Document:

Exhibit
10.6

 

AMENDED
AND RESTATED AIRCRAFT TIME SHARING AGREEMENT

 

THIS AMENDED AND RESTATED
TIME SHARING AGREEMENT (this “Agreement”) is entered into on March 27, 2006 by
Cephalon, Inc. (“Owner”), a Delaware corporation, with principal offices at 41
Moores Road, Frazer, PA 19355, and Frank Baldino, Jr., Ph.D. (“Lessee”).

 

BACKGROUND:

 

A.                                   Owner
is the registered owner of certain civil aircraft as described in the
Specification Sheet attached hereto and made a part hereof, as Exhibit A (the “Aircraft”).

 

B.                                     Owner
employs a fully qualified flight crew to operate the Aircraft;

 

C.                                     From
time to time, Lessee may desire to lease the Aircraft and flight crew from
owner for Lessee’s personal travel at Lessee’s discretion on a time sharing
basis as defined in Section 91.501(c)(1) of the Federal Aviation Regulations (“FAR”).

 

D.                                    This
Agreement sets forth the understanding of the Parties as to the terms under
which Owner will provide Lessee with the use, on a periodic basis, of the
Aircraft; and

 

E.                                      The
use of the Aircraft will at all times be pursuant to and in full compliance
with the requirements of FAR Part 91 and particularly,
Sections 91.501(b)(6), 91.501(c)(1), and 91.501(d).

 

F.                                      The
Owner and Lessee entered that certain Time Sharing Agreement dated January 23,
2006 and now intend to amend and restate that agreement in its entirety.

 

NOW, THEREFORE, Owner and
Lessee agree as follows:

 

1.                                       Subject
to the terms and conditions of this Agreement, Owner agrees to lease the
Aircraft to Lessee at Lessee’s discretion from time-to-time on a non-exclusive
basis and on an “as needed and as available basis” pursuant to the provisions
of FAR Section 91.501(b)(6), 91.501(c)(1), and 91.501(d) and to provide a fully
qualified flight crew for all operations for flights scheduled in accordance
with the terms of this Agreement.

 

2.                                       This
Agreement shall remain in effect unless and until terminated by either party
for any reason upon written notice to the other, such termination to become
effective ten (10) days from the date of the notice or upon the earlier of (a)
the

 

 

termination of this Agreement by consent of Owner and Lessee, (b) the
date of Lessee’s termination of employment with Owner and (c) the date of
Lessee’s death.

 

3.                                       Lessee
may use the Aircraft from time-to-time, subject to the prior permission and
approval of Owner, for any and all purposes allowed by FAR Section 91.501(b)(6).
Lessee’s use shall include the use of the Aircraft by guests of the Company if
they accompany him or her on the flight. Lessee shall not accept any
compensation whatsoever for any flight conducted under this Agreement.

 

4.                                       Lessee
shall pay Owner for each flight conducted under this Agreement the actual
expenses of each specific flight as authorized by FAR Section 91.501(d) as in
effect from time to time. On the date of this Agreement these expenses include
and are limited to:

 

(a)                                  fuel,
oil, lubricants and other additives;

 

(b)                                 travel
expenses of the crew, including food, lodging and ground transportation;

 

(c)                                  hangar
and tie down costs away from the Aircraft’s base of operation;

 

(d)                                 insurance
obtained for the specific flight;

 

(e)                                  landing
fees, airport taxes and similar assessments;

 

(f)                                    customs,
foreign permit and similar fees directly related to the flight;

 

(g)                                 in-flight
food and beverages;

 

(h)                                 passenger
ground transportation;

 

(i)                                     flight
planning and weather contract services; and

 

(j)                                     an
additional charge equal to one hundred percent (100%) of the expenses listed in
clause (a) above.

 

5.                                       Owner
will pay all expenses related to the operation of the Aircraft when incurred
and will provide monthly invoices to Lessee for the expenses enumerated in
Section 4 hereof. Lessee shall pay the amounts invoiced within fifteen (15)
days after receipt of the related invoice.

 

6.                                       The
Parties acknowledge that with the exception of the expenses for in-flight food
and beverages and passenger ground transportation, the payment of expenses set
forth in Section 4 hereof are subject to the federal excise tax imposed under
Section

 

 

4261 of the Internal Revenue Code. Lessee shall pay Owner for such
expenses and the amount of such taxes within fifteen (15) days of receipt of
the applicable invoice. Owner agrees to collect and remit to the Internal
Revenue Service for the benefit of Lessee all such federal excise taxes.

 

7.                                       In
the event that Lessee desires to use the Aircraft pursuant to this Agreement,
Lessee will so notify Owner and will provide Owner with requests for flight
time and proposed flight schedules as far as possible in advance of any given
flight. Requests for flight time shall be in a form, whether oral or written,
mutually convenient to and agreed upon by Owner and Lessee. In addition to
proposed schedules and flight times, Lessee shall provide at least the
following information for each proposed flight at some time prior to scheduled
departure as required by Owner or Owner’s flight crew:

 

(a)                                  departure
point;

 

(b)                                 destinations;

 

(c)                                  date
and time of flight;

 

(d)                                 the
number and identity of any anticipated passengers;

 

(e)                                  the
nature and extent of luggage and/or cargo to be carried;

 

(f)                                    the
date and time of a return flight, if any; and

 

(g)                                 any
other information concerning the proposed flight that may be pertinent or
required by Owner or Owner’s flight crew.

 

8.                                       Owner
shall have sole and exclusive authority over the scheduling of the Aircraft,
including which aircraft is used for any particular flight.

 

9.                                       Owner
shall be solely responsible for securing maintenance, preventive maintenance,
and required or otherwise necessary inspections on the Aircraft and shall take
such requirements into account in scheduling flights of the Aircraft. No period
of maintenance, preventive maintenance, or inspection shall be delayed or
postponed for the purpose of scheduling the Aircraft, unless such maintenance
or inspection can be safely conducted at a later time in compliance with all
applicable laws and regulations, and within the sound discretion of the
pilot-in-command. The pilot-in-command shall have final and complete authority
to cancel any flight for any reason or condition that in his or her judgment
would compromise the safety of the flight.

 

10.                                 Owner
shall be responsible for the physical and technical operation of the Aircraft
and the safe performance of all flights and shall retain full authority and
control, including exclusive operational control, and possession of the
Aircraft at all times during the term of this Agreement. Owner shall employ,
pay for, and provide to Lessee a qualified flight crew for each flight
undertaken under this Agreement. In accordance with

 

 

applicable FAR, the qualified flight crew provided by Owner will
exercise all of its duties and responsibilities with respect to the safety of
each flight conducted under this Agreement. Lessee agrees that the flight crew,
in its sole discretion, may terminate any flight, refuse to commence any
flight, or take other action that in the considered judgment of the
pilot-in-command is necessitated by considerations of safety. Without limiting
the generality of Section 11, no such action of the pilot-in-command shall
create or support any liability for loss, injury, damage, or delay to Lessee or
any other person.

 

11.                                 THE
OWNER AND LESSEE AGREE THAT OWNER SHALL IN NO EVENT BE LIABLE TO LESSEE OR HIS
EMPLOYEES, AGENTS, REPRESENTATIVES, GUESTS, OR INVITEES FOR ANY INDIRECT,
SPECIAL, OR CONSEQUENTIAL DAMAGES AND/OR PUNITIVE DAMAGES OF ANY KIND OR NATURE
UNDER ANY CIRCUMSTANCES OR FOR ANY REASON INCLUDING ANY DELAY OR FAILURE TO
FURNISH THE AIRCRAFT OR CAUSED OR OCCASIONED BY THE PERFORMANCE OR
NON-PERFORMANCE OF ANY SERVICES COVERED BY THIS AGREEMENT.

 

12.                                 Owner
may maintain such insurance coverage with respect to the Aircraft and any
flights made under this Agreement as Owner may elect in its sole discretion,
including all-risk physical damage insurance (hull Coverage), aircraft bodily
injury and property damage liability insurance. The risk of loss during the
period when the Aircraft is operated on behalf of Lessee under this Agreement
shall remain with Owner, and Owner will retain all rights and benefits with respect
to the proceeds payable under policies of hull insurance maintained by Owner
that may be payable as a result of any incident or occurrence while an Aircraft
is being operated on behalf of Lessee under this Agreement. Lessee shall be
named as an additional insured on liability insurance policies maintained by
Owner on the Aircraft with respect to flights conducted pursuant to this
Agreement. The liability insurance policies on which Lessee is named an
additional insured shall provide that as to Lessee coverage shall not be
invalidated or adversely affected by any action or inaction, omission or
misrepresentation by Owner or any other person (other than Lessee). Any hull
insurance policies maintained by Owner on any Aircraft used by Lessee under
this Agreement shall include a waiver of any rights of subrogation of the
insurers against Lessee.

 

13.                                 Lessee
agrees that the insurance specified in Section 12 shall provide its sole
recourse for all claims, losses, liabilities, obligations, demands, suits,
judgments or causes of action, penalties, fines, costs and expenses of any
nature whatsoever, including attorneys’ fees and expenses for or on account of
or arising out of, or in any way connected with the use of the Aircraft by
Lessee or its guests, including injury to or death of any persons, including
Lessee and its guests which may result from or arise out of the use or
operation of the Aircraft during the term of this Agreement. This
Section 13 shall survive termination of this Agreement.

 

14.                                 A
copy of this Agreement shall be carried in the Aircraft and available for
review upon the request of the FAA on all flights conducted pursuant to this
Agreement.

 

 

15.                                 Lessee
represents, warrants and covenants to Owner that:

 

(a)                                  He
will use each Aircraft for and on his own account only and will not use any
Aircraft for the purposes of providing transportation of passengers or cargo in
air commerce for compensation or hire;

 

(b)                                 He
shall refrain from incurring any mechanics or other lien in connection with the
Aircraft, whether permissible or impermissible under this Agreement, and he
shall not attempt to convey, mortgage, assign, lease or any way alienate the
Aircraft or create any kind of lien or security interest involving the Aircraft
or do anything or take any action that might mature into such a lien, and
Lessee shall, at his own expense, promptly take such action as may be necessary
to discharge any such lien;

 

(c)                                  During
the term of this Agreement, he will abide by and conform to all such laws,
governmental, and airport orders, rules, and regulations as shall from time to
time be in effect relating in any way to the operation and use of the Aircraft
by a time-sharing lessee.

 

16.                                 For
purposes of this Agreement, the permanent base of operation of the Aircraft shall
be New Castle County Airport, c/o Cephalon Flight Department, 6 DBRA Way, New
Castle, DE, 19720 unless changed by Owner, in which event Owner shall notify
Lessee of the new permanent base of operation of the Aircraft.

 

17.                                 Lessee
hereby indemnifies Owner and agrees to hold harmless Owner from and against any
Losses imposed on, incurred by or asserted against Owner (i) arising out of or
resulting from the willful misconduct or gross negligence of Lessee, (ii) to
the extent such Loss is a direct result of any failure of Lessee to comply with
any covenants required to be performed or observed by him, or (iii) to the
extent such Loss is a direct result of any breach by Lessee of any of Lessee’s
warranties or representations contained in this Agreement. Losses shall be
determined after taking into account the available proceeds of any applicable
insurance policies.

 

18.                                 Neither
this Agreement nor Lessee’s interest in this Agreement shall be assignable to
any other person or entity without the prior written consent of Owner.

 

19.                                 [Intentionally
omitted]

 

20.                                 Legal
title to the Aircraft shall remain in the Owner at all times.

 

21.                                 This
Agreement shall be governed by and construed in accordance with the laws of
Pennsylvania (excluding the conflicts of law rules thereof).

 

22.                                 This
Agreement constitutes the entire understanding between Owner and Lessee with
respect to its subject matter, and there are no representations, warranties,

 

 

conditions, covenants, or Agreements other than as set forth expressly
herein. Any changes or modifications to this Agreement must be in writing and
signed by authorized representatives of both parties. This Agreement may be
executed in counterparts, which shall, singly or in the aggregate, constitute a
fully executed and binding Agreement.

 

23.                                 Any
notice, request, or other communication to any party by the other party under
this Agreement shall be conveyed in writing and shall be deemed given on the
earlier of the date (i) notice is personally delivered with receipt
acknowledged, (ii) a facsimile notice is transmitted, or (iii) three (3) days
after notice is mailed by certified mail, return receipt requested, postage
paid, and addressed to the party at the address set forth below. The address of
a party to which notices or copies of notice are to be given may be changed
from time to time by such party by written notice to the other party.

 

If
to Owner:

 

Cephalon,
Inc.

41
Moores Road

Frazer,
PA 19355

Attention:
General Counsel

FAX:
1-610-738-6258

 

If
to Lessee:

 

Frank
Baldino, Jr., Ph.D.

c/o
Cephalon, Inc.

41
Moores Road

Frazer,
PA 19355

 

24.                                 If
any one or more of the provisions of the Agreement shall be held invalid,
illegal, or unenforceable, the remaining provisions of this Agreement shall be
unimpaired, and the invalid, illegal, or unenforceable provision shall be
replaced by a mutually acceptable provision, which, being valid, legal, and
enforceable, comes closest to the intention of the parties underlying the
invalid, illegal, or unenforceable provision. To the extent permitted by applicable
law, the parties hereby waive any provision of law, which renders any provision
of this Agreement prohibited or unenforceable in any respect.

 

25.                                 The
failure of a party to require performance of any provision of this Agreement
shall in no way affect that party’s right thereafter to enforce such provision
nor shall the waiver by a party of any breach of any provision of this
Agreement be taken or held to be a waiver of any further breach of the same
provision or any other provision.

 

26.                                 NEITHER
OWNER (NOR ITS AFFILIATES) MAKES, HAS MADE OR SHALL BE DEEMED TO MAKE OR HAVE
MADE, AND OWNER (FOR ITSELF AND ITS AFFILIATES) HEREBY DISCLAIMS, ANY WARRANTY
OR

 

 

REPRESENTATION, EITHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH
RESPECT TO ANY AIRCRAFT TO BE USED HEREUNDER OR ANY ENGINE OR COMPONENT THEREOF
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY AS TO DESIGN, COMPLIANCE WITH
SPECIFICATIONS, QUALITY OF MATERIALS OR WORKMANSHIP, MERCHANTABILITY, FITNESS
FOR ANY PURPOSE, USE OR OPERATION, AIRWORTHINESS, SAFETY, PATENT, TRADEMARK OR
COPYRIGHT INFRINGEMENT OR TITLE.

 

27.                                 Truth
in leasing statement under FAR Section 91.23: 
Owner shall mail a copy of this Agreement for and on behalf of both
Parties to:  Flight Standards Technical
Division, P.O. Box 25724, Oklahoma City, Oklahoma 73125, within twenty-four
(24) hours of its execution, as provided by FAR Section 91.23(c)(1).
Additionally, Owner agrees to comply with the notification requirements of FAR
Section 91.23 by notifying by telephone or in person the FAA Flight Standards
District Office nearest the airport where the first flight will originate at
least forty-eight (48) hours prior to the first flight under this Agreement.

 

(a)                                  OWNER
HEREBY CERTIFIES THAT THE AIRCRAFT HAS BEEN INSPECTED AND MAINTAINED WITHIN THE
TWELVE (12) MONTH PERIOD PRECEDING THE DATE OF THIS AGREEMENT, EXCEPT TO THE
EXTENT THE AIRCRAFT IS LESS THAN TWELVE (12) MONTHS OLD, IN ACCORDANCE WITH THE
PROVISIONS OF FAR PART 91 AND ALL APPLICABLE REQUIREMENTS FOR THE MAINTENANCE
AND INSPECTION THERE UNDER HAVE BEEN MET AND ARE VALID FOR THE OPERATIONS TO BE
CONDUCTED UNDER THIS AGREEMENT.

 

(b)                                 OWNER
WHOSE ADDRESS APPEARS IN SECTION 23 ABOVE AND WHOSE AUTHORIZED SIGNATURE
APPEARS BELOW, AGREES, CERTIFIES, AND KNOWINGLY ACKNOWLEDGES THAT WHEN THE AIRCRAFT
IS OPERATED UNDER THIS AGREEMENT, OWNER SHALL BE KNOWN AS, CONSIDERED, AND
SHALL IN FACT BE THE OPERATOR OF THE AIRCRAFT AND THAT OWNER UNDERSTANDS ITS
RESPONSIBILITIES FOR COMPLIANCE WITH APPLICABLE FEDERAL AVIATION REGULATIONS.

 

(c)                                  AN
EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND PERTINENT FARS CAN BE
OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS DISTRICT OFFICE, GENERAL
AVIATION DISTRICT OFFICE, OR AIR CARRIER DISTRICT OFFICE. EACH PARTY AGREES TO
UNDERSTAND AND ABIDE BY THESE REGULATIONS.

 

[THE
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

 

 

IN WITNESS WHEREOF, Owner
and Lessee caused the signatures of their authorized representatives to be
affixed below on the day and year first above written.

 

 

	
  OWNER:

  	
   

  
	
   

  	
   

  
	
  CEPHALON, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Carl A. Savini

  	
   

  	
   

  
	
  Name:

  	
  Carl A. Savini

  
	
  Title:

  	
  Executive Vice
  President & Chief Administrative Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  LESSEE:

  	
   

  
	
   

  	
   

  
	
  /s/ Frank Baldino, Jr.

  	
   

  	
   

  
	
  Frank Baldino, Jr.,
  Ph.D.

  	
   

  
					

 

 

EXHIBIT A

 

CEPHALON, INC.

 

Aircraft Subject to Amended and
Restated Time Sharing Agreement

 

Each of the undersigned
is a party to the Amended and Restated Time Sharing Agreement dated March 27,
2006, by and between Cephalon, Inc. (“Cephalon” or “Owner”), and Frank Baldino,
Jr., Ph.D. (“Lessee”) (collectively the “Parties”), and agrees that from and
after the date below, until this Exhibit A shall be superseded and replaced
through agreement of the Parties or the Amended and Restated Time Sharing
Agreement shall be terminated pursuant to its terms, the Aircraft described below
shall constitute the “Aircraft” described in and subject to the terms of the
Time Sharing Agreement.

 

2001 Bombardier
Challenger CL-600-2B16

 

Manufacturer’s Serial
Number 5488

 

FAA Registration Number
N8570

 

Engine Model: General
Electric CF34-3B; Serial Numbers: 872952 and 872953

 

Dated: March 27, 2006

 

 

	
  OWNER:

  
	
   

  
	
  CEPHALON, INC.

  
	
   

  
	
  /s/ Carl A. Savini

  	
   

  
	
   

  
	
  By: Carl A. Savini

  
	
  Its: Executive Vice
  President & Chief Administrative Officer

  
	
   

  
	
   

  
	
  LESSEE:

  
	
   

  
	
  Frank Baldino, Jr.,
  Ph.D.

  
	
   

  
	
   

  
	
  /s/ Frank Baldino, Jr.Exhibit 10.1

 

 

ev3 Inc.

 

AMENDED AND RESTATED

2005 INCENTIVE STOCK PLAN

 

(as amended through May 9, 2006)

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  § 1. BACKGROUND AND PURPOSE

  	
  1

  
	
   

  	
   

  
	
  § 2. DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Affiliate

  	
  1

  
	
  2.2

  	
  Board

  	
  1

  
	
  2.3

  	
  Change Effective Date

  	
  1

  
	
  2.4

  	
  Change in Control

  	
  2

  
	
  2.5

  	
  Code

  	
  3

  
	
  2.6

  	
  Committee

  	
  3

  
	
  2.7

  	
  Company

  	
  3

  
	
  2.8

  	
  Director

  	
  3

  
	
  2.9

  	
  Eligible Employee

  	
  4

  
	
  2.10

  	
  Fair Market Value

  	
  4

  
	
  2.11

  	
  ISO

  	
  4

  
	
  2.12

  	
  1933 Act

  	
  4

  
	
  2.13

  	
  1934 Act

  	
  4

  
	
  2.14

  	
  Non-ISO

  	
  4

  
	
  2.15

  	
  Option

  	
  4

  
	
  2.16

  	
  Option Certificate

  	
  5

  
	
  2.17

  	
  Option Price

  	
  5

  
	
  2.18

  	
  Parent

  	
  5

  
	
  2.19

  	
  Plan

  	
  5

  
	
  2.20

  	
  Rule 16b-3

  	
  5

  
	
  2.21

  	
  SAR Value

  	
  5

  
	
  2.22

  	
  Stock

  	
  5

  
	
  2.23

  	
  Stock Appreciation Right

  	
  5

  
	
  2.24

  	
  Stock Appreciation Right Certificate

  	
  6

  
	
  2.25

  	
  Stock Grant

  	
  6

  
	
  2.26

  	
  Stock Grant Certificate

  	
  6

  
	
  2.27

  	
  Stock Unit Grant

  	
  6

  
	
  2.28

  	
  Subsidiary

  	
  6

  
	
  2.29

  	
  Ten Percent Shareholder

  	
  6

  
	
   

  	
   

  	
   

  
	
  § 3. SHARES AND GRANT LIMITS

  	
  7

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Shares Reserved

  	
  7

  
	
  3.2

  	
  Source of Shares

  	
  7

  
	
  3.3

  	
  Use of Proceeds

  	
  7

  
	
  3.4

  	
  Grant Limits

  	
  7

  
	
   

  	
   

  	
   

  
	
  § 4. EFFECTIVE DATE

  	
  8

  
	
   

  	
   

  	
   

  
	
  § 5. COMMITTEE 

  	
  8

  

 

 

	
  § 6. ELIGIBILITY

  	
  9

  
	
   

  	
   

  	
   

  
	
  § 7. OPTIONS

  	
  9

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Committee Action

  	
  9

  
	
  7.2

  	
  $100,000 Limit

  	
  10

  
	
  7.3

  	
  Option Price

  	
  10

  
	
  7.4

  	
  Payment

  	
  10

  
	
  7.5

  	
  Exercise

  	
  11

  
	
   

  	
   

  	
   

  
	
  § 8. STOCK APPRECIATION RIGHTS

  	
  12

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Committee Action

  	
  12

  
	
  8.2

  	
  Terms and Conditions

  	
  12

  
	
  8.3

  	
  Exercise

  	
  14

  
	
   

  	
   

  	
   

  
	
  § 9. STOCK GRANTS

  	
  14

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Committee Action

  	
  14

  
	
  9.2

  	
  Conditions

  	
  15

  
	
  9.3

  	
  Dividends, Voting Rights and Creditor Status

  	
  17

  
	
  9.4

  	
  Satisfaction of Forfeiture Conditions.

  	
  19

  
	
  9.5

  	
  Income Tax Deduction

  	
  19

  
	
   

  	
   

  	
   

  
	
  § 10. NON-TRANSFERABILITY

  	
  21

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  General Rule

  	
  21

  
	
  10.2

  	
  Transfers to Family Members

  	
  21

  
	
   

  	
   

  	
   

  
	
  § 11. SECURITIES REGISTRATION

  	
  22

  
	
   

  	
   

  	
   

  
	
  § 12. LIFE OF PLAN

  	
  23

  
	
   

  	
   

  	
   

  
	
  § 13. ADJUSTMENT

  	
  24

  
	
   

  	
   

  	
   

  
	
  13.1

  	
  Capital Structure

  	
  24

  
	
  13.2

  	
  Available Shares

  	
  24

  
	
  13.3

  	
  Transactions Described in § 424 of the Code

  	
  25

  
	
  13.4

  	
  Fractional Shares

  	
  26

  
	
   

  	
   

  	
   

  
	
  § 14. CHANGE IN CONTROL

  	
  26

  
	
   

  	
   

  	
   

  
	
  § 15. AMENDMENT OR TERMINATION

  	
  27

  
	
   

  	
   

  	
   

  
	
  § 16. MISCELLANEOUS

  	
  28

  
	
   

  	
   

  	
   

  
	
  16.1

  	
  Shareholder Rights

  	
  28

  
	
  16.2

  	
  No Contract of Employment

  	
  28

  
	
  16.3

  	
  Withholding

  	
  28

  
	
  16.4

  	
  Construction

  	
  29

  
	
  16.5

  	
  Other Conditions

  	
  29

  
	
  16.6

  	
  Rule 16b-3

  	
  29

  
	
  16.7

  	
  Coordination with Employment Agreements and Other Agreements

  	
  30

  

 

ii

 

§ 1.

BACKGROUND AND PURPOSE

 

The purpose of
this Plan is to promote the interest of the Company by authorizing the
Committee to grant Options and Stock Appreciation Rights and to make Stock
Grants and Stock Unit Grants to Eligible Employees and Directors or consultants
in order (1) to attract and retain Eligible Employees, Directors or
consultants, (2) to provide an additional incentive to each Eligible Employee,
Director or consultant to work to increase the value of Stock and (3) to
provide each Eligible Employee, Director or consultant with a stake in the
future of the Company which corresponds to the stake of each of the Company’s
shareholders.

 

§ 2.

DEFINITIONS

 

2.1           Affiliate
— means any organization (other than a Subsidiary) that would be treated as
under common control with the Company under § 414(c) of the Code if “50
percent” were substituted for “80 percent” in the income tax regulations under
§ 414(c) of the Code.

 

2.2           Board
— means the Board of Directors of the Company.

 

2.3           Change
Effective Date — means either the date which includes the “closing” of the
transaction which makes a Change in Control effective if the Change in Control
is made effective through a transaction which has a “closing” or the date a
Change in Control is reported in accordance with applicable law as effective to
the Securities and Exchange Commission if the Change in Control is made
effective other than through a transaction which has a “closing”.

 

 

2.4           Change
in Control — means a change in control of the Company occurring after the
effective date of this Plan of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response
to any similar item on any similar schedule or form) promulgated under the 1934
Act, whether or not the Company is then subject to such reporting requirement; provided,
however, that, without limitation, a Change in Control shall include: (i)
the acquisition (other than from the Company) after the date hereof by any
person, entity or “group” within the meaning of Section 13(d)(3) or
14(d)(2) of the 1934 Act (excluding, for this purpose, the Company or its
subsidiaries, any employee benefit plan of the Company or its subsidiaries
which acquires beneficial ownership of voting securities of the Company, any
qualified institutional investor who meets the requirements of
Rule 13d-1(b)(1) promulgated under the 1934 Act, Warburg Pincus LLC and
its affiliates, and The Vertical Group, L.P. and its affiliates) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the 1934
Act) of 20% or more of either the then-outstanding shares of common stock or
the combined voting power of the Company’s then-outstanding capital stock
entitled to vote generally in the election of directors; (ii) individuals who,
as of the date hereof, constitute the Board (the “Incumbent Board”) ceasing for
any reason to constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s stockholders was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board (other
than an

 

2

 

election or
nomination of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
directors of the Company) shall be, for purposes of this Agreement, considered
as though such person were a member of the Incumbent Board; or (iii) approval
by the stockholders of the Company of (A) a reorganization, merger, or
consolidation, in each case, with respect to which persons who were the
stockholders of the Company immediately prior to such reorganization, merger,
or consolidation do not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the election of directors
of the reorganized, merged, consolidated or other surviving corporation’s
then-outstanding voting securities, (B) a liquidation or dissolution of the
Company, or (C) the sale of all or substantially all of the assets of the
Company.

 

2.5           Code
— means the Internal Revenue Code of 1986, as amended.

 

2.6           Committee
— means a committee of the Board which shall have at least 2 members, each of
whom shall be appointed by and shall serve at the pleasure of the Board and at
least 2 of whom shall come within the definition of a “non-employee director”
under Rule 16b-3, or if no such committee of the Board has been appointed, the
Board as a whole.

 

2.7           Company
— means ev3 Inc. and any successor to ev3 Inc.

 

2.8           Director
— means any member of the Board who is not an employee of the Company or a
Parent or Subsidiary or affiliate (as such term is defined in Rule 405 of the
1933 Act) of the Company.

 

3

 

2.9           Eligible
Employee — means an employee of the Company or any Subsidiary or Parent or
Affiliate to whom the Committee decides for reasons sufficient to the Committee
to make a grant under this Plan.

 

2.10         Fair
Market Value — means either (a) the closing price on any date for a
share of Stock as reported by The Wall Street Journal or, if The Wall
Street Journal no longer reports such closing price, such closing price as
reported by a newspaper or trade journal selected by the Committee or, if no
such closing price is available on such date, (b) such closing price as so
reported in accordance with § 2.10(a) for the immediately preceding
business day, or, if no newspaper or trade journal reports such closing price
or if no such price quotation is available, (c) the price which the
Committee acting in good faith determines through any reasonable valuation
method that a share of Stock might change hands between a willing buyer and a
willing seller, neither being under any compulsion to buy or to sell and both
having reasonable knowledge of the relevant facts.

 

2.11         ISO
— means an option granted under this Plan to purchase Stock which is intended
to satisfy the requirements of § 422 of the Code.

 

2.12         1933
Act — means the Securities Act of 1933, as amended.

 

2.13         1934
Act — means the Securities Exchange Act of 1934, as amended.

 

2.14         Non-ISO
— means an option granted under this Plan to purchase Stock which is intended
to fail to satisfy the requirements of § 422 of the Code.

 

2.15         Option
— means an ISO or a Non-ISO which is granted under § 7.

 

4

 

2.16         Option
Certificate — means the certificate (whether in electronic or written form)
which sets forth the terms and conditions of an Option granted under this Plan.

 

2.17         Option
Price — means the price which shall be paid to purchase one share of Stock
upon the exercise of an Option granted under this Plan.

 

2.18         Parent
— means any corporation which is a parent corporation (within the meaning of
§ 424(e) of the Code) of the Company.

 

2.19         Plan
— means this ev3 Inc. 2005 Incentive Stock Plan as effective as of the date
approved by the shareholders of the Company and as amended from time to time
thereafter. For each grant of an Option to an Eligible Employee, Director or
consultant who is a resident of France, the Plan shall include the terms of the
addendum titled, “Terms and Conditions for French Option Grants”, which shall
supercede the terms of the Plan to the extent that the terms of such addendum
conflict with the terms of the Plan.

 

2.20         Rule
16b-3 — means the exemption under Rule 16b-3 to Section 16(b) of
the 1934 Act or any successor to such rule.

 

2.21         SAR
Value — means the value assigned by the Committee to a share of Stock in
connection with the grant of a Stock Appreciation Right under § 8.

 

2.22         Stock
— means the common stock of the Company.

 

2.23         Stock
Appreciation Right — means a right which is granted under § 8 to receive
the appreciation in a share of Stock.

 

5

 

2.24         Stock
Appreciation Right Certificate — means the certificate (whether in
electronic or written form) which sets forth the terms and conditions of a
Stock Appreciation Right which is not granted as part of an Option.

 

2.25         Stock
Grant — means a grant under § 9 which is designed to result in the
issuance of the number of shares of Stock described in such grant rather than a
payment in cash based on the Fair Market Value of such shares of Stock.

 

2.26         Stock
Grant Certificate — means the certificate (whether in electronic or written
form) which sets forth the terms and conditions of a Stock Grant or a Stock
Unit Grant.

 

2.27         Stock
Unit Grant — means a grant under § 9 which is designed to result in
the payment of cash based on the Fair Market Value of the number of shares of
Stock described in such grant rather than the issuance of the number of shares
of Stock described in such grant.

 

2.28         Subsidiary
— means a corporation which is a subsidiary corporation (within the meaning of
§ 424(f) of the Code) of the Company.

 

2.29         Ten
Percent Shareholder — means a person who owns (after taking into account
the attribution rules of § 424(d) of the Code) more than ten percent of
the total combined voting power of all classes of stock of either the Company,
a Subsidiary or Parent.

 

6

 

§ 3.

SHARES AND GRANT LIMITS

 

3.1           Shares
Reserved. There shall (subject to § 13) be reserved for issuance under
this Plan 6,000,000 shares of Stock; provided, however that no more than
2,000,000 shares of Stock may be issued in connection with the exercise of
ISOs.

 

3.2           Source
of Shares. The shares of Stock described in § 3.1 shall be reserved to
the extent that the Company deems appropriate from authorized but unissued
shares of Stock and from shares of Stock which have been reacquired by the
Company. All shares of Stock described in § 3.1 shall remain available for
issuance under this Plan until issued pursuant to the exercise of an Option or
a Stock Appreciation Right or issued pursuant to a Stock Grant, and any such
shares of stock which are issued pursuant to an Option, a Stock Appreciation
Right or a Stock Grant which are forfeited thereafter shall again become
available for issuance under this Plan. Finally, if the Option Price under an
Option is paid in whole or in part in shares of Stock or if shares of Stock are
tendered to the Company in satisfaction of any condition to a Stock Grant, such
shares thereafter shall become available for issuance under this Plan and shall
be treated the same as any other shares available for issuance under this Plan.

 

3.3           Use
of Proceeds. The proceeds which the Company receives from the sale of any
shares of Stock under this Plan shall be used for general corporate purposes
and shall be added to the general funds of the Company.

 

3.4           Grant
Limits. No Eligible Employee, Director or consultant in any calendar year
shall be granted an Option to purchase (subject to § 13) more than

 

7

 

300,000 shares of Stock or a Stock Appreciation Right based on the
appreciation with respect to (subject to § 13) more than 300,000 shares of
Stock, and no Stock Grant or Stock Unit Grant shall be made to any Eligible
Employee, Director or consultant in any calendar year where the Fair Market
Value of the Stock subject to such grant on the date of the grant exceeds
$10,000,000. No more than 500,000 non-forfeitable shares of Stock shall
(subject to § 13) be issued pursuant to Stock Grants under § 9.

 

§ 4. 

EFFECTIVE DATE

 

The effective
date of this Plan shall be the date the shareholders of the Company (acting at
a duly called meeting of such shareholders) approve the adoption of this Plan.

 

§ 5.

COMMITTEE

 

This Plan
shall be administered by the Committee. The Committee acting in its absolute
discretion shall exercise such powers and take such action as expressly called
for under this Plan and, further, the Committee shall have the power to
interpret this Plan and (subject to § 14 and § 15 and Rule 16b-3) to
take such other action in the administration and operation of this Plan as the
Committee deems equitable under the circumstances, which action shall be
binding on the Company, on each affected Eligible Employee, Director or consultant
and on each other person directly or indirectly affected by such action.
Furthermore, the Committee as a condition to making any grant under this Plan
to any Eligible Employee, Director or consultant shall have the right to
require him or her to execute an agreement which makes the Eligible Employee,
Director or

 

8

 

consultant subject to non-competition provisions and other restrictive
covenants which run in favor of the Company.

 

§ 6.

ELIGIBILITY

 

Only Eligible
Employees who are employed by the Company or a Subsidiary or Parent shall be
eligible for the grant of ISOs under this Plan. All Eligible Employees,
Directors and consultants shall be eligible for the grant of Non-ISOs and Stock
Appreciation Rights and for Stock Grants and Stock Unit Grants under this Plan.

 

§ 7.

OPTIONS

 

7.1           Committee
Action. The Committee acting in its absolute discretion shall have the
right to grant Options to Eligible Employees, Directors and consultants under
this Plan from time to time to purchase shares of Stock, but the Committee
shall not (subject to § 13) take any action, whether through amendment,
cancellation, replacement grants, or any other means, to reduce the Option
Price of any outstanding Options absent the approval of the Company’s
shareholders. Each grant of an Option to an Eligible Employee, Director or
consultant shall be evidenced by an Option Certificate, and each Option
Certificate shall set forth whether the Option is an ISO or a Non-ISO and shall
set forth such other terms and conditions of such grant as the Committee acting
in its absolute discretion deems consistent with the terms of this Plan; however,
(a) if the Committee grants an ISO and a Non-ISO to an Eligible Employee on the
same date, the right of the Eligible Employee to exercise the ISO shall not be
conditioned on his or her failure to exercise the Non-ISO and (b) if the only
condition to

 

9

 

exercise of the Option is the completion of a period of service, such
period of service shall be no less than the one (1) year period which starts on the date as of which the
Option is granted unless the Committee determines that a shorter period of
service (or no period of service) better serves the Company’s interest.

 

7.2           $100,000
Limit. No Option shall be treated as an ISO to the extent that the
aggregate Fair Market Value of the Stock subject to the Option which would
first become exercisable in any calendar year exceeds $100,000. Any such excess
shall instead automatically be treated as a Non-ISO. The Committee shall
interpret and administer the ISO limitation set forth in this § 7.2 in
accordance with § 422(d) of the Code, and the Committee shall treat this §
7.2 as in effect only for those periods for which § 422(d) of the Code is
in effect.

 

7.3           Option
Price. The Option Price for each share of Stock subject to an Option shall
be no less than the Fair Market Value of a share of Stock on the date the
Option is granted; provided, however, if the Option is an ISO granted to an
Eligible Employee who is a Ten Percent Shareholder, the Option Price for each
share of Stock subject to such ISO shall be no less than 110% of the Fair
Market Value of a share of Stock on the date such ISO is granted.

 

7.4           Payment.
The Option Price shall be payable in full upon the exercise of any Option and,
at the discretion of the Committee, an Option Certificate can provide for the
payment of the Option Price either in cash, by check or in Stock which has been
held for at least 6 months and which is acceptable to the Committee, or through
any cashless exercise procedure which is effected by an unrelated broker
through a sale of Stock in the open market and which is acceptable to the
Committee,

 

10

 

or in any combination of such forms of payment. Any payment made in
Stock shall be treated as equal to the Fair Market Value of such Stock on the
date the certificate for such Stock (or proper evidence of such certificate) is
presented to the Committee or its delegate in such form as acceptable to the
Committee.

 

7.5           Exercise.

 

(a)                                  Exercise
Period. Each Option granted under this Plan shall be exercisable in whole
or in part at such time or times as set forth in the related Option
Certificate, but no Option Certificate shall make an Option exercisable on or
after the earlier of

 

(1)                                  the
date which is the fifth anniversary of the date the Option is granted, if the
Option is an ISO and the Eligible Employee is a Ten Percent Shareholder on the
date the Option is granted, or

(2)                                  the
date which is the tenth anniversary of the date the Option is granted, if the
Option is (a) a Non-ISO or (b) an ISO which is granted to an Eligible Employee
who is not a Ten Percent Shareholder on the date the Option is granted.

 

(b)                                 Termination
of Status as Eligible Employee or Director. Subject to § 7.5(a), an
Option Certificate may provide for the exercise of an Option after an Eligible
Employee’s, Director’s

 

11

 

or consultant’s
status as such has terminated for any reason whatsoever, including death or
disability.

 

§ 8.

STOCK APPRECIATION RIGHTS

 

8.1           Committee
Action. The Committee acting in its absolute discretion shall have the
right to grant Stock Appreciation Rights to Eligible Employees, Directors and
consultants under this Plan from time to time, and each Stock Appreciation
Right grant shall be evidenced by a Stock Appreciation Right Certificate or, if
such Stock Appreciation Right is granted as part of an Option, shall be
evidenced by the Option Certificate for the related Option.

 

8.2           Terms
and Conditions.

 

(a)                                  Stock
Appreciation Right Certificate. If a Stock Appreciation Right is granted
independent of an Option, such Stock Appreciation Right shall be evidenced by a
Stock Appreciation Right Certificate, and such certificate shall set forth the
number of shares of Stock on which the Eligible Employee’s, Director’s or
consultant’s right to appreciation shall be based and the SAR Value of each
share of Stock. Such SAR Value shall be no less than the Fair Market Value of a
share of Stock on the date that the Stock Appreciation Right is granted. The
Stock Appreciation Right Certificate shall set forth such other terms and
conditions for the exercise of the Stock Appreciation Right as the Committee
deems appropriate under the circumstances, but no Stock Appreciation Right
Certificate shall

 

12

 

make a Stock
Appreciation Right exercisable on or after the date which is the tenth
anniversary of the date such Stock Appreciation Right is granted.

 

(b)                                 Option
Certificate. If a Stock Appreciation Right is granted together with an Option,
such Stock Appreciation Right shall be evidenced by an Option Certificate, the
number of shares of Stock on which the Eligible Employee’s, Director’s or
consultant’s right to appreciation shall be based shall be the same as the
number of shares of Stock subject to the related Option, and the SAR Value for
each such share of Stock shall be no less than the Option Price under the
related Option. Each such Option Certificate shall provide that the exercise of
the Stock Appreciation Right with respect to any share of Stock shall cancel
the Eligible Employee’s, Director’s or consultant’s right to exercise his or
her Option with respect to such share and, conversely, that the exercise of the
Option with respect to any share of Stock shall cancel the Eligible Employee’s,
Director’s or consultant’s right to exercise his or her Stock Appreciation
Right with respect to such share. A Stock Appreciation Right which is granted
as part of an Option shall be exercisable only while the related Option is
exercisable. The Option Certificate shall set forth such other terms and
conditions for the exercise of the Stock Appreciation Right as the Committee
deems appropriate under the circumstances.

 

13

 

(c)                                  Minimum
Period of Service. If the only condition to exercise of a Stock
Appreciation Right is the completion of a period of service, such period of
service shall be no less than the one (1) year period which starts on the date
as of which the Stock Appreciation Right is granted unless the Committee
determines that a shorter period of service (or no period of service) better
serves the Company’s interest.

 

8.3           Exercise.
A Stock Appreciation Right shall be exercisable only when the Fair Market Value
of a share of Stock on which the right to appreciation is based exceeds the SAR
Value for such share, and the payment due on exercise shall be based on such
excess with respect to the number of shares of Stock to which the exercise
relates. An Eligible Employee, Director or consultant upon the exercise of his
or her Stock Appreciation Right shall receive a payment from the Company in
cash or in Stock issued under this Plan, or in a combination of cash and Stock,
and the number of shares of Stock issued shall be based on the Fair Market
Value of a share of Stock on the date the Stock Appreciation Right is exercised.
The Committee acting in its absolute discretion shall have the right to
determine the form and time of any payment under this § 8.3.

 

§ 9.

STOCK GRANTS

 

9.1           Committee
Action. The Committee acting in its absolute discretion shall have the
right to make Stock Grants and Stock Unit Grants to Eligible Employees,
Directors or consultants. Each Stock Grant and each Stock Unit Grant shall be

 

14

 

evidenced by a Stock Grant Certificate, and each Stock Grant
Certificate shall set forth the conditions, if any, under which Stock will be
issued under the Stock Grant or cash will be paid under the Stock Unit Grant
and the conditions under which the Eligible Employee’s, Director’s or
consultant’s interest in any Stock which has been issued will become
non-forfeitable.

 

9.2           Conditions.

 

(a)                                  Conditions
to Issuance of Stock. The Committee acting in its absolute discretion may
make the issuance of Stock under a Stock Grant subject to the satisfaction of
one, or more than one, condition which the Committee deems appropriate under
the circumstances for Eligible Employees, Directors or consultants generally or
for an Eligible Employee, a Director or a consultant in particular, and the
related Stock Grant Certificate shall set forth each such condition and the
deadline for satisfying each such condition. Stock subject to a Stock Grant
shall be issued in the name of an Eligible Employee, Director or consultant
only after each such condition, if any, has been timely satisfied, and any
Stock which is so issued shall be held by the Company pending the satisfaction
of the forfeiture conditions, if any, under § 9.2(b) for the related Stock
Grant.

 

(b)                                 Conditions
on Forfeiture of Stock or Cash Payment. The Committee acting in its
absolute discretion may make any cash payment due under a Stock Unit Grant or
Stock issued in the

 

15

 

name of an
Eligible Employee, Director or consultant under a Stock Grant non-forfeitable
subject to the satisfaction of one, or more than one, objective employment,
performance or other condition that the Committee acting in its absolute
discretion deems appropriate under the circumstances for Eligible Employees,
Directors or consultants generally or for an Eligible Employee, a Director or a
consultant in particular, and the related Stock Grant Certificate shall set
forth each such condition, if any, and the deadline, if any, for satisfying each
such condition. An Eligible Employee’s, Director’s or consultant’s
non-forfeitable interest in the shares of Stock underlying a Stock Grant or the
cash payable under a Stock Unit Grant shall depend on the extent to which he or
she timely satisfies each such condition. If a share of Stock is issued under
this § 9.2(b) before an Eligible Employee’s, Director’s or consultant’s
interest in such share of Stock is non-forfeitable, (1) such share of Stock
shall not be available for re-issuance under § 3 until such time, if any,
as such share of Stock thereafter is forfeited as a result of a failure to
timely satisfy a forfeiture condition and (2) the Company shall have the right
to condition any such issuance on the Eligible Employee, Director or consultant
first signing an irrevocable stock power in favor of the Company with respect
to the forfeitable shares of Stock issued to such Eligible Employee, Director
or consultant in

 

16

 

order for the
Company to effect any forfeiture called for under the related Stock Grant
Certificate.

 

(c)                                  Minimum
Period of Service. If the only condition to the forfeiture of a Stock Grant
or a Stock Unit Grant is the completion of a period of service, such period of
service shall be no less than the three (3) year period which starts on the
date as of which the Stock Grant or Stock Unit Grant is made unless the
Committee determines that a shorter period of service (or no period of service)
better serves the Company’s interest.

 

9.3           Dividends,
Voting Rights and Creditor Status.

 

(a)                                  Cash
Dividends. Except as otherwise set forth in a Stock Grant Certificate, if a
dividend is paid in cash on a share of Stock after such Stock has been issued
under a Stock Grant but before the first date that an Eligible Employee’s,
Director’s or consultant’s interest in such Stock (1) is forfeited
completely or (2) becomes completely non-forfeitable, the Company shall
pay such cash dividend directly to such Eligible Employee, Director or
consultant.

 

(b)                                 Stock
Dividends. If a dividend is paid on a share of Stock in Stock after such
Stock has been issued under a Stock Grant but before the first date that an
Eligible Employee’s, Director’s or consultant’s interest in such Stock
(1) is forfeited completely or (2) becomes completely
non-forfeitable, the Company shall hold such dividend

 

17

 

Stock subject
to the same conditions under § 9.2(b) as the related Stock Grant.

 

(c)                                  Other.
If a dividend (other than a dividend described in § 9.3(a) or
§ 9.3(b)) is paid with respect to a share of Stock after such Stock has
been issued under a Stock Grant but before the first date that an Eligible
Employee’s, Director’s or consultant’s interest in such Stock (1) is
forfeited completely or (2) becomes completely non-forfeitable, the
Company shall distribute or hold such dividend in accordance with such rules as
the Committee shall adopt with respect to each such dividend.

 

(d)                                 Voting.
Except as otherwise set forth in a Stock Grant Certificate, an Eligible
Employee, Director or consultant shall have the right to vote the Stock issued
under his or her Stock Grant during the period which comes after such Stock has
been issued under a Stock Grant but before the first date that an Eligible
Employee’s, Director’s or consultant’s interest in such Stock (1) is forfeited
completely or (2) becomes completely non-forfeitable.

 

(e)                                  General
Creditor Status. Each Eligible Employee and each Director and each
consultant to whom a Stock Unit grant is made shall be no more than a general
and unsecured creditor of the Company with respect to any cash payable under
such Stock Unit Grant.

 

18

 

9.4           Satisfaction
of Forfeiture Conditions. A share of Stock shall cease to be subject to a
Stock Grant at such time as an Eligible Employee’s, Director’s or consultant’s
interest in such Stock becomes non-forfeitable under this Plan, and the
certificate or other evidence of ownership representing such share shall be
transferred to the Eligible Employee, Director or consultant as soon as
practicable thereafter.

 

9.5           Income
Tax Deduction.

 

(a)                                  General.
The Committee shall (where the Committee under the circumstances deems in the
Company’s best interest) either (1) make Stock Grants and Stock Unit Grants to
Eligible Employees subject to at least one condition related to one, or more
than one, performance goal based on the performance goals described in
§ 9.5(b) which seems likely to result in the Stock Grant or Stock Unit
Grant qualifying as “performance-based compensation” under § 162(m) of the Code
or (2) make Stock Grants and Stock Unit Grants to Eligible Employees under such
other circumstances as the Committee deems likely to result in an income tax
deduction for the Company with respect such Stock Grant or Stock Unit Grant. A
performance goal may be set in any manner determined by the Committee,
including looking to achievement on an absolute or relative basis in relation
to peer groups or indexes.

 

(b)                                 Performance
Goals. A performance goal is described in this § 9.5(b) if such goal
relates to (1) the Company’s return over capital costs or increases in return
over capital costs, (2) the Company’s

 

19

 

total earnings
or the growth in such earnings, (3) the Company’s consolidated earnings or the
growth in such earnings, (4) the Company’s earnings per share or the growth in
such earnings, (5) the Company’s net earnings or the growth in such earnings,
(6) the Company’s earnings before interest expense, taxes, depreciation,
amortization and other non-cash items or the growth in such earnings, (7) the
Company’s earnings before interest and taxes or the growth in such earnings,
(8) the Company’s consolidated net income or the growth in such income, (9) the
value of the Company’s common stock or the growth in such value, (10) the
Company’s stock price or the growth in such price, (11) the Company’s return on
assets or the growth on such return, (12) the Company’s cash flow or the growth
in such cash flow, (13) the Company’s total shareholder return or the growth in
such return, (14) the Company’s expenses or the reduction of such expenses,
(15) the Company’s sales growth, (16) the Company’s overhead ratios or changes
in such ratios, (17) the Company’s expense-to-sales ratios or the changes in
such ratios, or (18) the Company’s economic value added or changes in such
value added.

 

(c)                                  Adjustments.
When the Committee determines whether a performance goal has been satisfied for
any period, the Committee may exclude any or all “extraordinary items” as
determined under U.S. generally accepted accounting principles and any other

 

20

 

unusual or
non-recurring items, including, without limitation, the charges or costs
associated with restructurings of the Company, discontinued operations, and the
cumulative effects of accounting changes. The Committee may also adjust any
performance goal for a period as it deems equitable in recognition of unusual
or non-recurring events affecting the Company, changes in applicable tax laws
or accounting principles, or such other factors as the Committee may determine
(including, without limitation, any adjustments that would result in the
Company’s paying non-deductible compensation to an Eligible Employee).

 

§ 10.

NON-TRANSFERABILITY

 

10.1         General
Rule. Except as
provided in § 10.2, no Option, Stock Grant, Stock Unit Grant or Stock
Appreciation Right shall be transferable by an Eligible Employee, Director or
consultant other than by will or by the laws of descent and distribution, and
any Option or Stock Appreciation Right shall be exercisable during an Eligible
Employee’s, Director’s or consultant’s lifetime only by the Eligible Employee,
Director or consultant. The person or persons to whom an Option or Stock Grant
or Stock Unit Grant or Stock Appreciation Right is transferred by will or by
the laws of descent and distribution or pursuant to § 10.2, thereafter
shall be treated as the Eligible Employee, Director or consultant.

 

10.2         Transfers
to Family Members. An
Option or Stock Grant, Stock Unit Grant or Stock Appreciation Right may be
transferred by an Eligible Employee,

 

21

 

Director or consultant to a “family member” (as defined for purposes of
Form S-8 under the 1933 Act) of such Eligible Employee, Director or consultant
or to a trust exclusively for the benefit of one or more of such family members
of such Eligible Employee, Director or consultant; provided such transfer is
made as a gift without consideration, and such transfer complies with
applicable securities laws.

 

§ 11.

SECURITIES REGISTRATION

 

As a condition
to the receipt of shares of Stock under this Plan, the Eligible Employee,
Director or consultant shall, if so requested by the Company, agree to hold
such shares of Stock for investment and not with a view of resale or
distribution to the public and, if so requested by the Company, shall deliver
to the Company a written statement satisfactory to the Company to that effect. Furthermore,
if so requested by the Company, the Eligible Employee, Director or consultant
shall make a written representation to the Company that he or she will not sell
or offer for sale any of such Stock unless a registration statement shall be in
effect with respect to such Stock under the 1933 Act and any applicable state
securities law or he or she shall have furnished to the Company an opinion in
form and substance satisfactory to the Company of legal counsel satisfactory to
the Company that such registration is not required. Certificates or other
evidence of ownership representing the Stock transferred upon the exercise of
an Option or Stock Appreciation Right or upon the lapse of the forfeiture
conditions, if any, on any Stock Grant may at the discretion of the Company
bear a legend to the effect that such Stock has not been registered under the
1933 Act or any applicable state securities law and that such Stock cannot be
sold or offered for

 

22

 

sale in the absence of an effective registration statement as to such
Stock under the 1933 Act and any applicable state securities law or an opinion
in form and substance satisfactory to the Company of legal counsel satisfactory
to the Company that such registration is not required.

 

§ 12.

LIFE OF PLAN

 

No Option or
Stock Appreciation Right shall be granted or Stock Grant or Stock Unit Grant
made under this Plan on or after the earlier of:

 

(1)                                  the
tenth anniversary of the effective date of this Plan (as determined under
§ 4), in which event this Plan otherwise thereafter shall continue in
effect until all outstanding Options and Stock Appreciation Rights have been
exercised in full or no longer are exercisable and all Stock issued under any
Stock Grants under this Plan have been forfeited or have become
non-forfeitable, or

(2)                                  the
date on which all of the Stock reserved under § 3 has (as a result of the
exercise of Options or Stock Appreciation Rights granted under this Plan or the
satisfaction of the forfeiture conditions, if any, on Stock Grants) been issued
or no longer is available for use under this Plan, in which event this Plan
also shall terminate on such date.

 

23

 

§ 13.

ADJUSTMENT

 

13.1         Capital
Structure. The grant caps described in § 3.4, the number, kind or class (or
any combination thereof) of shares of Stock subject to outstanding Options and
Stock Appreciation Rights granted under this Plan and the Option Price of such
Options and the SAR Value of such Stock Appreciation Rights as well as the
number, kind or class (or any combination thereof) of shares of Stock subject
to outstanding Stock Grants and Stock Unit Grants made under this Plan shall be
adjusted by the Committee in a reasonable and equitable manner to preserve
immediately after

 

(a)                                  any
equity restructuring or change in the capitalization of the Company, including,
but not limited to, spin offs, stock dividends, large non-reoccurring
dividends, rights offerings or stock splits, or

(b)                                 any
other transaction described in § 424(a) of the Code which does not
constitute a Change in Control of the Company

 

the aggregate intrinsic value
of each such outstanding Option, Stock Appreciation Right, Stock Grant and
Stock Unit Grant immediately before such restructuring or recapitalization or
other transaction.

 

13.2         Available
Shares. If any
adjustment is made with respect to any outstanding Option, Stock Appreciation
Right, Stock Grant or Stock Unit Grant under § 13.1, then the Committee
shall adjust the number, kind or class (or any combination thereof) of shares
of Stock reserved under § 3.1 so that there is a sufficient number, kind
and class of shares of Stock available for issuance pursuant to each such
Option, Stock Appreciation Right, Stock Grant and Stock Unit Grant as adjusted
under § 13.1

 

24

 

without seeking the approval of
the Company’s shareholders for such adjustment unless such approval is required
under applicable law or the rules of the stock exchange on which shares of
Stock are traded. Furthermore, the Committee shall have the absolute discretion
to further adjust such number, kind or class (or any combination thereof) of
shares of Stock reserved under § 3.1 in light of any of the events
described in § 13.1(a) and § 13.1(b) to the extent the Committee
acting in good faith determines that a further adjustment would be appropriate
and proper under the circumstances and in keeping with the purposes of this
Plan without seeking the approval of the Company’s shareholders for such
adjustment unless such approval is required under applicable law or the rules
of the stock exchange on which shares of Stock are traded.

 

13.3         Transactions Described
in § 424 of the Code. If there is a corporate transaction described in
§ 424(a) of the Code which does not constitute a Change in Control of the
Company, the Committee as part of any such transaction shall have the right to
make Stock Grants, Stock Unit Grants and Option and Stock Appreciation Right grants
(without regard to any limitations set forth under 3.4 of this Plan) to effect
the assumption of, or the substitution for, outstanding stock grants, stock
unit grants and option and stock appreciation right grants previously made by
any other corporation to the extent that such corporate transaction calls for
such substitution or assumption of such outstanding stock grants, stock unit
grants and stock option and stock appreciation right grants. Furthermore, if
the Committee makes any such grants as part of any such transaction, the
Committee shall have the right to increase the number of shares of Stock
available for issuance under § 3.1 by the number of shares of Stock
subject to such grants without seeking the approval of the Company’s

 

25

 

shareholders for such adjustment unless such approval is required under
applicable law or the rules of the stock exchange on which shares of Stock are
traded.

 

13.4         Fractional
Shares. If any adjustment under this § 13 would create a fractional
share of Stock or a right to acquire a fractional share of Stock under any
Option, Stock Appreciation Right or Stock Grant, such fractional share shall be
disregarded and the number of shares of Stock reserved under this Plan and the
number subject to any Options or Stock Appreciation Right grants and Stock
Grants shall be the next lower number of shares of Stock, rounding all
fractions downward. An adjustment made under this § 13 by the Committee
shall be conclusive and binding on all affected persons.

 

§ 14.

CHANGE IN CONTROL

 

If there is a
Change in Control of the Company, then as of the Change Effective Date for such
Change in Control any and all conditions to the exercise of all outstanding
Options and Stock Appreciation Rights on such date and any and all outstanding
issuance and forfeiture conditions on any Stock Grants and Stock Unit Grants on
such date automatically shall be deemed 100% satisfied as of such Change
Effective Date, and the Board shall have the right (to the extent expressly
required as part of such transaction) to cancel such Options, Stock
Appreciation Rights, Stock Grants and Stock Unit Grants after providing each
Eligible Employee, Director and consultant a reasonable period to exercise his
or her Options and Stock Appreciation Rights and to take such other action as
necessary or appropriate to receive the Stock subject to any Stock Grants and
the cash payable under any Stock Unit Grants;

 

26

 

provided, if any issuance or forfeiture condition described in this
§ 14 relates to satisfying any performance goal and there is a target for
such goal, such issuance or forfeiture condition shall be deemed satisfied
under this § 14 only to the extent of such target unless such target has
been exceeded before the Change Effective Date, in which event such issuance or
forfeiture condition shall be deemed satisfied to the extent such target had
been so exceeded. A Change in Control shall affect a Stock Appreciation Right
or a Stock Unit Grant which is subject to § 409A of the Code only if the
Change in Control meets the requirements for a Change in Control under
§ 409A of the Code.

 

§ 15.

AMENDMENT OR TERMINATION

 

This Plan may
be amended by the Board from time to time to the extent that the Board deems
necessary or appropriate; provided, however, (a) no amendment shall be made
absent the approval of the shareholders of the Company to the extent such
approval is required under applicable law or the rules of the stock exchange on
which shares of Stock are listed and (b) no amendment shall be made to
§ 14 on or after the date of any Change in Control which might adversely
affect any rights which otherwise would vest on the related Change Effective
Date. The Board also may suspend granting Options or Stock Appreciation Rights
or making Stock Grants or Stock Unit Grants under this Plan at any time and may
terminate this Plan at any time; provided, however, the Board shall not have
the right unilaterally to modify, amend or cancel any Option or Stock
Appreciation Right granted or Stock Grant made before such suspension or
termination unless (1) the Eligible Employee, Director or consultant

 

27

 

consents in writing to such modification, amendment or cancellation or
(2) there is a dissolution or liquidation of the Company or a transaction
described in § 13.1 or § 14.

 

§ 16.

MISCELLANEOUS

 

16.1         Shareholder
Rights. No Eligible Employee, Director or consultant shall have any rights
as a shareholder of the Company as a result of the grant of an Option or a
Stock Appreciation Right pending the actual delivery of the Stock subject to
such Option or Stock Appreciation Right to such Eligible Employee, Director or
consultant. An Eligible Employee’s, Director’s or consultant’s rights as a
shareholder in the shares of Stock which remain subject to forfeiture under
§ 9.2(b) shall be set forth in the related Stock Grant Certificate.

 

16.2         No
Contract of Employment. The grant of an Option or a Stock Appreciation
Right or a Stock Grant or Stock Unit Grant to an Eligible Employee, Director or
consultant under this Plan shall not constitute a contract of employment or a
right to continue to serve on the Board and shall not confer on an Eligible
Employee, Director or consultant any rights upon his or her termination of
employment or service in addition to those rights, if any, expressly set forth
in this Plan or the related Option Certificate, Stock Appreciation Right
Certificate, or Stock Grant Certificate.

 

16.3         Withholding.
Each Option, Stock Appreciation Right, Stock Grant and Stock Unit Grant shall
be made subject to the condition that the Eligible Employee, Director or
consultant consents to whatever action the Committee directs to satisfy the
minimum statutory federal and state tax withholding requirements, if any, which
the Company determines are applicable to the exercise of such Option or Stock

 

28

 

Appreciation Right or to the satisfaction of any forfeiture conditions
with respect to Stock subject to a Stock Grant or Stock Unit Grant issued in
the name of the Eligible Employee, Director or consultant. No withholding shall
be effected under this Plan which exceeds the minimum statutory federal and
state withholding requirements.

 

16.4         Construction.
All references to sections (§) are to sections (§) of this Plan unless
otherwise indicated. This Plan shall be construed under the laws of the State
of Delaware. Each term set forth in § 2 shall, unless otherwise stated,
have the meaning set forth opposite such term for purposes of this Plan and,
for purposes of such definitions, the singular shall include the plural and the
plural shall include the singular. Finally, if there is any conflict between
the terms of this Plan and the terms of any Option Certificate, Stock
Appreciation Right Certificate or Stock Grant Certificate, the terms of this
Plan shall control.

 

16.5         Other
Conditions. Each Option Certificate, Stock Appreciation Right Certificate
or Stock Grant Certificate may require that an Eligible Employee, Director or
consultant (as a condition to the exercise of an Option or a Stock Appreciation
Right or the issuance of Stock subject to a Stock Grant) enter into any
agreement or make such representations prepared by the Company, including
(without limitation) any agreement which restricts the transfer of Stock
acquired pursuant to the exercise of an Option or a Stock Appreciation Right or
a Stock Grant or provides for the repurchase of such Stock by the Company.

 

16.6         Rule
16b-3. The Committee shall have the right to amend any Option, Stock Grant
or Stock Appreciation Right to withhold or otherwise restrict the transfer of
any Stock or cash under this Plan to an Eligible Employee, Director or

 

29

 

consultant as the Committee deems appropriate in order to satisfy any
condition or requirement under Rule 16b-3 to the extent Rule 16 of the 1934 Act
might be applicable to such grant or transfer.

 

16.7         Coordination
with Employment Agreements and Other Agreements. If the Company enters into an employment
agreement or other agreement with an Eligible Employee, Director or consultant
which expressly provides for the acceleration in vesting of an outstanding
Option, Stock Appreciation Right, Stock Grant or Stock Unit Grant or for the
extension of the deadline to exercise any rights under an outstanding Option,
Stock Appreciation Right, Stock Grant or Stock Unit Grant, any such
acceleration or extension shall be deemed effected pursuant to, and in
accordance with, the terms of such outstanding Option, Stock Appreciation
Right, Stock Grant or Stock Unit Grant and this Plan even if such employment
agreement or other agreement is first effective after the date the outstanding
Option or Stock Appreciation Right was granted or the Stock Grant or Stock Unit
Grant was made.

 

30

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