such determination shall be
conclusive and binding on all persons.

16.16     “ISO”
means an incentive stock option described in section 422(b) of the Code.

16.17     “NSO”
means a share option not described in sections 422 or 423 of the Code.

16.18     “Option”
means an ISO or NSO granted under the Plan and entitling the holder to purchase
Shares.

16.19     “Option
Agreement” means the agreement between the Company and an Optionee
that contains the terms, conditions and restrictions pertaining to his or her
Option.

16.20     “Optionee”
means an individual or estate that holds an Option or SAR.

16.21     “Outside
Director” means a member of the Board who is not an Employee.

16.22     “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 shares possessing 50% or more of the total combined voting
power of all classes of shares in one of the other corporations in such chain.
A corporation that attains the status of a Parent on a date after the adoption
of the Plan shall be considered a Parent commencing as of such date.

16.23     “Participant”
means an individual or estate that holds an Award.

16.24     “Plan”
means this Verigy Ltd. 2006 Equity Incentive Plan, as amended from time to
time.

16.25     “Replacement
Awards” means Awards granted or Shares issued by the Company in the
conversion, assumption, substitution, or exchange of awards previously granted
under the Agilent Technologies, Inc. 1999 Stock Plan or the Agilent
Technologies, Inc. 1999 Non-employee Director Stock Plan.

16.26     “Restricted
Share” means a Share awarded under the Plan.

16.27     “Restricted
Share Agreement” means the agreement between the Company and the
recipient of a Restricted Share that contains the terms, conditions and
restrictions pertaining to such Restricted Share.

16.28     “SAR”
means a share appreciation right granted under the Plan.

16.29     “SAR
Agreement” means the agreement between the Company and an Optionee
that contains the terms, conditions and restrictions pertaining to his or her
SAR.

16.30     “Service”
means service as an Employee, Outside Director or Consultant.

16.31     “Shares”
means the Ordinary Shares of the Company.

 17
 

 

16.32     “Share
Unit” means a bookkeeping entry representing the equivalent of one
Share, as awarded under the Plan.

16.33     “Share
Unit Agreement” means the agreement between the Company and the
recipient of a Share Unit that contains the terms, conditions and restrictions
pertaining to such Share Unit.

16.34     “Subsidiary”
means any 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 shares possessing 50% or more
of the total combined voting power of all classes of shares in one of the other
corporations in such chain. A corporation that attains the status of a
Subsidiary on a date after the adoption of the Plan shall be considered a
Subsidiary commencing as of such date.

16.35     “Substitute
Awards” means:

(a)  Awards granted or Shares issued by the
Company in assumption of, or in substitution or exchange for, awards previously
granted by: (i) a company acquired by the Company; (ii) a company
acquired by any Subsidiary; or (iii) a company with which the Company or
any Subsidiary combines; and

(b)  Awards granted or Shares issued by the
Company in assumption of, or in substitution or exchange for, awards previously
granted by Agilent Technologies, Inc.

Adoption and Amendment History:

Adopted by the Board of Directors:                   ,    2006

Approved by the shareholder:                   ,    2006

 18
 

 

APPENDIX A

PERFORMANCE
CRITERIA FOR RESTRICTED SHARES AND SHARE UNITS

The
Committee may apply any one or more of the following performance criteria,
individually, alternatively or in any combination, either to the Company as a
whole or to a business unit, Subsidiary or Affiliate, measured annually,
quarterly or cumulatively over a period of years, either on an absolute basis
or relative to a pre-established target, with respect to previous years’
results or a designated comparison group, in each case as specified by the
Committee: (i) cash flow (before or after dividends), (ii) earnings
per share (including earnings before interest, taxes, depreciation and
amortization), (iii) share price, (iv) return on equity,
(v) total shareholder return, (vi) return on capital (including
return on total capital or return on invested capital), (vii) return on
assets or net assets, (viii) market capitalization, (ix) economic
value added, (x) debt leverage (debt to capital), (xi) revenue or net
revenue, (xii) income or net income, (xiii) operating income,
(xiv) operating profit or net operating profit, (xv) operating margin
or profit margin, (xvi) return on operating revenue, (xvii) cash from
operations, (xviii) operating ratio, (xix) operating revenue,
(xx) customer satisfaction measures, (xxi) net order dollars,
(xxii) guaranteed efficiency measures; (xxiii) service agreement
renewal rates; (xxiv) service revenues as a percentage of product
revenues, either with respect to one or more particular transactions or with
respect to revenues as a whole; or (xxv) individual performance. To the
extent consistent with section 162(m) of the Code, the Committee may
appropriately adjust any evaluation of performance under a performance
criterion to exclude any of the following events that occurs during a
performance period: (i) asset write-downs, (ii) litigation,
claims, judgments or settlements, (iii) the effect of changes in tax law,
accounting principles or other such laws or provisions affecting reported
results, (iv) accruals for reorganization and restructuring programs and
(v) any extraordinary, unusual or non-recurring items

 19

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