Document:

exv10w2

 

Exhibit 10.2

AMENDMENT No. 3 TO SECURED LOAN AGREEMENT

     AMENDMENT TO SECURED LOAN AGREEMENT (this “Amendment”) dated as of December 21, 2007 among
WESTLB AG, NEW YORK BRANCH (the “Lender”), U.S. BANK NATIONAL ASSOCIATION, a national banking
association (the “Collateral Agent” and
“Securities Intermediary”), LEASE EQUITY
APPRECIATION FUND II, L.P., a Delaware limited partnership
(“LEAF” or the “Seller”), LEAF FINANCIAL
CORPORATION, a Delaware corporation (the “Servicer”), LEAF FUNDING INC., a Delaware corporation
(the “Originator”) and LEAF FUND II, LLC, a Delaware limited liability company (the “Borrower”).

W
I T N E S S E
T H:

     WHEREAS, the parties hereto are parties to the Secured Loan Agreement, dated as of June 1,
2005 (as modified, amended or supplemented from time to time, the “Secured Loan Agreement”);

     WHEREAS, pursuant to Section 14.04 of the Secured Loan Agreement, the parties hereto wish to
amend the Secured Loan Agreement and hereby agree that the Secured Loan Agreement is hereby
amended; and

     NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

     SECTION 1. Definitions.

     (a) Whenever
used in this Amendment, capitalized terms used and not otherwise
defined herein shall have the meanings set forth in Appendix A to the Secured Loan Agreement.

     (b) Any
term that relates to a document or a statute, rule, or regulation includes any
amendments, modifications, supplements, or any other changes that may have occurred since the
document, statute, rule, or regulation came into being, including changes that occur after the
date of this Amendment.

     SECTION 2. Amendments. The parties hereto hereby agree, pursuant to Section 14.04
of the Secured Loan Agreement, to amend the Secured Loan Agreement as follows:

     (a) The definition of Senior Leverage Ratio in Appendix A shall be struck in its
entirety and replaced with:

          “Senior Leverage Ratio” means, with respect to LEAF, the result obtained by dividing
LEAF’S Combined Recourse Debt by LEAF’S Adjusted Partner’s Capital. For such determination,
“Combined Recourse Debt” means all of LEAF’s debts and liabilities, but excluding third party
accounts payable, accrued expenses, non-recourse debt and intercompany obligations, and “Adjusted
Partner’s Capital” means partner’s capital (in accordance with GAAP with no adjustment for other
comprehensive income accounted for pursuant to SFAS 133/138)

 

 

plus “Due to General Partner” plus subordinated debt, if any. For such determination (including
Section 7.02(jj)), “Due to General Partner” means amounts, as set forth in the financial statements
of LEAF, that are due to LEAF Financial Corporation and its affiliates, as general partner of LEAF,
for management fees and expenses due for servicing the Securitized Portfolio in addition to amounts
LEAF Financial Corporation has paid for property taxes due on the Securitized Portfolio that have
been billed to Customers.

          (b) Subsection (jj) of Section 7.02 shall be struck in its entirety and replaced
with:

          “(jj) As of the last day of each fiscal quarter commencing December 31, 2006, LEAF shall
maintain “Adjusted Partner’s Capital” of no less than 75.00% of “partner’s equity” (as reflected
in its financial statements) as of the last day of its offering period pursuant to its Prospectus
dated December 22, 2004 as reported in its December 31, 2006 financial statements.”

     (c) The effective date of this amendment shall be the date hereof.

     SECTION 3. Representations and Warranties.

     Borrower, LEAF and Servicer each hereby severally certifies as to itself that its respective
representations and warranties set forth in Article VI of the Secured Loan Agreement (and any other
representations and warranties made by Borrower, LEAF or Servicer in the Secured Loan Agreement)
are true and correct on the date hereof with the same force and effect as if made on the date
hereof, except to the extent such representations and warranties speak specifically to an earlier
date in which case they shall have been true and correct on such date. In addition, Borrower, LEAF
and Servicer each severally represents and warrants (which representations and warranties shall
survive the execution and delivery hereof) that (a) no unwaived Facility Termination Event or Event
of Default (nor any event that but for notice or lapse of time or both would constitute an unwaived
Facility Termination Event or Event of Default) shall have occurred and be continuing as of the
date hereof nor shall any unwaived Facility Termination Event or Event of Default (nor any event
that but for notice or lapse of time or both would constitute an unwaived Facility Termination
Event or Event of Default) occur due to this Amendment becoming effective, (b) Borrower, LEAF and
Servicer each has the power and authority to execute and deliver this Amendment and has taken or
caused to be taken all necessary actions to authorize the execution and delivery of this Amendment,
(c) no consent of any other person (including, without limitation, members or creditors of
Borrower, LEAF or Servicer), and no action of, or filing with any governmental or public body or
authority is required to authorize, or is otherwise required in connection with the execution and
performance of this Amendment, other than such that have been obtained, (d) the Secured Loan
Agreement, as amended by this Amendment, constitutes the legal, valid and binding obligation of
Servicer, LEAF and the Borrower, enforceable against them in accordance with its terms except as
the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, reorganization and
other similar laws of general application affecting creditors’ rights generally and by general
principles of equity (whether such enforceability is considered in a proceeding in equity or law),
and (e) the execution, delivery and performance of this Amendment will not violate any provision of
any existing law or regulation or any order or decree of any court, regulatory body or
administrative agency or the certificate of formation or the limited liability company

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agreement of Servicer, LEAF or Borrower or any material indenture, agreement, mortgage, deed of
trust or other instrument to which Servicer, LEAF or the Borrower is a party or by which it is
bound.

     SECTION 4. Ratification. Upon execution of this Amendment, the Secured Loan Agreement
shall be amended in accordance herewith, and the respective rights, limitations, obligations,
duties, liabilities and immunities of the parties shall hereafter be determined, exercised and
enforced subject in all respects to such amendments, and the terms of this Amendment shall be a
part of the Secured Loan Agreement for any and all purposes. Except as modified and expressly
amended by this Amendment, the Amendment is in all respects ratified and confirmed, and all the
terms, provisions and conditions thereof shall be and remain in full force and effect.

     SECTION 5. GOVERNING LAW. THIS AGREEMENT SHALL, IN
ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW
PRINCIPLES THEREOF.

     SECTION 6. Counterparts. For the purpose of facilitating the execution of this
Amendment and for other purposes, this Amendment may be executed simultaneously in any number of
counterparts, each of which shall be deemed to be an original and together shall constitute and be
one and the same instrument.

     SECTION 7. Severability of Provisions. If any one or more of the provisions or terms
of this Amendment shall be for any reason whatsoever held invalid, then such provisions or terms
shall be deemed severable from the remaining provisions or terms of this Amendment and shall in no
way affect the validity or enforceability of the other provisions or terms of this Amendment.

     SECTION 8. Amendment. This Amendment may be amended or modified from time to time by
the parties hereto, but only by an instrument in writing signed by each of the parties hereto.

     SECTION 9. Headings. The Section headings are not part of this Amendment and shall
not be used in its interpretation.

[REMAINDER OF PAGE IS INTENTIONALLY LEFT BLANK]

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          IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

	 	 	 	 	 
	 	

LEAF FUND II, LLC, 
    as Borrower

 	 
	 	    By:	/s/   Miles Herman
 	 
	 	 	Name:  	Miles Herman 	 
	 	 	Title:  	Vice President 	 
	 
	 	LEASE EQUITY APPRECIATION FUND II, L.P.,
      as Seller

 	 
	 	     By: LEAF FINANCIAL CORPORATION,
         as General Partner
 	 
	 
	 	    By:	/s/     Miles Herman
 	 
	 	 	Name:  	Miles Herman 	 
	 	 	Title:  	President and COO 	 
	 
	 	LEAF FINANCIAL CORPORATION, as Servicer	 
	 
	 	    By:	/s/ Miles Herman
 	 
	 	 	Name:  	Miles Herman 	 
	 	 	Title:  	President and COO 	 
	 
	 	LEAF FUNDING, INC., as Originator

 	 
	 	    By:	/s/         Miles Herman
 	 
	 	 	Name:  	Miles Herman 	 
	 	 	Title:  	President and COO 	 
	 

 

 

	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION, as
 Collateral Agent and Securities Intermediary

 	 
	 	By:  	/s/ Diane L. Reynolds 	 
	 	 	Name:  	Diane L. Reynolds	 
	 	 	Title:  	Vice President	 
	 
	 	WESTLB AG, NEW YORK BRANCH, as Lender

 	 
	 	By:  	/s/  Matthew Tallo
 	 
	 	 	Name:  	Matthew Tallo 	 
	 	 	Title:  	Director 	 
	 
	 	By:  	                        /s/      Vesselina Koleva
 	 
	 	 	Name:  	Vesselina Koleva 	 
	 	 	Title:  	Directorexv4w1

 

Exhibit 4.1

EURAND N.V.

EQUITY COMPENSATION PLAN

(Adopted August 29, 2007 and amended on December 12, 2007)

	1.	 	Purpose

     This Plan is an amendment and restatement of the Eurand N.V. 1999 Stock Option Plan. The
purpose of the Plan is to provide a means through which the Company may attract qualified persons
to enter and remain in the employ or service of the Company and its Subsidiaries and to provide a
means whereby they can acquire shares in the Company, thereby strengthening their commitment to the
welfare of the Company and promoting an identity of interest between shareholders of the Company
and these employees. This Plan is intended to cover the grant of Options, Restricted Stock and
Other Stock-Based Awards to employees and directors of the Company and/or employees of the
Company’s U.S., Italian, French and Irish Subsidiaries. So that the appropriate incentive can be
provided, and to insure that any applicable provisions of local law are complied with, Exhibit A to
the Plan provides for any specific terms applicable to the granting of options to employees of the
U.S. subsidiaries.

	2.	 	Definitions

     The following definitions shall be applicable throughout the Plan.

	 	(a)	 	“Award” means, individually or collectively, any Incentive Stock Option,
Nonqualified Stock Option, Restricted Stock Award, or Other Stock-based Award.
	 
	 	(b)	 	“Award Agreement” means the agreement between the Company and a Holder who has
been granted an Award which defines the rights and obligations of the parties with
respect to such Award.
	 
	 	(c)	 	“Board” means the Board of Directors of the Company.
	 
	 	(d)	 	“Cause” means the Company or a Subsidiary (as the case may be) having cause to
terminate an Optionee’s employment or service in accordance with the provisions of any
existing employment, consulting or any other agreement between the Optionee and the
Company or a Subsidiary (as the case may be) or, in the absence of such an employment,
consulting or other agreement, upon (i) the determination by the Company or a
Subsidiary (as the case may be) that the Optionee has ceased to perform his duties to
the Company or a Subsidiary (as the case may be) (other than as a result of his
incapacity due to physical or mental illness or injury), which failure amounts to
intentional and extended neglect of his duties, (ii) the Committee’s determination that
the Optionee has engaged in or is about to engage in conduct materially injurious to
the Company or any act of fraud or embezzlement against the Company, or (iii) the
Optionee having pled no contest or guilty to a charge of a felony or having been
convicted of a felony.
	 
	 	(e)	 	“Change of Control” shall unless the Board otherwise directs by resolution
adopted prior thereto or, in the case of a particular Award, the applicable Award
Agreement states otherwise, be deemed to have occurred if: (i) any person (as

 

 

	 	 	 	defined in Section 3(a)(9) of the U.S. Securities Exchange Act of 1934, and as used
in Sections 13(d) and 14(d) thereof, including any “group” as defined in Section
13(d)(3) thereof (a “Person”), but excluding the Company, any Subsidiary, any
employee benefit plan sponsored or maintained by the Company or any Subsidiary
(including any trustee of such plan acting as trustee), and any Person who owns shares of the Company representing 50% or more of the Company’s outstanding
securities eligible to vote for the election of directors of the Company (the
“Voting Shares”) immediately prior to the IPO, becomes the beneficial owner of 50%
or more of the Voting Shares; (ii) the Company undergoes any merger, consolidation,
reorganization, recapitalization or other similar business transaction sale of all
or substantially all of the Company’s assets or combination of the foregoing
transactions (a “Transaction”), other than a Transaction involving only the Company
and one or more affiliates, and immediately following such Transaction the
shareholders of the Company immediately prior to the Transaction do not continue to
own at least a majority of the voting power in the resulting entity; (iii) the
persons who are the members of the Board immediately prior to the IPO (the
“Incumbent Directors”) shall cease (for any reason other than death) to constitute
at least a majority of members of the Board or the board of directors of any
successor to the Company, provided that any director who was not a director
immediately prior to the IPO shall be deemed to be an Incumbent Director if such
director was elected to the Board by, or on the recommendation of or with the
approval of, at least a majority of the directors who then qualified as Incumbent
Directors, either actually or by prior operation of this definition; or (iv) the
shareholders of the Company approve a plan of liquidation or dissolution of the
Company, or any such plan is actually implemented. Notwithstanding the foregoing, a
Change of Control of the Company shall not be deemed to occur solely because any
person acquires beneficial ownership of more than 50% of the Voting Shares as a
result of the acquisition of Voting Shares by the Company which reduces the number
of the Voting Shares outstanding; provided, that if after such
acquisition by the Company such person becomes the beneficial owner of additional
Voting Shares that increases the percentage of outstanding Voting Shares
beneficially owned by such person, a Change of Control of the Company shall then
occur.
	 
	 	(f)	 	“Committee” means, unless otherwise specifically determined by the Board, the
Compensation Committee of the Board, which, unless otherwise specifically determined by
the Board, shall be composed entirely of Qualified Members, to the extent Qualified
Members are required, or desirable, under applicable law to take action under the Plan;
provided, however, that, the Board or the Committee may appoint a
different committee to assume any or all powers of the Committee, including by
delegating to one or more officers of the Company the authority to grant Options under
the Plan to employees who are not executive officers, within such limits as the Board
or Committee determines in accordance with applicable law and the regulations of any
national securities exchange on which the Company’s shares are listed. If the Board
makes a determination to assume any or all powers of the Committee or to appoint a
different committee or officer to assume any or all powers of the Committee, any
reference to the Committee

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	 	 	 	herein shall be deemed to be a reference to the Board or such other committee or
officer. Prior to the time the Board makes a determination to assume any or all
powers of the Committee, to appoint a different committee or officer to assume any
or all powers of the Committee or to appoint members of the Compensation Committee
who are not also Qualified Members, the Board shall give due consideration to the
ramifications under all applicable laws and/or regulations of any applicable
jurisdiction of such determination, including Section 162(m) and the requirements of
any national securities exchange on which the Company’s shares are listed.
	 
	 	(g)	 	“Company” means Eurand N.V., a company with limited liability duly organized
under the laws of the Netherlands, or any successor entity.
	 
	 	(h)	 	“Disability” means that the Optionee has been determined by the Committee, in
its discretion, or pursuant to any provision of applicable law, to meet the
requirements for payment of long-term disability benefits by reason of total
disability.
	 
	 	(i)	 	“Eligible Person” means any (i) person regularly employed by the Company or a
Subsidiary or (ii) director of the Company.
	 
	 	(j)	 	“Fair Market Value” on a given date means (i) if the Shares are listed on a
national securities exchange, the closing price on the primary exchange with which the
Shares are listed and traded on such date, or, if there is no such sale on that date,
then on the last preceding date on which such a sale was reported; or (ii) if the
Shares are not listed on a national securities exchange, the amount determined by the
Committee to be the fair market value based upon a good faith attempt to value the
Shares accurately.
	 
	 	(k)	 	“Holder” means an Eligible Person who has been granted an Award.
	 
	 	(l)	 	“Normal Termination” means termination of employment or service with the
Company and all Subsidiaries:

	 	(i)	 	Upon retirement pursuant to the retirement plan of the Company
or a Subsidiary (as the case may be), as may be applicable at the time to the
Optionee in question;
	 
	 	(ii)	 	On account of Disability;
	 
	 	(iii)	 	By the Company or a Subsidiary (as the case may be) without Cause; or
	 
	 	(iv)	 	With the specific written consent of the Committee.

	 	(m)	 	“Option” means an option issued pursuant to this Plan.
	 
	 	(n)	 	“Optionee” means the holder of an Option.

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	 	(o)	 	“Option Period” means the period of time set by the Committee after which time
an Option will expire.
	 
	 	(p)	 	“Option Price” means the exercise price set for an Option.
	 
	 	(q)	 	“Other Stock-Based Award” means an Award described in Section 10.
	 
	 	(r)	 	“Plan” means this Eurand N.V. Equity Compensation Plan, which is an amendment
and restatement of the Eurand N.V. 1999 Stock Option Plan.
	 
	 	(s)	 	“Qualified Member” means a member of the Board who is (i) an “outside director”
within the meaning of Regulation 1.162-27(c) under Section 162(m), to the extent that
Section 162(m) is applicable, and (ii) an independent member of the Board under the
NASDAQ independence requirements, to the extent that action by such an independent
member is required by NASDAQ.
	 
	 	(t)	 	“Restricted Period” means, with respect to any Share of Restricted Stock, the
period of time determined by the Committee during which such Award is subject to
forfeiture and other the restrictions.
	 
	 	(u)	 	“Restricted Stock” means Shares of the Company subject to forfeiture and other
restrictions established by the Committee.
	 
	 	(v)	 	“Section 162(m)” means Section 162(m) of the U.S. Internal Revenue Code and any
regulations or guidance promulgated thereunder.
	 
	 	(w)	 	“Section 409A” shall mean Section 409A of the U.S. Internal Revenue Code of
1986, as amended, and any regulations or U.S. Treasury guidance promulgated thereunder.
	 
	 	(x)	 	“Shares” means the ordinary shares of the Company.
	 
	 	(y)	 	“Subsidiary” means a subsidiary (“dochtermaatschappij”) of the Company, within
the meaning given to it by Article 2:24c of the Netherlands Civil Code.

	3.	 	Effective Date, Duration

     The Plan is effective as of August 29, 2007, the date of adoption of the Plan by the Board,
subject to approval of the Plan by the shareholders of the Company. The expiration date of the
Plan, after which no Awards may be granted hereunder, shall be August 29, 2017; provided,
however, that the administration of the Plan shall continue in effect until all matters
relating to the settlement of Awards previously granted have been settled.

	4.	 	Administration

     The Committee shall administer the Plan. The acts of a majority of the members present at any
meeting at which a quorum of the Committee is present or acts approved in writing by a

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majority of the Committee shall be deemed the acts of the Committee. Subject to the
provisions of the Plan, the Committee shall have exclusive power to:

	 	(a)	 	Select the Eligible Persons to participate in the Plan;
	 
	 	(b)	 	Determine the nature and extent of the Awards to be granted to each Eligible
Person;
	 
	 	(c)	 	Determine the time or times when Awards will be granted to each Eligible
Person;
	 
	 	(d)	 	Determine the duration of each Option Period and Restricted Period;
	 
	 	(e)	 	Determine the vesting schedule, if any, for each Award;
	 
	 	(f)	 	Determine all terms and conditions to which each Award may be subject;
	 
	 	(g)	 	Prescribe the form of each Award Agreement;
	 
	 	(h)	 	Cause records to be established in which there shall be entered, from time to
time as Awards are granted to Eligible Persons, the date of each Award grant, the
number of Awards granted to each Holder, the expiration date and the duration of each
Option Period and Restricted Period, the number of Shares underlying each Award and the
date on which Awards are exercised, become vested and subject to distribution, which
records shall be provided to the Subsidiaries as necessary in order to enable the
Subsidiaries to comply with any applicable reporting requirements with respect to the
granting, exercise and disposition of Awards; and
	 
	 	(i)	 	At any time prior to or in connection with any termination of employment or
service of a Holder with the Company and all Subsidiaries, provide for a longer
post-termination exercise or survival period with respect to any Award (not to exceed
the expiration date of the Award) or modify any forfeiture provisions with respect to
any Award; provided, that the Committee shall give due consideration to the
provisions of Sections 409A and 422 of the Internal Revenue Code as they apply to any
such extension or modification of an Award to any U.S. resident.

     The Committee shall have the authority, subject to the provisions of the Plan, to establish,
adopt, and revise such rules and regulations and to make all such determinations relating to the
Plan as it may deem necessary or advisable for the administration of the Plan. The Committee’s
interpretation of the Plan or any documents evidencing Awards granted pursuant thereto and all
decisions and determinations by the Committee with respect to the Plan shall be final, binding, and
conclusive on all parties unless otherwise determined by the Committee.

	5.	 	Grant of Awards; Shares Subject to the Plan

     The Committee may, from time to time, grant Awards to one or more Eligible Persons;
provided, however, that:

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	 	a)	 	Subject to adjustment under Section 12, the aggregate maximum number of Shares,
with respect to which Awards may be granted, may not exceed 7,735,224. The maximum
number of shares underlying un-issued Awards and therefore available for grant at any
one time is determined in accordance with the following formula:

Shares Available for grant = S - x-y

	 	 	 	where:
	 
	 	 	 	“S” means the aggregate maximum number of Shares subject to the Plan; and
	 
	 	 	 	“x” means the number of Shares underlying issued and outstanding Awards (i.e.
Options that have been granted but not exercised, Restricted Stock Awards and Other
Stock-Based Awards with respect to which the forfeiture provisions have not yet
lapsed, excluding Awards which prior to exercise or vesting expired, terminated,
were cancelled or otherwise lapsed);
	 
	 	 	 	“y” means the number of Shares issued as the result of the exercise of Options;
	 
	 	 	 	provided that the number of Shares underlying Awards granted to any
one Eligible Person in any one year or in aggregate in any one year shall not
exceed the limitations on such Awards set out in the Plan, if any.
	 
	 	b)	 	Such shares shall be deemed to have been used in payment of Options whether
they are actually delivered or the Fair Market Value equivalent of such shares is paid
in cash;
	 
	 	c)	 	Shares surrendered in payment of the exercise price of an Option, and shares
withheld or surrendered for payment of taxes, shall not be available for re-issuance
under the Plan. If stock appreciation rights are granted, the full number of shares
subject to the stock appreciation rights shall be considered issued under the Plan,
without regard to the number of shares issued upon exercise of the stock appreciation
rights and without regard to any cash settlement of the stock appreciation rights.
	 
	 	d)	 	In the event any Award shall be surrendered, terminate, expire, or be
forfeited, the number of Shares no longer subject thereto shall thereupon be released
and shall thereafter be available for new Awards under the Plan;
	 
	 	e)	 	Shares delivered by the Company in settlement of Awards under the Plan may be
authorized and unissued Shares or Shares held in the treasury of the Company or
acquired by private purchase all in accordance with applicable law; and
	 
	 	f)	 	Following the 2007 effective date of this Plan, no individual may receive
Awards under the Plan with respect to more than 500,000 Shares in any one calendar
year, subject to adjustment under Section 12. For this purpose, such shares shall be
deemed to have been used in payment of Awards whether they are actually

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	 	 	 	delivered or where the Fair Market Value equivalent of such shares for an Award is
paid in cash.

	6.	 	Eligibility

     Participation shall be limited to Eligible Persons who have received written notification from
the Committee, or from a person designated by the Committee, that they have been selected to
participate in the Plan.

	7.	 	Option Terms

     The Committee is authorized to grant one or more Options to any Eligible Person, subject to
any applicable specific provisions set forth in Exhibit A attached hereto. Each Option so granted
shall be subject to the following conditions, or to such other conditions as may be reflected in
the applicable Award Agreement.

	 	(a)	 	Option price. The Option Price per Shares for each Option shall be set by the
Committee at the time of grant but shall not be less than the Fair Market Value of a
Share at the date of grant.
	 
	 	(b)	 	Manner of exercise and form of payment. Options which have become exercisable
may be exercised by delivery of written notice of exercise to the Committee accompanied
by payment of the Option Price. The Option Price shall be payable in cash pursuant to
clause (i) or, at the Committee’s discretion, by a cashless exercise pursuant to clause
(ii) below.

	 	(i)	 	The Option Price shall be payable by check drawn on a bank
acceptable to the Committee in (A) Euro or (B) U.S. Dollars (for Eligible
Persons employed by the U.S. Subsidiary). In the event the Option Price is not
paid in Euro, then the Committee shall determine, as of the date of exercise,
the exchange rate for Euro and the currency with which the Option Price is paid
(based upon the exchange rate set forth in the Wall Street Journal for the
relevant day) and file with the Netherlands Chamber of Commerce and Industry a
statement setting forth the exchange rate on such date.
	 
	 	(ii)	 	At the discretion of the Committee, the Option Price may be
paid (A) in Shares valued at the Fair Market Value at the time the Option is
exercised, (B) in other property having a fair market value on the date of
exercise equal to the Option Price, (C) through a net exercise of the Options
whereby the Optionee instructs the Company to withhold that number of Shares
having a Fair Market Value equal to the aggregate exercise price of the Options
being exercised and deliver to the Optionee the remainder of the Shares subject
to exercise or (D) in any other manner permitted by the Committee,
provided that any non-cash exercise of an Option shall be subject to
applicable requirements of Netherlands’ law, including, but not limited to, a
declaration by an accountant that the value of the property contributed at
least equals the par value of the Shares received by the

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	 	 	 	Optionee, and the filing of such declaration with the trade register of the
Netherlands Chamber of Commerce and Industry where the Company is
registered.

	 	(c)	 	Option Period and Vesting. Options shall vest and become exercisable in such
manner and on such date or dates as shall be determined by the Committee. The
Committee shall also establish an Option Period which shall not exceed ten years.
Notwithstanding any dates set by the Committee for vesting and exercisability, the
Committee may in its sole discretion accelerate the vesting and exercisability of any
Option. If an Option is exercisable in installments, exercise of one installment shall
not affect the Optionee’s ability to exercise unexercised installments in accordance
with the terms of the Plan and the applicable Award Agreement. Unless otherwise
determined by the Committee or stated in the applicable Award Agreement, the Option
shall expire upon an Optionee’s termination of employment with the Company or a
Subsidiary at such times as are set forth in Section 8.
	 
	 	(d)	 	Other Terms and Conditions. Each Option granted under the Plan shall be
evidenced by an Award Agreement, which (i) shall contain such provisions as may be
determined by the Committee, (ii) shall, with respect to Eligible Persons employed by
the U.S. Subsidiaries, be deemed to contain the provisions set forth in Exhibit A, and
(iii) except as may be specifically stated otherwise in such Award Agreement, be
subject to the following terms and conditions:

	 	(i)	 	Each Option or portion thereof that is exercisable shall be
exercisable for the full amount or for any part thereof.
	 
	 	(ii)	 	Each Share purchased through the exercise of an Option shall be
paid for in full at the time of the exercise. Each Option shall cease to be
exercisable, as to any Share, when the Optionee purchases such share or when
the Option expires.
	 
	 	(iii)	 	Unless otherwise determined by the Committee, Options shall
not be transferable by the Optionee except by will or the laws of descent and
distribution, subject to any restrictions thereon in the Company’s Articles of
Association, and shall be exercisable during the Optionee’s lifetime only by
the Optionee.
	 
	 	(iv)	 	Each Option shall vest and become exercisable by the Optionee
in accordance with the vesting schedule established by the Committee and set
forth in the Award Agreement.
	 
	 	(v)	 	Shares issued upon exercise of an Option shall be subject to
the transfer restrictions set forth in the Company’s Articles of Association,
which restrictions include, among other things, the requirement that a notarial
deed of transfer be executed by the transferor in the Netherlands and that the
Board approve the proposed transfer.

8

 

	 	(vi)	 	Each Award Agreement may contain such other provisions (whether
or not applicable to an Option granted to any other Optionee) as the Committee
determines to be appropriate including, without limitation, provisions to
assist the Optionee in financing the purchase of Shares upon the exercise of
Options (if permitted by the Company’s Articles of Association and applicable
law), provisions giving the Company the right to repurchase Shares acquired
under any Option in the event the Optionee elects to dispose of such shares or
terminates employment with the Company and its Subsidiaries, and provisions to
comply with applicable securities laws and tax withholding requirements. Any
such provisions shall be reflected in the applicable Award Agreement.

	8.	 	Expiration of Option upon Termination of Employment

     Except as otherwise determined by the Committee and set forth in an Award Agreement, the
following provisions will apply to all Options upon an Optionee’s termination of employment or
service with the Company and all Subsidiaries.

	 	(a)	 	If prior to the end of the Option Period the Optionee shall undergo a Normal
Termination, all unvested Options then held by such Optionee shall expire on the date
of Normal Termination and all vested Options then held by such Optionee shall expire on
the earlier of the last day of the respective Option Period or the date that is three
months after the date of such Normal Termination. All vesting with respect to Options
shall cease on the date of Normal Termination and all Options which are vested as of
such date shall remain exercisable by the Optionee until their expiration as provided
above.
	 
	 	(b)	 	If the Optionee dies prior to the end of the Option Period and while still in
the employ or service of the Company or a Subsidiary or within three months of Normal
Termination, all unvested Options then held by such Optionee shall expire on the date
of death and all other Options then held by such Optionee shall expire on the earlier
of the last day of the respective Option Period or the date that is one year after the
date of death of the Optionee. All vesting with respect to Options shall cease on the
earlier of the date of Normal Termination or the date of death and all such Options
which are vested as of such date shall remain exercisable by the person or persons to
whom the Optionee’s rights under the Options pass by will or the applicable laws of
descent and distribution until their expiration as provided above.
	 
	 	(c)	 	If an Optionee ceases employment or service with the Company or a Subsidiary
for any reason other than Normal Termination or death, all Options then held by such
Optionee, whether vested or unvested, shall expire immediately upon such cessation of
employment or service.

9

 

	9.	 	Restricted Stock Awards

	 	(a)	 	Award of Restricted Stock.

	 	(i)	 	The Committee shall have the authority to (1) grant Restricted
Stock, (2) issue or transfer Restricted Stock to Eligible Persons, and (3)
establish terms, conditions and restrictions applicable to such Restricted
Stock, including the Restricted Period, which may differ with respect to each
grantee, the time or times at which Restricted Stock shall be granted or become
vested and the number of Shares to be covered by each Award.
	 
	 	(ii)	 	The Holder of a Restricted Stock Award shall execute and
deliver to the Company an Award Agreement with respect to the Restricted Stock
setting forth the restrictions applicable to such Restricted Stock. If the
Committee determines that the Restricted Stock shall be held in escrow rather
than delivered to the Holder pending the release of the applicable
restrictions, the Holder additionally shall execute and deliver to the Company
(i) an escrow agreement satisfactory to the Committee and (ii) the appropriate
blank stock powers with respect to the Restricted Stock covered by such
agreements. If a Holder shall fail to execute a Restricted Stock Agreement
and, if applicable, an escrow agreement and stock powers, the Award shall be
null and void. Subject to the restrictions set forth in Section 9(b), the
Holder shall generally have the rights and privileges of a stockholder as to
such Restricted Stock, including the right to vote such Restricted Stock. At
the discretion of the Committee, cash dividends and stock dividends, if any,
with respect to the Restricted Stock may be either currently paid to the Holder
or withheld by the Company for the Holder’s account. Unless otherwise
determined by the Committee, no interest will accrue or be paid on the amount
of any cash dividends withheld. Unless otherwise determined by the Committee,
cash dividends or stock dividends so withheld by the Committee shall be subject
to forfeiture to the same degree as the shares of Restricted Stock to which
they relate.
	 
	 	(iii)	 	Upon the Award of Restricted Stock, the Committee shall cause
a stock certificate registered in the name of the Holder to be issued and, if
it so determines, deposited together with the stock powers with an escrow agent
designated by the Committee. If an escrow arrangement is used, the Committee
shall cause the escrow agent to issue to the Holder a receipt evidencing any
stock certificate held by it registered in the name of the Holder.

	 	(b)	 	Restrictions.

	 	(i)	 	Restricted Stock awarded to an Eligible Person shall be subject
to the following restrictions until the expiration of the Restricted Period,
and to such other terms and conditions as may be set forth in the applicable

10

 

	 	 	 	Award Agreement: (1) if an escrow arrangement is used, the Holder shall not
be entitled to delivery of the stock certificate; (2) the shares shall be
subject to the restrictions on transferability set forth in the Award
Agreement; (3) the shares shall be subject to forfeiture to the extent
provided in Section 9(d) and the Award Agreement and, to the extent such
Shares are forfeited, the stock certificates shall be returned to the
Company, and all rights of the Holder to such Shares and as a shareholder
shall terminate without further obligation on the part of the Company.

	 	(ii)	 	The Committee shall have the authority to remove any or all of
the restrictions on the Restricted Stock whenever it may determine that, by
reason of changes in applicable laws or other changes in circumstances arising
after the date of the Restricted Stock Award, such action is appropriate.

     (c) Restricted Period. The Restricted Period of Restricted Stock shall commence on the date
of grant and shall expire from time to time as to that part of the Restricted Stock indicated in a
schedule established by the Committee and set forth in a written Award Agreement.

     (d) Forfeiture Provisions. Except to the extent determined by the Committee and reflected in
the underlying Award Agreement, in the event a Holder terminates employment with the Company and
all Subsidiaries for any reason during a Restricted Period, that portion of the Award with respect
to which restrictions have not expired shall be completely forfeited.

     (e) Delivery of Restricted Stock. Upon the expiration of the Restricted Period with respect
to any Shares covered by a Restricted Stock Award, the restrictions set forth in Section 9(b) and
the Award Agreement shall be of no further force or effect with respect to shares of Restricted
Stock which have not then been forfeited. If an escrow arrangement is used, upon such expiration,
the Company shall deliver to the Holder, or his beneficiary, without charge, the stock certificate
evidencing the Shares of Restricted Stock which have not then been forfeited and with respect to
which the Restricted Period has expired (to the nearest full Share) and any cash dividends or stock
dividends credited to the Holder’s account with respect to such Restricted Stock and the interest
thereon, if any.

     (f) Stock Restrictions. Each certificate representing Restricted Stock awarded under the Plan
shall bear the following legend until the end of the Restricted Period with respect to such Shares:

          “Transfer of this certificate and the shares represented hereby is restricted pursuant
to the terms of a Restricted Stock Agreement, dated as of                     , between Eurand N.V.
and                     . A copy of such Agreement is on file at the offices of Eurand N.V.”

Stop transfer orders shall be entered with the Company’s transfer agent and registrar against the
transfer of any such legended securities.

11

 

	10.	 	Other Stock-Based Awards

     The Committee may grant any other cash, stock or stock-related Awards (“Other Stock-Based
Awards”) to any Eligible Person under this Plan as the Committee deems appropriate, including, but
not limited to, stock appreciation rights, limited stock appreciation rights, phantom stock Awards,
restricted stock units, the bargain purchase of Shares and Share bonuses. Any such Awards shall
contain such terms and conditions as the Committee deems appropriate. Such Awards and agreements
need not be identical. With respect to any benefit under which Shares are or may in the future be
issued for consideration other than prior services, the amount of such consideration shall not be
less than the amount (such as the par value of such shares) required to be received by the Company
in order to comply with applicable law. The Committee may credit dividend equivalents with respect
to Other Stock-Based Awards, on such terms as the Committee deems appropriate.

	11.	 	General

	 	(a)	 	Privileges of Share Ownership. Except as otherwise specifically provided in
the Plan, no person shall be entitled to the rights attached to Shares which are
subject to Awards hereunder until such Shares have been issued to that person free and
clear of any restrictions.
	 
	 	(b)	 	Government and Other Regulations. The obligation of the Company to deliver
Shares upon the exercise of Options or disposition of other Awards shall be subject to
all applicable laws, rules, and regulations, and to such approvals by governmental
agencies as may be required. Notwithstanding any terms or conditions of any Option to
the contrary, the Company shall be under no obligation to offer to sell or to sell and
shall be prohibited from offering to sell or selling any Shares pursuant to an Award
unless such shares have been properly registered for sale pursuant to applicable
securities laws or unless the Company has received an opinion of counsel, satisfactory
to the Company, that such shares may be offered or sold without such registration
pursuant to an available exemption therefrom and the terms and conditions of such
exemption have been fully complied with. The Company shall be under no obligation to
register for sale under any applicable securities laws any of the Shares to be offered
or sold under the Plan. If the Shares offered for sale or sold under the Plan are
offered or sold pursuant to an exemption from registration under applicable securities
laws, the Company may restrict the transfer of such shares in such manner as it deems
advisable to ensure the availability of any such exemption.
	 
	 	(c)	 	Tax Withholding. It is the obligation of the Holder or other person receiving
Shares upon the exercise of an Option or disposition of an Award to pay to the Company
or a Subsidiary, as appropriate, the amount necessary to satisfy the Company’s or the
Subsidiary’s, as appropriate, obligation to withhold taxes and other payments as
required under Netherlands, U.S. federal, state and local, Italian, French and Irish
law, or the law of any other jurisdiction which is or becomes applicable to a Holder.
The Company or a Subsidiary, as appropriate, shall have the right to deduct from the
number of Shares issued upon the exercise of an Option or disposition of an Award such
number of Shares, valued at Fair

12

 

	 	 	 	Market Value on the date of payment, in an amount necessary to satisfy the minimum
applicable tax withholding amount as required by law to be withheld with respect to
such Awards. In the alternative, at the sole discretion of the Committee, a Holder
or other person receiving Shares upon exercise of an Option or disposition of an
Award may be required to pay to the Company or a Subsidiary, as appropriate, prior
to delivery of such Shares, the amount of any such taxes and payments which the
Company or a Subsidiary, as appropriate, is required to withhold, if any, with
respect to such Shares. Subject in particular cases to the disapproval of the
Committee and compliance with applicable provisions of Netherlands law, the Company
may accept Shares of equivalent Fair Market Value in payment of such withholding
obligations if the Holder elects to make payment in such manner.

	 	(d)	 	Claim to Awards and Employment Rights. No employee or other person shall have
any claim or right to be granted an Award under the Plan or, having been selected for
the grant of an Award, to be selected for a grant of any other Award. Neither the Plan
nor any action taken hereunder shall be construed as giving any Holder any right to be
retained in the employ or service of the Company or any Subsidiary.
	 
	 	(e)	 	No Liability of Committee Members. No member of the Committee shall be
personally liable by reason of any contract or other instrument executed by such member
or on his behalf in his capacity as a member of the Committee nor for any mistake of
judgment made in good faith, and the Company shall indemnify and hold harmless each
member of the Committee and each other employee, officer or director of the Company to
whom any duty or power relating to the administration or interpretation of the Plan may
be allocated or delegated, against any cost or expense (including counsel fees) or
liability (including any sum paid in settlement of a claim) arising out of any act or
omission to act in connection with the Plan unless arising out of such person’s own
fraud or willful bad faith; provided, however, that approval of the
Board shall be required for the payment of any amount in settlement of a claim against
any such person. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Company’s Articles of Association, as a matter of law, or otherwise, or any power that
the Company may have to indemnify them or hold them harmless.
	 
	 	(f)	 	Governing law. The Plan shall be governed by and construed in accordance with
the laws of the Netherlands, provided, however, that Award Agreements
with respect to Awards granted to Eligible Persons who are employed by the Company’s
U.S., Italian, French or Irish Subsidiaries may, at the Committee’s discretion, specify
that such Awards are governed by U.S., Italian, French or Irish law, respectively.
	 
	 	(g)	 	Reliance on Reports. Each member of the Committee shall be fully justified in
relying, acting or failing to act, and shall not be liable for having so relied, acted
or failed to act in good faith, upon any report made by the independent public

13

 

	 	 	 	accountant of the Company and its Subsidiaries and upon any other information
furnished in connection with the Plan by any person or persons other than himself.

	 	(h)	 	Relationship to Other Benefits. No payment under the Plan shall be taken into
account in determining any benefits under any pension, retirement, profit sharing,
group insurance or other benefit plan of the Company except as otherwise specifically
provided in such other plan.
	 
	 	(i)	 	Expenses. The expenses of administering the Plan shall be borne by the
Company.
	 
	 	(j)	 	Pronouns. Masculine pronouns and other words of masculine gender shall refer
to both men and women.
	 
	 	(k)	 	Titles and Headings. The titles and headings of the sections in the Plan are
for convenience of reference only, and in the event of any conflict, the text of the
Plan, rather than such titles or headings shall control.

	12.	 	Changes in Capital Structure

     In the event of any change in the outstanding Shares or in the capital structure of the
Company by reason of stock dividends or extraordinary dividends payable in cash or any other form
of consideration, stock splits, reverse stock splits, recapitalizations, reorganizations, mergers,
consolidations, combinations, exchanges, or other relevant changes in capitalization or any change
in applicable laws or any change in circumstances which results in or would result in any
substantial dilution or enlargement of the rights granted to, or available for, Holders, the
Committee shall make such substitution or adjustment, if any, as is equitable and proportional (as
determined by the Committee in good faith), as to (i) the number and/or kind of Shares or other
securities issued or reserved for issuance (including the maximum number and/or kind of Shares or
other securities with respect to which one person may be granted Awards in any given year) pursuant
to the Plan (after due authorization by the general meeting of shareholders, all in accordance with
the Company’s Articles by Association and applicable law) or any outstanding Award, and/or (ii) the
exercise price of any Option or stock appreciation right. Absent manifest error, any adjustment
shall be conclusively determined by the Committee; provided, in each case, the fair value of the
Award immediately following any such adjustment shall be equal to the fair value of the Award
immediately prior to such adjustment. The Company shall give each Holder notice of an adjustment
hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes.

     Notwithstanding the above, in the event of any of the following:

	 	(a)	 	The Company is merged or consolidated with another corporation or entity;
	 
	 	(b)	 	All or substantially all of the assets of the Company or Shares are acquired by
another person or entity;
	 
	 	(c)	 	a Change of Control;

14

 

	 	(d)	 	The reorganization or liquidation of the Company; or
	 
	 	(e)	 	The Company shall enter into a written agreement to undergo an event described
in clauses (a), (b), (c) or (d) above,

     then the Committee may, in its sole discretion and upon at least 10 days advance notice to the
affected persons, cancel any outstanding Awards and pay to the Holders thereof, in cash, the value
of such Awards based upon the price per Share received or to be received by other shareholders of
the Company in the event. Payments to Holders pursuant to the preceding sentence may, at the
Committee’s discretion, be made in the form of such other consideration, including stock or other
property, as determined by the Committee, as such Holder would have been entitled to receive upon
the occurrence of such transaction as if the Holder had been, immediately prior to such
transaction, the holder of the number of shares covered by such Award (less any applicable exercise
price). The terms of this Section 10 may be varied by the Committee in any particular Award
Agreement.

	13.	 	Change of Control

     Except to the extent reflected in a particular Award Agreement or as otherwise determined by
the Board prior to the occurrence of such event:

	 	(a)	 	In the event of a consummation of a Change of Control, notwithstanding any
vesting schedule with respect to an Award of Options or Restricted Stock, such Option
shall become immediately exercisable with respect to 100% of the shares subject to such
Option, and the Restricted Period shall expire with respect to 100% of such shares of
Restricted Stock, in each case immediately prior to the consummation of a Change of
Control.
	 
	 	(b)	 	In the event of a consummation of a Change of Control, all other Awards shall
become fully vested and or payable to the fullest extent of any Award or portion
thereof that has not then expired and any restrictions with respect thereto shall
expire, in each case immediately prior to such Change of Control. The Committee shall
have full authority and discretion to interpret this Section 13 and to implement any
course of action with respect to any Award so as to satisfy the intent of this
provision.
	 
	 	(c)	 	The obligations of the Company under the Plan shall be binding upon any
successor corporation or organization resulting from the merger, consolidation or other
reorganization of the Company, or upon any successor corporation or organization
succeeding to substantially all of the assets and business of the Company.
	 
	 	(d)	 	Notwithstanding anything herein to the contrary, to the extent that any Award
issued to a Holder who is subject to Section 409A is deemed to be deferred compensation
under Section 409A, a distribution of such Award upon a Change of Control shall only be
made to the extent that such event constituting a Change of Control, also qualifies as
a change in control under Section 409A.

15

 

	14.	 	Non-exclusivity of the Plan

     Neither the adoption of this Plan by the Board nor the submission of this Plan to the
shareholders of the Company for approval (to the extent such approval is required under the
Company’s Articles of Association or any applicable law) shall be construed as creating any
limitations on the power of the Board to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock options or other equity awards
otherwise than under this Plan, and such arrangements may be either applicable generally or only in
specific cases, in accordance with the Company’s Articles of Association and applicable law.

	15.	 	Amendments and Termination

     The Board may at any time terminate the Plan. Except as otherwise permitted without regard to
a Holder’s consent, the Committee may cancel or reduce or otherwise alter outstanding Awards with
the express written consent of an individual Holder. The Board may, at any time, or from time to
time, amend or suspend and, if suspended, reinstate, the Plan in whole or in part; provided,
however, that no amendment which requires shareholder approval under applicable law shall be
effective unless the same shall be approved by the requisite vote of the shareholders of the
Company.

Adopted by the Board of Directors of Eurand N.V. by resolution on August 2, 2007 and approved by
the shareholders of Eurand N.V. on August 29, 2007.

     Amendment
adopted by the Board of Directors of Eurand N.V. by resolution on
December 12, 2007.

16

 

EXHIBIT A

RULES APPLICABLE TO

ELIGIBLE PERSONS EMPLOYED BY

EURAND, INC.

AND

EURAND PHARMACEUTICALS, INC.

UNDER THE

EURAND N.V.

EQUITY COMPENSATION PLAN

	1.	 	Purpose

     The following provisions apply to Awards under the Eurand N.V. Equity Compensation Plan (the
“Plan”) to Eligible Persons residing in the U.S. These provisions are intended to supplement and
supersede the provisions of the Plan with respect to U.S. residents. Capitalized terms not defined
herein shall have the meaning attributed to them in the Plan. In the event of a conflict or
inconsistency between the terms and provisions of the Plan and the express provisions of these U.S.
Rules, the provisions of these U.S. Rules shall govern and control. Otherwise, the terms and
provisions of the Plan shall govern and control the grant of Awards under the Plan.

	2.	 	Definitions

     The following definitions shall be applicable.

	 	(a)	 	“Code” means the Internal Revenue Code of 1986, as amended. Reference to any
section of the Code shall be deemed to include any amendments or successor provisions
to such section and any regulations under such section.
	 
	 	(b)	 	“Incentive Stock Option” means an Option granted by the Board to an Eligible
Person under the Plan which is designated by the Board as an Incentive Stock Option
pursuant to Section 422 of the Code.

	3.	 	Administration

     Unless otherwise determined by the Board, any Awards granted to persons subject to Section
162(m) of the Code shall be approved by a committee of the Board comprised solely of Qualified
Members.

	4.	 	Incentive Stock Option Grants

     The following provisions apply to grants of Incentive Stock Options.

	 	(a)	 	No Incentive Stock Option may be granted unless the Plan and these U.S. Rules
are approved by the stockholders of the Company within 12 months of the adoption of the
Plan by the Board.

A-1

 

	 	(b)	 	Incentive Stock Options may be granted only to employees of the Company or any
subsidiary of the Company within the meaning of Section 424(f) of the Code.
	 
	 	(c)	 	If an Incentive Stock Option is granted to an Eligible Person who owns stock
representing more than 10% of the voting power of all classes of stock of the Company
or of a Subsidiary, the Option Period shall not exceed five years from the date of
grant of such Option and the Option Price shall be at least 110% of the Fair Market
Value (on the date of grant) of the Shares subject to the Option.
	 
	 	(d)	 	To the extent the aggregate Fair Market Value (determined as of the date of
grant) of the Shares for which Incentive Stock Options are exercisable for the first
time by any Participant during any calendar year (under all plans of the Company and
its Subsidiaries) exceeds $100,000, such excess Incentive Stock Options shall be
treated as ordinary Options.
	 
	 	(e)	 	Each Incentive Stock Option Award Agreement shall contain a provision requiring
the Optionee to notify the Company in writing immediately after the Optionee makes a
disqualifying disposition of any Shares acquired pursuant to the exercise of such
Incentive Stock Option. A disqualifying disposition is any disposition (including any
sale) of such Shares before the later of (a) two years after the date of grant of the
Incentive Stock Option or (b) one year after the date the Optionee acquired the Shares
by exercising the Incentive Stock Option.

	5.	 	Investment Representation

     Each Stock Option Award Agreement may contain a provision that, upon demand by the Committee
for such a representation, the Optionee shall deliver to the Committee at the time of any exercise
of an Option issued pursuant the Plan a written representation that the shares to be acquired upon
such exercise are to be acquired for investment and not for resale or with a view to the
distribution thereof. Upon such demand, delivery of such representation prior to the delivery of
any Shares issued upon exercise of an Option be a condition precedent to the right of the Optionee
or such other person to purchase any shares. In the event certificates for Shares are delivered
under the Plan with respect to which such investment representation has been obtained, the
Committee may cause a legend or legends to be placed on such certificates to make appropriate
reference to such representation and to restrict transfer in the absence of compliance with
applicable federal or state securities laws.

	6.	 	Governing Law

     The Plan as applied to U.S. residents shall be governed by and construed in accordance with
the internal laws of the Netherlands, provided, however, that Option Award Agreements
entered into by U.S. residents shall incorporate the provisions of the U.S. Rules contained in this
Exhibit A and shall be governed by the internal laws of the State of Nevada without regard to the
principles of conflicts of law thereof.

A-2

 

	7.	 	Amendments

     The Board may not without shareholder approval make any amendment to the Plan which would:

	 	(a)	 	Materially increase the maximum number of Shares which may be issued pursuant
to Awards;
	 
	 	(b)	 	Extend the maximum Option Period for Incentive Stock Options;
	 
	 	(c)	 	Extend the termination date of the Plan; or
	 
	 	(d)	 	Change the class of persons eligible to receive Incentive Stock Options under
the Plan.

	8.	 	Qualified Performance Based Compensation Under Section 162(m) of the Code

	 	(a)	 	All Options and stock appreciation rights issued under the Plan, are intended
to be exempt from the application of Section 162(m) of the Code as “qualified
performance based compensation.”
	 
	 	(b)	 	In addition, the Committee may determine that Restricted Stock and Other
Stock-Based Awards granted to an employee shall be considered “qualified
performance-based compensation” under section 162(m) of the Code, in which case the
provisions of this Section 8(b) shall apply.

	 	(i)	 	Performance Goals. When Awards are made under this
Section 8(b), the Committee shall establish in writing (i) the objective
performance goals that must be met, (ii) the period during which performance
will be measured, (iii) the maximum amounts that may be paid if the performance
goals are met, and (iv) any other conditions that the Committee deems
appropriate and consistent with the requirements of section 162(m) of the Code
for “qualified performance-based compensation.” The performance goals shall
satisfy the requirements for “qualified performance-based compensation,”
including the requirement that the achievement of the goals be substantially
uncertain at the time they are established and that the performance goals be
established in such a way that a third party with knowledge of the relevant
facts could determine whether and to what extent the performance goals have
been met. The Committee shall not have discretion to increase the amount of
compensation that is payable, but may reduce the amount of compensation that is
payable, pursuant to Grants identified by the Committee as “qualified
performance-based compensation.”
	 
	 	(ii)	 	Criteria Used for Objective Performance Goals. The
Committee shall use objectively determinable performance goals based on one or
more of the following criteria: stock price, earnings per share,
price-earnings multiples, net earnings, operating earnings, revenue, number of
days sales

A-3

 

	 		 	outstanding in accounts receivable, productivity, margin, EBITDA (earnings
before interest, taxes, depreciation and amortization), net capital
employed, return on assets, shareholder return, return on equity, return on
capital employed, growth in assets, unit volume, sales, cash flow, market
share, relative performance to a comparison group designated by the
Committee, or strategic business criteria consisting of one or more
objectives based on meeting specified revenue goals, market penetration
goals, customer growth, geographic business expansion goals, cost targets or
goals relating to acquisitions or divestitures. The performance goals may
relate to one or more business units or the performance of the Company and
its subsidiaries as a whole, or any combination of the foregoing.
Performance goals need not be uniform as among participants.
	 
	 	(iii)	 	Timing of Establishment of Goals. The Committee shall
establish the performance goals in writing either before the beginning of the
performance period or during a period ending no later than the earlier of (i)
90 days after the beginning of the performance period or (ii) the date on which
25% of the performance period has been completed, or such other date as may be
required or permitted under applicable regulations under section 162(m) of the
Code.
	 
	 	(iv)	 	Certification of Results. The Committee shall certify
the performance results for the performance period specified in the Award
agreement after the performance period ends. The Committee shall determine the
amount, if any, to be paid pursuant to each Award based on the achievement of
the performance goals and the satisfaction of all other terms of the Award
agreement.
	 
	 	(v)	 	Death, Disability or Other Circumstances. The
Committee may provide in the Award agreement that Awards under this Section
8(b) shall be payable, in whole or in part, in the event of the participant’s
death or disability, a Change of Control or under other circumstances
consistent with the Treasury regulations and rulings under section 162(m) of
the Code.

A-4

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