Document:

OPTION AGREEMENT

Exhibit 10.1

Property Option Agreement

PROPERTY OPTION AGREEMENT

THIS PROPERTY OPTION AGREEMENT is dated for reference the 22nd day of February, 2005.

BETWEEN:

LARRY SOSTAD, a British Columbia resident with a business address at 818 – 470 Granville Street, Vancouver, British Columbia, V6C 1V5;

               (the "Optionor")

                                                          

OF THE FIRST PART

AND:

KATIE GOLD CORP., a Nevada corporation with its business address at 1400 – 1055 West Hastings Street, Vancouver, British Columbia, Canada V6E 2E9;

               ("KGC")

                                                             

OF THE SECOND PART

WHEREAS:

A.

The Optionor is the owner of an undivided 100% right, title and interest in and to mineral claims described in this Property Option Agreement (the “Agreement”);

B.

KGC wishes to acquire the option to acquire a 100% interest in the Optionor's property on the terms and subject to the conditions contained in this Agreement;

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows:

1.   DEFINITIONS

1.1

In this Agreement, the following terms will have the meaning set forth below:

(A)

"Exploration and Development" means any and all activities comprising or undertaken in connection with the exploration and development of the Property, the construction of a mine and mining facilities on or in proximity to the Property and placing the Property into commercial production;

(B)

"Property" means and includes:

(i)  the mining claims in the Nicola Mining District, British Columbia, Canada listed in Schedule “A” to this Agreement; and

(ii)

all rights and appurtenances pertaining to the mining claims listed in Schedule A, including all water and water rights, rights of way, and easements, both recorded and unrecorded, to which the Optionor is entitled;

  (C)

"Property Expenditures" means all reasonable and necessary monies expended on or in connection with Exploration and Development as determined in accordance with generally accepted accounting principles including, without limiting the generality of the foregoing:

(i)

the cost of entering upon, surveying, prospecting and drilling on the Property;

(ii)

the cost of any geophysical, geochemical and geological reports or surveys relating to the Property;

(iii)

all filing and other fees and charges necessary or advisable to keep the Property in good standing with any regulatory authorities having jurisdiction;

(iv) all rentals, royalties, taxes (exclusive of all income taxes and mining taxes based on income and which are or may be assessed against any of the parties hereto) and any assessments whatsoever, whether the same constitute charges on the Property or arise as a result of the operation thereon;

(v)

the cost, including rent and finance charges, of all buildings, machinery, tools, appliances and equipment and related capital items that may be erected, installed and used from time to time in connection with Exploration and Development;

(vi)

the cost of construction and maintenance of camps required for Exploration and Development;

(vii) the cost of transporting persons, supplies, machinery and equipment in connection with Exploration and Development;

(viii) all wages and salaries of persons engaged in Exploration and Development and any assessments or levies made under the authority of any regulatory body having jurisdiction with respect to such persons or supplying food, lodging and other reasonable needs for such persons;

(ix) all costs of consulting and other engineering services including report preparation;

(x) 

the cost of compliance with all statutes, orders and regulations respecting environmental reclamation, restoration and other like work required as a result of conducting Exploration and Development; and

(xi)

all costs of searching for, digging, working, sampling, transporting, mining and procuring diamonds, other minerals, ores, and metals from and out of the Property;

2.   OPTION

2.1

The Optionor hereby grants to KGC the exclusive right and option to acquire an undivided 100% right, title and interest in and to the Property (the "Option") for total consideration consisting of a 2.5% Net Smelter Return attached as Schedule "B" hereto, cash payments to the Optionor totaling US$5,000.00 due upon execution of this Agreement and the incurrence of Property Expenditures totaling US$200,000.00 to be made as follows:

(A)

by the first anniversary of this Agreement, the incurrence of Property Expenditures in the amount of US$20,000.00; and

(B)

by the second anniversary of this Agreement, the incurrence of Property Expenditures in the further amount of US$180,000.00 for total aggregate Property Expenditures of US$200,000.00 by the second anniversary of this Agreement, provided that any Property Expenditures incurred prior to first anniversary which are in excess of US$20,000.00 will be applied to the further required amount of US$180,000.00.

2.2 

The Property Expenditures as outlined in 2.1 (A) and/or (B) may be extended by six months by written request of KGC accompanied by the payment to the Optionor of 10% of the Property Expenditures still outstanding in the current anniversary year as an extension fee.

2.3

Upon making the cash payments and Property Expenditures as specified in Paragraph 2.1, KGC shall have acquired an undivided 100% right, title and interest in and to the Property.

2.4 

This Agreement is an option only and the doing of any act or the making of any payment by KGC shall not obligate KGC to do any further acts or make any further payments.

2.5

KGC will have the right to re-purchase 1.5% of the 2.5% Net Smelter Return from the Optionor prior to commercial production for US$2.5 million.

2.6

KGC, at its option, may terminate this Agreement by written notice to the Optionor and incur no further costs, if the Geological Report on the Property is not acceptable to warrant further expenditure or effort on the Property.

3.   TRANSFER OF TITLE

3.1 

Upon execution of this Agreement, KGC shall be entitled to record this Agreement against title to the Property.

3.2

Upon making the cash payments and Property Expenditures as specified in Paragraph 2.1, the Optionor shall deliver to KGC a duly executed bill of sale or quit claim deed and such other executed documents of transfer as required, in the opinion of KGC's lawyers, for the transfer of an undivided 100% interest in the Property to KGC.

4.  AREA OF INTEREST

4.1 

Any new claims staked by KGC within a 2 kilometer radius of the current existing or extended claim boundaries will be for the benefit of and held in trust for the Optionor. The terms of this Agreement will apply to such additional claims. If this Agreement terminates then KGC will return such additional claims to the Optionor and execute such documents of transfer as required.

5.  RIGHT OF ENTRY

5.1 

During the term of this Agreement, KGC, its servants, agents and workmen and any persons duly authorised by KGC, shall have the right of access to and from and to enter upon and take possession of  and  prospect, explore and develop the Property in such manner  as KGC in its sole discretion may deem advisable for the purpose of incurring Property Expenditures as contemplated by Section 2, and shall have the right to remove and ship therefrom ores, minerals, metals, or other products recovered in any manner therefrom.

6.   COVENANTS OF KGC

6.1 

KGC covenants and agrees that:

(A) during the term of this Agreement, KGC shall keep the Property clear of all liens, encumbrances and other charges and shall keep the Optionor indemnified in respect thereof;

(B) KGC shall carry on all operations on the Property in a good and workmanlike manner and in compliance with all applicable governmental regulations and restrictions including but not limited to the posting of any reclamation bonds as may be required by any governmental regulations or regulatory authorities;

(C) during the term of the option herein, KGC shall pay or cause to be paid any rates, taxes, duties, royalties, workers' compensation or other assessments or fees levied with respect to its operations thereon and in particular KGC shall pay the yearly claim maintenance payments necessary to maintain the claims in good standing;

(D) KGC shall maintain books of account in respect of its expenditures and operations on the Property and, upon reasonable notice, shall make such books available for inspection by representatives of the Optionor;

(E) KGC shall allow any duly authorised agent or representative of the Optionor to inspect the Property at reasonable times and intervals and upon reasonable notice given to KGC, provided however, that it is agreed and understood that any such agent or representative shall be at his own risk in respect of, and KGC shall not be liable for, any injury incurred while on the Property, howsoever caused;

(F) KGC shall allow the Optionor access at reasonable times to all maps, reports, sample results and other technical data prepared or obtained by KGC in connection with its operations on the Property;

(G) KGC shall indemnify and save the Optionor harmless of and from any and all costs, claims, loss and damages whatsoever incidental to or arising out of any work or operations carried out by or on behalf of KGC on the Property, including any liability of an environmental nature.

7.   REPRESENTATIONS AND WARRANTIES

7.1

The Optionor hereby represents and warrants that:

(A) the Property is in good standing with all regulatory authorities having jurisdictions and all required claim maintenance payments have been made;

(B) it has not done anything whereby the mineral claims comprising the Property may be in any way encumbered;

(C) it has full corporate power and authority to enter into this Agreement and the entering into of this Agreement does not conflict with any applicable laws or with its charter documents or any contract or other commitment to which it is party; and

(D) the execution of this Agreement and the performance of its terms have been duly authorised by all necessary corporate actions including the resolution of its Board of Directors.

7.2

KGC hereby represents and warrants that:

(A) it has full corporate power and authority to enter into this Agreement and the entering into of this Agreement does not conflict with any applicable laws or with its charter documents or any contract or other commitment to which it is party; and

(B) the execution of this Agreement and the performance of its terms have been duly authorised by all necessary corporate actions including the resolution of its Board of Directors.

8.   ASSIGNMENT

8.1

With the consent of the other party, which consent shall not be unreasonably withheld, KGC and the Optionor has the right to assign all or any part of its interest in this Agreement and or in the Property, subject to the terms and conditions of this Agreement.  It shall be a condition precedent to any such assignment that the assignee of the interest being transferred agrees to be bound by the terms of this Agreement, insofar as they are applicable.

9.   CONFIDENTIALITY OF INFORMATION

9.1 

Each of KGC and the Optionor shall treat all data, reports, records and other information of any nature whatsoever relating to this Agreement and the Property as confidential, except where such information must be disclosed for public disclosure requirements of a public company.

10.  TERMINATION

10.1 

Until such time as KGC has acquired an undivided 100% interest in the Property pursuant to Section 2, this Agreement shall terminate upon any of the following events:

(A) upon the failure of KGC to make a payment or incur Property Expenditures required by and within the time limits prescribed by Paragraph 2.1;

(B) in the event that KGC, not being at the time in default under any provision of this Agreement, gives 30 day's written notice to the Optionor of the termination of this Agreement;

(C) in the event that KGC shall fail to comply with any of its obligations hereunder, other than the obligations contained in Paragraph 2.1, and subject to Paragraph 11.1,  and within 30 days of receipt by KGC of written notice from the Optionor of such default, KGC has not:

(i) cured such default, or commenced proceedings to cure such default and prosecuted same to completion without undue delay; or

(ii) given the Optionor notice that it denies that such default has occurred.

(D) delivery of notice of termination by KGC pursuant to Paragraph 2.6 in the event the Geological Report is not acceptable.

In the event that KGC gives notice that it denies that a default has occurred, KGC shall not be deemed in default until the matter shall have been determined finally through such means of dispute resolution as such matter has been subjected to by either party.

10.2 

Upon termination of this Agreement under Paragraph 10.1, KGC shall:

(A) transfer any interest in title to the Property, in good standing to the Optionor free and clear of all liens, charges, and encumbrances;

(B) turn over to the Optionor copies of all maps, reports, sample results, contracts and other data and documentation in the possession of KGC or, to the extent within KGC's control, in the possession of its agents, employees or  independent contractors, in connection with its operations on the Property; and

(C) ensure that the Property is in a safe condition and complies with all environmental and safety standards imposed by any duly authorized regulatory authority.

10.3

Upon the termination of this Agreement under Paragraph 10.1, KGC shall cease to be liable to the Optionor in debt, damages or otherwise save for the performance of those of its obligations which theretofore should have been performed, including those obligations in Paragraph 10.2.

10.4

Upon termination of this Agreement, KGC shall vacate the Property within a reasonable time after such termination, but shall have the right of access to the Property for a period of six months thereafter for the purpose of removing its chattels, machinery, equipment and fixtures.

11.  FORCE MAJEURE

11.1

The time for performance of any act or making any payment or any expenditure required under this Agreement shall be extended by the period of any delay or inability to perform due to fire, strikes, labour disturbances, riots, civil commotion, wars, acts of God, any present or future law or governmental regulation, any shortages of labour, equipment or materials, or any other cause not reasonably within the control of the party in default, other than lack of finances.

12.  REGULATORY APPROVAL

12.1

If this Agreement is subject to the prior approval of any securities regulatory bodies, then the parties shall use their best efforts to obtain such regulatory approvals.

13.  NOTICES

13.1

Any notice, election, consent or other writing required or permitted to be given hereunder shall be deemed to be sufficiently given if delivered or mailed postage prepaid or if given by telegram, telex or telecopier, addressed as follows:

In the case of the Optionor:      Larry Sostad

818 - 470 Granville Street

Vancouver BC

Canada V6C 1V5

                                 Telecopier: (604) 904-2432

In the case of KGC:  

Katie Gold Corp

                                   

#1400 - 1055 West Hastings Street

                       

            

Vancouver, BC

                                   

Canada V6E 2E9

Attn: President

Telecopier: (604) 443-7000

and any such notice given as aforesaid shall be deemed to have been  given to the  parties hereto if delivered, when delivered, or if mailed, on  the third  business  day  following the date of mailing,  or,  if  telegraphed, telexed or telecopied, on the same day as the telegraphing, telexing or telecopying thereof PROVIDED HOWEVER that during the period of  any  postal interruption in Canada any notice given hereunder by mail shall  be  deemed to have been given only as of the date of actual delivery of the same. Any party may from time to time by notice in writing change its address for the purposes of this Paragraph 13.1.

14.  GENERAL TERMS AND CONDITIONS

14.1

The parties hereto hereby covenant and agree that they will execute such further agreements, conveyances and assurances as may be requisite, or which counsel for the parties may deem necessary to effectually carry out the intent of this Agreement.

14.2 

This Agreement shall constitute the entire agreement between the parties with respect to the Property.  No representations or inducements have been made save as herein set forth.  No changes, alterations or modifications of this Agreement shall be binding upon either party until and unless a memorandum in writing to such effect shall have been signed by all parties hereto.  This Agreement shall supersede all previous written, oral or implied understandings between the parties with respect to the matters covered hereby.

14.3 

Time shall be of the essence of this Agreement.

14.4 

The titles to the sections in this Agreement shall not be deemed to form part of this Agreement but shall be regarded as having been used for convenience of reference only.

14.5 

Unless otherwise noted, all currency references contained in this Agreement shall be deemed to be references to United States funds.

14.6 

Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision shall be prohibited by or be invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

14.7 

The Schedules to this Agreement shall be construed with and as an integral part of this Agreement to the same extent as if they were set forth verbatim herein.

14.8 

Defined terms contained in this Agreement shall have the same meanings where used in the Schedules.

14.9

This Agreement shall be governed by and interpreted in accordance with the laws of British Columbia and the laws of Canada applicable therein.

14.10

This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns.

WITNESS WHEREOF this Agreement has been executed by the parties hereto as of the day and year first above written.

/s/ Vicki Arnott

/s/ Larry Sostad

______________________________

______________________________

Witness

Larry Sostad

Vicki Arnott

______________________________

Name of Witness

1400 – 1055 West Hastings St.

______________________________

Address

Vancouver BC V6E 2E9

______________________________

KATIE GOLD CORP.

by its authorised signatory:

/s/ Robert Biagioni

______________________________

Signature of Authorised Signatory

Robert A. Biagioni, C.A.

______________________________

Name of Authorised Signatory

President

______________________________

Position of Authorised Signatory

SCHEDULE "A"

PROPERTY DESCRIPTION

 

Conglin Claims

Map 92H-078

                Nicola Mining District

                British Columbia

                Canada

List of Claims

CLAIM   TENURE #     AREA                    CURRENT EXPIRY DATE

Conglin-1  416550        25.0 Hectares    

     November 23, 2005

Conglin-2  416551        25.0 Hectares           November 23, 2005

Conglin-3  416552        25.0 Hectares           November 23, 2005

Conglin-4  416553        25.0 Hectares           November 23, 2005

Conglin-5  416554        25.0 Hectares           November 23, 2005

Conglin-6  416555        25.0 Hectares           November 23, 2005

SCHEDULE "B"

NET SMELTER RETURNS

For the purposes of this agreement, the term "Net Smelter Returns" shall mean the net proceeds actually paid to KGC from the sale by KGC of minerals mined and removed from the Property, after deduction of the following:

     (a)  smelting costs, treatment charges and penalties including, but not being limited to, metal losses, penalties for impurities and charges for refining, selling and handling by the smelter, refinery or other purchaser; provided, however, in the case of leaching operations or other solution mining or beneficiation techniques, where the metal being treated is precipitated or otherwise directly derived from such leach solution, all processing and recovery costs incurred by KGC, beyond the point at which the metal being treated is in solution, shall be considered as treatment charges;

     (b)  costs of handling, transporting and insuring ores, minerals and other materials or concentrates from the Property or from a concentrator, whether situated on or off the Property, to a smelter, refinery or other place of treatment; and

     (c)  ad valorem taxes and taxes based upon production, but not income taxes.

In the event KGC commingles minerals from the Property with minerals from other properties, KGC shall establish procedures, in accordance with sound mining and metallurgical techniques, for determining the proportional amount of the total recoverable metal content in the commingled minerals attributable to the input from each of the properties by calculating the same on a metallurgical basis, in accordance with sampling schedules and mining efficiency experience, so that production royalties applicable to minerals produced from the Property may reasonably be determined.Exhibit 10.1

 

 

AMENDED AND
RESTATED ACCELLENT INC.

 

2000 STOCK OPTION AND INCENTIVE PLAN

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  PURPOSE

  	
  1

  
	
  2.

  	
  DEFINITIONS

  	
  1

  
	
  3.

  	
  ADMINISTRATION OF THE PLAN

  	
  4

  
	
   

  	
  3.1.

  	
  Board

  	
  4

  
	
   

  	
  3.2.

  	
  Committee

  	
  4

  
	
   

  	
  3.3.

  	
  Grants

  	
  4

  
	
   

  	
  3.4.

  	
  No Liability

  	
  5

  
	
  4.

  	
  STOCK SUBJECT TO THE PLAN

  	
  5

  
	
  5.

  	
  EFFECTIVE DATE AND TERM OF THE
  PLAN

  	
  5

  
	
   

  	
  5.1.

  	
  Effective
  Date

  	
  5

  
	
   

  	
  5.2.

  	
  Term

  	
  5

  
	
  6.

  	
  OPTION
  GRANTS

  	
  6

  
	
   

  	
  6.1.

  	
  Employees;
  Service Providers; or Other Persons

  	
  6

  
	
   

  	
  6.2.

  	
  Successive
  Grants

  	
  6

  
	
  7.

  	
  LIMITATIONS ON GRANTS

  	
  6

  
	
   

  	
  7.1.

  	
  Limitations
  on Incentive Stock Options

  	
  6

  
	
   

  	
  7.2.

  	
  Limitation
  on Shares of Stock Subject to Grants

  	
  6

  
	
  8.

  	
  AWARD
  AGREEMENT

  	
  6

  
	
  9.

  	
  OPTION
  PRICE

  	
  7

  
	
  10.

  	
  VESTING, TERM AND EXERCISE OF
  OPTIONS

  	
  7

  
	
   

  	
  10.1.

  	
  Vesting
  and Option Period

  	
  7

  
	
   

  	
  10.2.

  	
  Term

  	
  7

  
	
   

  	
  10.3.

  	
  Acceleration

  	
  7

  
	
   

  	
  10.4.

  	
  Termination
  of Employment or Other Relationship

  	
  8

  
	
   

  	
  10.5.

  	
  Rights in
  the Event of Death

  	
  8

  
	
   

  	
  10.6.

  	
  Rights in
  the Event of Disability

  	
  8

  
	
   

  	
  10.7.

  	
  Limitations
  on Exercise of Option

  	
  9

  
	
   

  	
  10.8.

  	
  Method of
  Exercise

  	
  9

  
	
   

  	
  10.9.

  	
  Delivery
  of Stock Certificates

  	
  10

  
	
  11.

  	
  TRANSFERABILITY OF OPTIONS

  	
  10

  
	
   

  	
  11.1.

  	
  Transferability
  of Options

  	
  10

  
	
   

  	
  11.2.

  	
  Transfers

  	
  10

  
	
   

  	
   

  	
  11.2.1.

  	
  Family
  Transfers

  	
  10

  
	
   

  	
   

  	
  11.2.2.

  	
  Reserved

  	
  10

  
	
  12.

  	
  RESTRICTED STOCK AND RESTRICTED
  STOCK UNITS

  	
  10

  
	
   

  	
  12.1.

  	
  Grant of
  Restricted Stock or Restricted Stock Units

  	
  10

  
	
   

  	
  12.2.

  	
  Restrictions

  	
  11

  
	
   

  	
  12.3.

  	
  Restricted
  Stock Certificates

  	
  11

  
	
   

  	
  12.4.

  	
  Rights of
  Holders of Restricted Stock

  	
  11

  

 

 

	
   

  	
  12.5.

  	
  Rights of
  Holders of Restricted Stock Units

  	
  11

  
	
   

  	
  12.6.

  	
  Termination
  of Employment or Other Relationship

  	
  12

  
	
   

  	
  12.7.

  	
  Rights in
  the Event of Death

  	
  12

  
	
   

  	
  12.8.

  	
  Rights in
  the Event of Disability

  	
  12

  
	
   

  	
  12.9.

  	
  Delivery
  of Stock and Payment Therefor

  	
  12

  
	
  13.

  	
  NONTRANSFERABILITY OF SHARES;
  REPURCHASE RIGHTS

  	
  13

  
	
   

  	
  13.1.

  	
  Nontransferability of Shares

  	
  13

  
	
   

  	
  13.2.

  	
  Repurchase Rights

  	
  13

  
	
   

  	
  13.3.

  	
  Installment
  Payments

  	
  14

  
	
   

  	
  13.4.

  	
  Publicly
  Traded Stock

  	
  14

  
	
   

  	
  13.5.

  	
  Legend

  	
  14

  
	
  14.

  	
  CERTAIN PROVISIONS APPLICABLE TO
  AWARDS

  	
  14

  
	
   

  	
  14.1.

  	
  Stand-Alone,
  Additional, Tandem, and Substitute Grants

  	
  14

  
	
   

  	
  14.2.

  	
  Term of
  Grant

  	
  15

  
	
   

  	
  14.3.

  	
  Form and
  Timing of Payment Under Grants; Deferrals

  	
  15

  
	
  15.

  	
  PARACHUTE LIMITATIONS

  	
  15

  
	
  16.

  	
  REQUIREMENTS
  OF LAW

  	
  16

  
	
   

  	
  16.1.

  	
  General.

  	
  16

  
	
   

  	
  16.2.

  	
  Rule 16b-3

  	
  16

  
	
  17.

  	
  AMENDMENT AND TERMINATION OF
  THE PLAN

  	
  17

  
	
  18.

  	
  EFFECT OF CHANGES IN
  CAPITALIZATION

  	
  17

  
	
   

  	
  18.1.

  	
  Changes in
  Stock

  	
  17

  
	
   

  	
  18.2.

  	
  Reorganization
  in Which the Company Is the Surviving Entity and in Which No Change of
  Control Occurs

  	
  17

  
	
   

  	
  18.3.

  	
  Reorganization,
  Sale of Assets or Sale of Stock Which Involves a Change of Control

  	
  18

  
	
   

  	
  18.4.

  	
  Adjustments

  	
  18

  
	
   

  	
  18.5.

  	
  No Limitations
  on Company

  	
  18

  
	
  19.

  	
  DISCLAIMER
  OF RIGHTS

  	
  19

  
	
  20.

  	
  NONEXCLUSIVITY OF THE PLAN

  	
  19

  
	
  21.

  	
  WITHHOLDING
  TAXES

  	
  19

  
	
  22.

  	
  CAPTIONS

  	
  20

  
	
  23.

  	
  OTHER
  PROVISIONS

  	
  20

  
	
  24.

  	
  NUMBER
  AND GENDER

  	
  20

  
	
  25.

  	
  SEVERABILITY

  	
  20

  
	
  26.

  	
  POOLING

  	
  20

  
	
  27.

  	
  GOVERNING
  LAW

  	
  20

  
	
  28.

  	
  BLUE
  SKY PROVISIONS

  	
  21

  
	
   

  	
  28.1.

  	
  California
  Provisions

  	
  21

  
	
   

  	
  28.2.

  	
  Limitations
  on Grants to Non-Employees

  	
  22

  

 

 

AMENDED AND RESTATED ACCELLENT INC.

 

2000 STOCK OPTION AND INCENTIVE PLAN

 

Accellent Inc., a
Maryland corporation (the “Company”), sets forth herein the terms of its
Amended and Restated 2000 Stock Option and Incentive Plan (the “Plan”) as
follows:

 

1.                            PURPOSE

 

The Plan is intended to enhance the Company’s and its
affiliates’ (as defined herein) ability to attract and retain highly qualified
officers, directors, key employees, and other persons, and to motivate such
officers, directors, key employees, and other persons to serve the Company and
its affiliates and to expend maximum effort to improve the business results and
earnings of the Company, by providing to such officers, key employees and other
persons an opportunity to acquire or increase a direct proprietary interest in
the operations and future success of the Company.  To this end, the Plan provides for the grant
of stock options, restricted stock and restricted stock units in accordance
with the terms hereof.  Stock options
granted under the Plan may be non-qualified stock options or incentive stock
options, as provided herein.

 

2.                            DEFINITIONS

 

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

 

2.1           “affiliate” of, or person “affiliated”
with, a person means any company or other trade or business that controls, is
controlled by or is under common control with such person within the meaning of
Rule 405 of Regulation C under the Securities Act, including, without
limitation, any Subsidiary.

 

2.2           “Award Agreement” means the stock
option agreement, restricted stock agreement, restricted stock unit agreement
or other written agreement between the Company and a Grantee that evidences and
sets out the terms and conditions of a Grant.

 

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

 

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

 

2.5           “Change of Control” means (i) the
dissolution or liquidation of the Company or a merger, consolidation, or
reorganization of the Company with one or more other entities in which the
Company is not the surviving entity, (ii) a sale of substantially all of the
assets of the Company to another entity, or (iii) any transaction (including
without limitation a merger or reorganization in which the Company is the
surviving entity) which results in any person or entity (other than persons who
are shareholders or affiliates of the Company at the time the Plan is approved
by the Company’s shareholders) owning 80% or more of the combined voting power
of all classes of stock of the Company.

 

1

 

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

 

2.7           “Committee” means a committee of, and
designated from time to time by resolution of, the Board, which shall consist
of no fewer than two members of the Board, none of whom shall be an officer or
other salaried employee of the Company or any affiliate of the Company.

 

2.8           “Company” means Accellent Inc.

 

2.9           “Effective Date” means February 3,
2000, the date the Plan is approved by the Board.

 

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

 

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

 

2.12         “Family Member” means a person who is a
spouse, child, stepchild, grandchild, parent, stepparent, grandparent, niece,
nephew, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, of the
Grantee, any person sharing the Grantee’s household (other than a tenant or
employee), a trust in which these persons have more than fifty percent of the
beneficial interest, a foundation in which these persons (or the Grantee)
control the management of assets, and any other entity in which these persons
(or the Grantee) own more than fifty percent of the voting interests.

 

2.13         “Grant” means an award of an Option,
Restricted Stock or Restricted Stock Units under the Plan.

 

2.14         “Grant Date” means, as determined by
the Board or authorized Committee, (1) the date as of which the Board or such
Committee approves a Grant, (ii) the date on which the recipient of a Grant
first becomes eligible to receive a Grant under Section 6
hereof, or (iii) such other date as may be specified by the Board or such
Committee.

 

2.15         “Grantee” means a person who receives
or holds an Option, Restricted Stock or Restricted Stock Units under the Plan.

 

2

 

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

 

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

 

2.18         “Option Period” means the period during
which Options may be exercised as set forth in Section 10 hereof.

 

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

 

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

 

2.21         “Plan” means this Amended and Restated
Accellent Inc. 2000 Stock Option and Incentive Plan.

 

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

 

2.23         “Restricted Period” means the period
during which Restricted Stock or Restricted Stock Units are subject to
restrictions or conditions pursuant to Section 12.2 hereof.

 

2.24         “Restricted Stock” means shares of
Stock, awarded to a Grantee pursuant to Section 12 hereof,
that are subject to restrictions and to a risk of forfeiture.

 

2.25         “Restricted Stock Unit” means a unit
awarded to a Grantee pursuant to Section 12 hereof,
which represents a conditional right to receive a share of Stock in the future,
and which is subject to restrictions and to a risk of forfeiture.

 

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

 

2.27         “Service Provider” means a director,
consultant or adviser to the Company or a Subsidiary, as such persons may be
designated from time to time by the Board pursuant to Section 6
hereof.

 

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

 

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

 

2.30         “Termination Date” means the date upon
which an Option shall terminate or expire, as set forth in Section 10.2
hereof.

 

3

 

3.                            ADMINISTRATION OF THE PLAN

 

3.1.                            Board.

 

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

 

3.2.                            Committee.

 

The
Board from time to time may delegate to a Committee such powers and authorities
related to the administration and implementation of the Plan, as set forth in Section 3.1 above and in other applicable provisions, as the
Board shall determine, consistent with the certificate of incorporation and
by-laws of the Company and applicable law. 
In the event that the Plan, any Grant or any Award Agreement entered
into hereunder provides for any action to be taken by or determination to be
made by the Board, such action may be taken by or such determination may be
made by the Committee if the power and authority to do so has been delegated to
the Committee by the Board as provided for in this Section.  Unless otherwise expressly determined by the
Board, any such action or determination by the Committee shall be final, binding
and conclusive.  As permitted by law, the
Committee may delegate its authority under the Plan to a member of the Board or
an executive officer of the Company who is a member of the Board.

 

3.3.                            Grants.

 

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

 

4

 

Grantees to return to the Company Grants previously
awarded under the Plan.  Subject to the
terms and conditions of the Plan, any such subsequent Grant shall be upon such
terms and conditions as are specified by the Board at the time the new Grant is
made.  The Company may retain the right
in an Award Agreement to cause a forfeiture of the gain realized by a Grantee
on account of actions taken by the Grantee in violation or breach of or in
conflict with any non-competition agreement, any agreement prohibiting
solicitation of employees or clients of the Company or any affiliate thereof or any confidentiality obligation with respect to
the Company or any affiliate thereof or
otherwise in competition with the Company, to the extent specified in such
Award Agreement applicable to the Grantee. 
Furthermore, the Company may annul a Grant if the Grantee is an employee
of the Company or an affiliate thereof and is terminated “for cause” as defined
in the applicable Award Agreement.  The
Board may permit or require the deferral of any award payment, subject to such
rules and procedures as it may establish, which may include provisions for the
payment or crediting of interest or dividend equivalents, including converting
such credits into deferred Stock equivalents.

 

3.4.                            No Liability.

 

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

 

4.                            STOCK SUBJECT TO THE PLAN

 

Subject
to adjustment as provided in Section 18
hereof, the number of shares of Stock available for issuance under the Plan
shall be 3,850,000.  Stock issued or to
be issued under the Plan shall be authorized but unissued shares.  If any shares covered by Grant are not
purchased or are forfeited, or if a Grant otherwise terminates without delivery
of any Stock subject thereto, then the number of shares of Stock counted
against the aggregate number of shares available under the Plan with respect to
such Grant shall, to the extent of any such forfeiture or termination, again be
available for making Grants under the Plan.

 

5.                            EFFECTIVE DATE AND TERM OF THE
PLAN

 

5.1.                            Effective Date.

 

The
Plan shall be effective as of the Effective Date, subject to approval of the
Plan within one year of the Effective Date, by a majority of the votes cast on
the proposal at a meeting of shareholders, provided that a quorum is present or
by the written consent of the holders of a majority of the Company’s shares of
Stock entitled to vote.  Upon approval of
the Plan by the shareholders of the Company as set forth above, all Grants made
under the Plan on or after the Effective Date shall be fully effective as if
the shareholders of the Company had approved the Plan on the Effective
Date.  If the shareholders fail to
approve the Plan within one year after the Effective Date, any Grants made
hereunder shall be null and void and of no effect.

 

5.2.                            Term.

 

The
Plan has no termination date; however, no Incentive Stock Option may be granted
under the Plan on or after the tenth anniversary of the Effective Date.

 

5

 

6.                            OPTION GRANTS

 

6.1.                            Employees; Service Providers; or
Other Persons.

 

Grants
(including Grants of Incentive Stock Options, subject to Section 7.1) may be made under the Plan to
any employee, officer or director of, or other Service Provider providing
services to the Company or any Subsidiary, including any such employee who is
an officer or director of the Company or of any Subsidiary, as the Board shall
determine and designate from time to time.

 

6.2.                            Successive Grants.

 

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

 

7.                            LIMITATIONS ON GRANTS

 

7.1.                            Limitations on Incentive Stock
Options.

 

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

 

7.2.                            Limitation on Shares of Stock
Subject to Grants

 

During any time when the
Company has a class of equity security registered under Section 12 of the
Exchange Act, the maximum number of shares of Stock subject to Options that can
be awarded under the Plan to any person eligible for a Grant under Section 6
hereof is FORTY THOUSAND (40,000) per year.

 

8.                            AWARD AGREEMENT

 

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

 

6

 

9.                            OPTION PRICE

 

The Option Price of each Option shall be fixed by the
Board and stated in the Award Agreement evidencing such Option.  In the case of an Incentive Stock Option the
Option Price shall be not less than the Fair Market Value on the Grant Date of
a share of Stock; provided, however, that in the event that a Grantee would
otherwise be ineligible to receive an Incentive Stock Option by reason of the
provisions of Sections 422(b)(6) and 424(d) of the Code (relating to ownership
of more than ten percent of the Company’s outstanding shares of Stock), the
Option Price of an Option granted to such Grantee that is intended to be an
Incentive Stock Option shall be not less than the greater of the par value or
110 percent of the Fair Market Value of a share of Stock on the Grant Date. In
no case shall the Option Price of any Option be less than the par value of a
share of Stock.

 

10.                     VESTING, TERM AND EXERCISE OF
OPTIONS

 

10.1.                     Vesting and Option Period.

 

Subject
to Sections 10.2 and 18.3 hereof, each Option granted under the Plan shall become
exercisable at such times and under such conditions as shall be determined by
the Board and stated in the Award Agreement. 
For purposes of this Section 10.1,
fractional numbers of shares of Stock subject to an Option shall be rounded
down to the next nearest whole number. 
The period during which any Option shall be exercisable shall constitute
the “Option Period” with respect to such Option.

 

10.2.                     Term.

 

Each
Option granted under the Plan shall terminate, and all rights to purchase
shares of Stock thereunder shall cease, upon the expiration of ten years from
the date such Option is granted, or under such circumstances and on such date
prior thereto as is set forth in the Plan or as may be fixed by the Board and
stated in the Award Agreement relating to such Option; provided, however, that
in the event that the Grantee would otherwise be ineligible to receive an
Incentive Stock Option by reason of the provisions of Sections 422(b)(6) and
424(d) of the Code (relating to ownership of more than ten percent of the
outstanding shares of Stock), an Option granted to such Grantee that is
intended to be an Incentive Stock Option shall not be exercisable after the
expiration of five years from its Grant Date.

 

10.3.                     Acceleration.

 

Any
limitation on the exercise of an Option contained in any Award Agreement may be
rescinded, modified or waived by the Board, in its sole discretion, at any time
and from time to time after the Grant Date of such Option, so as to accelerate
the time at which the Option may be exercised. 
Notwithstanding any other provision of the Plan, no Option shall be
exercisable in whole or in part prior to the date the Plan is approved by the shareholders
of the Company as provided in Section 5.1
hereof.

 

7

 

10.4.                     Termination of Employment or Other
Relationship.

 

Unless otherwise
provided by the Board, upon the termination of a Grantee’s employment or other
relationship with the Company or any affiliate other than by reason of death or
“permanent and total disability” (within the meaning of Section 22(e)(3) of the
Code), any Option or portion thereof held by such Grantee that has not vested
in accordance with the provisions of Section 10.1 hereof
shall terminate immediately, and any Option or portion thereof that has vested
in accordance with the provisions of Section 10.1
hereof but has not been exercised shall terminate at the close of business on
the 90th day following the Grantee’s termination of employment or other
relationship (or, if such 90th day is a Saturday, Sunday or holiday, at the
close of business on the next preceding day that is not a Saturday, Sunday or
holiday).  Upon termination of an Option
or portion thereof, the Grantee shall have no further right to purchase shares
of Stock pursuant to such Option or portion thereof.  Whether a termination of employment or other
relationship shall have occurred for purposes of the Plan shall be determined
by the Board, which determination shall be final and conclusive.  For purposes of the Plan, a termination of
employment, service or other relationship shall not be deemed to occur if the
Grantee is immediately thereafter a director of the Company or an affiliate.

 

10.5.                     Rights in the Event of Death.

 

Unless
otherwise provided by the Board, if a Grantee dies while employed by or
providing services to the Company, any Option or portion thereof held by such
Grantee that has not vested in accordance with the provisions of Section 10.1 hereof shall terminate, and the executors or
administrators or legatees or distributees of such Grantee’s estate shall have
the right, at any time within one year after the date of such Grantee’s death
and prior to termination of the Option pursuant to Section 10.2
above, to exercise any Option or portion thereof that has vested as
of the date of such Grantee’s death.

 

10.6.                     Rights in the Event of Disability.

 

Unless
otherwise provided by the Board, if a Grantee’s employment or other
relationship with the Company or an affiliate is terminated by reason of the “permanent
and total disability” (within the meaning of Section 22(e)(3) of the Code) of
such Grantee, any Option or portion thereof held by such Grantee that has not
vested in accordance with the provisions of Section 10.1
hereof shall terminate, and the Grantee shall have the right, at any time
within one year after the date of such Grantee’s permanent and total disability
and prior to termination of the Option pursuant to Section 10.2
above, to exercise any Option or portion thereof that has vested as
of the date of such Grantee’s termination. 
Whether a termination of employment or service is to be considered by
reason of “permanent and total disability” for purposes of the Plan shall be
determined by the Board, which determination shall be final and conclusive.

 

8

 

10.7.                     Limitations on Exercise of Option.

 

Notwithstanding
any other provision of the Plan, in no event may any Option be exercised, in
whole or in part, prior to the date the Plan is approved by the shareholders of
the Company as provided herein, or after ten years following the date upon
which the Option is granted, or after the occurrence of an event referred to in
Section 18 hereof which results in
termination of the Option.

 

10.8.                     Method of Exercise.

 

An Option that is
exercisable may be exercised by the Grantee’s delivery to the Company of
written notice of exercise on any business day, at the Company’s principal
office, addressed to the attention of the Board.  Such notice shall specify the number of
shares of Stock with respect to which the Option is being exercised and shall
be accompanied by payment in full of the Option Price of the shares for which the
Option is being exercised.  The minimum
number of shares of Stock with respect to which an Option may be exercised, in
whole or in part, at any time shall be the lesser of (i) 100 shares or such
lesser number set forth in the applicable Award Agreement and (ii) the maximum
number of shares available for purchase under the Option at the time of
exercise.  Payment of the Option Price
for the shares purchased pursuant to the exercise of an Option shall be made
(i) in cash or in cash equivalents acceptable to the Company; (ii) to the
extent permitted by law and at the Board’s discretion, through the tender to
the Company of shares of Stock, which shares, if acquired from the Company,
shall have been held for at least six months at the time of tender and which
shall be valued, for purposes of determining the extent to which the Option
Price has been paid thereby, at their Fair Market Value on the date of
exercise; (iii) to the extent permitted by law and at the Board’s discretion,
through the withholding of shares of Stock otherwise issuable upon the exercise
of the Option, for purposes of determining the extent to which the Option Price
has been paid thereby, at their Fair Market Value on the date of exercise; or
(iv) to the extent permitted by law and at the Board’s discretion, by a
combination of the methods described in (i), (ii) and (iii).

 

From and after the
time the shares of Stock become publicly traded with the meaning of Section 13.4, payment in full of the Option Price need not
accompany the written notice of exercise provided that the notice of exercise
directs that the certificate or certificates for the shares of Stock for which
the Option is exercised be delivered to a licensed broker acceptable to the
Company as the agent for the individual exercising the Option and, at the time
such certificate or certificates are delivered, the broker tenders to the
Company cash (or cash equivalents acceptable to the Company) equal to the
Option Price for the shares of Stock purchased pursuant to the exercise of the
Option plus the amount (if any) of federal and/or other taxes which the Company
may in its judgment, be required to withhold with respect to the exercise of
the Option.  An attempt to exercise any
Option granted hereunder other than as set forth above shall be invalid and of
no force and effect.  Unless otherwise
stated in the applicable Award Agreement, an individual holding or exercising
an Option shall have none of the rights of a shareholder (for example, the right
to receive cash or dividend payments or distributions attributable to the
subject shares of Stock or to direct the voting of the subject shares of Stock)
until the shares of Stock covered thereby are fully paid and issued to such
individual.  Except as provided in Section 18 hereof, no adjustment shall be made for
dividends, distributions or other rights for which the record date is prior to
the date of such issuance.

 

9

 

10.9.                     Delivery of Stock Certificates.

 

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

 

11.                     TRANSFERABILITY OF OPTIONS

 

11.1.                     Transferability of Options

 

Except as provided
in Section 11.2, during the lifetime of a
Grantee, only the Grantee (or, in the event of legal incapacity or
incompetency, the Grantee’s guardian or legal representative) may exercise an
Option.  Except as provided in Section 11.2, no Option shall be assignable or transferable
by the Grantee to whom it is granted, other than by will or the laws of descent
and distribution.

 

11.2.                     Transfers.

 

11.2.1.           Family Transfers

 

If authorized in
the applicable Award Agreement, a Grantee may transfer, not for value, all or
part of an Option which is not an Incentive Stock Option to any Family
Member.  For the purpose of this Section 11.2, a “not for value” transfer is a transfer which
is (i) a gift, (ii) a transfer under a domestic relations order in settlement
of marital property rights; or (iii) a transfer to an entity in which more than
fifty percent of the voting interests are owned by Family Members (or the
Grantee) in exchange for an interest in that entity.  Following a transfer under this Section 11.2, any such Option shall continue to be subject
to the same terms and conditions as were applicable immediately prior to
transfer.  Subsequent transfers of
transferred Options are prohibited except to Family Members of the original
Grantee in accordance with this Section  11.2 or by will or the laws of descent and
distribution.  The events of termination
of employment or other relationship of Section 10.4
hereof shall continue to be applied with respect to the original Grantee,
following which the Option shall be exercisable by the transferee only to the
extent, and for the periods specified in Sections 10.4, 10.5, or 10.6.

 

11.2.2.           Reserved

 

[Reserved]

 

12.                     RESTRICTED STOCK AND RESTRICTED
STOCK UNITS

 

12.1.                     Grant of Restricted Stock or
Restricted Stock Units.

 

The
Board may from time to time grant Restricted Stock or Restricted Stock Units to
persons eligible to receive Grants under Section 6
hereof, subject to such restrictions, conditions and other terms as the Board
may determine.

 

10

 

12.2.                     Restrictions.

 

At the time a
Grant of Restricted Stock or Restricted Stock Units is made, the Board shall
establish a period of time (the “Restricted Period”) applicable to such
Restricted Stock or Restricted Stock Units. 
Each Grant of Restricted Stock or Restricted Stock Units may be subject
to a different Restricted Period.  The
Board may, in its sole discretion, at the time a Grant of Restricted Stock or
Restricted Stock Units is made, prescribe restrictions in addition to or other
than the expiration of the Restricted Period, including the satisfaction of
corporate or individual performance objectives, which may be applicable to all
or any portion of the Restricted Stock or Restricted Stock Units.  Such performance objectives shall be
established in writing by the Board prior to the ninetieth day of the year in
which the Grant is made and while the outcome is substantially uncertain.  Performance objectives shall be based on a
number of factors including, but not limited to, Stock price, market share,
sales, earnings per share, return on equity or costs.  Performance objectives may include positive
results, maintaining the status quo or limiting economic losses.  Subject to the fourth sentence of this Section 12.2, the Board also may, in its sole discretion,
shorten or terminate the Restricted Period or waive any other restrictions
applicable to all or a portion of the Restricted Stock or Restricted Stock
Units.  Neither Restricted Stock nor
Restricted Stock Units may be sold, transferred, assigned, pledged or otherwise
encumbered or disposed of during the Restricted Period or prior to the
satisfaction of any other restrictions prescribed by the Board with respect to
such Restricted Stock or Restricted Stock Units.

 

12.3.                     Restricted Stock Certificates.

 

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

 

12.4.                     Rights of Holders of Restricted
Stock.

 

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

 

12.5.                     Rights of Holders of Restricted
Stock Units.

 

Unless
the Board otherwise provides in an Award Agreement, holders of Restricted Stock
Units shall have no rights as stockholders of the Company.  The Board may provide in an Award

 

11

 

Agreement
evidencing a Grant of Restricted Stock Units that the holder of such Restricted
Stock Units shall be entitled to receive, upon the Company’s payment of a cash
dividend on its outstanding Stock, a cash payment for each Restricted Stock
Unit held equal to the per-share dividend paid on the Stock.  Such Award Agreement may also provide that
such cash payment will be deemed reinvested in additional Restricted Stock
Units at a price per unit equal to the Fair Market Value of a share of Stock on
the date that such dividend is paid.

 

12.6.                     Termination of Employment or Other
Relationship.

 

Unless
otherwise provided by the Board, upon the termination of a Grantee’s employment
or other relationship with the Company or an affiliate other than by reason of
death or “permanent and total disability” (within the meaning of Section
22(e)(3) of the Code), any shares of Restricted Stock or Restricted Stock Units
held by such Grantee that have not vested, or with respect to which all
applicable restrictions and conditions have not lapsed, shall immediately be
deemed forfeited.  Upon forfeiture of
Restricted Stock or Restricted Stock Units, the Grantee shall have no further
rights with respect to such Grant, including but not limited to any right to
vote Restricted Stock or any right to receive dividends with respect to shares
of Restricted Stock or Restricted Stock Units. 
Whether a termination of employment or other relationship shall have
occurred for purposes of the Plan shall be determined by the Board, which
determination shall be final and conclusive. 
For purposes of the Plan, a termination of employment, service or other
relationship shall not be deemed to occur if the Grantee is immediately
thereafter a director of the Company or an affiliate.

 

12.7.                     Rights in the Event of Death.

 

Unless
otherwise provided by the Board, if a Grantee dies while employed by the
Company or an affiliate, all Restricted Stock or Restricted Stock Units granted
to such Grantee shall fully vest on the date of death, and the shares of Stock
represented thereby shall be deliverable in accordance with the terms of the
Plan to the executors, administrators, legatees or distributees of the Grantee’s
estate.

 

12.8.                     Rights in the Event of Disability.

 

Unless
otherwise provided by the Board, if a Grantee’s employment or other
relationship with the Company or an affiliate is terminated by reason of the “permanent
and total disability” (within the meaning of Section 22(e)(3) of the Code) of
such Grantee, such Grantee’s Restricted Stock or Restricted Stock Units shall
continue to vest in accordance with the applicable Award Agreement for a period
of one year after such termination of employment or service, subject to the
earlier forfeiture of such Restricted Stock or Restricted Stock Units in
accordance with the terms of the applicable Award Agreement.  Whether a termination of employment or
service is to be considered by reason of “permanent and total disability” for
purposes of the Plan shall be determined by the Board, which determination
shall be final and conclusive.

 

12.9.                     Delivery of Stock and Payment
Therefor.

 

Upon the
expiration or termination of the Restricted Period and the satisfaction of any
other conditions prescribed by the Board, the restrictions applicable to shares
of Restricted Stock or Restricted Stock Units shall lapse, and, unless
otherwise provided in the Award Agreement, upon payment by the Grantee to the
Company, in cash or by check, of the greater of (i) the

 

12

 

aggregate par value of the shares of Stock represented
by such Restricted Stock or Restricted Stock Units or (ii) the purchase price,
if any, specified in the Award agreement relating to such Restricted Stock or
Restricted Stock Units, a stock certificate for such shares shall be delivered,
free of all such restrictions, to the Grantee or the Grantee’s beneficiary or
estate, as the case may be.

 

13.                     NONTRANSFERABILITY OF SHARES;
REPURCHASE RIGHTS

 

13.1.                     Nontransferability of Shares

 

Subject to Section 13.4 below, a Grantee (or such other individual who
is entitled to exercise an Option or otherwise acquire shares pursuant to a
Grant) shall not sell, pledge, assign, gift, transfer, or otherwise dispose of
any shares of Stock acquired pursuant to a Grant to any person or entity
without first offering such shares to the Company for purchase on the same
terms and conditions as those offered the proposed transferee.  The Company may assign its right of first
refusal under this Section 13 in
whole or in part, to (1) any holder of stock or other securities of the Company
(a “Stockholder”), (2) any affiliate or (3) any other person or entity that the
Board of Directors of the Company determines has a sufficient relationship with
or interest in the Company.  The Company
shall give reasonable written notice to the Grantee of any such assignment of
its rights.  The restrictions of this Section 13.1 apply to any person to whom Stock that was
originally acquired pursuant to a Grant is sold, pledged, assigned, bequeathed,
gifted, transferred or otherwise disposed of, without regard to the number of
such subsequent transferees or the manner in which they acquire the Stock, but
the restrictions of this Section 13.1 do
not apply to a transfer of Stock that occurs as a result of the death of the
Grantee or of any subsequent transferee (but shall apply to the executor, the
administrator or personal representative, the estate, and the legatees, beneficiaries
and assigns thereof).

 

13.2.                     Repurchase Rights.

 

Unless otherwise
provided in the applicable Award Agreement, subject to Section 13.4
below, upon the termination of a Grantee’s employment or other relationship
with the Company or an affiliate, the Company shall have the right, for a
period of up to twelve months following such termination, to repurchase any or
all of the shares of Stock acquired by the individual pursuant to this Plan
under a Grant (including shares of Stock that were previously transferred
pursuant to Sections 11.1, 11.2 or 13.1 above), at
a price equal to the Fair Market Value of such shares of Stock on the date of
termination. Upon the exercise of an Option following termination of a Grantee’s
employment or other relationship with the Company or an affiliate, the Company
shall have the right, for a period of up to twelve months following such
exercise, to repurchase any or all such shares of Stock acquired by the Grantee
pursuant to such exercise of such Option at a price that is equal to the Fair
Market Value of such shares (including shares that were previously transferred
pursuant to Sections 11.1, 11.2 or 13.1 above) on
the date of exercise (or at such other price or the Fair Market Value on such
other date as shall have been specified by the Board at the time of grant and
set out in the appropriate Award Agreement with respect to the grant).  In the event that the Company determines that
it cannot or will not exercise its rights to purchase Stock under this Section 13.2 and the applicable Award Agreement, in whole or
in part, the Company may assign its rights, in whole or in part, to (1) any
Stockholder  (2) any affiliate or

 

13

 

(3) any other person or entity that the Board of
Directors of the Company determines has a sufficient relationship with or
interest in the Company.  The Company
shall give reasonable written notice to the individual of any assignment of its
rights.

 

13.3.                     Installment Payments

 

In the case of any
purchase of Stock or an Option under this Section 13,
the Company or its permitted assignee may pay the Grantee, transferee of the
Option or other registered owner of the Stock the purchase price in three or
fewer annual installments.  Interest
shall be credited on the installments at the applicable federal rate (as
determined for purposes of Section 1274 of the Code) in effect on the date on
which the purchase is made.  The Company
or its permitted assignee shall pay at least one-third of the total purchase
price each year, plus interest on the unpaid balance, with the first payment
being made on or before the 60th day after the purchase.

 

13.4.                     Publicly Traded Stock

 

If the Stock is
listed on an established national or regional stock exchange or is admitted to
quotation on the National Association of Securities Dealers Automated Quotation
System, or is publicly traded in an established securities market, the
foregoing transfer restrictions of Sections 13.1
and 13.2 shall terminate as of the first
date that the Stock is so listed, quoted or publicly traded.

 

13.5.                     Legend

 

In order to enforce the
restrictions imposed upon shares of Stock under this Plan or as provided in an
Award Agreement, the Board may cause a legend or legends to be placed on any
certificate representing shares issued pursuant to this Plan that complies with
the applicable securities laws and regulations and makes appropriate reference
to the restrictions imposed under it.

 

14.                     CERTAIN PROVISIONS APPLICABLE TO
AWARDS

 

14.1.                     Stand-Alone, Additional, Tandem, and
Substitute Grants

 

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

 

14

 

14.2.                     Term of Grant

 

The term of each
Grant shall be for such period as may be determined by the Board; provided that
in no event shall the term of any Option exceed a period of ten years (or such
shorter term as may be required in respect of an Incentive Stock Option under
Section 422 of the Code).

 

14.3.                     Form and Timing of Payment Under
Grants; Deferrals

 

Subject to the
terms of the Plan and any applicable Award Agreement, payments to be made by
the Company or an affiliate upon the exercise of an
Option or other Grant may be made in such forms as the Board shall determine,
including, without limitation, cash, Stock, other Grants or other property, and
may be made in a single payment or transfer, in installments, or on a deferred
basis.  The settlement of any Grant may
be accelerated, and cash paid in lieu of Stock in connection with such
settlement, in the discretion of the Board or upon occurrence of one or more specified
events.  Installment or deferred payments
may be required by the Board or permitted at the election of the Grantee on
terms and conditions established by the Board. 
Payments may include, without limitation, provisions for the payment or
crediting of a reasonable interest rate on installment or deferred payments or
the grant or crediting of dividend equivalents or other amounts in respect of
installment or deferred payments denominated in Stock.

 

15.                     PARACHUTE LIMITATIONS

 

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

 

15

 

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

 

16.                     REQUIREMENTS OF LAW

 

16.1.                     General.

 

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

 

16.2.                     Rule 16b-3.

 

During any time
when the Company has a class of equity security registered under Section 12 of
the Exchange Act, it is the intent of the Company that Grants pursuant to the
Plan and the exercise of Options granted hereunder will qualify for the
exemption provided by Rule 16b-3 under the Exchange Act.  To the extent that any provision of the Plan
or action by the Board does not comply with the requirements of Rule 16b-3, it
shall be deemed inoperative to

 

16

 

the extent permitted by law and deemed advisable by
the Board, and shall not affect the validity of the Plan.  In the event that Rule 16b-3 is revised or
replaced, the Board may exercise its discretion to modify this Plan in any
respect necessary to satisfy the requirements of, or to take advantage of any
features of, the revised exemption or its replacement.

 

17.                     AMENDMENT AND TERMINATION OF THE
PLAN

 

The Board may, at
any time and from time to time, amend, suspend, or terminate the Plan as to any
shares of Stock as to which Grants have not been made; provided, however, that
the Board shall not, without approval of the Company’s shareholders, amend the
Plan such that it does not comply with the Code.  Except as permitted under this Section 17 or Section 18
hereof, no amendment, suspension, or termination of the Plan shall, without the
consent of the Grantee, alter or impair rights or obligations under any Grant
theretofore awarded under the Plan.

 

18.                     EFFECT OF CHANGES IN
CAPITALIZATION

 

18.1.                     Changes in Stock.

 

If the number of
outstanding shares of Stock is increased or decreased or the shares of Stock
are changed into or exchanged for a different number or kind of shares or other
securities of the Company on account of any recapitalization, reclassification,
stock split, reverse split, combination of shares, exchange of shares, stock
dividend or other distribution payable in capital stock, or other increase or
decrease in such shares effected without receipt of consideration by the
Company occurring after the Effective Date, the number and kinds of shares for
which Grants of Options, Restricted Stock and Restricted Stock Units may be
made under the Plan shall be adjusted proportionately and accordingly by the
Company.  In addition, the number and
kind of shares for which Grants are outstanding shall be adjusted proportionately
and accordingly so that the proportionate interest of the Grantee immediately
following such event shall, to the extent practicable, be the same as
immediately before such event.  Any such
adjustment in outstanding Options shall not change the aggregate Option Price
payable with respect to shares that are subject to the unexercised portion of
an Option outstanding but shall include a corresponding proportionate
adjustment in the Option Price per share. 
The conversion of any convertible securities of the Company shall not be
treated as an increase in shares effected without receipt of consideration.

 

18.2.                     Reorganization in Which the Company
Is the Surviving Entity and in Which No Change of Control Occurs.

 

Subject to Section 18.3 hereof, if the Company shall be the surviving
entity in any reorganization, merger, or consolidation of the Company with one
or more other entities and in which no Change of Control occurs, any Option
theretofore granted pursuant to the Plan shall pertain to and apply to the
securities to which a holder of the number of shares of Stock subject to such
Option would have been entitled immediately following such reorganization,
merger, or consolidation, with a corresponding proportionate adjustment of the
Option Price per share so that the aggregate Option Price thereafter shall be
the same as the aggregate Option Price of the shares remaining subject to the
Option immediately prior to such reorganization, merger, or consolidation.  Subject to any contrary language in an Award
Agreement evidencing a Grant of

 

17

 

Restricted Stock, any restrictions applicable to such
Restricted Stock shall apply as well to any replacement shares received by the
Grantee as a result of the reorganization, merger or consolidation.

 

18.3.                     Reorganization, Sale of Assets or
Sale of Stock Which Involves a Change of Control.

 

Subject
to the exceptions set forth in the last sentence of this Section
18.3, (i) upon the occurrence of a
Change of Control, all outstanding shares of Restricted Stock and Restricted
Stock Units shall be deemed to have vested, and all restrictions and conditions
applicable to such shares of Restricted Stock and Restricted Stock Units shall
be deemed to have lapsed, immediately prior to the occurrence of such Change of
Control, and (ii) fifteen days prior to the scheduled consummation of a Change
of Control, all Options outstanding hereunder shall become immediately
exercisable and shall remain exercisable for a period of fifteen days.  Any exercise of an Option during such fifteen-day
period shall be conditioned upon the consummation of the event and shall be
effective only immediately before the consummation of the event.  Upon consummation of any Change of Control,
the Plan and all outstanding but unexercised Options shall terminate.  The Board shall send written notice of an
event that will result in such a termination to all individuals who hold
Options not later than the time at which the Company gives notice thereof to
its shareholders.  This Section 18.3 shall not apply to any Change of Control to the
extent that (A) provision is made in writing in connection with such Change of
Control for the assumption of the Options, Restricted Stock and Restricted
Stock Units theretofore granted, or for the substitution for such Options,
Restricted Stock and Restricted Stock Units of new options, restricted stock
and restricted stock units covering the stock of a successor entity, or a
parent or subsidiary thereof, with appropriate adjustments as to the number and
kinds of shares or units and exercise prices, in which event the Plan and
Options, Restricted Stock and Restricted Stock Units theretofore granted shall
continue in the manner and under the terms so provided or (B) a majority of the
full Board determines that such Change of Control shall not trigger application
of the provisions of this Section 18.3, subject
to Section 26.

 

18.4.                     Adjustments.

 

Adjustments under
this Section 18 related to shares of
Stock or securities of the Company shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive.  No fractional shares or other securities
shall be issued pursuant to any such adjustment, and any fractions resulting
from any such adjustment shall be eliminated in each case by rounding downward to
the nearest whole share.

 

18.5.                     No Limitations on Company.

 

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

 

18

 

19.                     DISCLAIMER OF RIGHTS

 

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

 

20.                     NONEXCLUSIVITY OF THE PLAN

 

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

 

21.                     WITHHOLDING TAXES

 

The Company or any affiliate, as the case may be, shall have the right to
deduct from payments of any kind otherwise due to a Grantee any Federal, state,
or local taxes of any kind required by law to be withheld with respect to the
vesting of or other lapse of restrictions applicable to Restricted Stock or
Restricted Stock Units or upon the issuance of any shares of Stock upon the
exercise of an Option.  At the time of
such vesting, lapse, or exercise, the Grantee shall pay to the Company or
affiliate, as the case may be, any amount that the Company or affiliate may
reasonably determine to be necessary to satisfy such withholding
obligation.  Subject to the prior approval
of the Company or the affiliate, which may be withheld by the Company or the
affiliate, as the case may be, in its sole discretion, the Grantee may elect to
satisfy such obligations, in whole or in part, (i) by causing the Company or
the affiliate to withhold shares of Stock otherwise issuable to the Grantee or
(ii) by delivering to the Company or the affiliate shares of Stock already
owned by the Grantee.  The shares of
Stock so delivered or withheld shall have an aggregate Fair Market Value equal
to such withholding obligations.  The Fair
Market Value of the shares of Stock used to satisfy such withholding obligation
shall be determined by the Company or the affiliate as of the date that the
amount of tax to be withheld is to be determined.  A Grantee who has made an election pursuant to
this Section 21 may satisfy

 

19

 

his or her withholding obligation only with shares of
Stock that are not subject to any repurchase, forfeiture, unfulfilled vesting,
or other similar requirements.

 

22.                     CAPTIONS

 

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

 

23.                     OTHER PROVISIONS

 

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

 

24.                     NUMBER AND GENDER

 

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

 

25.                     SEVERABILITY

 

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

 

26.                     POOLING

 

In the
event any provision of the Plan or the Award Agreement would prevent the use of
pooling of interests accounting in a corporate transaction involving the
Company and such transaction is contingent upon pooling of interests
accounting, then that provision shall be deemed amended or revoked to the
extent required to preserve such pooling of interests.  The Company may require in an Award Agreement
that a Grantee who receives a Grant under the Plan shall, upon advice from the
Company, take (or refrain from taking, as appropriate) all actions necessary or
desirable to ensure that pooling of interests accounting is available.

 

27.                     GOVERNING LAW

 

The validity and
construction of this Plan and the instruments evidencing the Grants awarded
hereunder shall be governed by the laws of the State of Maryland (excluding the
choice of law rules thereof).

 

20

 

28.                     BLUE SKY PROVISIONS

 

28.1.                     California Provisions

 

Notwithstanding the foregoing sections, any Grant made
under the Plan to a Grantee who is a resident of the State of California on the
Grant Date shall be subject to the following additional terms and conditions:

 

A.           For
the purpose of Grants which are not Incentive Stock Options, Fair Market Value
shall be determined in a manner not inconsistent with Section 260.140.50 of the
California Code of Regulations or any successor statute, and the exercise price
of any non-incentive stock option shall not be less than 85% of Fair Market
Value on the date of grant.

 

B.             Grants
may not be made under the Plan to Grantees ten years after the earlier of: (i) the
date the Plan was adopted by the Board or (ii) the date the Plan was approved
by the shareholders of the Company.

 

C.             An
Option granted under the Plan to a Grantee who is a person who owns stock
possessing more than ten percent of the combined voting power of all classes of
stock of the Company or its parent or its Subsidiary corporations shall have an
Option Price of at least 110% of the Fair Market Value of a share of Stock on
the Grant Date.

 

D.            Any
Option granted under the Plan to a Grantee who is not an officer, director, or
consultant of the Company or affiliates shall become exercisable at a rate of
at least twenty percent (20%) of the shares of Stock subject to such Grant per
year for a period of five years from the Grant Date; provided, that, such
Option shall be subject to such reasonable forfeiture conditions as the Board
may choose to impose and which are not inconsistent with Section 260.140.41 of
the California Code of Regulations or any successor statute.

 

E.              The
Company shall deliver to the Grantee financial statements on an annual basis
regarding the Company.   The financial
statements so provided shall comply with Section 260.140.46 of the California
Code of Regulations or any successor statute, but need not comply with Section
260.613 of the California Code of Regulations or any successor statute.

 

F.              Any
transfer of an Option granted under the Plan authorized by the Board in an
Award Agreement must comply with Section 260.140.41(d) of the California Code
of Regulations or any successor statute.

 

G.             A
Grant which authorizes a Grantee to purchase Stock under the Plan (other than a
non-qualified stock option) shall not be transferable other than by will or the
laws of descent and distribution.

 

21

 

H.            Unless
a Grantee’s employment is terminated for cause as defined by applicable law,
the Grantee shall have the right to exercise an Option, prior to the
termination of the Option in accordance with Section 10
and only to the extent that the Grantee was entitled to exercise such Option on
the date employment terminates, as follows: 
(i) at least six (6) months after the date of termination if the
termination was caused by the Grantee’s death or “permanent and total
disability” (within the meaning of Section 22(e)(3) of the Code), and (ii)
at least thirty (30) days after the date of termination if termination was
caused by other than death or “permanent and total disability” (within the
meaning of Section 22(e)(3) of the Code) of the Grantee.

 

I.                 The
purchase price for a grant of Restricted Stock or Restricted Stock Units shall
be at least 85% of the Fair Market Value of the Stock on the Grant Date and at
least 100% of the Fair Market Value of Stock on the Grant Date in the case of a
person who owns stock possessing more than ten percent of the combined voting
power of all classes of stock of the Company or its parent or its Subsidiary
corporations.

 

J.                At
no time shall the total number of shares of Stock issuable upon exercise of all
outstanding Options and the total number of shares provided for under all stock
bonus or similar plans of the Company exceed the applicable percentage as
calculated in accordance with the conditions and exclusions of Section
260.140.45 of the California Code of Regulations or any successor statute.

 

K.            Grants
may be made only to persons who are employees, directors, or consultants of the
Company or its affiliates.

 

If the Stock is
listed on an established national or regional stock exchange or is admitted to
quotation on the National Association of Securities Dealers Automated Quotation
System, or is publicly traded in an established securities market, the
restrictions of this Section 28.1 shall
terminate as of the first date that the Stock is so listed, quoted or publicly
traded.

 

28.2.                     Limitations on Grants to
Non-Employees

 

Notwithstanding Section 6, to the extent required to comply with
restrictions in state laws, including laws regulating the sale or issuance of
securities, a person: who is not an
employee of the Company or an employee of any wholly-owned subsidiary of the
Company shall not be eligible to receive a Grant under the Plan. Grants may be
made to such individuals under another plan of the Company.

 

*              *              *

 

The
Plan was duly adopted and approved by the Board of Directors of the Company as
of the 3rd day of February, 2000.

 

22

 

The Plan was duly
approved by the stockholders of the Company on the 31st day of January, 2001.

 

23

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