Document:

Exhibit 4.1

 

DISCOVERY LABORATORIES, INC.

2011 LONG-TERM INCENTIVE PLAN (AS AMENDED)

SECTION 1. PURPOSE

The purposes of this 2011 Long-Term Incentive Plan (the "Plan") are to encourage selected Employees, Directors and Consultants of Discovery Laboratories, Inc. (together with any successor thereto, the "Company") and its Subsidiaries to acquire a proprietary interest in the growth and performance of the Company, to generate an increased incentive to contribute to the Company's future success and prosperity, thus enhancing the value of the Company for the benefit of its shareholders, and to enhance the ability of the Company and its Subsidiaries to attract and retain exceptionally qualified individuals upon whom, in large measure, the sustained progress, growth and profitability of the Company depend.  This Plan shall be effective on the Effective Date (as defined in Section 16 below).

SECTION 2.  DEFINITIONS

As used in the Plan, the following terms shall have the meanings set forth below:

		(a)	"Award" shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent, Other Stock-Based Award, or cash granted under the Plan.

		(b)	"Award Agreement" shall mean any written agreement, contract, or other instrument or document, including an electronic communication, as may from time to time be designated by the Company as evidencing any Award granted under the Plan.

		(c)	"Board" shall mean the Board of Directors of the Company.

		(d)	"Cause", with respect to any Employee or Consultant of the Company or a Subsidiary, shall have the meaning set forth in such person's employment, consulting or other applicable agreement, or, in the absence of any such agreement or if such term is not defined in any such agreement, shall mean any one or more of the following, as determined by the Committee:

		(i)	willful misconduct or gross negligence in the performance of such person's duties;

		(ii)	willful and continued failure or refusal to perform satisfactorily any duties reasonably requested in the course of such person's employment by, or service to, the Company (other than a failure resulting from such person's disability); or

		(iii)	fraudulent, dishonest or other improper conduct engaged in by such person that causes, or has the potential to cause, harm to the Company or any of its Subsidiaries, or its or their business or reputation, including, without limitation, such person's violation of any policies of the Company applicable to such person, such person's violation of laws, rules or regulations applicable to such person, criminal activity, habitual drunkenness or use of illegal drugs.

		(e)	"Change in Control" shall have the meaning, if any, set forth in a Participant's employment, consulting or other applicable agreement, or, if such term is not defined in any such agreement, shall mean either a "Change in Control" as defined in subsection (e)(i) or a "409A Change in Control" as defined in subsection (e)(ii), as specified in the applicable Award Agreement.  If no definition is specified, the term shall mean a 409A Change in Control.

		(i)	A "Change in Control" shall mean the occurrence of any of the following events:

		(A)	the acquisition, directly or indirectly by any Person (other than the Company, any trustee or other fiduciary under an employee benefit plan of the Company, or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company), of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than thirty-five percent (35%) of the total combined voting power of the Company's outstanding securities;

		(B)	a change in the composition of the Board over a period of thirty-six (36) consecutive months or less such that a majority of the Board ceases to consist of Incumbent Members, which term means members of the Board on the first day of such period and any person becoming a member of the Board subsequent to such date whose election or nomination for election was approved by not less than two-thirds of the members of the Board who then comprised the Incumbent Directors;

		(C)	the Company combines with another company and is the surviving corporation but, immediately after the combination, the shareholders of the Company immediately prior to the combination hold, directly or indirectly, by reason of their being stockholders of the Company, fifty percent (50%) or less of the voting stock of the combined entity; or

		(D)	a liquidation of the Company, a sale of all or substantially all of the Company's assets, or a merger, consolidation or similar transaction in which the Company is not the surviving entity or survives as a wholly-owned or majority-owned subsidiary of another entity.

(ii)          "409A Change in Control" shall mean the occurrence of any of the following events:

(A)any Person (other than (1) the Company, or (2) any trustee or other fiduciary under an employee benefit plan of the Company), is or becomes the beneficial owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of securities of the Grantee's Employer (as defined below) by reason of having acquired such securities during the 12-month period ending on the date of the most recent acquisition (not including any securities acquired directly from the Company or its Affiliates) representing thirty percent (30%) or more of the total voting power of the Grantee's Employer's then outstanding voting securities;

		(B)	the majority of members of the Board of the Grantee's Employer is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board of the Grantee's Employer before the date of the appointment;

		(C)	there is consummated a merger or consolidation of the Grantee's Employer or any subsidiary thereof with any other corporation or other entity, resulting in a change described in clauses (A), (B), (D), or  (E) of this definition, other than (1) a merger or consolidation that would result in the voting securities of the Grantee's Employer outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or parent entity) more than sixty percent (60%) of the total voting power of the voting securities of the Grantee's Employer or such surviving or parent entity outstanding immediately after such merger or consolidation or (2) a merger or consolidation effected to implement a recapitalization of the Company or the Grantee's Employer (or similar transaction) in which no Person, directly or indirectly, acquired forty percent (40%) or more of the total voting power of the then outstanding securities of the Grantee's Employer (not including any securities acquired directly from the Company or its Affiliates);

		(D)	a liquidation of the Grantee's Employer involving the sale to any Person of at least forty percent (40%) of the total gross fair market value of all of the assets of the Grantee's Employer immediately before the liquidation; or

		(E)	the sale or disposition by the Grantee's Employer or any direct or indirect subsidiary of the Grantee's Employer to any Person (other than any Subsidiary) of assets that have a total fair market value equal to forty percent (40%) or more of the total gross fair market value of all of the assets of the Grantee's Employer and its subsidiaries (taken as a whole) immediately before such sale or disposition (or any transaction or related series of transactions having a similar effect), other than a sale or disposition by the Company or the Grantee's Employer or any direct or indirect subsidiary of either to an entity at least sixty percent (60%) of the total voting power of the voting securities of which is beneficially owned by shareholders of the Company or the Grantee's Employer in substantially the same proportions as their beneficial ownership of the Company or the Grantee's Employer immediately prior to such sale.

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For purposes of this subsection 2(e)(ii), "Grantee's Employer" shall mean (1) the corporation for which the Grantee directly provides services or (2) the corporation that is liable for payments of deferred compensation to Grantee (if any) hereunder, or (3) a corporation that is a majority shareholder of either such corporation, or any corporation in a chain of corporations each of which is a majority shareholder of another corporation in the chain, ending with the corporation described in (A) or (B).

		(f)	"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.

		(g)	"Committee" shall mean a committee of the Board, acting in accordance with the provisions of Section 3, designated by the Board to administer the Plan and composed of not less than two Directors.  Each member of the Committee shall qualify as an "outside director" as defined under Section 162(m) of the Code and the regulations promulgated thereunder and as a "non-employee director" under Rule 16b-3 promulgated under the 1934 Act, and shall satisfy any other requirements designated by the Board.  To the extent the Committee has delegated authority (including as described in Section 3(b)) the term "Committee" shall refer to such delegate.

		(h)	"Consultant" shall mean any person, including a Director, who is not an Employee and who is engaged by the Company or any Subsidiary thereof, to render services to or for the benefit of the Company or any Subsidiary and is compensated for such services.

		(i)	"Director" shall mean a member of the Board.

		(j)	"Disability" for each respective Participant shall have the meaning set forth in the Participant's employment agreement, Award Agreement or other similar agreement with the Company; provided, that if such term is not defined in any such agreement to which the Participant is a party or if Participant is not a party to any such agreement, then "Disability" shall mean (i) with respect to any ISO, a permanent and total disability, within the meaning of Section 22(e)(3) of the Code, and (ii) with respect to any deferred compensation subject to Code Section 409A such term as defined in Treasury Regulation Section 1.409A-3(i)(4)(i)(A) or (B) or 1.409A-3(i)(4)(iii), or (iii) for any other purpose, "disability" as defined in the Company's long term disability program applicable to the Grantee (or that would be applicable to the Grantee if the Grantee elected coverage).

		(k)	"Dividend Equivalent" shall mean any right granted under Section 10 of the Plan.

		(l)	"Eligible Person" shall mean an Employee, Director or Consultant.

		(m)	"Employee" shall mean any person treated as an employee (including officers and directors) in the records of the Company or any Subsidiary and who is subject to the control and direction of the Company or any Subsidiary with regard to both the work to be performed and the manner and method of performance.  For purposes of the Plan, the payment of a director's fee by the Company to a Director shall not be sufficient to constitute "employment" of the Director by the Company.

		(n)	"Fair Market Value" of a Share on any date of reference shall be determined by the Committee, in its sole discretion, and may be different for different purposes.  For this purpose, the Fair Market Value of a Share on any trading day shall be (i) if the Shares are listed or admitted for trading on any United States national securities exchange, or if actual transactions are otherwise reported on a consolidated transaction reporting system, the price of the last sale before or the first sale after the grant, the closing price on the trading day before or the trading day of the grant, the arithmetic mean of the high and low prices on the trading day before or the trading day of the grant, or shall be determined by any other reasonable method using actual transactions in the Shares as reported on such market.  The determination of fair market value for purposes of setting the exercise price or strike price of an award also may be determined using an average selling price during a specified period that is written 30 days before or 30 days after the applicable valuation date, provided the Committee irrevocably commits to grant the Award with an exercise or strike price set using such an average selling price before the beginning of the specified period, or (ii) if clause (i) is not applicable, the mean of the high bid and low asked quotations for a Share as reported by the National Quotation Bureau, Incorporated if at least two securities dealers have inserted both bid and asked quotations for the Shares on at least five of the 10 preceding trading days.  If the information set forth in clauses (i) and (ii) above is unavailable or inapplicable to the Company (e.g., if the Shares are not then publicly traded or quoted), then the "Fair Market Value" of a Share shall be the value as determined by the Committee by the reasonable application of a reasonable valuation method.

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		(o)	"Incentive Stock Option" and "ISO" shall mean an option granted under Section 6 of the Plan that is intended to meet the requirements of Section 422 of the Code, or any successor provision thereto.

		(p)	"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.

		(q)	"Non-Qualified Stock Option" shall mean an option granted under Section 6 of the Plan that is not intended to be an Incentive Stock Option.

		(r)	"Option" shall mean an Incentive Stock Option or a Non-Qualified Stock Option.

		(s)	"Other Stock-Based Award" shall mean any right granted under Section 11 of the Plan.

		(t)	"Participant" shall mean an Eligible Person granted an Award under the Plan.

		(u)	"Performance Award" shall mean any right granted under Section 9 of the Plan.

		(v)	"Performance Criteria" shall mean any quantitative and/or qualitative measures, as determined by the Committee, which may be used to measure the level of performance of the Company or any individual Participant during a Performance Period, including any Qualifying Performance Criteria.

		(w)	"Performance Period" shall mean any period as determined by the Committee in its sole discretion.

		(x)	"Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the 1934 Act and used in Sections 13(d) and 14(d) thereof, including "group" as defined in Section 13(d) thereof.

		(y)	"Qualifying Performance Criteria" shall mean one or more of the following performance criteria, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or related Subsidiary, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to a previous year's results or to a designated comparison group, in each case as specified by the Committee in the Award: achieving specified milestones in the discovery and development, commercialization or manufacturing of one or more of the Company product candidates, obtaining debt or equity financing, achieving personal management objectives, achieving sales, revenue, net income (before or after taxes), net earnings, earnings per share, return on total capital, return on equity, cash flow, cash flow from operations, operating profit and/or margin rate targets, subject to adjustment by the Committee to remove the effect of charges for restructurings, discontinued operations, extraordinary items and all items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence, related to the disposal of a segment or a business, or related to a change in accounting principle or otherwise.

		(z)	"Restricted Securities" shall mean Awards of Restricted Stock or other Awards under which issued and outstanding Shares are held subject to certain restrictions.

		(aa)	"Restricted Stock" shall mean any award of Shares granted under Section 8 of the Plan.

		(bb)	"Restricted Stock Unit" shall mean any right granted under Section 8 of the Plan that is denominated in Shares.

		(cc)	"Shares" shall mean the common shares of the Company par value $0.001 per share, and such other securities as may become the subject of Awards, or become subject to Awards, pursuant to an adjustment made under Section 4(b) of the Plan.

		(dd)	"Stock Appreciation Right" shall mean any right granted under Section 7 of the Plan.

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		(ee)	"Subsidiary" shall mean a subsidiary company as defined in Section 424(f) of the Code (with the Company being treated as the employer corporation for purposes of this definition).

		(ff)	"2007 Plan" shall mean the Company's 2007 Long-Term Incentive Plan as amended from time to time.

SECTION 3. ADMINISTRATION

Except as otherwise provided herein, the Plan shall be administered by the Committee, which shall have the power to interpret the Plan and to adopt such rules and guidelines for implementing the terms of the Plan as it may deem appropriate. The Committee shall have the ability to modify the Plan provisions, to the extent necessary, or delegate such authority, to accommodate any changes in law and regulations in jurisdictions in which Participants will receive Awards.

		(a)	Subject to the terms of the Plan and applicable law, the Committee shall have full power and authority to:

		(i)	designate Participants and grant Awards under the Plan;

		(ii)	determine the size and type or types of Awards to be granted to each Participant under the Plan;

		(iii)	determine the number of Shares to be covered by (or with respect to which payments, rights, or other matters are to be calculated in connection with) Awards;

		(iv)	determine the terms and conditions of any Award, and to prescribe Award Agreements evidencing or setting terms thereof, which need not be the same for each Participant;

		(v)	determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, or other Awards, or canceled, forfeited, or suspended, and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended;

		(vi)	determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, and other amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder thereof or of the Committee;

		(vii)	interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan;

		(viii)	establish, amend, suspend, or waive such rules and guidelines;

		(ix)	appoint such agents as it shall deem appropriate for the proper administration of the Plan;

		(x)	make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan; and

		(xi)	correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem desirable to carry the Plan into effect.

		(b)	Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time, and shall be final, conclusive, and binding upon all Persons, including the Company, any Subsidiary, any Participant, any holder or beneficiary of any Award, any shareholder, and any employee of the Company or of any Subsidiary. Subject to the requirements of applicable law and regulations, actions of the Committee may be taken by:

		(i)	a subcommittee, designated in writing by the Committee;

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		(ii)	the Committee but with one or more members abstaining or recusing himself or herself from acting on the matter, so long as two or more members remain to act on the matter. Such action, authorized by such a subcommittee or by the Committee upon the abstention or recusal of such members, shall be the action of the Committee for purposes of the Plan; or

		(iii)	one or more officers or managers of the Company or any Subsidiary, or a committee of such officers or managers, to whom authority to perform such functions as the Committee may determine, to the fullest extent permitted under Section 157 and other applicable provisions of the Delaware General Corporation Law and the Company's bylaws, have been delegated and whose authority is subject to such terms and limitations set forth by the Committee in writing, and whose authority shall not extend to any matter relating to Participants who are officers or directors of the Company for purposes of Section 16 of the 1934 Act.

SECTION 4. SHARES AVAILABLE FOR AWARDS

		(a)	Shares Available.

		(i)	Subject to adjustment as provided in Section 4(b) and to the terms of this Section 4, the total number of Shares reserved and available for delivery pursuant to Awards granted under the Plan shall be (A) seven million seven hundred thousand (7,700,000), plus (B) the number of shares that, immediately prior to the Effective Date, remain available for issuance or delivery under the 2007 Plan; plus (C) the number of shares subject to awards under the 2007 Plan which become available for grant under the Plan in accordance with Section 4(c) after the Effective Date.

		(ii)	The Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or substitute awards) and make adjustments if the number of Shares actually delivered differs from the number of Shares previously counted in connection with an Award.  Shares subject to an Award or an award under the 2007 Plan that is canceled, expired, forfeited, settled in cash or otherwise terminated or settled without delivery of the full number of Shares subject to such Award to the Participant will again be available for Awards.  In addition, in the case of any Award granted in substitution for an award of a company or business acquired by the Company or an Affiliate, shares delivered or to be delivered in connection with such substitute Award shall not be counted against the number of shares reserved under the Plan, but shall be available under the Plan by virtue of the Company's assumption of the plan or arrangement of the acquired company or business.  This Section 4(a)(ii) shall apply to the number of Shares reserved and available for ISOs only to the extent consistent with applicable regulations relating to ISOs under the Code.  Because Shares will count against the number reserved upon delivery (or later vesting) and subject to these share counting rules, the Committee may determine that Awards may be outstanding that relate to more Shares than the aggregate remaining available under the Plan, so long as Awards will not result in delivery and vesting of Shares in excess of the number then available under the Plan.  The Company shall at all times during the term of the Plan retain as authorized and unissued Shares or treasury Shares at least the number of Shares from time to time required under the provisions of the Plan, or otherwise assure itself of its ability to perform its obligations hereunder.

		(iii)	Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares.

		(iv)	Upon the Effective Date, no further Awards shall be granted under the 2007 Plan.

		(b)	Adjustments.

		(i)	In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Shares, or other securities), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event constitutes an equity restructuring transaction, as that term is defined in Statement of Financial Accounting Standards No. 123 (revised) or otherwise affects the Shares, then the Committee shall adjust the following in a manner that is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan:

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		(A)	the number and type of Shares or other securities which thereafter may be made the subject of Awards;

		(B)	the number and type of Shares or other securities subject to outstanding Awards;

		(C)	the number and type of Shares or other securities specified as the annual per-participant limitation under Sections 14(e), (f), and (g);

		(D)	the grant, purchase, or exercise price with respect to any Award, or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award; and

		(E)	other value determinations applicable to outstanding awards;

provided, however, in each case, that with respect to Awards of Incentive Stock Options no such adjustment shall be authorized to the extent that such authority would cause the Plan to violate Section 422(b)(1) of the Code or any successor provision thereto; and provided further, however, that the number of Shares subject to any Award denominated in Shares shall always be a whole number.

		(ii)	In the event the Company or any Subsidiary shall assume outstanding employee awards or the right or obligation to make future such awards in connection with the acquisition of another business or another corporation or business entity, the Committee may make such adjustments, not inconsistent with the terms of the Plan, in the terms of Awards as it shall deem appropriate in order to achieve reasonable comparability or other equitable relationship between the assumed awards and the Awards granted under the Plan as so adjusted.

		(iii)	The Committee shall be authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events affecting the Company, any Subsidiary, or the financial statements of the Company or any Subsidiary, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits to be made available under the Plan.

		(c)	Prior Plans. Except as otherwise provided herein, (i) any award made under the Company's Amended and Restated 1998 Stock Incentive Plan, as amended before the expiration of such plan, shall continue to be subject to the terms and conditions of such plan and the applicable award agreement, and (ii) any award made under the 2007 Plan before the Effective Date shall continue to be subject to the terms and conditions of the 2007 Plan and the applicable award agreement.

SECTION 5. ELIGIBILITY

Any Eligible Person shall be eligible to be designated a Participant.

SECTION 6. OPTIONS

The Committee is authorized to grant Options to Eligible Persons with the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine:

		(a)	Exercise Price. The purchase price per Share purchasable under an Option shall be determined by the Committee no later than the date of grant of such Option; provided, however, and except as provided in Section 4(b), that such purchase price shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option.

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		(b)	Option Term. The term of each Option shall be specified in the applicable Award Agreement and shall not exceed ten (10) years from its date of grant.

		(c)	Time and Method of Exercise. The Committee shall establish in the applicable Award Agreement the time or times at which and the circumstances under which (including based on achievement of performance goals and/or future service requirements) an Option may be exercised in whole or in part, and the method or methods by which, and the form or forms, including, without limitation, cash, Shares (including Shares deliverable on exercise), other Awards, or other property that does not have a deferral feature, (including through "net exercise" or "cashless exercise" arrangements to the extent permitted by applicable law), or any combination thereof, having a Fair Market Value on the exercise date equal to the relevant exercise price, in which, payment of the exercise price with respect thereto may be made or deemed to have been made, and the method or forms in which Shares will be delivered or deemed delivered in satisfaction of Options.  In addition, the Committee may allow a Participant to exercise any Option by delivering to the Company or its designated agent an executed irrevocable option exercise form together with irrevocable instructions to a broker-dealer to sell Shares and deliver the sale proceeds directly to the Company to the extent required to pay the Option exercise price.

		(d)	Incentive Stock Options. Only employees (as determined in accordance with Section 3401(c) of the Code) of the Company or a Subsidiary may be granted Incentive Stock Options.  The terms of any Incentive Stock Option granted under the Plan shall be designed to comply in all respects with the provisions of Section 422 of the Code, or any successor provision thereto, and any regulations promulgated thereunder.  In addition, Options designated as Incentive Stock Options shall not be eligible for treatment under the Code as Incentive Stock Options (and will be deemed to be Non-Qualified Stock Options) to the extent that either (1) the aggregate Fair Market Value of Shares (determined as of the time of grant) with respect to which such Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Subsidiary) exceeds $100,000, taking Options into account in the order in which they were granted, or (2) such Options otherwise remain exercisable but are not exercised within three (3) months of termination of employment (or such other period of time provided in Section 422 of the Code).

SECTION 7. STOCK APPRECIATION RIGHTS

The Committee is authorized to grant Stock Appreciation Rights to Eligible Persons.  Subject to the terms of the Plan and any applicable Award Agreement, a Stock Appreciation Right granted under the Plan shall confer on the Participant a right to receive, upon exercise thereof, the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the grant price of the right as specified by the Committee.

		(a)	Grant Price. The grant price of any Stock Appreciation Right shall be determined by the Committee no later than the date of grant, provided, however, that such price shall not be less than 100% of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right, and if a Stock Appreciation Right is granted in tandem to an Option, the grant price of the Stock Appreciation Right shall not be less than the exercise price of such Option.

		(b)	Term. The term of each Stock Appreciation Right shall be specified in the applicable Award Agreement and shall not exceed ten (10) years from the date of grant.

		(c)	Time and Method of Exercise. The Committee shall establish in the applicable Award Agreement the time or times at which and the circumstances under which a Stock Appreciation Right may be exercised in whole or in part (including achievement of performance goals and/or future service requirements, and the method of exercise, method of settlement, form of consideration payable in settlement (whether cash, Shares or other property) and the methods or forms in which Shares will be delivered or deemed to be delivered, and whether or not a Stock Appreciation Right shall be freestanding or in tandem or combination with any other Award).

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SECTION 8.  RESTRICTED STOCK AND RESTRICTED STOCK UNITS

		(a)	Grant. The Committee is authorized to grant Awards of Restricted Stock and Restricted Stock Units to Eligible Persons.

		(b)	Restrictions. Shares of Restricted Stock and Restricted Stock Units shall be subject to such restrictions as the Committee may establish in the applicable Award Agreement (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right), which restrictions may lapse separately or in combination at such time or times, under such circumstances (including based on achievement of performance goals and/or future service requirements), in such installments or otherwise, as the Committee may deem appropriate.  Unrestricted Shares, evidenced in such manner as the Committee shall deem appropriate, shall be delivered to the holder of Restricted Stock or Restricted Stock Unit promptly after such restrictions have lapsed.

		(c)	Registration. Any Restricted Stock or Restricted Stock Units granted under the Plan may be evidenced in such manner as the Committee may deem appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of Shares of Restricted Stock granted under the Plan, such certificate shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock.

		(d)	Consideration.  A Participant shall pay such consideration for Restricted Stock as the Committee may require; provided that the minimum consideration for shares of Restricted Stock (other than treasury shares) shall be the par value of such Shares.

		(e)	Forfeiture. Upon termination of service during the applicable restriction period, except as set forth herein or in the applicable Award Agreement or as otherwise determined by the Committee, all Shares of Restricted Stock and all Restricted Stock Units still, in either case, subject to restriction shall automatically be forfeited and reacquired for no additional consideration by the Company.

		(f)	Dividend Equivalents.  Unless otherwise determined by the Committee, and subject to Section 10, Dividend Equivalents on Restricted Stock Units shall be either (A) paid with respect to such Restricted Stock Units at the dividend payment date in cash or unrestricted Shares having a Fair Market Value equal to the amount of such dividends, or (B) deferred with respect to such Restricted Stock Units, either as a cash deferral or with the amount or value thereof automatically deemed reinvested in Restricted Stock Units, other Awards or other investment vehicles having a Fair Market Value equal to the amount of such dividends, as the Committee shall determine or permit a Participant to elect, and shall be paid when the Restricted Stock Units to which they relate are settled.  Notwithstanding the foregoing, Dividend Equivalents (whether in the form of Restricted Stock Units or otherwise) on Restricted Stock Units that are contingent on satisfying performance criteria shall be forfeited if the Restricted Stock Units to which they relate are forfeited or otherwise not earned.  Unless otherwise determined by the Committee, cash, Shares or other property distributed in connection with a stock split or stock dividend, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock and Restricted Stock Units with respect to which such Shares or other property has been distributed.

SECTION 9. PERFORMANCE AWARDS

The Committee is hereby authorized to grant Performance Awards to Participants. Performance Awards include arrangements under which the grant, issuance, retention, vesting and/or transferability of any Award is subject to such Performance Criteria and such additional conditions or terms as the Committee may designate.  Performance Awards may be made in cash.  Subject to the terms of the Plan and any applicable Award Agreement, a Performance Award granted under the Plan:

		(a)	may be denominated or payable in cash, Shares (including, without limitation, Restricted Stock), other securities, or other Awards; and

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		(b)	shall confer on the holder thereof rights valued as determined by the Committee and payable to, or exercisable by, the holder of the Performance Award, in whole or in part, upon the achievement of such performance goals during such Performance Periods as the Committee shall establish.

SECTION 10.  DIVIDEND EQUIVALENTS

The Committee is hereby authorized to grant to Participants Awards under which the holders thereof shall be entitled to receive payments equivalent to dividends or interest with respect to a number of Shares determined by the Committee, and the Committee may provide that such amounts (if any) shall be deemed to have been reinvested in additional Shares or otherwise reinvested. Subject to the terms of the Plan and any applicable Award Agreement, such Awards may have such terms and conditions as the Committee shall determine.

SECTION 11. OTHER STOCK-BASED AWARDS

The Committee is hereby authorized to grant to Participants such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as are deemed by the Committee to be consistent with the purposes of the Plan, provided, however, that such grants must comply with applicable law. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the terms and conditions of such Awards. Shares or other securities delivered pursuant to a purchase right granted under this Section 11 shall be purchased for such consideration, which may be paid by such method or methods and in such form or forms, including, without limitation, cash, Shares, other securities, or other Awards, or any combination thereof, as the Committee shall determine, the value of which consideration, as established by the Committee, and except as provided in Section 4(b), shall not be less than the Fair Market Value of such Shares or other securities as of the date such purchase right is granted.

SECTION 12. TERMINATION OF EMPLOYMENT OR SERVICE

		(a)	For Cause.  Except as otherwise provided by the Committee in an Award Agreement, if a Participant's employment or service is terminated for Cause (i) the Participant's Restricted Stock or Restricted Stock Units that are then forfeitable shall thereupon be forfeited, and (ii) any unexercised Option, Stock Appreciation Right, Performance Award, Other Stock-Based Award or cash Award shall terminate effective immediately upon such termination of employment or service.

		(b)	On Account of Death.  Except as otherwise provided by the Committee in an Award Agreement, if a Participant's employment or service terminates on account of death (or if a Participant dies within ninety (90) days following termination of employment due to Disability), then:

		(i)	the Participant's Restricted Stock and Restricted Stock Units that were forfeitable shall thereupon become nonforfeitable;

		(ii)	any unexercised Option or Stock Appreciation Right, to the extent exercisable on the date of such termination of employment or service, may be exercised, in whole or in part, within the first twelve (12) months after such termination of employment or service (but only during the term of such Award) after the death of the Participant by (A) his or her personal representative or by the person to whom an Option or Stock Appreciation Right, as applicable, is transferred by will or the applicable laws of descent and distribution or (B) the Participant's designated beneficiary; and, to the extent that any such Option or Stock Appreciation Right was not exercisable on the date of such termination of employment or service, it will immediately terminate; and

 

		(iii)	the Participant's rights with respect to any unexercised Performance Shares, Other Stock-Based Awards or cash Awards shall be as set forth in the applicable Award Agreement.

		(c)	On Account of Disability.  Except as otherwise provided by the Committee in an Award Agreement, if a Participant's employment or service terminates on account of Disability, then:

		(i)	the Participant's Restricted Stock and Restricted Stock Units that were forfeitable shall thereupon become nonforfeitable;

- 10 -

		(ii)	any unexercised Option or Stock Appreciation Right, to the extent exercisable on the date of such termination of employment or service, may be exercised in whole or in part, within the first ninety (90) days after such termination of employment or service (but only during the term of such Award) by the Participant, or by (A) his or her personal representative or by the person to whom an Option or Stock Appreciation Right, as applicable, is transferred by will or the applicable laws of descent and distribution or (B) the Participant's designated beneficiary; and, to the extent that any such Option or Stock Appreciation Right was not exercisable on the date of such termination of employment, it will immediately terminate; and

		(iii)	the Participant's rights with respect to any unexercised Performance Shares, Other Stock-Based Awards or cash Awards shall be as set forth in the applicable Award Agreement.

		(d)	Any Other Reason.  Except as otherwise provided by the Committee in an Award Agreement, if a Participant's employment or service terminates for any reason other than for Cause, death, or Disability, then:

		(i)	the Participant's Restricted Stock and Restricted Stock Units, to the extent forfeitable on the date of the Participant's termination of employment or service, shall be forfeited on such date;

		(ii)	any unexercised Option or Stock Appreciation Right, to the extent exercisable immediately before the Participant's termination of employment or service, may be exercised in whole or in part, not later than three (3) months after such termination of employment or service (but only during the term of such Award); and, to the extent that any such Option or Stock Appreciation Right was not exercisable on the date of such termination of employment or service, it will immediately terminate; and

		(iii)	the Participant's rights with respect to any unexercised Performance Shares, Other Stock-Based Awards or cash Awards shall be as set forth in the applicable Award Agreement.

		(e)	Repurchase Rights.  Except as otherwise provided by the Committee in an Award Agreement, if at any time a Participant's employment or service with the Company is terminated for Cause or a Participant breaches any post-termination covenants set forth in any written agreement between the Participant and the Company, the Company may, in its discretion, for a period of one year after the termination for Cause or the actual discovery by the Company of the breach, as applicable, and upon 10 (ten) days' notice to the Participant, (i) repurchase all or any portion of any Shares acquired by the Participant upon the Participant's exercise of an Award, and/or (ii) require any such Participant to repay to the Company the amount of any profits derived by such Participant upon the sale or other disposition of any Shares underlying an Award during the preceding three years.  The purchase price for any Shares repurchased by the Company pursuant to clause (i) of this Section 12(e) shall be the lesser of the price paid to acquire such Share and the Fair Market Value thereof on the date of such purchase by the Company.

SECTION 13. CHANGE IN CONTROL

Except as otherwise expressly provided in a Participant's employment or consulting agreement, Award Agreement, or other applicable agreement:

		(a)	In the event of any Change in Control, the vesting of each outstanding Option and Stock Appreciation Right shall automatically accelerate so that each such Option and Stock Appreciation Right shall, immediately prior to the effective date of the Change in Control, become fully exercisable with respect to the total number of Shares at the time subject to such Option or Stock Appreciation Right and may be exercised for any or all of those Shares as fully-vested Shares. However, an outstanding Option or Stock Appreciation Right shall not so accelerate if and to the extent: (i) such Option or Stock Appreciation Right is, in connection with the Change in Control, either to be assumed by the successor corporation (or parent thereof) or to be replaced with a comparable Option to purchase shares of the capital stock of the successor corporation (or parent thereof) or stock appreciation right, (ii) such Option or Stock Appreciation Right is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing on the unvested Option Shares or Stock Appreciation Right at the time of the Change in Control and provides for subsequent payout in accordance with the same vesting schedule applicable to the Option or Stock Appreciation Right or (iii) the acceleration of such Option or Stock Appreciation Right is subject to other limitations under the applicable Award Agreement. The determination of comparability under clause (i) above shall be made by the Committee, and its determination shall be final, binding and conclusive.

- 11 -

		(b)	All outstanding restrictions with respect to any Restricted Stock or Restricted Stock Units shall also terminate automatically, and the Shares subject to those restrictions shall immediately vest in full, in the event of any Change in Control, except to the extent: (i) those repurchase rights are to be assigned to the successor corporation (or parent thereof) in connection with such Change in Control or (ii) such accelerated vesting is precluded by other limitations imposed under the applicable Award Agreement or would trigger additional taxes under Section 409A of the Code.

		(c)	The Committee shall have the discretion, exercisable either at the time an Award is granted or at any time while the Award remains outstanding, to provide for the automatic acceleration of one or more outstanding Awards upon the occurrence of a Change in Control, whether or not those Awards are to be assumed or replaced in the Change in Control.

		(d)	The outstanding Options or other Awards shall in no way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

SECTION 14. GENERAL

		(a)	No Cash Consideration for Awards. Awards shall be granted for no cash consideration or for such minimal cash consideration as may be required by applicable law.

		(b)	Awards May be Granted Separately or Together. Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution for any other Award or any award granted under any other plan of the Company or any Subsidiary. Awards granted in addition to or in tandem with other Awards, or in addition to or in tandem with awards granted under any other plan of the Company or any Subsidiary, may be granted either at the same time as or at a different time from the grant of such other Awards or awards.

		(c)	Forms of Payment Under Awards. Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the Company or a Subsidiary upon the grant, exercise, or payment of an Award may be made in such form or forms as the Committee shall determine, including, without limitation, cash, Shares, rights in or to Shares issuable under the Award or other Awards, other securities, or other Awards, or any combination thereof, and may be made in a single payment or transfer, in installments, or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents in respect of installment or deferred payments.

		(d)	Limits on Transfer of Awards. Except as provided by the Committee, no Award and no right under any such Award, shall be assignable, alienable, saleable, or transferable by a Participant otherwise than by will or by the laws of descent and distribution provided, however, that, if so determined by the Committee, a Participant may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise the rights of the Participant with respect to any Award upon the death of the Participant. Each Award, and each right under any Award, shall be exercisable, during the Participant's lifetime, only by the Participant or, if permissible under applicable law, by the Participant's guardian or legal representative. No Award and no right under any such Award, may be pledged, alienated, attached, or otherwise encumbered, and any purported pledge, alienation, attachment, or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate.

- 12 -

		(e)	Per-Person Limitation on Options and SARs. The number of Shares with respect to which Options and Stock Appreciation Rights may be granted under the Plan during any year to an individual Participant shall not exceed 1,500,000 Shares, subject to adjustment as provided in Section 4(b).

		(f)	Per-Person Limitation on Certain Awards. Other than Options and Stock Appreciation Rights, the aggregate number of Shares with respect to which Restricted Stock, Restricted Stock Units, Performance Awards and Other Stock-Based Awards may be granted under the Plan during any year to an individual Participant shall not exceed 750,000 Shares, subject to adjustment as provided in Section 4(b).

		(g)	Per-Person Limit on Performance-Based Awards.  Subject to Section 4, the aggregate number of Shares subject to Awards that are intended to qualify as "performance-based compensation" under Code Section 162(m) granted during any calendar year to any one Eligible Person (taking into account the maximum number payable based on performance exceeding target objectives) shall not exceed three (3) million Shares.  The maximum amount payable as a cash Award for any performance period to an Eligible Person that is intended to satisfy the requirements for "performance-based compensation" under Code Section 162(m) shall be five (5) million dollars per calendar year.  In the case of an award with a multi-year performance period, these limits shall apply to each calendar year (or portion thereof) in the performance period.  The limitation on cash Awards is separate from and not affected by the limitation on Awards denominated in Shares.

		(h)	Conditions and Restrictions Upon Securities Subject to Awards. The Committee may provide that the Shares issued upon exercise of an Option or Stock Appreciation Right or otherwise subject to or issued under an Award shall be subject to such further agreements, restrictions, conditions or limitations as the Committee in its discretion may specify prior to the exercise of such Option or Stock Appreciation Right or the grant, vesting or settlement of such Award, including without limitation, conditions on vesting or transferability and forfeiture or repurchase provisions or provisions on payment of taxes arising in connection with an Award. Without limiting the foregoing, such restrictions may address the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any Shares issued under an Award, including without limitation: (A) restrictions under an insider trading policy or pursuant to applicable law, (B) restrictions designed to delay and/or coordinate the timing and manner of sales by Participant and holders of other Company equity compensation arrangements, (C) restrictions as to the use of a specified brokerage firm for such resales or other transfers and (D) provisions requiring Shares to be sold on the open market or to the Company in order to satisfy tax withholding or other obligations.

		(i)	Share Certificates. All Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares or other securities are then listed, and any applicable Federal, state, or local securities laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

		(j)	No Rights to Awards. No Participant or other Person shall have any claim to be granted any Award under the Plan, or, having been selected to receive an Award under this Plan, to be selected to receive a future Award, and further there is no obligation for uniformity of treatment of Employees, Directors, Consultants, Participants, or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to each recipient.

		(k)	Tax Provisions.

		(i)	Withholding.  The Company and any Subsidiary is authorized to withhold, at the time of grant or settlement or other time as appropriate, from any Award, any payment relating to an Award, including from a distribution of Shares, or any payroll or other payment to a Participant, amounts of withholding and other taxes required to be withheld.  This authority shall include authority to withhold or receive Shares or other property and to make cash payments in respect thereof in satisfaction of the Company's (or a Subsidiary's) withholding obligations, either on a mandatory or elective basis in the discretion of the Committee.  The Committee is specifically authorized to allow Participants to satisfy withholding tax amounts by electing to have the Company (or a Subsidiary) withhold from the Shares to be delivered upon exercise of an Option or vesting or settlement of a Stock Award that number of Shares having a Fair Market Value equal to the amount required to be withheld.

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		(ii)	Required Consent to and Notification of Code Section 83(b) Election.  No election under Code Section 83(b) (to include in gross income in the year of transfer the amounts specified in Code Section 83(b)) or under a similar provision of the laws of a jurisdiction outside the United States may be made unless expressly permitted by the terms of the Award Agreement or by action of the Committee in writing prior to the making of such election.  In any case in which a Participant is permitted to make such an election in connection with an Award, the Participant shall notify the Committee of such election within ten days of filing notice of the election with the Internal Revenue Service or other governmental authority, in addition to any filing and notification required pursuant to regulations issued under Code Section 83(b) or other applicable provision.

		(iii)	Requirement of Notification Upon Disqualifying Disposition Under Code Section 421(b).  If any Participant shall make any disposition of shares of Stock delivered pursuant to the exercise of an ISO under the circumstances described in Code Section 421(b) (relating to certain disqualifying dispositions), such Participant shall notify the Committee of such disposition within ten days thereof.

		(iv)	Payment of Tax Amount.  Notwithstanding anything herein to the contrary, in the event the Internal Revenue Service should finally determine that part or all of an Award that has not been settled is nevertheless required to be included in the Participant's gross income for federal income tax purposes, then an amount necessary to pay applicable federal, state or local income taxes on such includible value shall be distributed with respect to the Award in a lump sum cash payment within sixty (60) days after such determination, without the requirement of separate approval by the Committee.  A "final determination" of the Internal Revenue Service is a determination in writing ordering the payment of additional tax, reporting of additional gross income or otherwise requiring an Award or portion thereof to be included in gross income, which is not appealable or which the Participant does not appeal within the time prescribed for appeals.

		(v)	Construction in Compliance with Code Section 409A.  The Company intends that none of the grant, exercise, settlement or amendment or termination of any Award under the Plan will cause the Participant to be liable for payment of interest or a tax penalty under Code Section 409A.  The provisions of the Plan and any Award Agreement shall be construed consistent with that intent.

		(vi)	"Termination of service," "resignation" or words of similar import, as used in this Plan shall mean, with respect to any payments of deferred compensation subject to Section 409A of the Code, the Participant's "separation from service" as defined in Section 409A of the Code.  For this purpose, a "separation from service" is deemed to occur on the date that the Company and the Participant reasonably anticipate that the level of bona fide  services the Participant would perform after the date (whether as an employee or independent contractor) would permanently decrease to a level that, based on the facts and circumstances would constitute a separation from service; provided that a decrease to a level that is 50% or more of the average level of bona fide services provided over the prior 36 months shall not be a separation from service, and a decrease to a level that is 20% or less of the average level of such bona fide services shall be a separation from service.  The bona fide services taken into account for purposes of determining whether there has been a separation from service shall be services performed for the Company and any person or entity that would be considered a single employer with the Company under Section 414(b) or 414(c) of the code; provided that, in applying Section 1563(a)(1), (2), and (3) of the Code, the language "at least 50 percent" shall be used instead of "at least 80 percent;" and further provided that "at least 20 percent" shall be used instead of "at least 50 percent" where based on legitimate business criteria.

		(vii)	Six-Month Delay.  Any distribution or settlement of an Award triggered by the separation from service of a Specified Employee that would otherwise be made prior to the Deferred Distribution Date (as defined below) shall not occur earlier than the Deferred Distribution Date.  The "Deferred Distribution Date" is the day that is six (6) month and one (1) day after a Participant's separation from service.

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		(l)	No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Subsidiary from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases.

		(m)	No Right to Employment. The grant of an Award shall not constitute an employment contract nor be construed as giving a Participant the right to be retained in the employ or service of the Company or any Subsidiary. Further, the Company or a Subsidiary may at any time dismiss a Participant from employment, free from any liability, or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement.

		(n)	Governing Law. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Delaware and applicable Federal law without regard to conflict of laws.

		(o)	Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person, or Award, and the remainder of the Plan and any such Award shall remain in full force and effect.

		(p)	No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Subsidiary and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Subsidiary pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Subsidiary.

		(q)	No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, or other securities shall be paid or transferred in lieu of any fractional Shares, or whether such fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.

		(r)	Headings. Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.

		(s)	No Representations or Covenants With Respect to Tax Qualification. Although the Company may endeavor to (i) qualify an Award for favorable U.S. or foreign tax treatment (e.g., incentive stock options under Section 422 of the Code) or (ii) avoid adverse tax treatment (e.g., under Section 409A of the Code), the Company makes no representation to that effect and expressly disavows any covenant to maintain favorable or avoid unfavorable tax treatment. The Company shall be unconstrained in its corporate activities without regard to the potential negative tax impact on holders of Awards under the Plan.

		(t)	Compliance With Laws. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or stock exchanges on which the Company is listed as may be required. The Company shall have no obligation to issue or deliver evidence of title for Shares issued under the Plan prior to:

		(i)	obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and

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		(ii)	completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable or at a time when any such registration or qualification is not current, has been suspended or otherwise has ceased to be effective.

The inability or impracticability of the Company to obtain or maintain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

SECTION 15. AMENDMENT AND TERMINATION

Except to the extent prohibited by applicable law and unless otherwise expressly provided in an Award Agreement or in the Plan:

		(a)	Amendments to the Plan. The Board of Directors of the Company may amend, alter, suspend, discontinue, or terminate the Plan, in whole or in part; provided, however, that without the prior approval of the Company's shareowners, no material amendment shall be made if shareholder approval is required by law, regulation, or stock exchange, and; provided, further, that, notwithstanding any other provision of the Plan or any Award Agreement, no such amendment, alteration, suspension, discontinuation, or termination shall be made without the approval of the shareholders of the Company that would:

		(i)	increase the total number of Shares available for Awards under the Plan, except as provided in Section 4 hereof; or

		(ii)	except as provided in Section 4(b), permit Options, Stock Appreciation Rights, or Other Stock-Based Awards encompassing rights to purchase Shares to be repriced, replaced, or regranted through cancellation, or by lowering the exercise price of a previously granted Option or the grant price of a previously granted Stock Appreciation Right, or the purchase price of a previously granted Other Stock-Based Award.

		(b)	Amendments to Awards. The Committee may waive any conditions or rights under, amend any terms of, or amend, alter, suspend, discontinue, or terminate, any Awards theretofore granted, prospectively or retroactively. Except for amendments authorized under Section 13, no such amendment or alteration shall be made which would impair the rights of any Participant, without such Participant's consent, under any Award theretofore granted, provided that no such consent shall be required with respect to any amendment or alteration if the Committee determines in its sole discretion that such amendment or alteration either (i) is required or advisable in order for the Company, the Plan or the Award to satisfy or conform to any law or regulation or to meet the requirements of any accounting standard, or (ii) is not reasonably likely to significantly diminish the benefits provided under such Award.

SECTION 16. EFFECTIVE DATE OF THE PLAN

The Plan shall be effective on the date that it is approved by the Company's shareholders (the "Effective Date").

SECTION 17. TERM OF THE PLAN

Unless earlier terminated by action of the Board of Directors, the Plan will remain in effect until such time as no Shares remain available for delivery under the Plan and the Company has no further rights or obligations under the Plan with respect to outstanding Awards under the Plan.  No incentive stock option shall be granted under the Plan after the tenth anniversary of the adoption of the Plan by the Board.  However, unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond the termination of the Plan, and the authority of the Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award, or to waive any conditions or rights under any such Award, and the authority of the Board of Directors of the Company to amend the Plan, shall extend beyond such date.

 

 

- 16 -LOAN AGREEMENT

 

THIS LOAN AGREEMENT
(hereinafter, as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented, referred to
as this “Loan Agreement”), is made this 30th day of  January, 2013 by and between

 

HSL HOLDINGS INC.,
a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware (hereinafter referred
to as the “Borrower”),

 

AND

 

JUBILANT CADISTA
PHARMACEUTICALS INC., a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware
(hereinafter referred to as the “Lender”).

 

WITNESSETH:

 

WHEREAS, the
Borrower has requested that the Lender, and the Lender has agreed to, pursuant to the terms, conditions and provisions of this
Loan Agreement, make available to the Borrower an unsecured recourse loan in the principal amount of Twenty Million and 00/100
Dollars ($20,000,000.00) (the “Loan”) for the general corporate purposes of the Borrower, including, without
limitation, financing a portion of the working capital requirements and capital expenditures needs of the Borrower (hereinafter,
as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented, referred to as the “Loan
Facility”); and

 

WHEREAS, the
Loan is evidenced by that certain Note dated of even date herewith, in substantially the form attached hereto as Exhibit “A”,
executed by the Borrower, as the maker, in favor of the Lender, as the payee, in the aggregate principal amount of $20,000,000.00
(hereinafter, as it may be from time to time amended, modified, extended, renewed, refinanced, substituted and/or supplemented,
referred to as the “Note”).

 

NOW, THEREFORE,
IN CONSIDERATION OF THESE PREMISES AND THE MUTUAL REPRESENTATIONS, COVENANTS AND AGREEMENTS OF THE BORROWER AND THE LENDER, EACH
PARTY BINDING ITSELF AND ITS SUCCESSORS AND/OR ASSIGNS, THE BORROWER AND THE LENDER HEREBY AGREE AS FOLLOWS:

 

1.          THE
LOAN. Subject to the terms and conditions set forth herein, including, without limitation,
Borrower’s execution and delivery to Lender of the Note, which Borrower is executing and delivering to Lender simultaneously
herewith, Lender shall make the Loan to Borrower in the amount of Twenty Million Dollars ($20,000,000.00). Lender shall
make such funds available to Borrower by initiating a wire transfer of such funds, in accordance with written instructions from
Borrower.

 

    	1

    	 

    

 

2.          PAYMENT
OF INTEREST. (i) The outstanding principal amount of the Loan shall bear interest from the date hereof until paid in full
at a rate equal to four percent (4%) per annum. Under no circumstances will the interest rate on the Loan or under the Note
be more than the maximum rate allowed by applicable law. All computations of interest and fees
made or called for under this Loan Agreement or the Note shall be calculated on the basis of actual days elapsed over a 360 day
year.

 

(ii)         Interest
on the outstanding principal balance of the Loan shall be due and payable, in arrears, on each “Payment Date” (as defined
in the next sentence) until the principal balance is paid in full, all as more fully described in Paragraph 3 below. For
purposes of this Note: “Payment Date” means: (a) the last business day of July and January; (b) the Maturity
Date; (c) the date of any mandatory or optional prepayments; and (d) the date any principal amount of the Loan is required to be
repaid to Lender pursuant to a “Notice of Demand” (as defined in Paragraph 3).

 

(iii)        Should
any monies remain unpaid after their due date herein or as accelerated according to the terms hereof, or in such other circumstances
as provided herein (including, upon the occurrence of an Event of Default), then the interest rate on the outstanding principal
amount of the Loan shall be increased to a rate equal to two percent (2.0%) per annum above the interest rate then in effect (which
increased rate of interest shall be hereinafter referred to as the “Default Rate”).
In no event shall any interest rate under this Loan Agreement or the Note exceed the maximum rate allowed by applicable
usury law. The Borrower acknowledges the Default Rate to be liquidated damages, and as such, to be reasonable compensation to the
Lender for expenses, work and services arising from the loss of income as well as loss of other investment opportunities by reason
of allocating the amount of the Loan for the term thereof.

 

3.          Repayment
of Principal and Interest. The Borrower shall pay the principal amount of the Loan outstanding on the “Maturity
Date” (as defined below in this Paragraph 3), unless such date is extended in writing by Lender, in its sole and absolute
discretion upon the written request of the Borrower not less than thirty (30) days prior to the then Maturity Date. For purposes
of this Agreement, the “Maturity Date” shall initially mean January 31, 2015, and if extended by Lender, shall
mean the last business day of the twelfth calendar month commencing after the scheduled Maturity Date to which the last such agreed
to extension by Lender relates. If the Maturity Date, or a Payment Date, shall not be a business day, then the applicable Maturity
Date or Payment Date shall be the next business day after the originally scheduled Maturity Date or Payment Date. In addition,
the Borrower will pay all accrued and unpaid interest on each Payment Date commencing on the last business day of July 2013. All
accrued and unpaid interest fees, expenses and other sums due and owing under this Loan Agreement and the Note shall be due and
payable on the Maturity Date, or earlier to the extent otherwise required pursuant to the terms of this Loan Agreement or the Note.
Notwithstanding the foregoing or anything else to the contrary contained in the Loan Agreement, in the Note or otherwise, the Lender
shall have the right to demand payment from the Borrower at any time of all or any part of the Loan by delivering to Borrower a
written demand for payment (a “Notice of Demand”). The Borrower shall repay the principal amount of the Loan
demanded under a Notice of Demand, together with all accrued and unpaid interest thereon (and all prepayment fees, if any, described
in Paragraph 4(ii) below), and all other obligations under this Loan Agreement or the Note with respect to which payment
is demanded under the Notice of Demand, within sixty (60) days of Lender’s delivery of such notice; provided, however, that
if such sixtieth (60th) day is not a business day, then such amounts shall be due on the next business day following
such sixtieth (60th) day.

 

4.          Prepayment.
(i) Optional Prepayment. The Borrower may prepay the principal due under of the Loan, in whole or in part, with each payment
being in multiples of $1,000,000, without penalty or a premium, at any time upon the giving of not less than thirty (30) days’
prior express written notice to the Lender, subject to the following:

 

    	2

    	 

    

 

(a)          Any
partial prepayment of principal shall be applied against the outstanding principal balance of the Loan; and

 

(b)          Any
principal prepayment shall be accompanied by payment of all unpaid accrued interest on the Loan, together with all other unpaid
sums, expenses and fees due and owing hereunder, including, without limitation, the prepayment fee pursuant to Paragraph 4(ii),
all of which fees, if any, shall be deemed to have been earned, provided, however, that if the amount received is insufficient
to pay all such principal, interest, and other amounts due, the amount received shall be applied in the order and priority determined
in the sole discretion of Lender; and

 

(ii)  The
prepayment fee payable in connection with any prepayment of the Loan, pursuant to this Paragraph 4, Paragraph 3 or
otherwise, shall be in amount sufficient to compensate Lender for any loss, cost or expense incurred by it as a result of the prepayment,
including any loss or expense arising from fees payable to terminate the loans, if any, obtained by Lender (including pursuant
to its Credit Agreement or its principal revolving credit facility) for the purpose of funding the Loan in whole or in part.

 

(iii)  Loan
amounts that are repaid to Lender, whether pursuant to this Paragraph 4, Paragraph 3 or otherwise, may not be re-borrowed.

 

5.          Late
Charge. In the event that any payment, including, without limitation, interest and/or principal, required to be
made by the Borrower under this Loan Agreement or the Note shall not be received by the Lender within ten (10) days after the same
shall become due and payable, then the Lender may charge, and if so charged, the Borrower shall pay upon demand, a late charge
equal to two percent (2.0%) of such delinquent payment for the purpose of defraying the expense incident to the handling of such
delinquent payment.

 

6.          Tender
of Payment. All payments pursuant to the Loan Agreement or the Note shall be made in immediately available lawful
funds of the United States on a Payment Date at the office of the Lender located at 207 Kiley Drive, Salisbury, Maryland 21801,
or at such other place as the Lender shall designate in writing from time to time, and shall be credited as the funds become available
in lawful money of the United States. All sums payable to the Lender which is due on a day other than a business day shall be made
on the next succeeding business day and such extended time shall be included in the computation of interest. All payments under
this Loan Agreement and the Note shall be applied to pay late charges, accrued and unpaid interest, principal, escrows (if any)
and any other fees, costs and expenses which the Borrower is obligated to pay under this Loan Agreement and the Note, in such order
as the Lender may elect from time to time in its sole discretion.

 

7.          Time
of Payment. Whenever any payment to be made by the Borrower to the Lender pursuant to the terms of this Loan Agreement
or the Note (i) shall be tendered by the Borrower to the Lender in immediately available funds prior to or at 2:00 p.m. on the
date when due (which date shall be a Business Day), then such payment shall be considered to have been made on that business day,
(ii) shall be tendered by the Borrower to the Lender in immediately available funds after 2:00 p.m. on the date when due (which
date shall be a business day), then such payment shall be considered to have been made on the next succeeding business day or (iii)
shall be stated to be due on a day which is not a business day, such payment may be made on the next succeeding business day.

 

8.          Representations
and Warranties. To induce the Lender to lend the proceeds of the Loan to the Borrower pursuant to this Loan Agreement,
the Borrower makes the following representations and warranties:

 

    	3

    	 

    

 

(i)          The
Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware;

 

(ii)         The
Borrower has all requisite power, authority and legal right (a) to borrow hereunder, (b) to execute and deliver this Loan
Agreement and the Note and to consummate the transactions and perform its obligations hereunder and thereunder and (c) to own its
properties and assets and to carry on and conduct its business as presently conducted;

 

(iii)        The
execution, delivery and performance by the Borrower of this Loan Agreement and the Note have been duly authorized by all necessary
corporate action on the part of the Borrower;

 

(iv)        Neither
the execution and delivery of this Loan Agreement or the Note, nor the consummation of the transactions contemplated hereunder
or thereunder, or the compliance with or performance of the terms and conditions herein or therein will result in the creation
or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Borrower, except
as contemplated or provided herein or therein, or is prevented by, limited by, conflicts with or will result in the breach or violation
of or a default (with due notice or passing of time or both) under the terms, conditions or provisions of (a) the Borrower’s
certificate of incorporation or bylaws, (b) any indenture, evidence of indebtedness, loan or financing agreement, or other agreement
or instrument of whatever nature to which the Borrower is a party or by which the Borrower is bound, or (c) to the best of the
Borrower’s knowledge, any provision of any existing law, rule, regulation, order, writ, injunction or decree of any court
or federal, state, county or municipal governmental authority to which the Borrower is subject;

 

(v)         There
is no action, suit, proceeding, inquiry, hearing or investigation pending or, to the best of the Borrower’s knowledge, threatened
in any court of law or in equity, or before or by any federal, state, county or municipal governmental authority, wherein there
is a reasonable probability that an unfavorable determination, decision, decree, ruling or finding would (a) result in any material
adverse change in the business, assets, liabilities, financial condition, properties or operations of the Borrower, (b) materially
adversely affect the transactions contemplated by this Loan Agreement or the Note, and the ability of the Borrower to perform any
obligation hereunder and thereunder, or (c) adversely affect the validity or enforceability of this Loan Agreement or the Note.
To the best of the Borrower’s knowledge, the Borrower is not in violation of or in default with respect to any order, writ,
injunction, decree or demand of any such court or governmental authority;

 

(vi)        This
Loan Agreement and the Note, when executed and delivered by the Borrower, will constitute legal, valid and binding obligations
of the Borrower enforceable against the Borrower in accordance with their respective terms;

 

(vii)       All
information and financial and other data contained in financial statements and reports previously furnished by the Borrower to
the Lender are true, correct and complete as of the date of said statements and reports, and there has been no material adverse
change with respect thereto since the dates thereof. No information has been omitted which would make the information previously
furnished to the Lender in such reports and financial statements misleading or incorrect in any material respect. Any and all financial
statements and reports of the Borrower previously furnished to the Lender by the Borrower present fairly the financial position
of the Borrower as at their respective dates and the results of operations and changes in financial position in accordance with
United States generally accepted accounting principles (“GAAP”) consistently applied throughout the periods covered
thereby, except as otherwise expressly noted therein. Since the date of the last financial statements previously furnished to the
Lender, there has been no material adverse change in the financial condition, business or operations of the Borrower other than
changes in the ordinary course of business or as disclosed in writing to the Lender;

 

    	4

    	 

    

 

(viii)      The
Borrower has duly filed or caused to be filed all federal, state and local tax reports and returns which are required to be filed
by the Borrower and has paid or made provision for the payment of, all taxes, assessments, fees and other governmental charges
which have or may have become due pursuant to said returns, or otherwise pursuant to any assessment received by the Borrower, except
such taxes, if any, as are being contested in good faith by the Borrower by appropriate proceedings (provided that such contest
shall not result in any of the Borrower’s properties being subject to loss or forfeiture) and for which the Borrower has
accrued the estimated liability on its balance sheet for the payment thereof;

 

(ix)         The
Borrower has good and marketable title to all of its properties and assets listed in the most recent financial statements delivered
to the Lender on or prior to the date hereof (except (a) as otherwise expressly described in said financial statements, and (b)
those properties and assets disposed of since the date of said financial statements in the ordinary course of business); and

 

(x)          The
Borrower is not in violation of or in default, in any material respect, under any applicable federal, state or local laws, ordinances,
rules and/or regulations which materially and adversely affect the financial condition or operations of the Borrower, and the Borrower
is not in violation of or default in any material and adverse respect under any indenture, evidence of indebtedness, loan or financing
agreement or other agreement or instrument of whatever nature to which the Borrower is a party or by which the Borrower is bound,
a default under which might have consequences that would materially adversely affect the Borrower’s financial condition or
operations, except as disclosed in writing to the Lender.

 

9.          CERTAIN
AFFIRMATIVE COVENANTS.

 

(i)          Notice
of Event of Default.  Within two (2) business days of becoming aware of any Event of Default or an event which with
the giving of notice and the passage of time would constitute an Event of Default, the Borrower shall give the Lender written notice
thereof, together with a written statement of the president of the Borrower in his/her capacity as an authorized officer setting
forth the details thereof and any action with respect thereto taken or contemplated to be taken by the Borrower.

 

(ii)         Notice
of Material Adverse Change.  Within two (2) business days of becoming aware thereof, the Borrower shall give the
Lender written notice concerning any material adverse change in the business, assets, operations or financial condition of the
Borrower, setting forth the details thereof and any action with respect thereto taken or contemplated to be taken by the Borrower.

 

(iii)        Notice
of Material Proceedings.  Within two (2) business days of becoming aware thereof, the Borrower shall give the Lender
written notice of the commencement, existence or threat of any action, suit, proceeding, governmental investigation or arbitration
against or affecting the Borrower, including without limitation, litigation, arbitration or administration proceedings which, if
adversely decided, would result in a material adverse effect on the business, assets, operations or financial condition of the
Borrower or on the ability of the Borrower to perform its obligations under this Loan Agreement or the Note.

 

(iv)        Notice
of Material Claims.  The Borrower shall notify the Lender, within two (2) Business Days, of all written claims, complaints,
orders, citations or notices, whether formal or informal, received by the Borrower from a governmental authority or other person
or entity relating to any law, including, without limitation, any environmental law or health and safety law, which could reasonably
be expected to result in a material adverse effect. Such notices shall include, among other information, the name of the party
who filed the claim, the potential amount of the claim, and the nature of the claim.

 

    	5

    	 

    

 

(v)         Preservation
and Maintenance of Properties and Assets.  At all times throughout the term of this Loan Agreement and the
Note the Borrower shall operate, maintain and preserve all rights, privileges, franchises, licenses and other properties and assets
necessary to conduct the Borrower’s business in accordance with all applicable governmental laws, ordinances, approvals,
rules and regulations and requirements, including, but not limited to, zoning, sanitary, pollution, building, Environmental Laws
and safety laws and ordinances, rules and regulations promulgated thereunder.

 

10.         Financial
Statements; Reports and Books and Records.

 

(i) The Borrower covenants
and agrees that it (a) shall keep and maintain complete and accurate books and records, and (b) shall permit the Lender and any
authorized representatives of the Lender to have reasonable access to and to inspect, examine and make copies of the books and
records at the Borrower’s principal place of business.

 

(ii)         The
Borrower covenants and agrees that it shall furnish, or cause to be furnished, to the Lender, at the Borrower’s own cost
and expense, as soon as available after the end of each fiscal year of the Borrower, but in any event within one hundred fifty
(150) days of each fiscal year end of the Borrower during the term of this Loan Agreement, annual financial statements of the Borrower
prepared in accordance with GAAP certified by the president or chief financial officer of the Borrower as being true, correct and
complete.

 

(iii)        The
Borrower covenants and agrees that it shall furnish, or cause to be furnished, to the Lender, at the Borrower’s own cost
and expense, as soon as available after the first, second and third fiscal quarters of the Borrower, but in any event no later
than forty-five (45) days after each such fiscal quarter during the term of this Loan Agreement, “unaudited” management
prepared financial statements of the Borrower for such fiscal quarter period, all in reasonable detail, setting forth in comparative
form the corresponding figures for the corresponding dates and periods during the preceding fiscal year, and certified by the president
or chief financial officer of the Borrower in his capacity as an authorized officer as presenting fairly the financial position
of the Borrower as of the end of such dates and fiscal periods and the results of its operations and cash flows for such fiscal
periods, in conformity with Generally Accepted Accounting Principles applied in a manner consistent with that of the most recent
annual financial statements furnished to the Lender, subject to normal and recurring audit adjustments.

 

(iv)        The
Borrower covenants and agrees that it shall furnish to the Lender any other financial and other information reasonably requested
by the Lender.

 

11.         Fees
and Expenses.  At all times throughout the term of this Loan Agreement, the Borrower shall pay or reimburse
the Lender for all reasonable fees and out-of-pocket expenses actually earned or incurred by the Lender with respect to the enforcement
of the Borrower’s obligations hereunder, including, but not limited to, the reasonable fees and expenses of the Lender’s
attorneys reasonably incurred in the enforcement of Lender’s rights as set forth in this Loan Agreement and the Note. Any
expenses so paid by the Lender shall be deemed advances under this Loan Agreement and the Note and shall be treated as set forth
in Paragraph 12 hereof.

 

12.         Advances.  At
any time during the term of this Loan Agreement, if the Borrower should fail to perform or observe, or to cause to be performed
or observed, any covenant or obligation of the Borrower under this Loan Agreement or the Note, then the Lender, may, after the
issuance of written notice to the Borrower (but shall be under no obligation to), take such steps as are necessary to remedy any
such nonperformance or nonobservance and provide for payment thereof. All amounts advanced by the Lender pursuant to this Paragraph
12 shall become an additional obligation of the Borrower to the Lender, and shall become immediately due and payable by the
Borrower, together with interest thereon at the Default Rate.

 

    	6

    	 

    

 

13.         Further
Assurances.  The Borrower shall, from time to time, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such supplements hereto and such further instruments and documents as may reasonably be required for
carrying out the intention of or facilitating the performance of this Loan Agreement or the Note.

 

14.         Indemnification.  The
Borrower agrees to and does hereby indemnify, protect, defend and save harmless the Lender, as well as the Lender’s affiliates,
directors, officers, employees, agents, attorneys and shareholders (hereinafter referred to collectively as the “Indemnified
Parties” and individually as an “Indemnified Party”) from and against any and all losses, damages,
expenses or liabilities of any kind or nature and from any suits, claims, or demands, including reasonable counsel fees incurred
in investigating or defending such claim, suffered by any of them and caused by, relating to, arising out of, resulting from, or
in any way connected with the Loan; provided, however, the Borrower shall not be obligated to indemnify, protect, defend and save
harmless an Indemnified Party, if the loss, damage, expense or liability was caused by or resulted from said Indemnified Party’s
own gross negligence or willful misconduct.

 

In case any action
shall be brought against an Indemnified Party based upon any of the above provisions and in respect to which indemnity may be sought
against the Borrower, said Indemnified Party, against whom such action was brought shall promptly notify the Borrower in writing,
and the Borrower shall assume the defense thereof, including the employment of counsel selected by the Borrower and reasonably
satisfactory to said Indemnified Party, the payment of all costs and expenses and the right to negotiate and consent to settlement.
Upon reasonable determination made by said Indemnified Party, said Indemnified Party shall have the right to employ separate counsel
in any such action and to participate in the defense thereof. The Borrower shall not be liable for any settlement of any such action
effected without its consent, but if settled with the Borrower’s consent, or if there be a final judgment for the claimant
in any such action, the Borrower agrees to indemnify and save harmless said Indemnified Party against whom such action was brought
from and against any loss or liability by reason of such settlement or judgment. The provisions of this Paragraph 14 shall
survive the termination of this Loan Agreement and the repayment of the Loan evidenced by the Note.

 

15.         Events
of Default.  The occurrence of any of the following events and the passing of any applicable notice and
cure periods shall constitute an “Event of Default” under this Loan Agreement and the Note (hereinafter referred to
as an “Event of Default”):

 

(i)          Any
representation or warranty made by or on behalf of the Borrower, Jubilant Life Sciences Holdings, Inc., a Delaware corporation
(the “Guarantor”), or any other person or entity pursuant to or in connection with the Loan, this Loan Agreement
or the Note, or in any report, agreement, document, certificate, financial statement or other writing furnished by or on behalf
of the Borrower, Guarantor and/or any other person or entity to the Lender in connection with the Loan, shall prove to be false,
incorrect or misleading in any material respect as of the date when made;

 

(ii)         The
Borrower shall have failed to make a payment of any installment of principal and/or interest on the Loan on its due date;

 

    	7

    	 

    

 

(iii)        The
Borrower shall have failed to duly observe or perform any covenant, condition or agreement with respect to the payment of monies
on the part of the Borrower to be observed or performed pursuant to the terms of this Loan Agreement or the Note, other than the
payment of interest and/or principal which shall be governed by subparagraph (ii) above and such default shall have remained
uncured for a period of ten (10) days after notice thereof to the Borrower by the Lender;

 

(iv)        The
Borrower or Guarantor shall have applied for or consented to the appointment of a custodian, receiver, trustee or liquidator of
all or a substantial part of its assets; or shall generally be unable to pay its debts when due; or shall have admitted in writing
the inability to pay its debts as they mature; or shall have made a general assignment for the benefit of its creditors; or shall
have filed a petition or an answer seeking an arrangement with its creditors or shall have taken advantage of any insolvency law;
or shall have submitted an answer admitting the material allegations of a petition in bankruptcy or insolvency proceeding; or an
order, judgment or decree shall have been entered, without the application, approval or consent of the Borrower or Guarantor, as
applicable, by any court of competent jurisdiction appointing a custodian, receiver, trustee or liquidator of the Borrower or the
Guarantor or a substantial part of any of its assets; or if any Order for Relief shall have been entered under the Federal Bankruptcy
Code; or

 

(v)         The
occurrence of an “Event of Default,” as defined in that certain loan agreement, dated November 23, 2011, by and between
Borrower and Lender, as the same has been or may hereafter be amended (the “2011 Loan Agreement”).

 

16.         Remedies.  Upon
the occurrence of an Event of Default, and at any time thereafter during the continuance of such Event of Default, the Lender may
take one or more of the following remedial steps:

 

(i)          Declare
immediately due and payable the outstanding principal balance of the Loan, together with all accrued and unpaid interest, fees
and other sums or expenses payable hereunder and under the Note, and accordingly accelerate payment thereof, without presentment,
demand or notice of any kind, all of which are expressly waived, notwithstanding anything to the contrary contained herein or elsewhere;

 

(ii)         Take
any action at law or in equity (a) to collect the payments then due and thereafter to become due under this Loan Agreement and
the Note or (b) to enforce performance and observance of any obligation, agreement or covenant of the Borrower under this Loan
Agreement and the Note; and

 

(iii)        Exercise
any and all rights and remedies which are provided for in the Loan Agreement and the Note (or in any instrument or document related
thereto, including, without limitation, the Guaranty by Guarantor set forth below).

 

17.         ACKNOWLEDGEMENT
OF LENDER’S RIGHT TO DEMAND PAYMENT.  Nothing in Paragraph 15 or Paragraph 16 or any other
provisions in this Loan Agreement or in the Note shall limit the Lender’s right to demand repayment of all or any portion
of the outstanding principal amount of the Loan, accrued and unpaid interest, together with all prepayment fees and other sums
and expenses, pursuant to Paragraph 3, regardless of whether an Event of Default has occurred. The rights granted pursuant
to this Loan Agreement to Lender in connection with the occurrence of an Event of Default are in addition to, and not intended
to limit, such rights granted to Lender pursuant to Paragraph 3.

 

18.         No
Notices.  In order to entitle the Lender to exercise any remedy available to the Lender under Paragraph
16, it shall not be necessary for the Lender to give any notice, other than such notice as may be required expressly in this
Loan Agreement or by applicable law.

 

    	8

    	 

    

 

19.         Agreement
to Pay Attorneys’ Fees and Expenses.  If this Loan Agreement of the Note is placed in the hands
of an attorney for collection, by suit or otherwise, or to enforce its collection, the Borrower immediately and without demand
will pay all reasonable costs of collection and litigation together with reasonable attorneys’ fees.

 

20.         No
Additional Waiver Implied by One Waiver.  In the event any agreement contained in this Loan Agreement
or the Note should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular
breach so waived and shall not be deemed to waive any other breach hereunder.

 

21.         Failure
to Exercise Rights.  Nothing herein contained shall impose upon the Lender any obligation to enforce any
terms, covenants or conditions contained in this Loan Agreement or the Note. Failure of the Lender, in any one or more instances,
to insist upon strict performance by the Borrower of any terms, covenants or conditions of this Loan Agreement or the Note or any
document, agreement, instrument or certificate executed by the Borrower in connection with this Loan Agreement or the Note, shall
not be considered or taken as a waiver or relinquishment by the Lender of its right to insist upon and to enforce in the future,
by injunction or other appropriate legal or equitable remedy, strict compliance by the Borrower with all the terms, covenants and
conditions of this Loan Agreement or the Note and said other documents. The consent of the Lender to any act or omission by the
Borrower shall not be construed to be a consent to any other or subsequent act or omission or to waive the requirement for the
Lender’s consent to be obtained in any future or other instance.

 

22.         Successors
and Assigns.  All of the terms, covenants, warranties and conditions contained in this Loan Agreement
shall be binding upon and inure to the sole and exclusive benefit of the Borrower and the Lender and their respective successors
and assigns.

 

23.         Notices.  Unless
otherwise indicated differently, all notices, payments, requests, reports, information or demands which any party hereto may desire
or may be required to give to any other party hereunder, shall be in writing and shall be personally delivered or sent by confirmed
telecopy transmission, nationally recognized overnight courier or first-class certified or registered United States mail, postage
prepaid, return receipt requested, and sent to the party at its address appearing below or such other address as any party shall
hereafter inform the other party hereto by written notice given as aforesaid:

 

	If to the Borrower:	
        HSL HOLDINGS INC.

        3525 N. Regal Street

        Spokane, WA 99207

        Attn: Mr. Sitakant Chaudhary

        Fax No.: 509-484-4320

	 	 
	If to Lender:	
        JUBILANT CADISTA PHARMACEUTICALS INC.

        207 Kiley Drive

        Salisbury, Maryland 21801

        Attn: Mr. Kamal Mandan

        Fax No. 410-860-8719

 

All notices, payments, requests, reports,
information or demands so given shall be deemed effective upon receipt or, if mailed, upon receipt or the expiration of the third
day following the date of mailing, whichever occurs first, except that any notice of change in address shall be effective only
upon receipt by the party to whom said notice is addressed. A failure to send the requisite copies does not invalidate an otherwise
properly sent notice to the Borrower and/or the Lender.

 

    	9

    	 

    

 

24.         Modification
In Writing.  This Loan Agreement and the Note is the entire agreement between the Borrower and the Lender relating
to the Loan, and supersedes all prior agreements whether written or oral, with respect to the subject matter hereof. This Loan
Agreement and the Note may not be changed, waived, discharged or terminated orally, but only by an instrument in writing signed
by the party against whom enforcement of the change, waiver, discharge or termination is sought.

 

25.         Rights,
Powers and Remedies are Cumulative. None of the rights, powers and remedies conferred upon or reserved to the Lender
in this Loan Agreement is intended to be exclusive of any other available right, power or remedy, but each and every such right,
power and remedy shall be cumulative and not alternative, and shall be in addition to every right, power and remedy herein specifically
given or now or hereafter existing at law, in equity or by statute. Any forbearance, delay or omission by the Lender in the exercise
of any right, power or remedy shall not impair any such right, power or remedy or be considered or taken as a waiver or relinquishment
of the right to insist upon and to enforce in the future, by injunction or other appropriate legal or equitable remedy, any of
said rights, powers and remedies given to the Lender herein. The exercise of any right or partial exercise thereof by the Lender
shall not preclude the further exercise thereof, and the same shall continue in full force and effect until specifically waived
by an instrument in writing executed by the Lender.

 

26.         Usurious
Interest Rate.  Notwithstanding anything to the contrary contained in this Loan Agreement or in the Note, the effective
rate of interest under this Loan Agreement and the Note shall not exceed the maximum effective rate of interest permitted by applicable
law. In the event that the interest referred to hereunder would be usurious in the Lender’s opinion at any time, the Lender
reserves the right to reduce the interest payable by the Borrower. The provisions of this Paragraph 26 shall survive the
repayment of the Loan.

 

27.         No
Assignment. The Borrower may not assign any of its right, title or interest under this Loan Agreement, nor may the
Borrower delegate any of its obligations and duties under this Loan Agreement or the Note. Any attempted assignment or delegation
in contravention of the foregoing shall be null and void.

 

28.         Conflicting
Paragraphs. In the event any paragraphs of this Loan Agreement shall be determined to be apparently contrary to
or conflicting with any other paragraph of this Loan Agreement, then the paragraph containing the more specific provisions shall
control and govern with respect to such apparent conflict.

 

29.         DELAWARE
Law Governs. This Loan Agreement and the Note and all matters relating thereto
shall be governed by and construed and interpreted in accordance with the laws of the State of Delaware, without giving effect
to conflict of laws principles.

 

30.         Absolute
Liability of the Borrower.  The liability of the Borrower shall be absolute and unconditional and without regard
to the liability of any other party, except as otherwise provided herein.

 

    	10

    	 

    

 

IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be duly executed and delivered by their duly authorized officers, all as of the
day and year first above written.

 

	 	BORROWER:
	 	 
	 	HSL HOLDINGS INC.
	 	 
	 	By:	/s/Sitakant Chaudhary
	 	 	Name:  Sitakant Chaudhary
	 	 	Title: Chief Financial Officer
	 	 	 
	 	LENDER:
	 	 	 
	 	JUBILANT CADISTA PHARMACEUTICALS INC.
	 	 	 
	 	By:	/s/Kamal Mandan
	 	 	Name:  Kamal Mandan
	 	 	Title:  Chief Financial Officer

 

    	11

    	 

    

 

guaranty.  In
order to induce Lender to enter into the above Loan Agreement and make the Loan, Jubilant Life Sciences Holdings, Inc., a Delaware
corporation (“Guarantor”), hereby guaranties the full, prompt and unconditional payment when due, of each and every
liability and obligation of Borrower owing to the to the Lender under this Loan Agreement and/or the Note, when and as the same
shall become due, whether at the stated maturity date, by acceleration, on demand or otherwise, and the full, prompt, and unconditional
performance of each and every term and condition of any covenant to be performed by Borrower under this Agreement and/or the Note
(all liabilities, obligations and covenants of Borrower under this Loan Agreement and the Note are collectively referred to as
the “Loan Obligations”). This guaranty is absolute, continuing and unconditional and irrevocable and is a guaranty
of payment and performance as a primary obligor, not a guaranty of collection. Guarantor waives any right to require Lender, as
a condition of payment or performance Guarantor hereunder to proceed against Borrower or any other person or entity or to pursue
any other remedy or enforce any other right. To the extent permitted by applicable law, Guarantor unconditionally waives diligence,
demand or notice of any kind whatsoever with respect to this guaranty or the Loan Obligations or with respect to any condition
or circumstance whatsoever that might otherwise constitute a legal or equitable discharge, release or defense of a guarantor or
surety or that might otherwise limit recourse against Guarantor. Until such time as the Loan Obligations and all liabilities, obligations
and covenants of Borrower under the 2011 Loan Agreement and the promissory note executed in connection therewith have been fully
and indefeasibly been repaid to Lender, Guarantor hereby irrevocably and unconditionally waives and relinquishes any and all statutory,
contractual, common law, equitable or other rights and claims the Guarantor may have against Borrower in connection with the Loan
Obligations, including, without limitation, any claim (i) to seek reimbursement, contribution, indemnification, set-off or other
recourse from or against Borrower in connection with any payment by Guarantor pursuant to this Guaranty, or (ii) to be subrogated
to the Lender’s rights under this Loan Agreement and/or the Note upon the Guarantor’s performance under this Guranty.
Guarantor shall not have the right to consent to, or receive any notice of, any supplement to or amendment, waiver or modification
of the terms of this Loan Agreement or the Note, and no notice or demand on Guarantor shall entitle Guarantor to any other notice
or demand in the same, similar or any other circumstances. Borrower and Lender may renew, extend, change or modify the time, manner,
place or terms of payment, performance or observance of any or all of the Loan Obligations and settle or compromise any or all
of such Loan Obligations all in such manner and upon such terms as the Borrower and Lender may deem proper, without notice to or
further assent of Guarantor. Guarantor shall remain bound under this Guaranty notwithstanding such renewal, extension, change,
modification, release, settlement or compromise. No failure on the part of Lender, or delay by Lender, in exercising any right
under or with respect to this Guaranty shall operate as a waiver thereof, nor shall any single or partial exercise of any such
right preclude any other further exercise thereof or the exercise of any other right of the Lender with respect to this Guaranty.
The terms and provisions of Paragraphs 19, 22, 24, 27 and 29 of the Loan Agreement shall apply mutatis mutandis to this
Guaranty, as if this Guaranty were the Loan Agreement and the Guarantor was a party to the Loan Agreement as Borrower. For the
avoidance of doubt, any capitalized term used in this Guaranty that is not otherwise defined in this Guaranty shall have the meaning
ascribed to it in the above Loan Agreement.

 

	JUBILANT LIFE SCIENCES HOLDINGS, INC.	 
	 	 	 
	By:	/s/ Rahul Devnani	 	 
	 	Name:  Rahul Devnani	 
	 	Title:  Treasurer	 
	 	 
	Date: January 30, 2013	 

 

    	12

    	 

    

 

EXHIBIT “A”

 

ATTACHED TO AND MADE A PART OF THAT CERTAIN

LOAN AGREEMENT

BY AND BETWEEN HSL HOLDINGS INC., AS
THE BORROWER, 

AND 

JUBILANT CADISTA PHARACEUTICALS INC.,
AS THE LENDER,

DATED 

January 30, 2013

 

Form of Note

 

	$20,000,000.00	[_______], [_______]

January 30, 2013

 

FOR VALUE RECEIVED,
the undersigned, HSL HOLDINGS INC., a corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware (hereinafter referred to as the “Borrower”), promises to pay to the order of JUBILANT CADISTA
PHARMACEUTICALS INC., a corporation organized and good standing under the laws of the State of Delaware, its successors and/or
assigns (hereinafter collectively referred to as the “Lender”) on or before the Maturity Date, or such earlier date
as may be determined pursuant to the terms, conditions and provisions of the “Loan Agreement” (as such term is defined
below), including, without limitation, upon the demand of Lender, the principal sum of TWENTY MILLION AND 00/100 ($20,000,000.00)
DOLLARS. The Borrower hereby further promises to pay to the order of the Lender interest on the unpaid principal amount outstanding
under this Note (hereinafter, as it may be from time to time amended, modified, extended, renewed, refinanced, substituted and/or
supplemented, referred to as this “Note”) from the date outstanding until paid in full at the applicable interest rate
per annum determined pursuant to the terms, conditions and provisions of Paragraph 2(i) or Paragraph 2(iii) of, or
as otherwise provided for in, the Loan Agreement payable on the dates set forth in Paragraph 2(ii), Paragraph 3,
Paragraph 4 and Paragraph 16 of, or as otherwise provided in, the Loan Agreement. Defined terms used but not expressly
defined herein shall have the same meanings when used herein as set forth in the Loan Agreement. .

 

All payments of principal,
interest and fees hereunder shall be due and payable to the Lender not later than 2:00 p.m.
(Salisbury, Maryland time), on the day when due, all as more fully and accurately set forth in Paragraph 6 of the Loan Agreement.
Such payments shall be made in United States Dollars in immediately available funds without setoff, counterclaim (other than a
compulsory counterclaim) or other deduction of any nature.

 

Except as otherwise
provided in the Loan Agreement, if any payment of principal, interest or fees hereunder shall become due on a day which is not
a business day, such payment shall be made on the next following business day and such extension of time shall be included in computing
interest in connection with such payment.

 

    	13

    	 

    

 

This Note is the “Note”
referred to in, and is entitled to the benefits of that certain: (a) Loan Agreement dated January 30, 2013, executed by and between
the Borrower and the Lender (hereinafter, as it may be from time to time amended, modified, extended, renewed, refinanced and/or
supplemented, referred to as the “Loan Agreement”), which among other things provides for: (i) the acceleration of
the maturity hereof upon the occurrence of certain events; (ii) the demand for payment of the principal amount of this Note, accrued
and unpaid interest thereon and other fees and expenses in connection therewith at any time in Lender’s discretion; and (iii)
prepayments in certain circumstances and upon certain terms and conditions; and (b) Guaranty, dated as of the same date, executed
by Jubilant Life Sciences Holdings, Inc., a Delaware corporation.

 

The Borrower hereby
expressly waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note and the Loan Agreement.

 

This Note and the rights
and obligations of the parties hereunder shall be construed, interpreted, enforced and governed by the laws of the State of Delaware,
excluding the laws applicable to conflicts and choice of laws.

 

IN WITNESS WHEREOF,
the Borrower has caused this Note to be executed and delivered by its proper and duly authorized officer and has caused its corporate
seal to be hereunto affixed and attested, pursuant to the resolution of its Board of Directors, all on the day and year first hereinabove
written.

 

	[SEAL]	 	HSL HOLDINGS INC.,
	ATTEST:	 	as the Borrower
	 	 	 
	 	 	 	By:	 	 
	Name:	 	 	 	Name:
	Title:	 	 	 	Title:

 

    	14

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