Exhibit 10.2
SOLAR ENERTECH CORP.
2007 EQUITY INCENTIVE PLAN
     1. Establishment, Purpose and Term of Plan.
          1.1 Establishment. The Solar Enertech Corp. 2007 Equity Incentive Plan
(the “Plan”) is hereby established effective as of September 24, 2007.
          1.2 Purpose. The purpose of the Plan is to advance the interests of
the Participating Company Group and its stockholders by providing an incentive
to attract, retain and reward persons performing services for the Participating
Company Group and by motivating such persons to contribute to the growth and
profitability of the Participating Company Group. The Company intends that
Awards granted pursuant to the Plan be exempt from or comply with Section 409A
of the Code (including any amendments or replacements of such section), and the
Plan shall be so construed.
          1.3 Term of Plan. The Plan shall continue in effect until its
termination by the Committee; provided, however, that, to the extent required by
applicable law, all Awards shall be granted, if at all, within ten (10) years
from the date the Plan is adopted by the Board.
     2. Definitions and Construction.
          2.1 Definitions. Whenever used herein, the following terms shall have
their respective meanings set forth below:
               (a) “Affiliate” means (i) an entity, other than a Parent
Corporation, that directly, or indirectly through one or more intermediary
entities, controls the Company or (ii) an entity, other than a Subsidiary
Corporation, that is controlled by the Company directly or indirectly through
one or more intermediary entities. For this purpose, the term “control”
(including the term “controlled by”) means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
the relevant entity, whether through the ownership of voting securities, by
contract or otherwise; or shall have such other meaning assigned such term for
the purposes of registration on Form S-8 under the Securities Act.
               (b) “Award” means any Option, Restricted Stock Purchase Right,
Restricted Stock Bonus or Restricted Stock Unit Award granted under the Plan.
               (c) “Award Agreement” means a written or electronic agreement
between the Company and a Participant setting forth the terms, conditions and
restrictions of the Award granted to the Participant.
               (d) “Board” means the Board of Directors of the Company.
               (e) “Cause” means, unless such term or an equivalent term is
otherwise defined with respect to an Award by the Participant’s Award Agreement
or by a written contract of employment or service, any of the following: (i) the
Participant’s theft,

 

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dishonesty, willful misconduct, breach of fiduciary duty for personal profit, or
falsification of any Participating Company documents or records; (ii) the
Participant’s material failure to abide by a Participating Company’s code of
conduct or other policies (including, without limitation, policies relating to
confidentiality and reasonable workplace conduct); (iii) the Participant’s
unauthorized use, misappropriation, destruction or diversion of any tangible or
intangible asset or corporate opportunity of a Participating Company (including,
without limitation, the Participant’s improper use or disclosure of a
Participating Company’s confidential or proprietary information); (iv) any
intentional act by the Participant which has a material detrimental effect on a
Participating Company’s reputation or business; (v) the Participant’s repeated
failure or inability to perform any reasonable assigned duties after written
notice from a Participating Company of, and a reasonable opportunity to cure,
such failure or inability; (vi) any material breach by the Participant of any
employment, service, non-disclosure, non-competition, non-solicitation or other
similar agreement between the Participant and a Participating Company, which
breach is not cured pursuant to the terms of such agreement; or (vii) the
Participant’s conviction (including any plea of guilty or nolo contendere) of
any criminal act involving fraud, dishonesty, misappropriation or moral
turpitude, or which impairs the Participant’s ability to perform his or her
duties with a Participating Company.
               (f) “Change in Control” means, unless such term or an equivalent
term is otherwise defined with respect to an Award by the Participant’s Award
Agreement or written contract of employment or service, the occurrence of any of
the following:
                    (i) any “person” (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in
Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of
securities of the Company representing more than fifty percent (50%) of the
total combined voting power of the Company’s then-outstanding securities
entitled to vote generally in the election of Directors; provided, however, that
the following acquisitions shall not constitute a Change in Control: (1) an
acquisition by any such person who on the Effective Date is the beneficial owner
of more than fifty percent (50%) of such voting power, (2) any acquisition
directly from the Company, including, without limitation, a public offering of
securities, (3) any acquisition by the Company, (4) any acquisition by a trustee
or other fiduciary under an employee benefit plan of a Participating Company or
(5) any acquisition by an entity owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their
ownership of the voting securities of the Company; or
                    (ii) an Ownership Change Event or series of related
Ownership Change Events (collectively, a “Transaction”) in which the
stockholders of the Company immediately before the Transaction do not retain
immediately after the Transaction direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding securities entitled to vote generally in the election of Directors
or, in the case of an Ownership Change Event described in Section 2.1(x)(iii),
the entity to which the assets of the Company were transferred (the
“Transferee”), as the case may be; or

 

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                    (iii) the liquidation or dissolution of the Company.
provided, however, that a Change in Control shall be deemed not to include a
transaction described in subsections (i) or (ii) of this Section 2.1(f) in which
a majority of the members of the board of directors of the continuing, surviving
or successor entity, or parent thereof, immediately after such transaction is
comprised of Incumbent Directors. Notwithstanding the foregoing, to the extent
that any amount constituting Section 409A Deferred Compensation would become
payable under this Plan by reason of a Change in Control, such amount shall
become payable only if the event constituting a Change in Control would also
constitute a change in ownership or effective control of the Company or a change
in the ownership of a substantial portion of the assets of the Company within
the meaning of Section 409A.
     For purposes of the preceding sentence, indirect beneficial ownership shall
include, without limitation, an interest resulting from ownership of the voting
securities of one or more corporations or other business entities which own the
Company or the Transferee, as the case may be, either directly or through one or
more subsidiary corporations or other business entities. The Committee shall
have the right to determine whether multiple sales or exchanges of the voting
securities of the Company or multiple Ownership Change Events are related, and
its determination shall be final, binding and conclusive.
               (g) “Code” means the Internal Revenue Code of 1986, as amended,
and any applicable regulations promulgated thereunder.
               (h) “Committee” means the Compensation Committee and such other
committee or subcommittee of the Board, if any, duly appointed to administer the
Plan and having such powers in each instance as shall be specified by the Board.
If, at any time, there is no committee of the Board then authorized or properly
constituted to administer the Plan, the Board shall exercise all of the powers
of the Committee granted herein, and, in any event, the Board may in its
discretion exercise any or all of such powers.
               (i) “Company” means Solar EnerTech Corp., a Nevada corporation,
or any successor corporation thereto.
               (j) “Consultant” means a person engaged to provide consulting or
advisory services (other than as an Employee or a Director) to a Participating
Company.
               (k) “Director” means a member of the Board.
               (l) “Disability” means the inability of the Participant, in the
opinion of a qualified physician acceptable to the Company, to perform the major
duties of the Participant’s position with the Participating Company Group
because of the sickness or injury of the Participant.
               (m) “Dividend Equivalent Right” means the right of a Participant,
granted at the discretion of the Committee or as otherwise provided by the Plan,
to receive a credit for the account of such Participant in an amount equal to
the cash dividends paid on one share of Stock for each share of Stock
represented by an Award held by such Participant.
               (n) “Employee” means any person treated as an employee (including
an Officer or a Director who is also treated as an employee) in the records of a
Participating

 

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Company. The Company shall determine in good faith and in the exercise of its
discretion whether an individual has become or has ceased to be an Employee and
the effective date of such individual’s employment or termination of employment,
as the case may be. For purposes of an individual’s rights, if any, under the
terms of the Plan as of the time of the Company’s determination of whether or
not the individual is an Employee, all such determinations by the Company shall
be final, binding and conclusive as to such rights, if any, notwithstanding that
the Company or any court of law or governmental agency subsequently makes a
contrary determination as to such individual’s status as an Employee.
               (o) “Exchange Act” means the Securities Exchange Act of 1934, as
amended.
               (p) “Fair Market Value” means, as of any date, the value of a
share of Stock or other property as determined by the Committee, in its
discretion, or by the Company, in its discretion, if such determination is
expressly allocated to the Company herein, subject to the following:
                    (i) If, on such date, the Stock is listed on a national or
regional securities exchange or market system, or is quoted on the Over the
Counter Bulletin Board (OTCBB), the Fair Market Value of a share of Stock shall
be the closing price of a share of Stock (or the mean of the closing bid and
asked prices of a share of Stock if the Stock is so quoted instead) as quoted on
such national, regional securities exchange, market system or OTCBB constituting
the primary market for the Stock, as reported in The Wall Street Journal, the
OTCBB or such other source as the Company deems reliable. If the relevant date
does not fall on a day on which the Stock has traded over the counter or on such
securities exchange or market system, the date on which the Fair Market Value
shall be established shall be the last day on which the Stock was so traded
prior to the relevant date, or such other appropriate day as shall be determined
by the Committee, in its discretion.
                    (ii) If, on such date, the Stock is not listed on a national
or regional securities exchange, market system or OTCBB, the Fair Market Value
of a share of Stock shall be as determined by the Committee in good faith
without regard to any restriction other than a restriction which, by its terms,
will never lapse, and subject to the applicable requirements, if any, of
Section 409A of the Code.
               (q) “Incumbent Director” means a director who either (i) is a
member of the Board as of the Effective Date or (ii) is elected, or nominated
for election, to the Board with the affirmative votes of at least a majority of
the Incumbent Directors at the time of such election or nomination, but who was
not elected or nominated in connection with an actual or threatened proxy
contest relating to the election of directors of the Company.
               (r) “Insider” means an Officer, a Director of the Company or
other person whose transactions in Stock are subject to Section 16 of the
Exchange Act.
               (s) “Insider Trading Policy” means the written policy of the
Company pertaining to the purchase, sale, transfer or other disposition of the
Company’s equity

 

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securities by Directors, Officers, Employees or other service providers who may
possess material, nonpublic information regarding the Company or its securities.
               (t) “Net-Exercise” means a procedure by which the Participant
will be issued a number of whole shares of Stock upon the exercise of an Option
determined in accordance with the following formula:
                    N = X(A-B)/A, where
“N” = the number of shares of Stock to be issued to the Participant upon
exercise of the Option;
“X” = the total number of shares with respect to which the Participant has
elected to exercise the Option;
“A” = the Fair Market Value of one (1) share of Stock determined on the exercise
date; and
“B” = the exercise price per share (as defined in the Participant’s Award
Agreement)
               (u) “Nonstatutory Stock Option” means an Option not intended to
be (as set forth in the Award Agreement) or which does not qualify as an
incentive stock option within the meaning of Section 422(b) of the Code.
               (v) “Officer” means any person designated by the Board as an
officer of the Company.
               (w) “Option” means a right granted under Section 6 to purchase
Stock pursuant to the terms and conditions of the Plan. All Options shall be
Nonstatutory Stock Options.
               (x) “Ownership Change Event” means the occurrence of any of the
following with respect to the Company: (i) the direct or indirect sale or
exchange in a single or series of related transactions by the stockholders of
the Company of more than fifty percent (50%) of the voting stock of the Company;
(ii) a merger or consolidation in which the Company is a party; or (iii) the
sale, exchange, or transfer of all or substantially all of the assets of the
Company (other than a sale, exchange or transfer to one or more subsidiaries of
the Company).
               (y) “Parent Corporation” means any present or future “parent
corporation” of the Company, as defined in Section 424(e) of the Code.
               (z) “Participant” means any eligible person who has been granted
one or more Awards.
               (aa) “Participating Company” means the Company or any Parent
Corporation, Subsidiary Corporation or Affiliate.

 

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               (bb) “Participating Company Group” means, at any point in time,
all entities collectively which are then Participating Companies.
               (cc) “Restricted Stock Award” means an Award of a Restricted
Stock Bonus or a Restricted Stock Purchase Right.
               (dd) “Restricted Stock Bonus” means Stock granted to a
Participant pursuant to Section 7.
               (ee) “Restricted Stock Purchase Right” means a right to purchase
Stock granted to a Participant pursuant to Section 7.
               (ff) “Restricted Stock Unit” means a right granted to a
Participant pursuant to Section 8 to receive a share of Stock on a date
determined in accordance with the provisions of such Section and the
Participant’s Award Agreement.
               (gg) “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as
amended from time to time, or any successor rule or regulation.
               (hh) “Section 409A” means Section 409A of the Code.
               (ii) “Section 409A Deferred Compensation” means compensation
provided pursuant to the Plan that constitutes deferred compensation subject to
and not exempted from the requirements of Section 409A.
               (jj) “Securities Act” means the Securities Act of 1933, as
amended.
               (kk) “Service” means a Participant’s employment or service with
the Participating Company Group, whether in the capacity of an Employee, a
Director or a Consultant. A Participant’s Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Participant
renders Service to the Participating Company Group or a change in the
Participating Company for which the Participant renders such Service, provided
that there is no interruption or termination of the Participant’s Service.
Furthermore, a Participant’s Service shall not be deemed to have terminated if
the Participant takes any military leave, sick leave, or other bona fide leave
of absence approved by the Company. However, if any such leave taken by a
Participant exceeds ninety (90) days, then on the ninety-first (91st) day
following the commencement of such leave the Participant’s Service shall be
deemed to have terminated, unless the Participant’s right to return to Service
is guaranteed by statute or contract. Notwithstanding the foregoing, unless
otherwise designated by the Company or required by law, a leave of absence shall
not be treated as Service for purposes of determining vesting under the
Participant’s Award Agreement. A Participant’s Service shall be deemed to have
terminated either upon an actual termination of Service or upon the corporation
for which the Participant performs Service ceasing to be a Participating
Company. Subject to the foregoing, the Company, in its discretion, shall
determine whether the Participant’s Service has terminated and the effective
date of and reason for such termination.
               (ll) “Stock” means the common stock of the Company, as adjusted
from time to time in accordance with Section 4.3.

 

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               (mm) “Subsidiary Corporation” means any present or future
“subsidiary corporation” of the Company, as defined in Section 424(f) of the
Code.
               (nn) “Vesting Conditions” mean those conditions established in
accordance with the Plan prior to the satisfaction of which shares subject to an
Award remain subject to forfeiture or a repurchase option in favor of the
Company exercisable for the Participant’s monetary purchase price, if any, for
such shares upon the Participant’s termination of Service.
          2.2 Construction. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. Use
of the term “or” is not intended to be exclusive, unless the context clearly
requires otherwise.
     3. Administration.
          3.1 Administration by the Committee. The Plan shall be administered by
the Committee. All questions of interpretation of the Plan, of any Award
Agreement or of any other form of agreement or other document employed by the
Company in the administration of the Plan or of any Award shall be determined by
the Committee, and such determinations shall be final, binding and conclusive
upon all persons having an interest in the Plan or such Award, unless fraudulent
or made in bad faith. Any and all actions, decisions and determinations taken or
made by the Committee in the exercise of its discretion pursuant to the Plan or
Award Agreement or other agreement thereunder (other than determining questions
of interpretation pursuant to the preceding sentence) shall be final, binding
and conclusive upon all persons having an interest therein.
          3.2 Authority of Officers. Any Officer shall have the authority to act
on behalf of the Company with respect to any matter, right, obligation,
determination or election which is the responsibility of or which is allocated
to the Company herein, provided the Officer has apparent authority with respect
to such matter, right, obligation, determination or election.
          3.3 Administration with Respect to Insiders. With respect to
participation by Insiders in the Plan, at any time that any class of equity
security of the Company is registered pursuant to Section 12 of the Exchange
Act, the Plan shall be administered in compliance with the requirements, if any,
of Rule 16b-3.
          3.4 Powers of the Committee. In addition to any other powers set forth
in the Plan and subject to the provisions of the Plan, the Committee shall have
the full and final power and authority, in its discretion:
               (a) to determine the persons to whom, and the time or times at
which, Awards shall be granted and the number of shares of Stock to be subject
to each Award;
               (b) to determine the type of Award granted;

 

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               (c) to determine the Fair Market Value of shares of Stock or
other property;
               (d) to determine the terms, conditions and restrictions
applicable to each Award (which need not be identical) and any shares acquired
pursuant thereto, including, without limitation, (i) the exercise or purchase
price of shares pursuant to any Award, (ii) the method of payment for shares
purchased pursuant to any Award, (iii) the method for satisfaction of any tax
withholding obligation arising in connection with Award, including by the
withholding or delivery of shares of Stock, (iv) the timing, terms and
conditions of the exercisability or vesting of any Award or any shares acquired
pursuant thereto, (v)  the time of the expiration of any Award, (vi) the effect
of the Participant’s termination of Service on any of the foregoing, and
(vii) all other terms, conditions and restrictions applicable to any Award or
shares acquired pursuant thereto not inconsistent with the terms of the Plan;
               (e) to determine whether an Award will be settled in shares of
Stock, cash, or in any combination thereof;
               (f) to approve one or more forms of Award Agreement;
               (g) to amend, modify, extend, cancel or renew any Award or to
waive any restrictions or conditions applicable to any Award or any shares
acquired upon the exercise thereof;
               (h) to accelerate, continue, extend or defer the exercisability
of any Award or the vesting of any shares acquired upon the exercise thereof,
including with respect to the period following a Participant’s termination of
Service;
               (i) to prescribe, amend or rescind rules, guidelines and policies
relating to the Plan, or to adopt sub-plans or supplements to, or alternative
versions of, the Plan, including, without limitation, as the Committee deems
necessary or desirable to comply with the laws or regulations of or to
accommodate the tax policy, accounting principles or custom of, foreign
jurisdictions whose citizens may be granted Awards; and
               (j) to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award Agreement and to make all other
determinations and take such other actions with respect to the Plan or any Award
as the Committee may deem advisable to the extent not inconsistent with the
provisions of the Plan or applicable law.
          3.5 Indemnification. In addition to such other rights of
indemnification as they may have as members of the Board or the Committee or as
officers or employees of the Participating Company Group, members of the Board
or the Committee and any officers or employees of the Participating Company
Group to whom authority to act for the Board, the Committee or the Company is
delegated shall be indemnified by the Company against all reasonable expenses,
including attorneys’ fees, actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan, or any right
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel

 

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selected by the Company) or paid by them in satisfaction of a judgment in any
such action, suit or proceeding, except in relation to matters as to which it
shall be adjudged in such action, suit or proceeding that such person is liable
for gross negligence, bad faith or intentional misconduct in duties; provided,
however, that within sixty (60) days after the institution of such action, suit
or proceeding, such person shall offer to the Company, in writing, the
opportunity at its own expense to handle and defend the same.
     4. Shares Subject to Plan.
          4.1 Maximum Number of Shares Issuable. Subject to adjustment as
provided in Sections 4.2 and 4.3, the maximum aggregate number of shares of
Stock that may be issued under the Plan shall be 10,000,000 which shall consist
of authorized but unissued or reacquired shares of Stock or any combination
thereof.
          4.2 Share Counting. If an outstanding Award for any reason expires or
is terminated or canceled without having been exercised or settled in full, or
if shares of Stock acquired pursuant to an Award subject to forfeiture or
repurchase are forfeited or repurchased by the Company for an amount not greater
than the Participant’s purchase price, the shares of Stock allocable to the
terminated portion of such Award or such forfeited or repurchased shares of
Stock shall again be available for issuance under the Plan. Shares of Stock
shall not be deemed to have been issued pursuant to the Plan with respect to any
portion of an Award that is settled in cash. If the exercise price of an Option
is paid by tender to the Company, or attestation to the ownership, of shares of
Stock owned by the Participant, or by means of a Net-Exercise, the number of
shares available for issuance under the Plan shall be reduced by the gross
number of shares for which the Option is exercised. Shares withheld or
reacquired by the Company in satisfaction of tax withholding obligations
pursuant to Section 11.2 shall not again be available for issuance under the
Plan.
          4.3 Adjustments for Changes in Capital Structure. Subject to any
required action by the stockholders of the Company, in the event of any change
in the Stock effected without receipt of consideration by the Company, whether
through merger, consolidation, reorganization, reincorporation,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, split-up, split-off, spin-off, combination of shares, exchange of shares,
or similar change in the capital structure of the Company, or in the event of
payment of a dividend or distribution to the stockholders of the Company in a
form other than Stock (excepting normal cash dividends) that has a material
effect on the Fair Market Value of shares of Stock, appropriate and
proportionate adjustments shall be made in the number and class of shares
subject to the Plan and to any outstanding Awards, and in the exercise or
purchase price per share of any outstanding Awards in order to prevent dilution
or enlargement of Participants’ rights under the Plan. For purposes of the
foregoing, conversion of any convertible securities of the Company shall not be
treated as “effected without receipt of consideration by the Company.” If a
majority of the shares which are of the same class as the shares that are
subject to outstanding Awards are exchanged for, converted into, or otherwise
become (whether or not pursuant to an Ownership Change Event) shares of another
corporation (the “New Shares”), the Committee may unilaterally amend the
outstanding Awards to provide that such Awards are for New Shares. In the event
of any such amendment, the number of shares subject to, and the exercise or
purchase price per share of, the outstanding Awards shall be adjusted in a fair
and

 

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equitable manner as determined by the Committee, in its discretion. Any
fractional share resulting from an adjustment pursuant to this Section shall be
rounded down to the nearest whole number, and the exercise price per share shall
be rounded up to the nearest whole cent. In no event may the exercise price of
any Award be decreased to an amount less than the par value, if any, of the
stock subject to the Award. The Committee in its sole discretion, may also make
such adjustments in the terms of any Award to reflect, or related to, such
changes in the capital structure of the Company or distributions as it deems
appropriate. The adjustments determined by the Committee pursuant to this
Section shall be final, binding and conclusive.
     5. Eligibility and Option Limitations.
          5.1 Persons Eligible for Awards. Awards may be granted only to
Employees, Consultants and Directors.
          5.2 Participation in Plan. Awards are granted solely at the discretion
of the Committee. Eligible persons may be granted more than one Award. However,
eligibility in accordance with this Section shall not entitle any person to be
granted an Award, or, having been granted an Award, to be granted an additional
Award.
     6. Stock Options.
          Options shall be evidenced by Award Agreements specifying the number
of shares of Stock covered thereby, in such form as the Committee shall from
time to time establish. Award Agreements evidencing Options may incorporate all
or any of the terms of the Plan by reference and shall comply with and be
subject to the following terms and conditions:
          6.1 Exercise Price. The exercise price for each Option shall be
established in the discretion of the Committee; provided, however, that the
exercise price per share for an Option shall be not less than one hundred
percent (100%) of the Fair Market Value of a share of Stock on the effective
date of grant of the Option. Notwithstanding the foregoing, an Option may be
granted with an exercise price lower than the minimum exercise price set forth
above if such Option is granted pursuant to an assumption or substitution for
another option in a manner that would qualify under the provisions of
Section 424(a) of the Code.
          6.2 Exercisability and Term of Options. Options shall be exercisable
at such time or times, or upon such event or events, and subject to such terms,
conditions, performance criteria and restrictions as shall be determined by the
Committee and set forth in the Award Agreement evidencing such Option; provided,
however, that no Option shall be exercisable after the expiration of ten
(10) years after the effective date of grant of such Option. Subject to the
foregoing, unless otherwise specified by the Committee in the grant of an
Option, any Option granted hereunder shall terminate ten (10) years after the
effective date of grant of the Option, unless earlier terminated in accordance
with its provisions.
          6.3 Payment of Exercise Price.
               (a) Forms of Consideration Authorized. Except as otherwise
provided below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash or by check or
cash equivalent, (ii) subject to

 

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Section 6.3(b)(i), by tender to the Company, or attestation to the ownership, of
shares of Stock owned by the Participant having a Fair Market Value not less
than the exercise price, (iii) subject to Section 6.3(b)(ii), by delivery of a
properly executed notice of exercise together with irrevocable instructions to a
broker providing for the assignment to the Company of the proceeds of a sale or
loan with respect to some or all of the shares being acquired upon the exercise
of the Option (including, without limitation, through an exercise complying with
the provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System) (a "Cashless Exercise"), (iv) by
delivery of a properly executed notice electing a Net-Exercise, (v) by such
other consideration as may be approved by the Committee from time to time to the
extent permitted by applicable law, or (vi) by any combination thereof. The
Committee may at any time or from time to time grant Options which do not permit
all of the foregoing forms of consideration to be used in payment of the
exercise price or which otherwise restrict one or more forms of consideration.
               (b) Limitations on Forms of Consideration.
                    (i) Tender of Stock. Notwithstanding the foregoing, an
Option may not be exercised by tender to the Company, or attestation to the
ownership, of shares of Stock to the extent such tender or attestation would
constitute a violation of the provisions of any law, regulation or agreement
restricting the redemption of the Company’s stock. Unless otherwise provided by
the Committee, an Option may not be exercised by tender to the Company, or
attestation to the ownership, of shares of Stock unless such shares either have
been owned by the Participant for more than six (6) months (or such other
period, if any, as the Committee may permit) and not used for another Option
exercise by attestation during such period, or were not acquired, directly or
indirectly, from the Company.
                    (ii) Cashless Exercise. The Cashless Exercise program is
available only if, at the time of exercise, the offer and sale of shares of
Stock pursuant to the Plan is registered on a then effective registration
statement on Form S-8 under the Securities Act. The Company reserves, at any and
all times, the right, in the Company’s sole and absolute discretion, to
establish, decline to approve or terminate any program or procedures for the
exercise of Options by means of a Cashless Exercise, including with respect to
one or more Participants specified by the Company notwithstanding that such
program or procedures may be available to other Participants.
          6.4 Effect of Termination of Service.
               (a) Option Exercisability. Subject to earlier termination of the
Option as otherwise provided herein and unless otherwise provided by the
Committee, an Option shall terminate immediately upon the Participant’s
termination of Service to the extent that it is then unvested and shall be
exercisable after the Participant’s termination of Service to the extent it is
then vested only during the applicable time period determined in accordance with
this Section and thereafter shall terminate:
                    (i) Disability. If the Participant’s Service terminates
because of the Disability of the Participant, the Option, to the extent
unexercised and exercisable for vested shares on the date on which the
Participant’s Service terminated, may be exercised by the

 

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Participant (or the Participant’s guardian or legal representative) at any time
prior to the expiration of twelve (12) months after the date on which the
Participant’s Service terminated, but in any event no later than the date of
expiration of the Option’s term as set forth in the Award Agreement evidencing
such Option (the “Option Expiration Date”).
                    (ii) Death. If the Participant’s Service terminates because
of the death of the Participant, then the Option, to the extent unexercised and
exercisable for vested shares on the date on which the Participant’s Service
terminated, may be exercised by the Participant’s legal representative or other
person who acquired the right to exercise the Option by reason of the
Participant’s death at any time prior to the expiration of twelve (12) months
after the date on which the Participant’s Service terminated, but in any event
no later than the Option Expiration Date. The Participant’s Service shall be
deemed to have terminated on account of death if the Participant dies within
three (3) months after the Participant’s termination of Service.
                    (iii) Termination for Cause. Notwithstanding any other
provision of the Plan to the contrary, if the Participant’s Service is
terminated for Cause or if, following the Participant’s termination of Service
and during any period in which the Option otherwise would remain exercisable,
the Participant engages in any act that would constitute Cause, the Option shall
terminate in its entirety and cease to be exercisable immediately upon such
termination of Service or act.
                    (iv) Other Termination of Service. If the Participant’s
Service terminates for any reason, except Disability, death or Cause, the
Option, to the extent unexercised and exercisable for vested shares on the date
on which the Participant’s Service terminated, may be exercised by the
Participant at any time prior to the expiration of three (3) months after the
date on which the Participant’s Service terminated, but in any event no later
than the Option Expiration Date.
               (b) Extension if Exercise Prevented by Law. Notwithstanding the
foregoing, if the exercise of an Option within the applicable time periods set
forth in Section 6.4(a) is prevented by the provisions of Section 12 below, the
Option shall remain exercisable until thirty (30) days after the date such
exercise first would no longer be prevented by such provisions, but in any event
no later than the Option Expiration Date.
          6.5 Transferability of Options. During the lifetime of the
Participant, an Option shall be exercisable only by the Participant or the
Participant’s guardian or legal representative. An Option shall not be subject
in any manner to anticipation, alienation, sale, exchange, transfer, assignment,
pledge, encumbrance, or garnishment by creditors of the Participant or the
Participant’s beneficiary, except transfer by will or by the laws of descent and
distribution. Notwithstanding the foregoing, to the extent permitted by the
Committee, in its discretion, and set forth in the Award Agreement evidencing
such Option, an Option shall be assignable or transferable subject to the
applicable limitations, if any, described in the General Instructions to
Form S-8 under the Securities Act.

 

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     7. Restricted Stock Awards.
          Restricted Stock Awards shall be evidenced by Award Agreements
specifying whether the Award is a Restricted Stock Bonus or a Restricted Stock
Purchase Right and the number of shares of Stock subject to the Award, in such
form as the Committee shall from time to time establish. Award Agreements
evidencing Restricted Stock Awards may incorporate all or any of the terms of
the Plan by reference and shall comply with and be subject to the following
terms and conditions:
          7.1 Types of Restricted Stock Awards Authorized. Restricted Stock
Awards may be granted in the form of either a Restricted Stock Bonus or a
Restricted Stock Purchase Right. Restricted Stock Awards may be granted upon
such conditions as the Committee shall determine, including, without limitation,
upon the attainment of one or more performance goals.
          7.2 Purchase Price. The purchase price for shares of Stock issuable
under each Restricted Stock Purchase Right shall be established by the Committee
in its discretion. No monetary payment (other than applicable tax withholding)
shall be required as a condition of receiving shares of Stock pursuant to a
Restricted Stock Bonus, the consideration for which shall be services actually
rendered to a Participating Company or for its benefit. Notwithstanding the
foregoing, if required by applicable state corporate law, the Participant shall
furnish consideration in the form of cash or past services rendered to a
Participating Company or for its benefit having a value not less than the par
value of the shares of Stock subject to a Restricted Stock Award.
          7.3 Purchase Period. A Restricted Stock Purchase Right shall be
exercisable within a period established by the Committee, which shall in no
event exceed thirty (30) days from the effective date of the grant of the
Restricted Stock Purchase Right.
          7.4 Payment of Purchase Price. Except as otherwise provided below,
payment of the purchase price for the number of shares of Stock being purchased
pursuant to any Restricted Stock Purchase Right shall be made (a) in cash or by
check or cash equivalent, (b) by such other consideration as may be approved by
the Committee from time to time to the extent permitted by applicable law, or
(c) by any combination thereof.
          7.5 Vesting and Restrictions on Transfer. Shares issued pursuant to
any Restricted Stock Award may (but need not) be made subject to Vesting
Conditions based upon the satisfaction of such Service requirements, conditions,
restrictions or performance criteria as shall be established by the Committee
and set forth in the Award Agreement evidencing such Award. During any period in
which shares acquired pursuant to a Restricted Stock Award remain subject to
Vesting Conditions, such shares may not be sold, exchanged, transferred,
pledged, assigned or otherwise disposed of other than pursuant to an Ownership
Change Event or as provided in Section 7.8. The Committee, in its discretion,
may provide in any Award Agreement evidencing a Restricted Stock Award that, if
the satisfaction of Vesting Conditions with respect to any shares subject to
such Restricted Stock Award would otherwise occur on a day on which the sale of
such shares would violate the provisions of the Insider Trading Policy, then
satisfaction of the Vesting Conditions automatically shall be determined on the
next trading

 

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day on which the sale of such shares would not violate the Insider Trading
Policy. Upon request by the Company, each Participant shall execute any
agreement evidencing such transfer restrictions prior to the receipt of shares
of Stock hereunder and shall promptly present to the Company any and all
certificates representing shares of Stock acquired hereunder for the placement
on such certificates of appropriate legends evidencing any such transfer
restrictions.
          7.6 Voting Rights; Dividends and Distributions. Except as provided in
this Section, Section 7.5 and any Award Agreement, during any period in which
shares acquired pursuant to a Restricted Stock Award remain subject to Vesting
Conditions, the Participant shall have all of the rights of a stockholder of the
Company holding shares of Stock, including the right to vote such shares and to
receive all dividends and other distributions paid with respect to such shares.
However, in the event of a dividend or distribution paid in shares of Stock or
other property or any other adjustment made upon a change in the capital
structure of the Company as described in Section 4.3, any and all new,
substituted or additional securities or other property (other than normal cash
dividends) to which the Participant is entitled by reason of the Participant’s
Restricted Stock Award shall be immediately subject to the same Vesting
Conditions as the shares subject to the Restricted Stock Award with respect to
which such dividends or distributions were paid or adjustments were made.
          7.7 Effect of Termination of Service. Unless otherwise provided by the
Committee in the Award Agreement evidencing a Restricted Stock Award, if a
Participant’s Service terminates for any reason, whether voluntary or
involuntary (including the Participant’s death or disability), then (a) the
Company shall have the option to repurchase for the purchase price paid by the
Participant any shares acquired by the Participant pursuant to a Restricted
Stock Purchase Right which remain subject to Vesting Conditions as of the date
of the Participant’s termination of Service and (b) the Participant shall
forfeit to the Company any shares acquired by the Participant pursuant to a
Restricted Stock Bonus which remain subject to Vesting Conditions as of the date
of the Participant’s termination of Service. The Company shall have the right to
assign at any time any repurchase right it may have, whether or not such right
is then exercisable, to one or more persons as may be selected by the Company.
          7.8 Nontransferability of Restricted Stock Award Rights. Rights to
acquire shares of Stock pursuant to a Restricted Stock Award shall not be
subject in any manner to anticipation, alienation, sale, exchange, transfer,
assignment, pledge, encumbrance or garnishment by creditors of the Participant
or the Participant’s beneficiary, except transfer by will or the laws of descent
and distribution. All rights with respect to a Restricted Stock Award granted to
a Participant hereunder shall be exercisable during his or her lifetime only by
such Participant or the Participant’s guardian or legal representative.
     8. Restricted Stock Unit Awards.
          Restricted Stock Unit Awards shall be evidenced by Award Agreements
specifying the number of Restricted Stock Units subject to the Award, in such
form as the Committee shall from time to time establish. Award Agreements
evidencing Restricted Stock Units may incorporate all or any of the terms of the
Plan by reference and shall comply with and be subject to the following terms
and conditions:

 

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          8.1 Grant of Restricted Stock Unit Awards. Restricted Stock Unit
Awards may be granted upon such conditions as the Committee shall determine,
including, without limitation, upon the attainment of one or more performance
goals.
          8.2 Purchase Price. No monetary payment (other than applicable tax
withholding, if any) shall be required as a condition of receiving a Restricted
Stock Unit Award, the consideration for which shall be services actually
rendered to a Participating Company or for its benefit. Notwithstanding the
foregoing, if required by applicable state corporate law, the Participant shall
furnish consideration in the form of cash or past services rendered to a
Participating Company or for its benefit having a value not less than the par
value of the shares of Stock issued upon settlement of the Restricted Stock Unit
Award.
          8.3 Vesting. Restricted Stock Unit Awards may (but need not) be made
subject to Vesting Conditions based upon the satisfaction of such Service
requirements, conditions, restrictions or performance criteria as shall be
established by the Committee and set forth in the Award Agreement evidencing
such Award. The Committee, in its discretion, may provide in any Award Agreement
evidencing a Restricted Stock Unit Award that, if the satisfaction of Vesting
Conditions with respect to any shares subject to the Award would otherwise occur
on a day on which the sale of such shares would violate the provisions of the
Insider Trading Policy, then satisfaction of the Vesting Conditions
automatically shall be determined on the first to occur of (a) the next trading
day on which the sale of such shares would not violate the Insider Trading
Policy or (b) the later of (i) the last day of the calendar year in which the
original vesting date occurred or (ii) the last day of the Company’s taxable
year in which the original vesting date occurred.
          8.4 Voting Rights, Dividend Equivalent Rights and Distributions.
Participants shall have no voting rights with respect to shares of Stock
represented by Restricted Stock Units until the date of the issuance of such
shares (as evidenced by the appropriate entry on the books of the Company or of
a duly authorized transfer agent of the Company). However, the Committee, in its
discretion, may provide in the Award Agreement evidencing any Restricted Stock
Unit Award that the Participant shall be entitled to Dividend Equivalent Rights
with respect to the payment of cash dividends on Stock during the period
beginning on the date such Award is granted and ending, with respect to each
share subject to the Award, on the earlier of the date the Award is settled or
the date on which it is terminated. Such Dividend Equivalent Rights, if any,
shall be paid by crediting the Participant with additional whole Restricted
Stock Units as of the date of payment of such cash dividends on Stock. The
number of additional Restricted Stock Units (rounded to the nearest whole
number) to be so credited shall be determined by dividing (a) the amount of cash
dividends paid on such date with respect to the number of shares of Stock
represented by the Restricted Stock Units previously credited to the Participant
by (b) the Fair Market Value per share of Stock on such date. Such additional
Restricted Stock Units shall be subject to the same terms and conditions and
shall be settled in the same manner and at the same time as the Restricted Stock
Units originally subject to the Restricted Stock Unit Award. In the event of a
dividend or distribution paid in shares of Stock or other property or any other
adjustment made upon a change in the capital structure of the Company as
described in Section 4.3, appropriate adjustments shall be made in the
Participant’s Restricted Stock Unit Award so that it represents the right to
receive upon settlement any and all new, substituted or additional securities or
other property (other than normal cash dividends) to

 

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which the Participant would be entitled by reason of the shares of Stock
issuable upon settlement of the Award, and all such new, substituted or
additional securities or other property shall be immediately subject to the same
Vesting Conditions as are applicable to the Award.
          8.5 Effect of Termination of Service. Unless otherwise provided by the
Committee and set forth in the Award Agreement evidencing a Restricted Stock
Unit Award, if a Participant’s Service terminates for any reason, whether
voluntary or involuntary (including the Participant’s death or disability), then
the Participant shall forfeit to the Company any Restricted Stock Units pursuant
to the Award which remain subject to Vesting Conditions as of the date of the
Participant’s termination of Service.
          8.6 Settlement of Restricted Stock Unit Awards. The Company shall
issue to a Participant on the date on which Restricted Stock Units subject to
the Participant’s Restricted Stock Unit Award vest or on such other date
determined by the Committee, in its discretion, and set forth in the Award
Agreement one (1) share of Stock (and/or any other new, substituted or
additional securities or other property pursuant to an adjustment described in
Section 8.4) for each Restricted Stock Unit then becoming vested or otherwise to
be settled on such date, subject to the withholding of applicable taxes, if any.
If permitted by the Committee, the Participant may elect, consistent with the
requirements of Section 409A, to defer receipt of all or any portion of the
shares of Stock or other property otherwise issuable to the Participant pursuant
to this Section, and such deferred issuance date(s) and amount(s) elected by the
Participant shall be set forth in the Award Agreement. Notwithstanding the
foregoing, the Committee, in its discretion, may provide in any Award Agreement
for settlement of any Restricted Stock Unit Award by payment to the Participant
in cash of an amount equal to the Fair Market Value on the payment date of the
shares of Stock or other property otherwise issuable to the Participant pursuant
to this Section.
          8.7 Nontransferability of Restricted Stock Unit Awards. The right to
receive shares pursuant to a Restricted Stock Unit Award shall not be subject in
any manner to anticipation, alienation, sale, exchange, transfer, assignment,
pledge, encumbrance, or garnishment by creditors of the Participant or the
Participant’s beneficiary, except transfer by will or by the laws of descent and
distribution. All rights with respect to a Restricted Stock Unit Award granted
to a Participant hereunder shall be exercisable during his or her lifetime only
by such Participant or the Participant’s guardian or legal representative.
     9. Standard Forms of Award Agreements.
          9.1 Award Agreements. Each Award shall comply with and be subject to
the terms and conditions set forth in the appropriate form of Award Agreement
approved by the Committee and as amended from time to time. No Award or
purported Award shall be a valid and binding obligation of the Company unless
evidenced by a fully executed Award Agreement. Any Award Agreement may consist
of an appropriate form of Notice of Grant and a form of Agreement incorporated
therein by reference, or such other form or forms, including electronic media,
as the Committee may approve from time to time.
          9.2 Authority to Vary Terms. The Committee shall have the authority
from time to time to vary the terms of any standard form of Award Agreement
either in connection

 

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with the grant or amendment of an individual Award or in connection with the
authorization of a new standard form or forms; provided, however, that the terms
and conditions of any such new, revised or amended standard form or forms of
Award Agreement are not inconsistent with the terms of the Plan.
     10. Change in Control.
          10.1 Effect of Change in Control on Awards. Subject to the
requirements and limitations of Section 409A if applicable, the Committee may
provide for any one or more of the following:
               (a) Accelerated Vesting. The Committee may, in its discretion,
provide in any Award Agreement or, in the event of a Change in Control, may take
such actions as it deems appropriate to provide for the acceleration of the
exercisability, vesting and/or settlement in connection with such Change in
Control of each or any outstanding Award or portion thereof and shares acquired
pursuant thereto upon such conditions, including termination of the
Participant’s Service prior to, upon, or following such Change in Control, to
such extent as the Committee shall determine.
               (b) Assumption, Continuation or Substitution. In the event of a
Change in Control, the surviving, continuing, successor, or purchasing
corporation or other business entity or parent thereof, as the case may be (the
"Acquiror"), may, without the consent of any Participant, either assume or
continue the Company’s rights and obligations under each or any Award or portion
thereof outstanding immediately prior to the Change in Control or substitute for
each or any such outstanding Award or portion thereof a substantially equivalent
award with respect to the Acquiror’s stock, as applicable. For purposes of this
Section, if so determined by the Committee, in its discretion, an Award
denominated in shares of Stock shall be deemed assumed if, following the Change
in Control, the Award confers the right to receive, subject to the terms and
conditions of the Plan and the applicable Award Agreement, for each share of
Stock subject to the Award immediately prior to the Change in Control, the
consideration (whether stock, cash, other securities or property or a
combination thereof) to which a holder of a share of Stock on the effective date
of the Change in Control was entitled; provided, however, that if such
consideration is not solely common stock of the Acquiror, the Committee may,
with the consent of the Acquiror, provide for the consideration to be received
upon the exercise or settlement of the Award, for each share of Stock subject to
the Award, to consist solely of common stock of the Acquiror equal in Fair
Market Value to the per share consideration received by holders of Stock
pursuant to the Change in Control. If any portion of such consideration may be
received by holders of Stock pursuant to the Change in Control on a contingent
or delayed basis, the Committee may, in its sole discretion, determine such Fair
Market Value per share as of the time of the Change in Control on the basis of
the Committee’s good faith estimate of the present value of the probable future
payment of such consideration. Any Award or portion thereof which is neither
assumed or continued by the Acquiror in connection with the Change in Control
nor exercised or settled as of the time of consummation of the Change in Control
shall terminate and cease to be outstanding effective as of the time of
consummation of the Change in Control.

 

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               (c) Cash-Out of Awards. The Committee may, in its discretion and
without the consent of any Participant, determine that, upon the occurrence of a
Change in Control, each or any Award or a portion thereof outstanding
immediately prior to the Change in Control and not previously exercised or
settled shall be canceled in exchange for a payment with respect to each vested
share (and each unvested share, if so determined by the Committee) of Stock
subject to such canceled Award in (i) cash, (ii) stock of the Company or of a
corporation or other business entity a party to the Change in Control, or
(iii) other property which, in any such case, shall be in an amount having a
Fair Market Value equal to the Fair Market Value of the consideration to be paid
per share of Stock in the Change in Control, reduced by the exercise or purchase
price per share, if any, under such Award. If any portion of such consideration
may be received by holders of Stock pursuant to the Change in Control on a
contingent or delayed basis, the Committee may, in its sole discretion,
determine such Fair Market Value per share as of the time of the Change in
Control on the basis of the Committee’s good faith estimate of the present value
of the probable future payment of such consideration. In the event such
determination is made by the Committee, the amount of such payment (reduced by
applicable withholding taxes, if any) shall be paid to Participants in respect
of the vested portions of their canceled Awards as soon as practicable following
the date of the Change in Control and in respect of the unvested portions of
their canceled Awards in accordance with the vesting schedules applicable to
such Awards.
          10.2 Federal Excise Tax Under Section 4999 of the Code.
               (a) Excess Parachute Payment. In the event that any acceleration
of vesting pursuant to an Award and any other payment or benefit received or to
be received by a Participant would subject the Participant to any excise tax
pursuant to Section 4999 of the Code due to the characterization of such
acceleration of vesting, payment or benefit as an “excess parachute payment”
under Section 280G of the Code, the Participant may elect, in his or her sole
discretion, to reduce the amount of any acceleration of vesting called for under
the Award in order to avoid such characterization.
               (b) Determination by Independent Accountants. To aid the
Participant in making any election called for under Section 10.2(a), no later
than the date of the occurrence of any event that might reasonably be
anticipated to result in an “excess parachute payment” to the Participant as
described in Section 10.2(a), the Company shall request a determination in
writing by independent public accountants selected by the Company (the
“Accountants”). As soon as practicable thereafter, the Accountants shall
determine and report to the Company and the Participant the amount of such
acceleration of vesting, payments and benefits which would produce the greatest
after-tax benefit to the Participant. For the purposes of such determination,
the Accountants may rely on reasonable, good faith interpretations concerning
the application of Sections 280G and 4999 of the Code. The Company and the
Participant shall furnish to the Accountants such information and documents as
the Accountants may reasonably request in order to make their required
determination. The Company shall bear all fees and expenses the Accountants may
reasonably charge in connection with their services contemplated by this
Section 10.2(b).

 

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     11. Tax Withholding.
          11.1 Tax Withholding in General. The Company shall have the right to
deduct from any and all payments made under the Plan, or to require the
Participant, through payroll withholding, cash payment or otherwise, to make
adequate provision for, the federal, state, local and foreign taxes, if any,
required by law to be withheld by the Participating Company Group with respect
to an Award or the shares acquired pursuant thereto. The Company shall have no
obligation to deliver shares of Stock, to release shares of Stock from an escrow
established pursuant to an Award Agreement, or to make any payment in cash under
the Plan until the Participating Company Group’s tax withholding obligations
have been satisfied by the Participant.
          11.2 Withholding in Shares. The Company shall have the right, but not
the obligation, to deduct from the shares of Stock issuable to a Participant
upon the exercise or settlement of an Award, or to accept from the Participant
the tender of, a number of whole shares of Stock having a Fair Market Value, as
determined by the Company, equal to all or any part of the tax withholding
obligations of the Participating Company Group. The Fair Market Value of any
shares of Stock withheld or tendered to satisfy any such tax withholding
obligations shall not exceed the amount determined by the applicable minimum
statutory withholding rates.
     12. Compliance with Securities Law.
          The grant of Awards and the issuance of shares of Stock pursuant to
any Award shall be subject to compliance with all applicable requirements of
federal, state and foreign law with respect to such securities and the
requirements of any stock exchange or market system upon which the Stock may
then be listed. In addition, no Award may be exercised or shares issued pursuant
to an Award unless (a) a registration statement under the Securities Act shall
at the time of such exercise or issuance be in effect with respect to the shares
issuable pursuant to the Award or (b) in the opinion of legal counsel to the
Company, the shares issuable pursuant to the Award may be issued in accordance
with the terms of an applicable exemption from the registration requirements of
the Securities Act. The inability of the Company to obtain from any regulatory
body having jurisdiction the authority, if any, deemed by the Company’s legal
counsel to be necessary to the lawful issuance and sale of any shares hereunder
shall relieve the Company of any liability in respect of the failure to issue or
sell such shares as to which such requisite authority shall not have been
obtained. As a condition to issuance of any Stock, the Company may require the
Participant to satisfy any qualifications that may be necessary or appropriate,
to evidence compliance with any applicable law or regulation and to make any
representation or warranty with respect thereto as may be requested by the
Company.
     13. Compliance with Section 409A.
          13.1 Awards Subject to Section 409A. The provisions of this Section 13
shall apply to any Award or portion thereof that is or becomes subject to
Section 409A, notwithstanding any provision to the contrary contained in the
Plan or the Award Agreement applicable to such Award. Awards subject to
Section 409A include, without limitation:

 

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               (a) Any Nonstatutory Stock Option having an exercise price per
share less than the Fair Market Value determined as of the date of grant of such
Option or that permits the deferral of compensation other than the deferral of
recognition of income until the exercise or transfer of the Option or the time
the shares acquired pursuant to the exercise of the option first become
substantially vested.
               (b) Any Restricted Stock Award that either provides by its terms,
or under which the Participant makes an election, for settlement of all or any
portion of the Award either (i) on one or more dates following the end of the
Short-Term Deferral Period (as defined below) or (ii) upon or after the
occurrence of any event that will or may occur later than the end of the
Short-Term Deferral Period.
     Subject to U.S. Treasury Regulations promulgated pursuant to Section 409A
(“Section 409A Regulations”) or other applicable guidance, the term “Short-Term
Deferral Period” means the period ending on the later of (i) the 15th day of the
third month following the end of the Company’s fiscal year in which the
applicable portion of the Award is no longer subject to a substantial risk of
forfeiture or (ii) the 15th day of the third month following the end of the
Participant’s taxable year in which the applicable portion of the Award is no
longer subject to a substantial risk of forfeiture. For this purpose, the term
“substantial risk of forfeiture” shall have the meaning set forth in
Section 409A Regulations or other applicable guidance.
          13.2 Deferral and/or Distribution Elections. Except as otherwise
permitted or required by Section 409A or Section 409A Regulations or other
applicable guidance, the following rules shall apply to any deferral and/or
distribution elections (each, an “Election”) that may be permitted or required
by the Committee pursuant to an Award subject to Section 409A:
               (a) All Elections must be in writing and specify the amount (or
an objective, nondiscretionary formula determining the amount) of the
distribution in settlement of an Award being deferred, as well as the time and
form of distribution as permitted by this Plan.
               (b) All Elections shall be made by the end of the Participant’s
taxable year prior to the year in which services commence for which an Award may
be granted to such Participant; provided, however, that if the Award qualifies
as “performance-based compensation” for purposes of Section 409A (and is based
on a performance period of at least 12 consecutive months), then the Election
may be made no later than six (6) months prior to the end of the performance
period, provided that the Participant’s service is continuous from the later of
the beginning of the performance period or the date on which the performance
goals are established through the date such election is made and provided
further that no election may be made after the compensation has become readily
ascertainable (as provided by Section 409A Regulations).
               (c) Elections shall continue in effect until a written election
to revoke or change such Election is received by the Company, except that a
written election to revoke or change such Election must be made prior to the
last day for making an Election determined in accordance with paragraph
(b) above or as permitted by Section 13.3.

 

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          13.3 Subsequent Elections. Except as otherwise permitted or required
by Section 409A Regulations or other applicable guidance, any Award subject to
Section 409A which permits a subsequent Election to delay the distribution or
change the form of distribution in settlement of such Award shall comply with
the following requirements:
               (a) No subsequent Election may take effect until at least twelve
(12) months after the date on which the subsequent Election is made;
               (b) Each subsequent Election related to a distribution in
settlement of an Award not described in Section 13.4(b), 13.4(c) or 13.4(f) must
result in a delay of the distribution for a period of not less than five
(5) years from the date such distribution would otherwise have been made; and
               (c) No subsequent Election related to a distribution pursuant to
Section 13.4(d) shall be made less than twelve (12) months prior to the date of
the first scheduled payment under such distribution.
          13.4 Distributions Pursuant to Deferral Elections. Except as otherwise
permitted or required by Section 409A Regulations or other applicable guidance,
no distribution in settlement of an Award subject to Section 409A may commence
earlier than:
               (a) The Participant’s separation from service (as defined by
Section 409A Regulations);
               (b) The date the Participant becomes Disabled (as defined below);
               (c) The Participant’s death;
               (d) A specified time (or pursuant to a fixed schedule) that is
either (i) specified by the Committee upon the grant of an Award and set forth
in the Award Agreement evidencing such Award or (ii) specified by the
Participant in an Election complying with the requirements of Section 13.2
and/or 13.3, as applicable;
               (e) A change in the ownership or effective control of the Company
or in the ownership of a substantial portion of the assets of the Company (as
defined by Section 409A Regulations); or
               (f) The occurrence of an Unforeseeable Emergency (as defined by
Section 409A Regulations).
     Notwithstanding anything else herein to the contrary, to the extent that a
Participant is a “Specified Employee” (as defined by Section 409A Regulations)
of the Company, no distribution pursuant to Section 13.4(a) in settlement of an
Award subject to Section 409A may be made before the date (the “Delayed Payment
Date”) which is six (6) months after such Participant’s date of separation from
service, or, if earlier, the date of the Participant’s death. All such amounts
that would, but for this paragraph, become payable prior to the Delayed Payment
Date shall be accumulated and paid on the Delayed Payment Date.

 

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          13.5 Unforeseeable Emergency. The Committee shall have the authority
to provide in any Award subject to Section 409A for distribution in settlement
of all or a portion of such Award in the event that a Participant establishes,
to the satisfaction of the Committee, the occurrence of an Unforeseeable
Emergency. In such event, the amount(s) distributed with respect to such
Unforeseeable Emergency cannot exceed the amounts reasonably necessary to
satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes or
penalties reasonably anticipated as a result of such distribution(s), after
taking into account the extent to which such hardship is or may be relieved
through reimbursement or compensation by insurance or otherwise, by liquidation
of the Participant’s assets (to the extent the liquidation of such assets would
not itself cause severe financial hardship), or by cessation of deferrals under
the Plan. All distributions with respect to an Unforeseeable Emergency shall be
made in a lump sum within 90 days of the occurrence of Unforeseeable Emergency
and following the Committee’s determination that an Unforeseeable Emergency has
occurred.
     The occurrence of an Unforeseeable Emergency shall be judged and determined
by the Committee. The Committee’s decision with respect to whether an
Unforeseeable Emergency has occurred and the manner in which, if at all, the
distribution in settlement of an Award shall be altered or modified, shall be
final, conclusive, and not subject to approval or appeal.
          13.6 Disabled. The Committee shall have the authority to provide in
any Award subject to Section 409A for distribution in settlement of such Award
in the event that the Participant becomes Disabled. A Participant shall be
considered “Disabled” if either:
               (a) the Participant is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than twelve (12) months, or
               (b) the Participant is, by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than twelve (12) months,
receiving income replacement benefits for a period of not less than three
(3) months under an accident and health plan covering employees of the
Participant’s employer.
     All distributions payable by reason of a Participant becoming Disabled
shall be paid in a lump sum or in periodic installments as established by the
Participant’s Election, commencing within 90 days following the date the
Participant becomes Disabled. If the Participant has made no Election with
respect to distributions upon becoming Disabled, all such distributions shall be
paid in a lump sum within 90 days following the date the Participant becomes
Disabled.
          13.7 Death. If a Participant dies before complete distribution of
amounts payable upon settlement of an Award subject to Section 409A, such
undistributed amounts shall be distributed to his or her beneficiary under the
distribution method for death established by the Participant’s Election, or, if
the Participant has made no Election with respect to distributions upon death,
in a lump sum, within 90 days following the Participant’s death and following
receipt by the Committee of satisfactory notice and confirmation of the
Participant’s death.

 

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          13.8 No Acceleration of Distributions. Notwithstanding anything to the
contrary herein, this Plan does not permit the acceleration of the time or
schedule of any distribution under this Plan pursuant to any Award subject to
Section 409A, except as provided by Section 409A and Section 409A Regulations.
     14. Amendment or Termination of Plan.
          The Committee may amend, suspend or terminate the Plan at any time.
However, without the approval of the Company’s stockholders, there shall be no
amendment of the Plan that would require approval of the Company’s stockholders
under any applicable law, regulation or rule, including the rules of any stock
exchange or market system upon which the Stock may then be listed. No amendment,
suspension or termination of the Plan shall affect any then outstanding Award
unless expressly provided by the Committee. Except as provided by the next
sentence, no amendment, suspension or termination of the Plan may adversely
affect any then outstanding Award without the consent of the Participant.
Notwithstanding any other provision of the Plan or any Award Agreement to the
contrary, the Committee may, in its sole and absolute discretion and without the
consent of any Participant, amend the Plan or any Award Agreement, to take
effect retroactively or otherwise, as it deems necessary or advisable for the
purpose of conforming the Plan or such Award Agreement to any present or future
law, regulation or rule applicable to the Plan, including, but not limited to,
Section 409A of the Code and all applicable guidance promulgated thereunder.
     15. Miscellaneous Provisions.
          15.1 Repurchase Rights. Shares issued under the Plan may be subject to
one or more repurchase options, or other conditions and restrictions as
determined by the Committee in its discretion at the time the Award is granted.
The Company shall have the right to assign at any time any repurchase right it
may have, whether or not such right is then exercisable, to one or more persons
as may be selected by the Company. Upon request by the Company, each Participant
shall execute any agreement evidencing such transfer restrictions prior to the
receipt of shares of Stock hereunder and shall promptly present to the Company
any and all certificates representing shares of Stock acquired hereunder for the
placement on such certificates of appropriate legends evidencing any such
transfer restrictions.
          15.2 Forfeiture Events.
               (a) The Committee may specify in an Award Agreement that the
Participant’s rights, payments, and benefits with respect to an Award shall be
subject to reduction, cancellation, forfeiture, or recoupment upon the
occurrence of specified events, in addition to any otherwise applicable vesting
or performance conditions of an Award. Such events may include, but shall not be
limited to, termination of Service for Cause or any act by a Participant,
whether before or after termination of Service, that would constitute Cause for
termination of Service.
               (b) If the Company is required to prepare an accounting
restatement due to the material noncompliance of the Company, as a result of
misconduct, with any financial reporting requirement under the securities laws,
any Participant who knowingly or through gross

 

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negligence engaged in the misconduct, or who knowingly or through gross
negligence failed to prevent the misconduct, and any Participant who is one of
the individuals subject to automatic forfeiture under Section 304 of the
Sarbanes-Oxley Act of 2002, shall reimburse the Company the amount of any
payment in settlement of an Award earned or accrued during the twelve- (12-)
month period following the first public issuance or filing with the United
States Securities and Exchange Commission (whichever first occurred) of the
financial document embodying such financial reporting requirement.
          15.3 Provision of Information. Each Participant shall be given access
to information concerning the Company equivalent to that information generally
made available to the Company’s common stockholders.
          15.4 Rights as Employee, Consultant or Director. No person, even
though eligible pursuant to Section 5, shall have a right to be selected as a
Participant, or, having been so selected, to be selected again as a Participant.
Nothing in the Plan or any Award granted under the Plan shall confer on any
Participant a right to remain an Employee, Consultant or Director or interfere
with or limit in any way any right of a Participating Company to terminate the
Participant’s Service at any time. To the extent that an Employee of a
Participating Company other than the Company receives an Award under the Plan,
that Award shall in no event be understood or interpreted to mean that the
Company is the Employee’s employer or that the Employee has an employment
relationship with the Company.
          15.5 Rights as a Stockholder. A Participant shall have no rights as a
stockholder with respect to any shares covered by an Award until the date of the
issuance of such shares (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company). No
adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date such shares are issued, except as provided
in Section 4.3 or another provision of the Plan.
          15.6 Delivery of Title to Shares. Subject to any governing rules or
regulations, the Company shall issue or cause to be issued the shares of Stock
acquired pursuant to an Award and shall deliver such shares to or for the
benefit of the Participant by means of one or more of the following: (a) by
delivering to the Participant evidence of book entry shares of Stock credited to
the account of the Participant, (b) by depositing such shares of Stock for the
benefit of the Participant with any broker with which the Participant has an
account relationship, or (c) by delivering such shares of Stock to the
Participant in certificate form.
          15.7 Fractional Shares. The Company shall not be required to issue
fractional shares upon the exercise or settlement of any Award.
          15.8 Retirement and Welfare Plans. Neither Awards made under this Plan
nor shares of Stock or cash paid pursuant to such Awards shall be included as
“compensation” for purposes of computing the benefits payable to any Participant
under any Participating Company’s retirement plans (both qualified and
non-qualified) or welfare benefit plans unless such other plan expressly
provides that such compensation shall be taken into account in computing such
benefits.

 

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          15.9 Severability. If any one or more of the provisions (or any part
thereof) of this Plan shall be held invalid, illegal or unenforceable in any
respect, such provision shall be modified so as to make it valid, legal and
enforceable, and the validity, legality and enforceability of the remaining
provisions (or any part thereof) of the Plan shall not in any way be affected or
impaired thereby.
          15.10 No Constraint on Corporate Action. Nothing in this Plan shall be
construed to: (a) limit, impair, or otherwise affect the Company’s or another
Participating Company’s right or power to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure, or to merge or
consolidate, or dissolve, liquidate, sell, or transfer all or any part of its
business or assets; or (b) limit the right or power of the Company or another
Participating Company to take any action which such entity deems to be necessary
or appropriate.
          15.11 Unfunded Obligation. Participants shall have the status of
general unsecured creditors of the Company. Any amounts payable to Participants
pursuant to the Plan shall be unfunded and unsecured obligations for all
purposes, including, without limitation, Title I of the Employee Retirement
Income Security Act of 1974. No Participating Company shall be required to
segregate any monies from its general funds, or to create any trusts, or
establish any special accounts with respect to such obligations. The Company
shall retain at all times beneficial ownership of any investments, including
trust investments, which the Company may make to fulfill its payment obligations
hereunder. Any investments or the creation or maintenance of any trust or any
Participant account shall not create or constitute a trust or fiduciary
relationship between the Committee or any Participating Company and a
Participant, or otherwise create any vested or beneficial interest in any
Participant or the Participant’s creditors in any assets of any Participating
Company. The Participants shall have no claim against any Participating Company
for any changes in the value of any assets which may be invested or reinvested
by the Company with respect to the Plan.
          15.12 Choice of Law. Except to the extent governed by applicable
federal law, the validity, interpretation, construction and performance of the
Plan and each Award Agreement shall be governed by the laws of the State of
California, without regard to its conflict of law rules.