Common use of Treatment of Stock Options and Other Stock-Based Awards Clause in Contracts

Treatment of Stock Options and Other Stock-Based Awards. (a) The Target will take all requisite action so that, at the Effective Time, the portion of each option to acquire shares of Target Common Stock (each such option, a “Target Stock Option”) that is vested and outstanding immediately prior to the Effective Time and for which the per share exercise price of such Target Stock Option is equal to or less than the Merger Consideration (each such portion, a “Cashed Out Target Stock Option”), will be, by virtue of this Agreement and without any further action on the part of Parent, Merger Sub, the Target, the holder of such Cashed Out Target Stock Option or any other Person, cancelled and converted into the right to receive from Parent and the Surviving Corporation, as promptly as reasonably practicable after the Effective Time, an amount in cash, without interest, equal to the product of (i) the aggregate number of shares of Target Common Stock subject to such Cashed Out Target Stock Option (only to the extent vested as provided above), multiplied by (ii) the excess of the Merger Consideration over the per share exercise price under such Cashed Out Target Stock Option (the aggregate amount, the “Option Consideration”), less any Taxes required to be withheld in accordance with Section 4.05. Each Target Stock Option (or portion thereof) outstanding immediately prior to the Effective Time that is not a Cashed Out Target Stock Option shall be referred to herein as an “Assumed Target Stock Option.” (b) Effective as of the Effective Time, Parent shall assume the Target Stock Plans and each Assumed Target Stock Option, which shall thereafter be vested for such number of shares of Parent Common Stock as equals the number of shares of Target Common Stock subject to such Assumed Target Stock Option multiplied by the Equity Award Exchange Ratio, rounded down to the nearest whole share. The exercise price of each such Assumed Target Stock Option shall be equal to the exercise price per share set forth in the option agreement for such Assumed Target Stock Option divided by the Equity Award Exchange Ratio, rounded up to the nearest whole cent. All rights with respect to Target Common Stock under Assumed Target Stock Options shall by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Target, the holder of any Assumed Target Stock Option or any other Person, be converted into rights with respect to Parent Common Stock on the terms and conditions set forth in this Section 4.07(b). Accordingly, from and after the Effective Time, (i) each Assumed Target Stock Option may be exercised solely for the number of shares of Parent Common Stock determined in accordance with this Section 4.07(b) with an exercise price determined in accordance with this Section 4.07(b); (ii) any restriction on the exercise of any Assumed Target Stock Option shall continue in full force and effect; and (iii) the term, vesting schedule and other provisions of such Assumed Target Stock Option shall otherwise remain unchanged; provided, however, that: (A) each Assumed Target Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, recapitalization or other similar transaction with respect to Parent Common Stock subsequent to the Effective Time; and (B) Parent’s board of directors or a committee thereof shall succeed to the authority and responsibility of the Target Board or any committee thereof with respect to each Target Stock Plan and Assumed Target Stock Option. As soon as practicable after the Effective Time, Parent shall prepare and file with the SEC a Form S-8 (or file such other appropriate form) registering a number of shares of Parent Common Stock necessary to fulfill Parent’s obligations under this Section 4.07(b). (c) Each share of Target Common Stock granted under the Target 2006 Incentive Plan that is unvested or is subject to a repurchase option, risk of forfeiture, vesting schedule or other condition under any applicable restricted stock purchase agreement or other Contract with Target or under which Target has any rights and either (i) is validly tendered and not validly withdrawn in the Offer as of the Expiration Time (each a “Tendered Target Restricted Stock Award”) or (ii) not validly tendered or validly tendered and subsequently validly withdrawn and is outstanding immediately prior to the Effective Time (each a “Non-Tendered Target Restricted Stock Award” and together with the Tendered Target Restricted Stock Awards, the “Target Restricted Stock Awards”) shall (a) in the case of the Tendered Target Restricted Stock Awards, as soon as practicable after the Expiration Time and in compliance with applicable Law, receive the Offer Price net to such holder of Tendered Target Restricted Stock Award in cash, without interest and subject to any required withholding of Taxes and (b) in the case of the Non-Tendered Target Restricted Stock Awards, be cancelled and converted into only the right to receive (without interest), automatically and without any required action on the part of the holder thereof, an amount in cash (less applicable Tax withholdings) equal to the Merger Consideration; provided that, pursuant to and in accordance with the Target 2006 Incentive Plan, the Offer Price or Merger Consideration, as applicable, payable with respect to any Target Restricted Stock Awards shall continue to be, as applicable, unvested and/or subject to the same repurchase option, risk of forfeiture, vesting schedule and other conditions as were set forth in the applicable restricted stock purchase agreement or other Contract with respect to such Target Restricted Stock Award and the holder of any such Target Restricted Stock Award must remain in service to Parent, the Target or any of their affiliates through the applicable vesting date or date when the applicable conditions shall terminate, to receive payment in respect thereof and such payment shall be made promptly following such applicable vesting date or date when the applicable conditions have terminated, as applicable. Parent’s board of directors or a committee thereof shall succeed to the authority and responsibility of the Target Board or any committee thereof with respect to each Target Stock Plan and Target Restricted Stock Award. (d) At or prior to the Effective Time, the Target, the Target Board and the compensation committee of such board, as applicable, will adopt any resolutions and take any actions (including obtaining any employee or stockholder consents) that may be necessary to effectuate the provisions of this Section 4.07, and causing the Target Stock Plans and all Assumed Target Stock Options to be exchanged and assumed by Parent on the terms and conditions set forth in this Section 4.07. (e) Section 4.07(e) of the Disclosure Schedules (the “Equity Award Certificate”) sets forth (i) each Target Stock Option outstanding as of the close of business on November 3, 2014, identifying the number of shares of Target Common Stock subject to such Target Stock Option, the exercise price of such Target Stock Option, the date such Target Stock Option was granted, the date such Target Stock Option expires, the vesting schedule of such Target Stock Option and the portion thereof that is vested and outstanding as of the date hereof, and (ii) each Target Restricted Stock Award outstanding as of the date hereof, identifying the number of shares of Target Common Stock subject to such Target Restricted Stock Award, the date such Target Restricted Stock Award was granted, the date such Target Restricted Stock Award expires, the vesting schedule of such Target Restricted Stock Award and the portion thereof that is vested and outstanding as of the date hereof. Not later than 5:00 p.m. Boston time, on the second Business Day preceding the Effective Time, Target shall provide to Parent an updated Equity Award Certificate setting forth (i) each Target Stock Option outstanding as of the Effective Time, identifying the number of shares of Target Common Stock subject to such Target Stock Option, the exercise price of such Target Stock Option, the portion thereof that is a Cashed Out Target Stock Option, the portion thereof that is an Assumed Target Stock Option, the date such Target Stock Option was granted, the date such Target Stock Option expires and the vesting schedule of such Target Stock Option, in each case as of the Effective Time, and (ii) each Target Restricted Stock Award outstanding as of the Effective Time, identifying the number of shares of Target Common Stock subject to such Target Restricted Stock Award , the date such Target Restricted Stock Award was granted and the vesting schedule and other material terms of such Target Restricted Stock Award, in each case as of the Effective Time.

Treatment of Stock Options and Other Stock-Based Awards. (a) The Target will take all requisite action so that, at Prior to the Effective Time, the portion Board of Directors of the Company (or, if appropriate, any committee thereof) shall adopt appropriate resolutions and take all other actions necessary and appropriate to provide that, immediately prior to the Effective Time, each option to acquire purchase shares of Target Company Common Stock (each such option, a “Target Stock Company Option”) granted under the equity incentive plans of the Company or under any and all individual consultant, employee, director, independent contractor, independent sales personnel or distributor agreement (collectively, the “Company Stock Plans”), whether vested or unvested, that is vested and outstanding immediately prior to the Effective Time and for which shall be cancelled and, in exchange therefor, each former holder of any such cancelled Company Option shall be entitled to receive, in consideration of the per share exercise price cancellation of such Target Company Option and in settlement therefor, a payment (comprised of Parent Common Stock Option is and cash) equal to or less than the product of (i) the total number of shares of Company Common Stock previously subject to such Company Option and (ii) the excess, if any, of the Merger Consideration Value over the exercise price per share of Company Common Stock previously subject to such Company Option (each such portion, a amounts payable hereunder being referred to as the “Cashed Out Target Stock OptionPer Option Consideration”). From and after the Effective Time, will beany such cancelled Company Option shall no longer be exercisable by the former holder thereof, by virtue but shall only entitle such holder to the payment of this Agreement and without any further action on an allocable portion of the part of ParentAggregate Option Consideration. At, Merger Sub, the Target, the holder of such Cashed Out Target Stock Option or any other Person, cancelled and converted into the right to receive from Parent and the Surviving Corporation, as promptly as reasonably practicable after the Effective Time, an amount Parent shall or shall cause the Surviving Corporation to deliver in exchange for each Company Option which is canceled pursuant to this Section 4.6(a) a payment (comprised of Parent Common Stock and cash, without interest, ) equal to the product of (i) the Aggregate Option Consideration and (ii) a fraction, the numerator of which is the Per Option Consideration for such Company Option and the denominator of which is the aggregate number of shares the Per Option Consideration for all Company Options. The portion of Target Common Stock subject to each such Cashed Out Target Stock Option (only payment consisting of cash shall be equal to the extent vested as provided above), multiplied by ratio which (i) the value of the Aggregate Adjusted Cash Consideration bears to (ii) the excess value of the Merger Aggregate Consideration over (based, for such purposes, on the per share exercise price under Parent Reference Price in respect of the value of the Parent Common Stock that comprised part of the Aggregate Consideration). The portion of each such Cashed Out Target payment consisting of Parent Common Stock Option shall be equal to the ratio which (i) the aggregate amountvalue of the Aggregate Stock Consideration bears to (ii) the value of the Aggregate Consideration (based, for such purposes, on the Parent Reference Price in respect of the value of the Parent Common Stock that comprised part of the Aggregate Consideration). The cash and shares payable pursuant to the preceding sentence shall be subject to any applicable withholding or other taxes required by Applicable Law to be withheld, with any such amounts being withheld from the cash payment to the maximum extent possible. (b) Prior to the Effective Time, the “Option Consideration”)Board of Directors of the Company (or, less if appropriate, any Taxes required to be withheld in accordance with Section 4.05. Each Target Stock Option (or portion committee thereof) outstanding shall adopt appropriate resolutions and take all other actions necessary and appropriate to provide that, immediately prior to the Effective Time that is not a Cashed Out Target Stock Option shall be referred to herein as an “Assumed Target Stock Option.” (b) Effective as of the Effective Time, Parent shall assume the Target Stock Plans and each Assumed Target Stock Optionright of any kind, which shall thereafter be vested for such number of contingent or accrued, to receive shares of Parent Company Common Stock as equals the number of shares of Target Common Stock subject to such Assumed Target Stock Option multiplied or benefits measured by the Equity Award Exchange Ratio, rounded down to the nearest whole share. The exercise price value of each such Assumed Target Stock Option shall be equal to the exercise price per share set forth in the option agreement for such Assumed Target Stock Option divided by the Equity Award Exchange Ratio, rounded up to the nearest whole cent. All rights with respect to Target Common Stock under Assumed Target Stock Options shall by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Target, the holder of any Assumed Target Stock Option or any other Person, be converted into rights with respect to Parent Common Stock on the terms and conditions set forth in this Section 4.07(b). Accordingly, from and after the Effective Time, (i) each Assumed Target Stock Option may be exercised solely for the number of shares of Parent Common Stock determined in accordance with this Section 4.07(b) with an exercise price determined in accordance with this Section 4.07(b); (ii) any restriction on the exercise of any Assumed Target Stock Option shall continue in full force and effect; and (iii) the term, vesting schedule and other provisions of such Assumed Target Stock Option shall otherwise remain unchanged; provided, however, that: (A) each Assumed Target Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, recapitalization or other similar transaction with respect to Parent Common Stock subsequent to the Effective Time; and (B) Parent’s board of directors or a committee thereof shall succeed to the authority and responsibility of the Target Board or any committee thereof with respect to each Target Stock Plan and Assumed Target Stock Option. As soon as practicable after the Effective Time, Parent shall prepare and file with the SEC a Form S-8 (or file such other appropriate form) registering a number of shares of Parent Company Common Stock necessary to fulfill Parent’s obligations under this Section 4.07(b). (c) Each share Stock, and each award of Target any kind consisting of shares of Company Common Stock Stock, granted under the Target 2006 Incentive Plan that is unvested or is subject to a repurchase option, risk of forfeiture, vesting schedule or other condition under any applicable Company Stock Plans (including restricted stock purchase agreement or units and leveraged share awards), other Contract with Target or under which Target has any rights and either than Company Options (i) is validly tendered and not validly withdrawn in the Offer as of the Expiration Time (each each, a “Tendered Target Restricted Stock Company Stock-Based Award”) ), whether vested or (ii) not validly tendered or validly tendered and subsequently validly withdrawn and unvested, which is outstanding immediately prior to the Effective Time shall be cancelled and, in exchange therefor, each former holder of any such cancelled Company Stock-Based Award shall be entitled to receive, in consideration of the cancellation of such Company Stock-Based Award and in settlement therefor, a payment of the Merger Consideration (each a “Noncomprised of Parent Common Stock and cash) into which the number of shares of Company Common Stock previously subject to such Company Stock-Tendered Target Restricted Based Award would have been converted into in the Merger if such shares of Company Common Stock Award” and together with had been outstanding immediately prior to the Tendered Target Restricted Stock AwardsEffective Time; provided, the “Target Restricted Stock Awards”) shall (a) that in the case of leveraged share awards, any such payment will be reduced by any unpaid portion of any loan with respect to such award. Such reduction shall be comprised of a proportionate reduction in the Tendered Target Restricted cash and Parent Common Stock Awardsotherwise required to be paid. From and after the Effective Time, any such cancelled Company Stock-Based Award shall only entitle such holder to the payment of the Merger Consideration pursuant to this Section 4.6(b), as soon so reduced. At, or as promptly as reasonably practicable after after, the Expiration Time and in compliance with applicable LawEffective Time, receive Parent shall or shall cause the Offer Price net Surviving Corporation to such provide each holder of Tendered Target Restricted Company Stock-Based Awards which are canceled pursuant to this Section 4.6(b) with a lump sum cash payment and a payment of Parent Common Stock Award in cash, without interest and subject to any required withholding of Taxes and (b) in the case of the Non-Tendered Target Restricted Stock Awards, be cancelled and converted into only the right to receive (without interest), automatically and without any required action on the part of the holder thereof, an amount in cash (less applicable Tax withholdings) equal to the Merger Consideration; provided that, Consideration payable to such holder pursuant to and in accordance with the Target 2006 Incentive Plan, the Offer Price or Merger Considerationthis Section 4.6(b), as applicableso reduced, payable with respect subject to any Target Restricted Stock Awards shall continue applicable withholding or other taxes required by Applicable Law to bebe withheld, as applicable, unvested and/or subject with any such amounts withheld from the cash payment to the same repurchase option, risk of forfeiture, vesting schedule and other conditions maximum extent possible. (c) The Company shall take all steps necessary to provide that the Company Stock Plans (as were set forth in the applicable restricted stock purchase agreement or other Contract with respect to such Target Restricted Stock Award and the holder of well as any outstanding awards under any such Target Restricted Stock Award must remain in service to Parent, the Target or any of their affiliates through the applicable vesting date or date when the applicable conditions shall terminate, to receive payment in respect thereof and such payment shall be made promptly following such applicable vesting date or date when the applicable conditions have terminated, plans) are terminated effective as applicable. Parent’s board of directors or a committee thereof shall succeed to the authority and responsibility of the Target Board or any committee thereof with respect to each Target Stock Plan and Target Restricted Stock AwardClosing. (d) At No fractional shares of Parent Common Stock shall be issued to holders of Company Options or prior Company Stock-Based Awards, but in lieu thereof each holder of Company Options or Company Stock-Based Awards otherwise entitled to a fractional share of Parent Common Stock will be entitled to receive, from the Effective Time, the Target, the Target Board and the compensation committee of such board, as applicable, will adopt any resolutions and take any actions (including obtaining any employee or stockholder consents) that may be necessary to effectuate Company in accordance with the provisions of this Section 4.074.6, and causing a cash payment in lieu of such fractional shares of Parent Common Stock in addition to the Target Stock Plans and all Assumed Target Stock Options to be exchanged and assumed cash payment otherwise contemplated by Parent on the terms and conditions set forth in this Section 4.07. (e) Section 4.07(e) of the Disclosure Schedules (the “Equity Award Certificate”) sets forth (i) each Target Stock Option outstanding as of the close of business on November 34.6, 2014, identifying equal to the number of such fractional shares of Target Parent Common Stock subject multiplied by the Parent Reference Price. Fractional share interests will not entitle the owner thereof to such Target Stock Option, vote or to any other rights (including the exercise price right to receive dividends or other distributions of such Target Stock Option, Parent) of a stockholder of Parent. The parties acknowledge that payment of cash consideration in lieu of issuing fractional shares is not separately bargained-for consideration but merely represents a mechanical rounding off for purposes of avoiding the date such Target Stock Option was granted, the date such Target Stock Option expires, the vesting schedule of such Target Stock Option expense and the portion thereof that is vested and outstanding as of the date hereof, and (ii) each Target Restricted Stock Award outstanding as of the date hereof, identifying the number of shares of Target Common Stock subject to such Target Restricted Stock Award, the date such Target Restricted Stock Award was granted, the date such Target Restricted Stock Award expires, the vesting schedule of such Target Restricted Stock Award and the portion thereof that is vested and outstanding as of the date hereof. Not later than 5:00 p.m. Boston time, on the second Business Day preceding the Effective Time, Target shall provide inconvenience to Parent an updated Equity Award Certificate setting forth (i) each Target Stock Option outstanding as that would otherwise be caused by the issuance of the Effective Time, identifying the number of shares of Target Common Stock subject to such Target Stock Option, the exercise price of such Target Stock Option, the portion thereof that is a Cashed Out Target Stock Option, the portion thereof that is an Assumed Target Stock Option, the date such Target Stock Option was granted, the date such Target Stock Option expires and the vesting schedule of such Target Stock Option, in each case as of the Effective Time, and (ii) each Target Restricted Stock Award outstanding as of the Effective Time, identifying the number of shares of Target Common Stock subject to such Target Restricted Stock Award , the date such Target Restricted Stock Award was granted and the vesting schedule and other material terms of such Target Restricted Stock Award, in each case as of the Effective Timefractional shares.

Treatment of Stock Options and Other Stock-Based Awards. (a) The Target will take all requisite action so that, at Upon payment by the Effective TimeCompany of the Recapitalization Dividend, the portion of Company shall adjust each option to acquire shares purchase a share of Target Company Common Stock (each such optioneach, a “Target Company Stock Option”) by reducing the exercise price of each such Company Stock Option by the amount payable in respect of one Share in connection with the payment of the Recapitalization Dividend, as determined by the Company in its sole discretion. Each Company Stock Option, whether vested or unvested, that is vested and outstanding immediately prior to the Effective Time and for which the per share exercise price of such Target Stock Option is equal to or less than the Merger Consideration (each such portion, a “Cashed Out Target Stock Option”), will be, by virtue of this Agreement and without any further action on the part of Parent, Merger Sub, the Target, the holder of such Cashed Out Target Stock Option or any other Person, cancelled and converted into the right to receive from Parent and the Surviving Corporation, as promptly as reasonably practicable after the Effective Time, an amount in cash, without interest, equal to the product of (i) the aggregate number of shares of Target Common Stock subject to such Cashed Out Target Stock Option (only to the extent vested as provided above), multiplied by (ii) the excess of the Merger Consideration over the per share exercise price under such Cashed Out Target Stock Option (the aggregate amount, the “Option Consideration”), less any Taxes required to be withheld in accordance with Section 4.05. Each Target Stock Option (or portion thereof) outstanding immediately prior to the Effective Time that is not a Cashed Out Target Stock an In-the-Money Option shall be referred to herein as an “Assumed Target Stock Option.” (b) Effective shall, as of the Effective Time, Parent shall assume become fully vested. At the Target Stock Plans and Closing, each Assumed Target Stock Option, which shall thereafter be vested for such number of shares of Parent Common Stock as equals the number of shares of Target Common Stock subject to such Assumed Target Stock Option multiplied by the Equity Award Exchange Ratio, rounded down to the nearest whole share. The exercise price of each such Assumed Target Stock In-the-Money Option shall be cancelled and converted automatically into the right of the holder thereof to receive, subject to the holder’s execution and delivery to the Company of an acknowledgment in the form reasonably satisfactory to the Company and Parent (the “Optionholder Acknowledgement”): (i) an amount of cash equal to the exercise price per share set forth in the option agreement for such Assumed Target Stock Option divided by the Equity Award Exchange Ratio, rounded up to the nearest whole cent. All rights with respect to Target Common Stock under Assumed Target Stock Options shall by virtue product of the Merger Option Spread Value and without any action on the part of ParentTotal Cash Percentage (the “Recapitalization Option Cash Consideration”), Merger Sub, the Target, the holder of any Assumed Target Stock Option or any other Person, be converted into rights with respect to Parent Common Stock on the terms and conditions set forth in this Section 4.07(b). Accordingly, from and after the Effective Time, (i) each Assumed Target Stock Option may be exercised solely for the number of shares of Parent Common Stock determined in accordance with this Section 4.07(b) with an exercise price determined in accordance with this Section 4.07(b); (ii) any restriction on an amount of Verso First Lien Notes (valued at fair market value as determined by the exercise Company’s Board of any Assumed Target Stock Directors in its sole discretion after taking into account the trading price of the Existing Verso First Lien Notes) equal to the product of the Option shall continue in full force Spread Value and effect; the Total Note Percentage (the “Recapitalization Option Note Consideration”), and (iii) the term, vesting schedule and other provisions of such Assumed Target Stock Option shall otherwise remain unchanged; provided, however, that: (A) each Assumed Target Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, recapitalization or other similar transaction with respect to Parent Common Stock subsequent to the Effective Time; and (B) Parent’s board of directors or a committee thereof shall succeed to the authority and responsibility of the Target Board or any committee thereof with respect to each Target Stock Plan and Assumed Target Stock Option. As soon as practicable after the Effective Time, Parent shall prepare and file with the SEC a Form S-8 (or file such other appropriate form) registering a number of shares of Parent Common Stock necessary (valued at the Parent Trading Price) equal to fulfill Parentthe product of the Option Spread Value and the Total Share Percentage (the “Recapitalization Option Share Consideration”), in each case as reasonably determined by the Company’s obligations under Board of Directors based on the Waterfall Schedule; provided that the Recapitalization Option Cash Consideration, the Recapitalization Option Note Consideration and the Recapitalization Option Share Consideration shall each be reduced on a Relative Recapitalization Option Pro Rata Basis by the Option Withholding Amount. Notwithstanding the foregoing, if a holder of In-the-Money Options does not deliver an Optionholder Acknowledgement to the Company, then each In-the-Money Option held by such holder shall be cancelled and converted automatically into the right of such holder to receive (x) an amount of cash equal to the product of the Option Spread Value and the Option Cash Consideration Percentage (the “Option Cash Consideration”), (y) an amount of Verso First Lien Notes (valued at fair market value as determined by the Company’s Board of Directors in its sole discretion after taking into account the trading price of the Existing Verso First Lien Notes) equal to the product of the Option Spread Value and the Option Note Consideration Percentage (the “Option Note Consideration”), and (z) a number of shares of Parent Common Stock (valued at Parent Trading Price) equal to the product of the Option Spread Value and the Option Share Consideration Percentage (the “Option Share Consideration”), each as reasonably determined by the Company’s Board of Directors based on the Waterfall Schedule; provided that the Option Cash Consideration, the Option Note Consideration and the Option Share Consideration shall each be reduced on a Relative Option Pro Rata Basis by the Option Withholding Amount. The Surviving Corporation or one of its Subsidiaries, as applicable, shall pay or issue, as the case may be, to the former holders of In-the-Money Options the consideration described in this Section 4.07(b2.3(a) on or as soon as reasonably practicable following the Closing Date through the Company’s payroll system; provided that the recipients thereof shall be required, as a condition of receiving such consideration, to execute a Stockholder Release. All Company Stock Options that are Out-of-the-Money Options shall automatically be canceled and terminated as of the Effective Time without payment and shall be of no further force or effect. As of the Effective Time, all Company Stock Options shall no longer be outstanding and shall automatically cease to exist, and each holder of a Company Stock Option shall cease to have any rights with respect thereto, except the right to receive the payments, if any, specified in this Section 2.3(a). The Company shall deliver written notice to each holder of a Company Stock Option informing such holder of the effect of the Merger on the Company Stock Options (which notice, for the avoidance of doubt, may be included as part of the Optionholder Acknowledgements contemplated by this Section 2.3(a), as determined by the Company in its sole discretion). (cb) Each share holder of Target restricted stock units that correspond to shares of Company Common Stock granted (each, a “Company RSU”) shall be entitled to receive, in respect of each Company RSU held by such holder, a dividend equivalent equal to the Per Share Recapitalization Dividend in connection with the Company’s payment of the Recapitalization Dividend (the “Dividend Equivalent”), less all such amounts as are required to be withheld or deducted under the Target 2006 Incentive Plan that is unvested Code or is subject any provision of state, local or foreign Tax Law, in accordance with the award agreement pursuant to a repurchase option, risk of forfeiture, vesting schedule or other condition under any applicable restricted stock purchase agreement or other Contract with Target or under which Target has any rights and either the Company RSU was granted (i) is validly tendered and not validly withdrawn the “RSU Award Agreement”). As provided in the Offer applicable RSU Award Agreement and provided it has not previously been forfeited in accordance with its terms, the Dividend Equivalent in respect of each Company RSU shall be paid in cash to the holder thereof, less all such amounts as are required to be withheld or deducted under the Code or any provision of state, local or foreign Tax Law, on the Expiration Time (each a “Tendered Target Restricted date on which the Company Common Stock Award”) underlying the Company RSU is distributed to the holder in accordance with the applicable RSU Award Agreement or (ii) not validly tendered on or validly tendered and subsequently validly withdrawn and promptly following the Closing Date pursuant to the Company’s payroll system if the underlying Company RSU vests pursuant to the next sentence. Each Company RSU, whether vested or unvested, that is outstanding immediately prior to the Effective Time (each a “Non-Tendered Target Restricted Stock Award” and together with the Tendered Target Restricted Stock AwardsTime, the “Target Restricted Stock Awards”) shall (a) in the case shall, as of the Tendered Target Restricted Stock AwardsEffective Time, as soon as practicable after become fully vested. At the Expiration Time and in compliance with applicable LawClosing, receive the Offer Price net to such holder of Tendered Target Restricted Stock Award in cash, without interest and subject to any required withholding of Taxes and (b) in the case of the Non-Tendered Target Restricted Stock Awards, each Company RSU shall be cancelled and converted automatically into only the right of the holder thereof to receive on or promptly following the Closing Date through the Company’s payroll system (i) the Per Share Closing Cash Consideration, (ii) the Per Share Closing Note Consideration and (iii) the Per Share Closing Share Consideration, each as reasonably determined by the Company’s Board of Directors based on the Waterfall Schedule; provided that the Per Share Closing Cash Consideration, the Per Share Closing Note Consideration, and the Per Share Closing Share Consideration payable in respect of each Company RSU shall each be reduced on a Relative RSU Pro Rata Basis by the RSU Withholding Amount and provided further that the recipients thereof shall be required, as a condition of receiving such consideration, to execute a Stockholder Release. As of the Effective Time, all Company RSUs shall no longer be outstanding and shall automatically cease to exist, and each holder of a Company RSU shall cease to have any rights with respect thereto, except the right to receive the payments specified in this Section 2.3(b) and any unpaid portion of the Dividend Equivalent in respect of each Company RSU held by the holder immediately prior to the Effective Time, which unpaid portion (without interest), automatically and without any required action if any) shall become payable to the holder as of the Effective Time. The Company shall deliver written notice to each holder of a Company RSU informing such holder of the effect of the Merger on the Company RSUs (which notice, for the avoidance of doubt, may be included as part of the holder thereof, an amount in cash (less applicable Tax withholdings) equal to the Merger Consideration; provided that, pursuant to and in accordance with the Target 2006 Incentive Plan, the Offer Price or Merger ConsiderationOptionholder Acknowledgements contemplated by Section 2.3(a), as applicable, payable with respect to any Target Restricted Stock Awards shall continue to be, as applicable, unvested and/or subject to determined by the same repurchase option, risk Company in its sole discretion). In the event that the immediate payment of forfeiture, vesting schedule and other conditions as were set forth in the applicable restricted stock purchase agreement or other Contract with respect to such Target Restricted Stock Award and the holder of any such Target Restricted Stock Award must remain in service to Parent, the Target or any of their affiliates through the applicable vesting date or date when the applicable conditions shall terminate, to receive payment consideration contemplated above in respect thereof of the Company RSUs would cause an impermissible acceleration event under Section 409A of the Code, such consideration shall become vested at the Effective Time and will be paid at the earliest time such payment shall be made promptly following such applicable vesting date or date when the applicable conditions have terminated, as applicable. Parent’s board of directors or a committee thereof shall succeed to the authority and responsibility of the Target Board or any committee thereof with respect to each Target Stock Plan and Target Restricted Stock Award.would not cause an impermissible acceleration event under Section 409A. (dc) At or prior to the Effective Time, the TargetBoard of Directors of the Company (or, if appropriate, any administering committee) shall adopt such resolutions that are necessary for the Target Board treatment of the Company Stock Options and the compensation committee of such board, as applicable, will adopt any resolutions and take any actions (including obtaining any employee or stockholder consents) that may be necessary Company RSUs pursuant to effectuate the provisions of this Section 4.07, and causing the Target Stock Plans and all Assumed Target Stock Options to be exchanged and assumed by Parent on the terms and conditions set forth in this Section 4.072.3. (ed) Section 4.07(e) The conversions and payments in respect of the Disclosure Schedules (Company Stock Options and Company RSUs pursuant to this Section 2.3 are intended to comply with or be exempt from the “Equity Award Certificate”) sets forth (i) each Target Stock Option outstanding as requirements of Section 409A of the close Code and shall be interpreted in such a manner. To the extent that any conversions or payments to made under this Section 2.3 could cause the application of business on November 3, 2014, identifying the number of shares of Target Common Stock subject to such Target Stock Option, the exercise price of such Target Stock Option, the date such Target Stock Option was granted, the date such Target Stock Option expires, the vesting schedule of such Target Stock Option and the portion thereof that is vested and outstanding as an accelerated or additional tax under Section 409A of the date hereofCode, and (ii) each Target Restricted Stock Award outstanding as of such payments shall be deferred if deferral will make such payments compliant under Section 409A, or such payments shall be restructured, to the date hereof, identifying the number of shares of Target Common Stock subject to such Target Restricted Stock Award, the date such Target Restricted Stock Award was granted, the date such Target Restricted Stock Award expires, the vesting schedule of such Target Restricted Stock Award and the portion thereof that is vested and outstanding as of the date hereof. Not later than 5:00 p.m. Boston time, on the second Business Day preceding the Effective Time, Target shall provide to Parent an updated Equity Award Certificate setting forth (i) each Target Stock Option outstanding as of the Effective Time, identifying the number of shares of Target Common Stock subject to such Target Stock Option, the exercise price of such Target Stock Option, the portion thereof that is a Cashed Out Target Stock Option, the portion thereof that is an Assumed Target Stock Option, the date such Target Stock Option was granted, the date such Target Stock Option expires and the vesting schedule of such Target Stock Optionextent possible, in each case as of a manner, determined by the Effective TimeCompany in its sole discretion, and (ii) each Target Restricted Stock Award outstanding as of the Effective Time, identifying the number of shares of Target Common Stock subject to that does not cause such Target Restricted Stock Award , the date such Target Restricted Stock Award was granted and the vesting schedule and other material terms of such Target Restricted Stock Award, in each case as of the Effective Timean accelerated or additional tax.

Treatment of Stock Options and Other Stock-Based Awards. (a) The Target will take all requisite action so thatExcept as otherwise agreed in writing by Parent and the applicable holder thereof, at the Effective Time, the portion of each option to acquire shares of Target Common purchase Shares (collectively, the “Company Stock (each such option, a “Target Stock OptionOptions”) that is vested granted under the employee and outstanding immediately prior to director stock plans of the Effective Time and for which Company (the per share exercise price of such Target “Company Stock Option is equal to or less than the Merger Consideration (each such portion, a “Cashed Out Target Stock OptionPlans”), will bewhether vested or unvested, by virtue of this Agreement and without any further action on the part of Parent, Merger Sub, the Target, the holder of such Cashed Out Target Stock Option or any other Person, cancelled and converted into the right to receive from Parent and the Surviving Corporation, as promptly as reasonably practicable after the Effective Time, an amount in cash, without interest, equal to the product of (i) the aggregate number of shares of Target Common Stock subject to such Cashed Out Target Stock Option (only to the extent vested as provided above), multiplied by (ii) the excess of the Merger Consideration over the per share exercise price under such Cashed Out Target Stock Option (the aggregate amount, the “Option Consideration”), less any Taxes required to be withheld in accordance with Section 4.05. Each Target Stock Option (or portion thereof) outstanding immediately prior to the Effective Time that is not a Cashed Out Target Stock Option shall be referred to herein as an “Assumed Target Stock Option.” (b) Effective as of the Effective Time, Parent shall assume the Target Stock Plans and each Assumed Target Stock Option, which shall thereafter be vested for such number of shares of Parent Common Stock as equals the number of shares of Target Common Stock subject to such Assumed Target Stock Option multiplied by the Equity Award Exchange Ratio, rounded down to the nearest whole share. The exercise price of each such Assumed Target Stock Option shall be equal to the exercise price per share set forth in the option agreement for such Assumed Target Stock Option divided by the Equity Award Exchange Ratio, rounded up to the nearest whole cent. All rights with respect to Target Common Stock under Assumed Target Stock Options shall by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Target, the holder of any Assumed Target Stock Option or any other Person, be converted into rights with respect to Parent Common Stock on the terms and conditions set forth in this Section 4.07(b). Accordingly, from and after the Effective Time, (i) each Assumed Target Stock Option may be exercised solely for the number of shares of Parent Common Stock determined in accordance with this Section 4.07(b) with an exercise price determined in accordance with this Section 4.07(b); (ii) any restriction on the exercise of any Assumed Target Stock Option shall continue in full force and effect; and (iii) the term, vesting schedule and other provisions of such Assumed Target Stock Option shall otherwise remain unchanged; provided, however, that: (A) each Assumed Target Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, recapitalization or other similar transaction with respect to Parent Common Stock subsequent to the Effective Time; and (B) Parent’s board of directors or a committee thereof shall succeed to the authority and responsibility of the Target Board or any committee thereof with respect to each Target Stock Plan and Assumed Target Stock Option. As soon as practicable after the Effective Time, Parent shall prepare and file with the SEC a Form S-8 (or file such other appropriate form) registering a number of shares of Parent Common Stock necessary to fulfill Parent’s obligations under this Section 4.07(b). (c) Each share of Target Common Stock granted under the Target 2006 Incentive Plan that is unvested or is subject to a repurchase option, risk of forfeiture, vesting schedule or other condition under any applicable restricted stock purchase agreement or other Contract with Target or under which Target has any rights and either (i) is validly tendered and not validly withdrawn in the Offer as of the Expiration Time (each a “Tendered Target Restricted Stock Award”) or (ii) not validly tendered or validly tendered and subsequently validly withdrawn and is outstanding immediately prior to the Effective Time (each a “Non-Tendered Target Restricted Stock Award” and together with will at the Tendered Target Restricted Stock Awards, the “Target Restricted Stock Awards”) shall (a) in the case of the Tendered Target Restricted Stock Awards, as soon as practicable after the Expiration Effective Time and in compliance with applicable Law, receive the Offer Price net to such holder of Tendered Target Restricted Stock Award in cash, without interest and subject to any required withholding of Taxes and (b) in the case of the Non-Tendered Target Restricted Stock Awards, be cancelled and converted into only the right to receive (without interest), automatically and without any required action on the part of the holder thereof, an amount in cash (less applicable Tax withholdings) equal to the Merger Consideration; provided that, pursuant to and in accordance with the Target 2006 Incentive Plan, the Offer Price or Merger Consideration, as applicable, payable with respect to any Target Restricted Stock Awards shall continue to be, as applicable, unvested and/or subject to the same repurchase option, risk of forfeiture, vesting schedule and other conditions as were set forth in the applicable restricted stock purchase agreement or other Contract with respect to such Target Restricted Stock Award and the holder of such Company Stock Option will, in full settlement of such Company Stock Option, receive from the Surviving Corporation an amount (subject to any such Target Restricted Stock Award must remain applicable withholding tax) in service to Parent, the Target or any of their affiliates through the applicable vesting date or date when the applicable conditions shall terminate, to receive payment in respect thereof and such payment shall be made promptly following such applicable vesting date or date when the applicable conditions have terminated, as applicable. Parent’s board of directors or a committee thereof shall succeed cash equal to the authority and responsibility product of (x) the excess, if any, of the Target Board or any committee thereof with respect Merger Consideration over the exercise price per Share of such Company Stock Option multiplied by (y) the total number of Shares subject to each Target such Company Stock Plan and Target Restricted Stock AwardOption (the aggregate amount of such cash hereinafter referred to as the “Option Consideration”). (db) At or Except as otherwise agreed in writing by Parent and the applicable holder thereof, immediately prior to the Effective Time, each award of restricted common stock granted under the Target, the Target Board and the compensation committee of such board, as applicable, will adopt any resolutions and take any actions (including obtaining any employee or stockholder consents) that may be necessary to effectuate the provisions of this Section 4.07, and causing the Target Company Stock Plans (the “Restricted Shares”) shall vest in full and all Assumed Target Stock Options be converted into the right to be exchanged and assumed by Parent on receive the terms and conditions set forth Merger Consideration as provided in this Section 4.072.1(a) . (ec) Section 4.07(e) of the Disclosure Schedules (the “Equity Award Certificate”) sets forth (i) each Target Stock Option outstanding Except as of the close of business on November 3, 2014, identifying the number of shares of Target Common Stock subject to such Target Stock Option, the exercise price of such Target Stock Option, the date such Target Stock Option was granted, the date such Target Stock Option expires, the vesting schedule of such Target Stock Option otherwise agreed in writing by Parent and the portion thereof that is vested and outstanding as of the date hereofapplicable holder thereof, and (ii) each Target Restricted Stock Award outstanding as of the date hereof, identifying the number of shares of Target Common Stock subject to such Target Restricted Stock Award, the date such Target Restricted Stock Award was granted, the date such Target Restricted Stock Award expires, the vesting schedule of such Target Restricted Stock Award and the portion thereof that is vested and outstanding as of the date hereof. Not later than 5:00 p.m. Boston time, on the second Business Day preceding at the Effective Time, Target each performance share based on Shares granted under the Company Stock Plans (the “Performance Shares”), whether vested or unvested, which is outstanding immediately prior to the Effective Time shall provide be deemed to Parent be earned at the level set forth in the applicable Company Stock Plan and applicable award agreement, shall become fully vested and shall entitle the holder thereof to receive, at the Effective Time or, with respect to Shares issuable with respect to Performance Shares that the applicable holder has validly elected to defer on or prior to December 31, 2006, such later date as the applicable holder shall have validly elected, an updated Equity Award Certificate setting forth amount in cash equal to the Merger Consideration in respect of each Share earned with respect to the Performance Shares (isubject to any applicable withholding taxes) each Target Stock (the aggregate amount of such cash, together with the Option outstanding Consideration, hereinafter referred to as of the “Option and Stock-Based Consideration”). (d) Prior to the Effective Time, identifying the number of shares of Target Common Stock subject Company will adopt such resolutions as may reasonably be required in its discretion to such Target Stock Option, effectuate the exercise price of such Target Stock Option, the portion thereof that is a Cashed Out Target Stock Option, the portion thereof that is an Assumed Target Stock Option, the date such Target Stock Option was granted, the date such Target Stock Option expires and the vesting schedule of such Target Stock Option, in each case as of the Effective Time, and (ii) each Target Restricted Stock Award outstanding as of the Effective Time, identifying the number of shares of Target Common Stock subject to such Target Restricted Stock Award , the date such Target Restricted Stock Award was granted and the vesting schedule and other material terms of such Target Restricted Stock Award, in each case as of the Effective Timeactions contemplated by this Section 2.3.

Treatment of Stock Options and Other Stock-Based Awards. (a) The Target will take all requisite action so thatEach option, at prior to the Effective Time, the portion of each option to acquire shares of Target purchase Common Stock (each such optioncollectively, a the “Target Company Stock OptionOptions”) that is vested and outstanding immediately prior to granted under any equity based compensation plan (including the Effective Time and for which Company’s employee stock purchase plans) of the per share exercise price of such Target Company (the “Company Stock Option is equal to or less than the Merger Consideration (each such portion, a “Cashed Out Target Stock OptionPlans”), will bewhether vested or unvested, by virtue of this Agreement and without any further action on the part of Parent, Merger Sub, the Target, the holder of such Cashed Out Target Stock Option or any other Person, cancelled and converted into the right to receive from Parent and the Surviving Corporation, as promptly as reasonably practicable after the Effective Time, an amount in cash, without interest, equal to the product of (i) the aggregate number of shares of Target Common Stock subject to such Cashed Out Target Stock Option (only to the extent vested as provided above), multiplied by (ii) the excess of the Merger Consideration over the per share exercise price under such Cashed Out Target Stock Option (the aggregate amount, the “Option Consideration”), less any Taxes required to be withheld in accordance with Section 4.05. Each Target Stock Option (or portion thereof) outstanding immediately prior to the Effective Time that is not a Cashed Out Target Stock Option shall be referred to herein as an “Assumed Target Stock Option.” (b) Effective as of the Effective Time, Parent shall assume the Target Stock Plans and each Assumed Target Stock Option, which shall thereafter be vested for such number of shares of Parent Common Stock as equals the number of shares of Target Common Stock subject to such Assumed Target Stock Option multiplied by the Equity Award Exchange Ratio, rounded down to the nearest whole share. The exercise price of each such Assumed Target Stock Option shall be equal to the exercise price per share set forth in the option agreement for such Assumed Target Stock Option divided by the Equity Award Exchange Ratio, rounded up to the nearest whole cent. All rights with respect to Target Common Stock under Assumed Target Stock Options shall by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Target, the holder of any Assumed Target Stock Option or any other Person, be converted into rights with respect to Parent Common Stock on the terms and conditions set forth in this Section 4.07(b). Accordingly, from and after the Effective Time, (i) each Assumed Target Stock Option may be exercised solely for the number of shares of Parent Common Stock determined in accordance with this Section 4.07(b) with an exercise price determined in accordance with this Section 4.07(b); (ii) any restriction on the exercise of any Assumed Target Stock Option shall continue in full force and effect; and (iii) the term, vesting schedule and other provisions of such Assumed Target Stock Option shall otherwise remain unchanged; provided, however, that: (A) each Assumed Target Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, recapitalization or other similar transaction with respect to Parent Common Stock subsequent to the Effective Time; and (B) Parent’s board of directors or a committee thereof shall succeed to the authority and responsibility of the Target Board or any committee thereof with respect to each Target Stock Plan and Assumed Target Stock Option. As soon as practicable after the Effective Time, Parent shall prepare and file with the SEC a Form S-8 (or file such other appropriate form) registering a number of shares of Parent Common Stock necessary to fulfill Parent’s obligations under this Section 4.07(b). (c) Each share of Target Common Stock granted under the Target 2006 Incentive Plan that is unvested or is subject to a repurchase option, risk of forfeiture, vesting schedule or other condition under any applicable restricted stock purchase agreement or other Contract with Target or under which Target has any rights and either (i) is validly tendered and not validly withdrawn in the Offer as of the Expiration Time (each a “Tendered Target Restricted Stock Award”) or (ii) not validly tendered or validly tendered and subsequently validly withdrawn and is outstanding immediately prior to the Effective Time (each a “Non-Tendered Target Restricted Stock Award” and together with will at the Tendered Target Restricted Stock Awards, the “Target Restricted Stock Awards”) shall (a) in the case of the Tendered Target Restricted Stock Awards, as soon as practicable after the Expiration Effective Time and in compliance with applicable Law, receive the Offer Price net to such holder of Tendered Target Restricted Stock Award in cash, without interest and subject to any required withholding of Taxes and (b) in the case of the Non-Tendered Target Restricted Stock Awards, be cancelled and converted into only the right to receive (without interest), automatically and without any required action on the part of the holder thereof, an amount in cash (less applicable Tax withholdings) equal to the Merger Consideration; provided that, pursuant to and in accordance with the Target 2006 Incentive Plan, the Offer Price or Merger Consideration, as applicable, payable with respect to any Target Restricted Stock Awards shall continue to be, as applicable, unvested and/or subject to the same repurchase option, risk of forfeiture, vesting schedule and other conditions as were set forth in the applicable restricted stock purchase agreement or other Contract with respect to such Target Restricted Stock Award and the holder of such Company Stock Option will, in full settlement of such Company Stock Option, receive from the Surviving Corporation an amount (subject to any applicable withholding Tax) in cash equal to the product of (x) the excess, if any, of the Merger Consideration over the exercise price per Share of such Target Restricted Company Stock Award must remain in service Option, multiplied by (y) the total number of Shares subject to Parentsuch Company Stock Option (the aggregate amount of such cash hereinafter referred to as the “Option Consideration”). In the case of any Company Stock Option that does not explicitly provide for the cash out of such stock option as contemplated by this Section 3.3(a), the Target Company shall obtain, prior to the Acceptance Date, a waiver and release from the holders of all such Company Stock Options, except as provided below in this Section 3.3(a), in exchange for the Option Consideration; in any case where the Option Consideration is zero or any negative, the Company shall offer the stock option holder an amount of their affiliates through cash (the “Stock Option Cash Out Consideration”) as determined by the Company and the applicable vesting date or date when stock option holder as necessary to obtain the applicable conditions waiver and release as contemplated herein and the Company shall terminatepay to such holders the Stock Option Cash Out Consideration prior to the Acceptance Date; provided, however, that any Stock Option Cash Out Consideration must be approved by Parent in writing prior to receive any payment in respect thereof thereof. Notwithstanding the foregoing, the Company has frozen the VistaCare, Inc. Employee Stock Purchase Plan (“ESPP”), effective December 31, 2007, and such payment any amounts not utilized to purchase Common Stock shall be made promptly following such applicable vesting date or date when the applicable conditions have terminated, as applicable. Parent’s board of directors or a committee thereof shall succeed to the authority and responsibility of the Target Board or any committee thereof with respect to each Target Stock Plan and Target Restricted Stock Award. (d) At or distributed prior to the Effective Time. (b) Each award of restricted Common Stock granted under the Company Stock Plans, together with the associated Rights (the “Restricted Shares”), that is issued and outstanding immediately prior to the Acceptance Date shall vest in full immediately prior to the Acceptance Date and either (i) to the limited extent such Restricted Shares are tendered by the beneficial owner of such Restricted Shares in the Offer and accepted by the Merger Sub, the Targetbeneficial owner of such Restricted Shares will be entitled to the Per Share Amount for such Restricted Shares payable pursuant to Section 1.1(f), or (ii) to the extent such Restricted Shares are not tendered by the beneficial owner in the Offer and only to the extent such payment is not duplicative of the payment described in Section 3.3(b)(i), such Restricted Shares shall be converted into the right to receive the Merger Consideration pursuant to Section 3.1(a). (c) The surrender of a Company Stock Option to the Company in exchange for the Option Consideration shall be deemed a release of any and all rights the holder had or may have had in respect of such Company Stock Option. Prior to the expiration of the Offer, the Target Board and the compensation committee of such board, as applicable, will adopt any resolutions and Company shall use its reasonable best efforts to take any actions all action necessary (including obtaining causing the Board of Directors (or any employee committees thereof) to take such actions as are allowed by the Company Stock Plans or stockholder consentsany option or award agreements) that may be necessary to effectuate the provisions of actions contemplated by this Section 4.073.3 and to ensure that, and causing the Target Stock Plans and all Assumed Target Stock Options to be exchanged and assumed by Parent on the terms and conditions set forth in this Section 4.07. (e) Section 4.07(e) of the Disclosure Schedules (the “Equity Award Certificate”) sets forth (i) each Target Stock Option outstanding as of the close of business on November 3, 2014, identifying the number of shares of Target Common Stock subject to such Target Stock Option, the exercise price of such Target Stock Option, the date such Target Stock Option was granted, the date such Target Stock Option expires, the vesting schedule of such Target Stock Option and the portion thereof that is vested and outstanding as of the date hereof, and (ii) each Target Restricted Stock Award outstanding as of the date hereof, identifying the number of shares of Target Common Stock subject to such Target Restricted Stock Award, the date such Target Restricted Stock Award was granted, the date such Target Restricted Stock Award expires, the vesting schedule of such Target Restricted Stock Award and the portion thereof that is vested and outstanding as of the date hereof. Not later than 5:00 p.m. Boston time, on the second Business Day preceding following the Effective Time, Target no Person other than Parent and its Subsidiaries shall provide to Parent an updated Equity Award Certificate setting forth have any right (i) each Target Stock Option outstanding as to acquire equity securities of the Effective Time, identifying the number of shares of Target Common Stock subject to such Target Stock OptionCompany, the exercise price of such Target Stock Option, the portion Surviving Corporation or any Subsidiary thereof that is a Cashed Out Target Stock Option, the portion thereof that is an Assumed Target Stock Option, the date such Target Stock Option was granted, the date such Target Stock Option expires and the vesting schedule of such Target Stock Option, in each case as of the Effective Time, and or (ii) each Target Restricted Stock Award outstanding as to receive any payment in respect of any equity based compensatory award or warrant other than with respect to the payment of the Effective Time, identifying the number of shares of Target Common Stock subject to such Target Restricted Stock Award , the date such Target Restricted Stock Award was granted and the vesting schedule and other material terms of such Target Restricted Stock Award, Option Consideration as provided in each case as of the Effective Timethis Section 3.3.

Treatment of Stock Options and Other Stock-Based Awards. (a) The Target will take all requisite action so thatExcept as otherwise agreed in writing by Parent and the applicable holder thereof, at the Effective Time, the portion of each option to acquire shares of Target Common purchase Shares (collectively, the “Company Stock (each such option, a “Target Stock OptionOptions”) that is vested granted under the employee and outstanding immediately prior to director stock plans of the Effective Time and for which Company (the per share exercise price of such Target “Company Stock Option is equal to or less than the Merger Consideration (each such portion, a “Cashed Out Target Stock OptionPlans”), will bewhether vested or unvested, by virtue of this Agreement and without any further action on the part of Parent, Merger Sub, the Target, the holder of such Cashed Out Target Stock Option or any other Person, cancelled and converted into the right to receive from Parent and the Surviving Corporation, as promptly as reasonably practicable after the Effective Time, an amount in cash, without interest, equal to the product of (i) the aggregate number of shares of Target Common Stock subject to such Cashed Out Target Stock Option (only to the extent vested as provided above), multiplied by (ii) the excess of the Merger Consideration over the per share exercise price under such Cashed Out Target Stock Option (the aggregate amount, the “Option Consideration”), less any Taxes required to be withheld in accordance with Section 4.05. Each Target Stock Option (or portion thereof) outstanding immediately prior to the Effective Time that is not a Cashed Out Target Stock Option shall be referred to herein as an “Assumed Target Stock Option.” (b) Effective as of the Effective Time, Parent shall assume the Target Stock Plans and each Assumed Target Stock Option, which shall thereafter be vested for such number of shares of Parent Common Stock as equals the number of shares of Target Common Stock subject to such Assumed Target Stock Option multiplied by the Equity Award Exchange Ratio, rounded down to the nearest whole share. The exercise price of each such Assumed Target Stock Option shall be equal to the exercise price per share set forth in the option agreement for such Assumed Target Stock Option divided by the Equity Award Exchange Ratio, rounded up to the nearest whole cent. All rights with respect to Target Common Stock under Assumed Target Stock Options shall by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Target, the holder of any Assumed Target Stock Option or any other Person, be converted into rights with respect to Parent Common Stock on the terms and conditions set forth in this Section 4.07(b). Accordingly, from and after the Effective Time, (i) each Assumed Target Stock Option may be exercised solely for the number of shares of Parent Common Stock determined in accordance with this Section 4.07(b) with an exercise price determined in accordance with this Section 4.07(b); (ii) any restriction on the exercise of any Assumed Target Stock Option shall continue in full force and effect; and (iii) the term, vesting schedule and other provisions of such Assumed Target Stock Option shall otherwise remain unchanged; provided, however, that: (A) each Assumed Target Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, recapitalization or other similar transaction with respect to Parent Common Stock subsequent to the Effective Time; and (B) Parent’s board of directors or a committee thereof shall succeed to the authority and responsibility of the Target Board or any committee thereof with respect to each Target Stock Plan and Assumed Target Stock Option. As soon as practicable after the Effective Time, Parent shall prepare and file with the SEC a Form S-8 (or file such other appropriate form) registering a number of shares of Parent Common Stock necessary to fulfill Parent’s obligations under this Section 4.07(b). (c) Each share of Target Common Stock granted under the Target 2006 Incentive Plan that is unvested or is subject to a repurchase option, risk of forfeiture, vesting schedule or other condition under any applicable restricted stock purchase agreement or other Contract with Target or under which Target has any rights and either (i) is validly tendered and not validly withdrawn in the Offer as of the Expiration Time (each a “Tendered Target Restricted Stock Award”) or (ii) not validly tendered or validly tendered and subsequently validly withdrawn and is outstanding immediately prior to the Effective Time (each a “Non-Tendered Target Restricted Stock Award” and together with will at the Tendered Target Restricted Stock Awards, the “Target Restricted Stock Awards”) shall (a) in the case of the Tendered Target Restricted Stock Awards, as soon as practicable after the Expiration Effective Time and in compliance with applicable Law, receive the Offer Price net to such holder of Tendered Target Restricted Stock Award in cash, without interest and subject to any required withholding of Taxes and (b) in the case of the Non-Tendered Target Restricted Stock Awards, be cancelled and converted into only the right to receive (without interest), automatically and without any required action on the part of the holder thereof, an amount in cash (less applicable Tax withholdings) equal to the Merger Consideration; provided that, pursuant to and in accordance with the Target 2006 Incentive Plan, the Offer Price or Merger Consideration, as applicable, payable with respect to any Target Restricted Stock Awards shall continue to be, as applicable, unvested and/or subject to the same repurchase option, risk of forfeiture, vesting schedule and other conditions as were set forth in the applicable restricted stock purchase agreement or other Contract with respect to such Target Restricted Stock Award and the holder of such Company Stock Option will, in full settlement of such Company Stock Option, receive from the Surviving Corporation an amount (subject to any such Target Restricted Stock Award must remain applicable withholding tax) in service to Parent, the Target or any of their affiliates through the applicable vesting date or date when the applicable conditions shall terminate, to receive payment in respect thereof and such payment shall be made promptly following such applicable vesting date or date when the applicable conditions have terminated, as applicable. Parent’s board of directors or a committee thereof shall succeed cash equal to the authority and responsibility product of (x) the excess, if any, of the Target Board or any committee thereof with respect Merger Consideration over the exercise price per Share of such Company Stock Option multiplied by (y) the total number of Shares subject to each Target such Company Stock Plan and Target Restricted Stock AwardOption (the aggregate amount of such cash hereinafter referred to as the “Option Consideration”). (db) At or Except as otherwise agreed in writing by Parent and the applicable holder thereof, immediately prior to the Effective Time, each award of restricted Common Stock granted under the Target, the Target Board and the compensation committee of such board, as applicable, will adopt any resolutions and take any actions (including obtaining any employee or stockholder consents) that may be necessary to effectuate the provisions of this Section 4.07, and causing the Target Company Stock Plans (the “Restricted Shares”) shall vest in full and all Assumed Target Stock Options be converted into the right to be exchanged and assumed by Parent on receive the terms and conditions set forth Merger Consideration as provided in this Section 4.072.1(a). (ec) Section 4.07(e) of the Disclosure Schedules (the “Equity Award Certificate”) sets forth (i) each Target Stock Option outstanding Except as of the close of business on November 3, 2014, identifying the number of shares of Target Common Stock subject to such Target Stock Option, the exercise price of such Target Stock Option, the date such Target Stock Option was granted, the date such Target Stock Option expires, the vesting schedule of such Target Stock Option otherwise agreed in writing by Parent and the portion thereof that is vested and outstanding as of the date hereofapplicable holder thereof, and (ii) each Target Restricted Stock Award outstanding as of the date hereof, identifying the number of shares of Target Common Stock subject to such Target Restricted Stock Award, the date such Target Restricted Stock Award was granted, the date such Target Restricted Stock Award expires, the vesting schedule of such Target Restricted Stock Award and the portion thereof that is vested and outstanding as of the date hereof. Not later than 5:00 p.m. Boston time, on the second Business Day preceding at the Effective Time, Target each performance share based on Shares granted under the Company Stock Plans (the “Performance Shares”), whether vested or unvested, which is outstanding immediately prior to the Effective Time shall provide be deemed to Parent be earned at the level set forth in the applicable Company Stock Plan and applicable award agreement, shall become fully vested and shall entitle the holder thereof to receive, at the Effective Time or, with respect to Shares issuable with respect to Performance Shares that the applicable holder has validly elected to defer on or prior to December 31, 2006, such later date as the applicable holder shall have validly elected, an updated Equity Award Certificate setting forth amount in cash equal to the Merger Consideration in respect of each Share earned with respect to the Performance Shares (isubject to any applicable withholding taxes) each Target Stock (the aggregate amount of such cash, together with the Option outstanding Consideration, hereinafter referred to as of the “Option and Stock-Based Consideration”). (d) Prior to the Effective Time, identifying the number of shares of Target Common Stock subject Company will adopt such resolutions as may reasonably be required in its discretion to such Target Stock Option, effectuate the exercise price of such Target Stock Option, the portion thereof that is a Cashed Out Target Stock Option, the portion thereof that is an Assumed Target Stock Option, the date such Target Stock Option was granted, the date such Target Stock Option expires and the vesting schedule of such Target Stock Option, in each case as of the Effective Time, and (ii) each Target Restricted Stock Award outstanding as of the Effective Time, identifying the number of shares of Target Common Stock subject to such Target Restricted Stock Award , the date such Target Restricted Stock Award was granted and the vesting schedule and other material terms of such Target Restricted Stock Award, in each case as of the Effective Timeactions contemplated by this Section 2.3.

Treatment of Stock Options and Other Stock-Based Awards. (a) The Target will take all requisite action so thatBrookfield Homes currently maintains and sponsors the Brookfield Homes 2009 Stock Option Plan and the Brookfield Homes 2002 Stock Option Plan, at each providing for the Effective Time, the portion grant or award to its officers and employees of each option options to acquire shares of Target purchase or receive Brookfield Homes Common Stock (each such optionthe “Employee Stock Plans”). Brookfield Homes also maintains and sponsors the Brookfield Homes Deferred Share Unit Plan providing executive officers and directors the option to elect to receive a portion of their compensation in the form of deferred share units tied to the value of Brookfield Homes Common Stock (the “Deferred Unit Plan“ and, together with the Employee Stock Plans, the “Brookfield Homes Stock Plans”). The Brookfield Homes Stock Plans will be replaced with a Brookfield Residential Properties Stock Option Plan (the “Target Brookfield Residential Stock OptionOption Plan”) that is vested and a Brookfield Residential Properties Deferred Share Unit Plan (the “Brookfield Residential Deferred Share Unit Plan,” and together with the Brookfield Residential Stock Option Plan, the “Brookfield Residential Stock Plans”). Subject to the last two sentences of this paragraph, the outstanding options and other awards under the Brookfield Homes Stock Plans shall be exchanged for options or deferred share units under the Brookfield Residential Stock Plans exercisable or issuable upon the same terms and conditions as under the Brookfield Homes Stock Plans and the agreements relating thereto immediately prior to the Effective Time and for which Date of the per share exercise price of such Target Stock Option is equal to or less than the Merger Consideration (each such portionMerger, a “Cashed Out Target Stock Option”), will be, by virtue of this Agreement and without any further action on the part of Parent, Merger Sub, the Target, the holder of such Cashed Out Target Stock Option or any other Person, cancelled and converted into the right to receive from Parent and the Surviving Corporation, as promptly as reasonably practicable after the Effective Time, an amount in cash, without interest, equal to the product of except that (i) upon the aggregate number exercise or issuance of options, shares of Brookfield Residential Common Stock shall be issuable in lieu of shares of Target Brookfield Homes Common Stock subject to such Cashed Out Target Stock Option (only to the extent vested as provided above)Stock, multiplied by and (ii) upon the excess redemption of the Merger Consideration over the per deferred share exercise price under such Cashed Out Target Stock Option (the aggregate amountunits, the “Option Consideration”), less any Taxes required to be withheld in accordance with Section 4.05. Each Target Stock Option (or portion thereof) outstanding immediately prior to the Effective Time that is not a Cashed Out Target Stock Option shall be referred to herein as an “Assumed Target Stock Option.” (b) Effective as value of the Effective Time, Parent shall assume units will be based on the Target Stock Plans and each Assumed Target Stock Option, which shall thereafter value of Brookfield Residential Common Stock. Appropriate adjustments will be vested for such number of shares of Parent Common Stock as equals made in both the number of shares of Target Brookfield Residential Common Stock subject to issuable upon the exercise of such Assumed Target Stock Option multiplied by option after the Equity Award Exchange Ratio, rounded down to Effective Date and the nearest whole share. The exercise price of each such Assumed Target Stock Option shall be equal option to preserve the exercise price per share set forth in the option agreement for such Assumed Target Stock Option divided by the Equity Award Exchange Ratio, rounded up to the nearest whole cent. All rights with respect to Target Common Stock under Assumed Target Stock Options shall by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Target, the holder of any Assumed Target Stock Option or any other Person, be converted into rights with respect to Parent Common Stock on the terms and conditions set forth in this Section 4.07(b). Accordingly, from and after the Effective Time, (i) each Assumed Target Stock Option may be exercised solely for the number of shares of Parent Common Stock determined in accordance with this Section 4.07(b) with an exercise price determined in accordance with this Section 4.07(b); (ii) any restriction on the exercise of any Assumed Target Stock Option shall continue in full force and effect; and (iii) the term, vesting schedule and other provisions of such Assumed Target Stock Option shall otherwise remain unchanged; provided, however, that: (A) each Assumed Target Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, recapitalization or other similar transaction with respect to Parent Common Stock subsequent to the Effective Time; and (B) Parent’s board of directors or a committee thereof shall succeed to the authority and responsibility of the Target Board or any committee thereof with respect to each Target Stock Plan and Assumed Target Stock Option. As soon as practicable after the Effective Time, Parent shall prepare and file with the SEC a Form S-8 (or file such other appropriate form) registering a number of shares of Parent Common Stock necessary to fulfill Parent’s obligations under this Section 4.07(b). (c) Each share of Target Common Stock granted under the Target 2006 Incentive Plan that is unvested or is subject to a repurchase option, risk of forfeiture, vesting schedule or other condition under any applicable restricted stock purchase agreement or other Contract with Target or under which Target has any rights and either (i) is validly tendered and not validly withdrawn in the Offer as of the Expiration Time (each a “Tendered Target Restricted Stock Award”) or (ii) not validly tendered or validly tendered and subsequently validly withdrawn and is outstanding economic value immediately prior to the Effective Time (each a “Non-Tendered Target Restricted Stock Award” Transactions and together with to reflect the Tendered Target Restricted Stock Awards, impact of the “Target Restricted Stock Awards”) shall (a) Transactions. Appropriate adjustments will also be made in the case number of units allocated to a participant under the Brookfield Residential Deferred Share Unit Plan to reflect the impact of the Tendered Target Restricted Stock Awards, as soon as practicable after the Expiration Time and in compliance Transactions. It is intended that new at-the-money options of Brookfield Residential will be granted with applicable Law, receive the Offer Price net to such holder of Tendered Target Restricted Stock Award in cash, without interest and subject to any required withholding of Taxes and (b) in the case of the Non-Tendered Target Restricted Stock Awards, be cancelled and converted into only the right to receive (without interest), automatically and without any required action on the part of the holder thereof, an amount in cash (less applicable Tax withholdings) equal a value approximately equivalent to the Merger Consideration; provided that, pursuant to and in Black-Scholes value of any out-of-the-money options of Brookfield Homes being replaced. In accordance with the Target 2006 Incentive terms of the Brookfield Homes Deferred Share Unit Plan, the Offer Price or Merger ConsiderationBrookfield Homes director deferred share unit holders may elect, as applicable, payable with respect to any Target Restricted Stock Awards shall continue to be, as applicable, unvested and/or subject to the same repurchase option, risk of forfeiture, vesting schedule and other conditions as were set forth in the applicable restricted stock purchase agreement or other Contract with respect to such Target Restricted Stock Award and the holder of any such Target Restricted Stock Award must remain in service to Parent, the Target or any a result of their affiliates through the applicable vesting date or date when the applicable conditions shall terminateseparation from service, to receive payment in respect thereof and such payment shall be made promptly following such applicable vesting date either cash or date when the applicable conditions have terminated, as applicable. Parent’s board of directors or a committee thereof shall succeed to replace their Brookfield Homes deferred share units with Brookfield Residential deferred share units pursuant to the authority and responsibility of the Target Board or any committee thereof with respect to each Target Stock Plan and Target Restricted Stock Awardforegoing. (d) At or prior to the Effective Time, the Target, the Target Board and the compensation committee of such board, as applicable, will adopt any resolutions and take any actions (including obtaining any employee or stockholder consents) that may be necessary to effectuate the provisions of this Section 4.07, and causing the Target Stock Plans and all Assumed Target Stock Options to be exchanged and assumed by Parent on the terms and conditions set forth in this Section 4.07. (e) Section 4.07(e) of the Disclosure Schedules (the “Equity Award Certificate”) sets forth (i) each Target Stock Option outstanding as of the close of business on November 3, 2014, identifying the number of shares of Target Common Stock subject to such Target Stock Option, the exercise price of such Target Stock Option, the date such Target Stock Option was granted, the date such Target Stock Option expires, the vesting schedule of such Target Stock Option and the portion thereof that is vested and outstanding as of the date hereof, and (ii) each Target Restricted Stock Award outstanding as of the date hereof, identifying the number of shares of Target Common Stock subject to such Target Restricted Stock Award, the date such Target Restricted Stock Award was granted, the date such Target Restricted Stock Award expires, the vesting schedule of such Target Restricted Stock Award and the portion thereof that is vested and outstanding as of the date hereof. Not later than 5:00 p.m. Boston time, on the second Business Day preceding the Effective Time, Target shall provide to Parent an updated Equity Award Certificate setting forth (i) each Target Stock Option outstanding as of the Effective Time, identifying the number of shares of Target Common Stock subject to such Target Stock Option, the exercise price of such Target Stock Option, the portion thereof that is a Cashed Out Target Stock Option, the portion thereof that is an Assumed Target Stock Option, the date such Target Stock Option was granted, the date such Target Stock Option expires and the vesting schedule of such Target Stock Option, in each case as of the Effective Time, and (ii) each Target Restricted Stock Award outstanding as of the Effective Time, identifying the number of shares of Target Common Stock subject to such Target Restricted Stock Award , the date such Target Restricted Stock Award was granted and the vesting schedule and other material terms of such Target Restricted Stock Award, in each case as of the Effective Time.

Treatment of Stock Options and Other Stock-Based Awards. (a) The Target will take all requisite action so thatExcept as otherwise agreed in writing by Parent and the applicable holder thereof, at the Effective Time, the portion of each option to acquire shares of Target Common purchase Shares (collectively, the “Company Stock (each such option, a “Target Stock OptionOptions”) that is vested granted under the employee and outstanding immediately prior to director stock plans of the Effective Time and for which Company (the per share exercise price of such Target “Company Stock Option is equal to or less than the Merger Consideration (each such portion, a “Cashed Out Target Stock OptionPlans”), will bewhether vested or unvested, by virtue of this Agreement and without any further action on the part of Parent, Merger Sub, the Target, the holder of such Cashed Out Target Stock Option or any other Person, cancelled and converted into the right to receive from Parent and the Surviving Corporation, as promptly as reasonably practicable after the Effective Time, an amount in cash, without interest, equal to the product of (i) the aggregate number of shares of Target Common Stock subject to such Cashed Out Target Stock Option (only to the extent vested as provided above), multiplied by (ii) the excess of the Merger Consideration over the per share exercise price under such Cashed Out Target Stock Option (the aggregate amount, the “Option Consideration”), less any Taxes required to be withheld in accordance with Section 4.05. Each Target Stock Option (or portion thereof) outstanding immediately prior to the Effective Time that is not a Cashed Out Target Stock Option shall be referred to herein as an “Assumed Target Stock Option.” (b) Effective as of the Effective Time, Parent shall assume the Target Stock Plans and each Assumed Target Stock Option, which shall thereafter be vested for such number of shares of Parent Common Stock as equals the number of shares of Target Common Stock subject to such Assumed Target Stock Option multiplied by the Equity Award Exchange Ratio, rounded down to the nearest whole share. The exercise price of each such Assumed Target Stock Option shall be equal to the exercise price per share set forth in the option agreement for such Assumed Target Stock Option divided by the Equity Award Exchange Ratio, rounded up to the nearest whole cent. All rights with respect to Target Common Stock under Assumed Target Stock Options shall by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Target, the holder of any Assumed Target Stock Option or any other Person, be converted into rights with respect to Parent Common Stock on the terms and conditions set forth in this Section 4.07(b). Accordingly, from and after the Effective Time, (i) each Assumed Target Stock Option may be exercised solely for the number of shares of Parent Common Stock determined in accordance with this Section 4.07(b) with an exercise price determined in accordance with this Section 4.07(b); (ii) any restriction on the exercise of any Assumed Target Stock Option shall continue in full force and effect; and (iii) the term, vesting schedule and other provisions of such Assumed Target Stock Option shall otherwise remain unchanged; provided, however, that: (A) each Assumed Target Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, recapitalization or other similar transaction with respect to Parent Common Stock subsequent to the Effective Time; and (B) Parent’s board of directors or a committee thereof shall succeed to the authority and responsibility of the Target Board or any committee thereof with respect to each Target Stock Plan and Assumed Target Stock Option. As soon as practicable after the Effective Time, Parent shall prepare and file with the SEC a Form S-8 (or file such other appropriate form) registering a number of shares of Parent Common Stock necessary to fulfill Parent’s obligations under this Section 4.07(b). (c) Each share of Target Common Stock granted under the Target 2006 Incentive Plan that is unvested or is subject to a repurchase option, risk of forfeiture, vesting schedule or other condition under any applicable restricted stock purchase agreement or other Contract with Target or under which Target has any rights and either (i) is validly tendered and not validly withdrawn in the Offer as of the Expiration Time (each a “Tendered Target Restricted Stock Award”) or (ii) not validly tendered or validly tendered and subsequently validly withdrawn and is outstanding immediately prior to the Effective Time (each a “Non-Tendered Target Restricted Stock Award” and together with will at the Tendered Target Restricted Stock Awards, the “Target Restricted Stock Awards”) shall (a) in the case of the Tendered Target Restricted Stock Awards, as soon as practicable after the Expiration Effective Time and in compliance with applicable Law, receive the Offer Price net to such holder of Tendered Target Restricted Stock Award in cash, without interest and subject to any required withholding of Taxes and (b) in the case of the Non-Tendered Target Restricted Stock Awards, be cancelled and converted into only the right to receive (without interest), automatically and without any required action on the part of the holder thereof, an amount in cash (less applicable Tax withholdings) equal to the Merger Consideration; provided that, pursuant to and in accordance with the Target 2006 Incentive Plan, the Offer Price or Merger Consideration, as applicable, payable with respect to any Target Restricted Stock Awards shall continue to be, as applicable, unvested and/or subject to the same repurchase option, risk of forfeiture, vesting schedule and other conditions as were set forth in the applicable restricted stock purchase agreement or other Contract with respect to such Target Restricted Stock Award and the holder of such Company Stock Option will, in full settlement of such Company Stock Option, receive from the Surviving Corporation an amount (subject to any such Target Restricted Stock Award must remain applicable withholding tax) in service to Parent, the Target or any of their affiliates through the applicable vesting date or date when the applicable conditions shall terminate, to receive payment in respect thereof and such payment shall be made promptly following such applicable vesting date or date when the applicable conditions have terminated, as applicable. Parent’s board of directors or a committee thereof shall succeed cash equal to the authority and responsibility product of (x) the excess, if any, of the Target Board or any committee thereof with respect Merger Consideration over the exercise price per Share of such Company Stock Option multiplied by (y) the total number of Shares subject to each Target such Company Stock Plan and Target Restricted Stock AwardOption (the aggregate amount of such cash hereinafter referred to as the “Option Consideration”). (db) At or Except as otherwise agreed in writing by Parent and the applicable holder thereof, immediately prior to the Effective Time, each award of restricted Common Stock granted under the Target, the Target Board and the compensation committee of such board, as applicable, will adopt any resolutions and take any actions (including obtaining any employee or stockholder consents) that may be necessary to effectuate the provisions of this Section 4.07, and causing the Target Company Stock Plans (the “Restricted Shares”) shall vest in full and all Assumed Target Stock Options be converted into the right to be exchanged and assumed by Parent on receive the terms and conditions set forth Merger Consideration as provided in this Section 4.072.1(a) . (ec) Section 4.07(e) of the Disclosure Schedules (the “Equity Award Certificate”) sets forth (i) each Target Stock Option outstanding Except as of the close of business on November 3, 2014, identifying the number of shares of Target Common Stock subject to such Target Stock Option, the exercise price of such Target Stock Option, the date such Target Stock Option was granted, the date such Target Stock Option expires, the vesting schedule of such Target Stock Option otherwise agreed in writing by Parent and the portion thereof that is vested and outstanding as of the date hereofapplicable holder thereof, and (ii) each Target Restricted Stock Award outstanding as of the date hereof, identifying the number of shares of Target Common Stock subject to such Target Restricted Stock Award, the date such Target Restricted Stock Award was granted, the date such Target Restricted Stock Award expires, the vesting schedule of such Target Restricted Stock Award and the portion thereof that is vested and outstanding as of the date hereof. Not later than 5:00 p.m. Boston time, on the second Business Day preceding at the Effective Time, Target each performance share based on shares of Common Stock granted under the Company Stock Plans (the “Performance Shares”), whether vested or unvested, which is outstanding immediately prior to the Effective Time shall provide be deemed to Parent an updated Equity Award Certificate setting be earned at the level set forth (i) each Target in the applicable Company Stock Option outstanding as of Plan and applicable award agreement, shall become fully vested and shall entitle the holder thereof to receive, at the Effective Time, identifying an amount in cash equal to the number Merger Consideration in respect of shares of Target Common Stock each Share earned with respect to the Performance Shares (subject to such Target Stock Option, any applicable withholding taxes) (the exercise price aggregate amount of such Target Stock Optioncash, together with the portion thereof that is a Cashed Out Target Stock OptionOption Consideration, hereinafter referred to as the portion thereof that is an Assumed Target Stock Option, the date such Target Stock “Option was granted, the date such Target Stock Option expires and the vesting schedule of such Target Stock Option, in each case as of Stock-Based Consideration”). (d) Prior to the Effective Time, and (ii) each Target Restricted Stock Award outstanding the Company will adopt such resolutions as of may reasonably be required in its discretion to effectuate the Effective Time, identifying the number of shares of Target Common Stock subject to such Target Restricted Stock Award , the date such Target Restricted Stock Award was granted and the vesting schedule and other material terms of such Target Restricted Stock Award, in each case as of the Effective Timeactions contemplated by this Section 2.3.

Treatment of Stock Options and Other Stock-Based Awards. (a) The Target will take all requisite action so that, at the Effective Time, the portion of each Each option to acquire shares of Target Common Stock purchase Shares (each such option, a “Target Stock Option”) that is vested and outstanding immediately prior to the Effective Time and for which the per share exercise price of such Target Stock Option is equal to or less than the Merger Consideration (each such portion, a “Cashed Out Target Stock Option”), will be, by virtue of this Agreement and without any further action on the part of Parent, Merger Sub, the Target, the holder of such Cashed Out Target Stock Option or any other Person, cancelled and converted into the right to receive from Parent and the Surviving Corporation, as promptly as reasonably practicable after the Effective Time, an amount in cash, without interest, equal to the product of (i) the aggregate number of shares of Target Common Stock subject to such Cashed Out Target Stock Option (only to the extent vested as provided above), multiplied by (ii) the excess of the Merger Consideration over the per share exercise price under such Cashed Out Target Stock Option (the aggregate amountcollectively, the “Option ConsiderationCompany Stock Options”), less any Taxes required to be withheld in accordance with Section 4.05. Each Target Stock Option (or portion thereof) outstanding immediately prior to the Effective Time that is not a Cashed Out Target Stock Option shall be referred to herein as an “Assumed Target Stock Option.” (b) Effective as of the Effective Time, Parent shall assume the Target Stock Plans and each Assumed Target Stock Option, which shall thereafter be vested for such number of shares of Parent Common Stock as equals the number of shares of Target Common Stock subject to such Assumed Target Stock Option multiplied by the Equity Award Exchange Ratio, rounded down to the nearest whole share. The exercise price of each such Assumed Target Stock Option shall be equal to the exercise price per share set forth in the option agreement for such Assumed Target Stock Option divided by the Equity Award Exchange Ratio, rounded up to the nearest whole cent. All rights with respect to Target Common Stock under Assumed Target Stock Options shall by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Target, the holder of any Assumed Target Stock Option or any other Person, be converted into rights with respect to Parent Common Stock on the terms and conditions set forth in this Section 4.07(b). Accordingly, from and after the Effective Time, (i) each Assumed Target Stock Option may be exercised solely for the number of shares of Parent Common Stock determined in accordance with this Section 4.07(b) with an exercise price determined in accordance with this Section 4.07(b); (ii) any restriction on the exercise of any Assumed Target Stock Option shall continue in full force and effect; and (iii) the term, vesting schedule and other provisions of such Assumed Target Stock Option shall otherwise remain unchanged; provided, however, that: (A) each Assumed Target Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, recapitalization or other similar transaction with respect to Parent Common Stock subsequent to the Effective Time; and (B) Parent’s board of directors or a committee thereof shall succeed to the authority and responsibility of the Target Board or any committee thereof with respect to each Target Stock Plan and Assumed Target Stock Option. As soon as practicable after the Effective Time, Parent shall prepare and file with the SEC a Form S-8 (or file such other appropriate form) registering a number of shares of Parent Common Stock necessary to fulfill Parent’s obligations under this Section 4.07(b). (c) Each share of Target Common Stock granted under the Target 2006 Incentive Plan Company stock option plans, whether vested or unvested, that is unvested or is subject to a repurchase option, risk of forfeiture, vesting schedule or other condition under any applicable restricted stock purchase agreement or other Contract with Target or under which Target has any rights and either (i) is validly tendered and not validly withdrawn in the Offer as of the Expiration Time (each a “Tendered Target Restricted Stock Award”) or (ii) not validly tendered or validly tendered and subsequently validly withdrawn and is outstanding immediately prior to the Effective Time (each a “Non-Tendered Target Restricted Stock Award” and together with will at the Tendered Target Restricted Stock Awards, the “Target Restricted Stock Awards”) shall (a) in the case of the Tendered Target Restricted Stock Awards, as soon as practicable after the Expiration Effective Time and in compliance with applicable Law, receive the Offer Price net to such holder of Tendered Target Restricted Stock Award in cash, without interest and subject to any required withholding of Taxes and (b) in the case of the Non-Tendered Target Restricted Stock Awards, be cancelled and converted into only the right to receive (without interest), automatically and without any required action on the part of the holder thereof, an amount in cash (less applicable Tax withholdings) equal to the Merger Consideration; provided that, pursuant to and in accordance with the Target 2006 Incentive Plan, the Offer Price or Merger Consideration, as applicable, payable with respect to any Target Restricted Stock Awards shall continue to be, as applicable, unvested and/or subject to the same repurchase option, risk of forfeiture, vesting schedule and other conditions as were set forth in the applicable restricted stock purchase agreement or other Contract with respect to such Target Restricted Stock Award and the holder of such Company Stock Option will, in full settlement of such Company Stock Option, receive from the Surviving Corporation an amount (less such amounts as are required to be withheld or deducted under the Code or any provision of state, local or foreign Tax Law) in cash equal to the product of the excess, if any, of the Merger Consideration over the exercise price per Share of such Company Stock Option multiplied by the total number of Shares subject to such Company Stock Option, if the award would otherwise vest solely upon the continued employment of the holder. The aggregate amount of such cash received in accordance with this Section 3.3(a) shall hereinafter be referred to as the “Option Consideration.” If the exercise price per Share of any such Target Restricted Company Stock Award must remain in service Option is equal to Parentor greater than the per share Merger Consideration, the Target or such Company Stock Option shall be canceled without any of their affiliates through the applicable vesting date or date when the applicable conditions shall terminate, to receive cash payment being made in respect thereof and such payment shall be made promptly following such applicable vesting date or date when the applicable conditions have terminated, as applicable. Parent’s board of directors or a committee thereof shall succeed to the authority and responsibility of the Target Board or any committee thereof with respect to each Target Stock Plan and Target Restricted Stock Awardthereof. (db) At or Immediately prior to the Effective Time, the Targeteach award of restricted stock (“Company Restricted Shares”), restricted stock units (“Company RSUs”) and other equity-based awards excluding Company Stock Options (collectively, the Target Board and the compensation committee of such board, as applicable, will adopt any resolutions and take any actions (including obtaining any employee or stockholder consents) that may be necessary to effectuate the provisions of this Section 4.07, and causing the Target Stock Plans and all Assumed Target Stock Options to be exchanged and assumed by Parent on the terms and conditions set forth in this Section 4.07.“Company Equity Awards”): (e) Section 4.07(e) of the Disclosure Schedules (the “Equity Award Certificate”) sets forth (i) each Target Stock Option outstanding as shall vest in full, if the award would otherwise vest solely upon the continued employment of the close of business on November 3holder, 2014, identifying the number of shares of Target Common Stock subject to such Target Stock Option, the exercise price of such Target Stock Option, the date such Target Stock Option was granted, the date such Target Stock Option expires, the vesting schedule of such Target Stock Option and the portion thereof that is vested and outstanding as of the date hereof, and or (ii) each Target Restricted Stock Award outstanding shall vest as if the target level of performance had been achieved, if the award would otherwise vest, in whole or in part, upon any criteria other than solely by the continued employment of the date hereofholder. The vested Company Equity Awards received under this Section 3.3(b) shall then be converted into the right to receive the Merger Consideration as provided in Section 3.1(a), identifying less such amounts as are required to be withheld or deducted under the number Code or any provision of shares of Target Common Stock subject to such Target Restricted Stock Awardstate, local or foreign Tax Law (the date such Target Restricted Stock Award was granted, the date such Target Restricted Stock Award expires, the vesting schedule aggregate amount of such Target Restricted Stock Award cash, together with the Option Consideration, hereinafter referred to as the “Option and the portion thereof that is vested and outstanding as of the date hereofStock-Based Consideration”). Not later than 5:00 p.m. Boston time, on the second Business Day preceding At the Effective Time, Target all Company Equity Awards and all Company Stock Options, whether or not vested, shall provide no longer be outstanding and shall automatically cease to Parent an updated exist, without any action on the part of any parties, and each holder of a Company Equity Award Certificate setting forth (i) each Target or a Company Stock Option outstanding as of shall cease to have any rights with respect thereto, except the right to receive the Option and Stock-Based Consideration. (c) Prior to the Effective Time, identifying the number of shares of Target Common Stock subject Company will adopt such resolutions and take all actions as may reasonably be required to such Target Stock Option, effectuate the exercise price of such Target Stock Option, the portion thereof that is a Cashed Out Target Stock Option, the portion thereof that is an Assumed Target Stock Option, the date such Target Stock Option was granted, the date such Target Stock Option expires and the vesting schedule of such Target Stock Option, in each case as of the Effective Time, and (ii) each Target Restricted Stock Award outstanding as of the Effective Time, identifying the number of shares of Target Common Stock subject to such Target Restricted Stock Award , the date such Target Restricted Stock Award was granted and the vesting schedule and other material terms of such Target Restricted Stock Award, in each case as of the Effective Timeactions contemplated by this Section 3.3.