Exhibit 10.1

 

CROSSROADS SYSTEMS, INC.

 

2010 STOCK INCENTIVE PLAN, AS AMENDED

 

Section 1.              PURPOSE

 

1.1           Purpose. The purpose of the Crossroads Systems, Inc. 2010 Stock
Incentive Plan, as amended (the “Plan”) is to provide a means through which
Crossroads Systems, Inc. (the “Company”) may attract able persons to serve as
employees, directors, or consultants of the Company or its subsidiaries and to
provide a means whereby those individuals upon whom the responsibilities of the
successful administration and management of the Company rest, and whose present
and potential contributions to the welfare of the Company are of importance, may
acquire and maintain stock ownership, thereby strengthening their concern for
the welfare of the Company. A further purpose of the Plan is to provide such
individuals with additional incentive and reward opportunities designed to
enhance the profitable growth of the Company. Accordingly, the Plan provides for
granting Incentive Stock Options, options that do not constitute Incentive Stock
Options, Restricted Stock Awards, or any combination of the foregoing, as is
best suited to the circumstances of the particular employee, consultant, or
director as provided in the Plan.

 

Section 2.              DEFINITIONS

 

2.1           Definitions. Whenever the following capitalized words or phrases
are used, the following definitions will be applicable throughout the Plan,
unless specifically modified by any Section:

 

(a)          “Affiliate” means, with respect to any person, any other person
directly or indirectly controlling, controlled by, or under common control with
such other person.

 

(b)          “Award” means, individually or collectively, any Option or
Restricted Stock Award.

 

(c)          “Board” means the board of directors of the Company.

 

(d)          “Change of Control Value” means the amount determined in accordance
with Section 9.4.

 

(e)          “Code” means the Internal Revenue Code of 1986, as amended.
Reference in the Plan to any section of the Code will be deemed to include any
amendments or successor provisions to such section and any regulations under
such section.

 

(f)          “Committee” means a committee of the Board that is selected by the
Board as provided in Section 4.1.

 

(g)          “Common Stock” means the common stock, $0.001 par value, of the
Company or any security into which such common stock may be changed by reason of
any transaction or event of the type described in Section 9.

 

(h)          “Company” means Crossroads Systems, Inc., a Delaware corporation.

 

(i)          “Consultant” means any person who is not an Employee or Director
and who is providing services to the Company or any parent or subsidiary
corporation (as defined in section 424 of the Code) as an advisor, consultant,
or other non-common law employee.

 

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(j)          “Corporate Change” means either (i) the Company will not be the
surviving entity in any merger, share exchange, or consolidation (or survives
only as a subsidiary of an entity), (ii) the Company sells, leases, or
exchanges, or agrees to sell, lease, or exchange, all or substantially all of
its assets to any other person or entity, (iii) the Company is to be dissolved
and liquidated, (iv) any person or entity, including a “group” as contemplated
by Section 13(d)(3) of the 1934 Act, acquires or gains ownership or control
(including, without limitation, power to vote) of more than 50% of the
outstanding shares of the Company’s voting stock (based upon voting power), or
(v) at such time as the Company becomes a reporting company under the 1934 Act,
as a result of or in connection with a contested election of Directors, the
persons who were Directors of the Company before such election will cease to
constitute a majority of the Board; provided, however, that a Corporate Change
will not include (A) any reorganization, merger, consolidation, sale, lease,
exchange, or similar transaction, which involves solely the Company and one or
more entities wholly-owned, directly or indirectly, by the Company immediately
prior to such event or (B) the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
voting stock of the Company immediately prior to such transaction or series of
transactions continue to hold 50% or more of the voting stock (based upon voting
power) of (1) any entity that owns, directly or indirectly, the stock of the
Company, (2) any entity with which the Company has merged, or (3) any entity
that owns an entity with which the Company has merged.

 

(k)          “Director” means (i) an individual elected to the Board by the
stockholders of the Company or by the Board under applicable corporate law who
either is serving on the Board on the date the Plan is adopted by the Board or
is elected to the Board after such date and (ii) for purposes of and relating to
eligibility for the grant of an Award, an individual elected to the board of
directors of any parent or subsidiary corporation (as defined in section 424 of
the Code) of the Company.

 

(l)          “Employee” means any person in an employment relationship with the
Company or any parent or subsidiary corporation (as defined in section 424 of
the Code).

 

(m)          “Fair Market Value” means, as of any specified date, (i) the mean
of the high and low sales prices of the Common Stock either (A) if the Common
Stock is traded on the National Market System of the NASDAQ, as reported on the
National Market System of NASDAQ on that date (or if no sales occur on that
date, on the last preceding date on which such sales of the Common Stock are so
reported), or (B) if the Common Stock is listed on a national securities
exchange, as reported on the stock exchange composite tape on that date (or if
no sales occur on that date, on the last preceding date on which such sales of
the Common Stock are so reported); (ii) if the Common Stock is not traded on the
National Market System of the NASDAQ or a national securities exchange but is
traded over the counter at the time a determination of its fair market value is
required to be made under the Plan, the average between the reported high and
low or closing bid and asked prices of Common Stock on the most recent date on
which Common Stock was publicly traded; (iii) in the event Common Stock is not
publicly traded at the time a determination of its value is required to be made
under the Plan, the amount determined by the Committee in its discretion through
the reasonable application of a reasonable valuation method that considers
applicable factors affecting market value and all information available as of
the valuation date; or (iv) on the date of an initial public offering of common
stock, the offering price under such initial public offering. In its
determination of Fair Market Value, the Board may use an independent appraisal
that meets the requirements of Code Section 401(a)(28)(c) and the regulations
thereunder, as long as such appraisal is as of a date that is no more than 12
months before the date of the Board’s determination.

 

(n)          “Forfeiture Restrictions” will have the meaning assigned to such
term in Section 8.2.

 

(o)          “Holder” means an Employee, Consultant, or Director who has been
granted an Award.

 

(p)          “Incentive Stock Option” means an incentive stock option within the
meaning of section 422 of the Code.

 

(q)          “1934 Act” means the Securities Exchange Act of 1934, as amended.

 

(r)          “Nonstatutory Stock Option” means Options that do not constitute
Incentive Stock Options.

 

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(s)          “Option” means an Award granted under Section 7 and includes both
Incentive Stock Options and options that do not constitute Incentive Stock
Options.

 

(t)          “Option Agreement” means a written agreement between the Company
and a Holder with respect to an Option, including the accompanying “Notice of
Grant of Stock Option.”

 

(u)          “Plan” means the Crossroads Systems, Inc. 2010 Stock Incentive
Plan, as amended from time to time.

 

(v)         “Restricted Stock Agreement” means a written agreement between the
Company and a Holder with respect to a Restricted Stock Award.

 

(w)          “Restricted Stock Award” means an Award granted under Section 8.

 

(x)          “Rule 16b-3” means SEC Rule 16b-3 promulgated under the 1934 Act,
as such may be amended from time to time, and any successor rule, regulation, or
statute fulfilling the same or a similar function.

 

2.2           Number and Gender. Wherever appropriate in the Plan, words used in
the singular will be considered to include the plural, and words used in the
plural will be considered to include the singular. The masculine gender, where
appearing in the Plan, will be deemed to include the feminine gender.

 

2.3           Headings. The headings of Sections and Subsections in the Plan are
included solely for convenience, and, if there is any conflict between such
headings and the text of the Plan, the text will control. All references to
Sections and Subsections are to this document unless otherwise indicated.

 

Section 3.              EFFECTIVE DATE AND DURATION OF THE PLAN

 

3.1           Effective Date. The Plan will become effective upon the date of
its adoption by the Board, provided that the Plan is approved by the
stockholders of the Company within 12 months after such adoption.
Notwithstanding any provision in the Plan, in any Option Agreement, or in any
Restricted Stock Agreement, no Option will be exercisable and no Restricted
Stock Award will vest prior to such stockholder approval.

 

3.2           Duration of Plan. No further Awards may be granted under the Plan
after ten years from the date the Plan is adopted by the Board. The Plan will
remain in effect until all Options granted under the Plan have been exercised,
forfeited, assumed, substituted, satisfied or expired and all Restricted Stock
Awards granted under the Plan have vested or been forfeited.

 

Section 4.              ADMINISTRATION

 

4.1           Composition of Committee. The Plan will be administered by a
committee of, and appointed by, the Board. In the absence of the Board’s
appointment of such Committee to administer the Plan, the Board will serve as
the Committee. Notwithstanding the foregoing, from and after the date upon which
the Company becomes a “publicly held corporation” (as defined in section 162(m)
of the Code and applicable interpretive authority under the Code), the Plan will
be administered by a committee of, and appointed by, the Board that will be
comprised solely of two or more outside Directors (within the meaning of the
term “outside directors” as used in section 162(m) of the Code and applicable
interpretive authority under the Code and within the meaning of “Non-Employee
Director” as defined in Rule 16b-3).

 

4.2           Powers. Subject to the express provisions of the Plan, the
Committee will have authority, in its discretion, to determine which Employees,
Consultants, or Directors will receive an Award, the time or times when such
Award will be made, whether an Incentive Stock Option or Nonstatutory Stock
Option will be granted, and the number of shares to be subject to each Option or
Restricted Stock Award. In making such determinations, the Committee will take
into account the nature of the services rendered by the respective Employees,
Consultants, or Directors, their present and potential contribution to the
Company’s success, and such other factors as the Committee in its discretion
will deem relevant.

 

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4.3           Additional Powers. The Committee will have such additional powers
as are delegated to it by the other provisions of the Plan. Subject to the
express provisions of the Plan, this will include the power (1) to construe the
Plan and the respective agreements executed under the Plan, (2) to prescribe
rules and regulations relating to the Plan, (3) to determine the terms,
restrictions, and provisions of the agreement relating to each Award, including
such terms, restrictions, and provisions as will be requisite in the judgment of
the Committee to cause designated Options to qualify as Incentive Stock Options,
and (4) to make all other determinations necessary or advisable for
administering the Plan. The Committee may correct any defect, supply any
omission, or reconcile any inconsistency in the Plan or in any agreement
relating to an Award in the manner and to the extent it will deem expedient to
carry it into effect. The determinations of the Committee on the matters
referred to in this Section will be conclusive and binding on all persons.

 

4.4           Limitation of Liability. The Committee and each member thereof
shall be entitled to, in good faith, rely or act upon any report or other
information furnished to him or her by any officer or employee of the Company or
an Affiliate, the Company’s legal counsel, independent auditors, consultants or
any other agents assisting in the administration of this Plan. Members of the
Committee and any officer or employee of the Company or an Affiliate acting at
the direction or on behalf of the Committee shall not be personally liable for
any action or determination taken or made in good faith with respect to this
Plan, and shall, to the fullest extent permitted by law, be indemnified and held
harmless by the Company with respect to any such action or determination.

 

Section 5.              STOCK SUBJECT TO THE PLAN

 

5.1           Stock Offered. Subject to the limitations set forth in
Section 5.2, the stock to be offered pursuant to the grant of an Award may be
(1) authorized but unissued Common Stock or (2) previously issued and
outstanding Common Stock reacquired by the Company. Any of such shares that
remain unissued and are not subject to outstanding Awards at the termination of
the Plan will cease to be subject to the Plan, but until termination of the Plan
the Committee will at all times make available a sufficient number of shares to
meet the requirements of the Plan.

 

5.2           Plan and Individual Limitations on Shares. Subject to adjustment
as provided in Section 9 with respect to shares of Common Stock subject to
Options then outstanding, the aggregate number of shares of Common Stock that
may be issued under the Plan will not exceed 5,250,000 shares, and in order that
the applicable regulations under the Code relating to Incentive Stock Options be
satisfied, the maximum number of shares of Common Stock that may be delivered
upon exercise of Incentive Stock Options shall be 5,250,000, as adjusted under
Section 9. Notwithstanding any provision herein to the contrary, the maximum
number of shares of Common Stock with respect to one or more Awards that may be
granted to any one Holder during each calendar year shall be 500,000, provided
that in no event shall any Holder receive one or more Awards of Restricted Stock
in excess of 250,000 shares of Common Stock. Shares will be deemed to have been
issued under the Plan only (1) to the extent actually issued and delivered
pursuant to an Award or (2) to the extent an Award is settled in cash. To the
extent that an Award lapses or the rights of its Holder terminate, any shares of
Common Stock subject to such Award will again be available for the grant of an
Award. From and after the date upon which the Company becomes a “publicly held
corporation” (as defined in section 162(m) of the Code and applicable
interpretive authority under the Code), the limitation set forth in the
preceding sentences will be applied in a manner that will permit compensation
generated under the Plan to constitute “performance-based” compensation for
purposes of section 162(m) of the Code, including, without limitation, counting
against such maximum number of shares, to the extent required under section
162(m) of the Code and applicable interpretative authority under the Code, any
shares subject to Options that are canceled or repriced.

 

Section 6.              GRANT OF AWARDS

 

6.1           Eligibility for Award. Awards may be granted only to persons who,
at the time of grant, are Employees, Consultants, or Directors.

 

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6.2          Grant of Awards. The Committee may from time to time in its
discretion grant Awards to one or more Employees, Consultants, or Directors
determined by it to be eligible for participation in the Plan in accordance with
the provisions of Section 6.1. An Award may be granted on more than one occasion
to the same person, and, subject to the limitations set forth in the Plan, such
Award may include an Incentive Stock Option, a Nonstatutory Stock Option, a
Restricted Stock Award, or any combination thereof.

 

Section 7.             STOCK OPTIONS

 

7.1          Option Period. The term of each Option will be as specified by the
Committee at the date of grant.

 

7.2          Limitations on Vesting and/or Exercise of Option. An Option will be
vested and/or exercisable in whole or in part and at such times as determined by
the Committee and set forth in the Notice of Grant and Option Agreement;
provided, however, that any Options granted under the Plan will be subject to a
one-year minimum vesting period (except as provided in Section 9.3). The
Committee in its discretion may provide that an Option will be vested or
exercisable upon (1) the attainment of one or more performance goals or targets
established by the Committee, which are based on (i) the price of a share of
Common Stock, (ii) the Company’s earnings per share, (iii) the Company’s market
share, (iv) the market share of a business unit of the Company designated by the
Committee, (v) the Company’s sales, (vi) the sales of a business unit of the
Company designated by the Committee, (vii) the net income (before or after
taxes) of the Company or a business unit of the Company designated by the
Committee, (viii) the cash flow return on investment of the Company or any
business unit of the Company designated by the Committee, (ix) the earnings
before or after interest, taxes, depreciation, and/or amortization of the
Company or any business unit of the Company designated by the Committee, (x) the
economic value added, or (xi) the return on stockholders’ equity achieved by the
Company; (2) the Holder’s continued employment as an Employee with the Company
or continued service as a Consultant or Director for a specified period of time;
(3) the occurrence of any event or the satisfaction of any other condition
specified by the Committee in its sole discretion; or (4) a combination of any
of the foregoing. Each Option may, in the discretion of the Committee, have
different provisions with respect to vesting and/or exercise of the Option.

 

7.3          Special Limitations on Incentive Stock Options.

 

(a)          An Incentive Stock Option may be granted only to an individual who
is an Employee at the time the Option is granted.

 

(b)          No Incentive Stock Option will be granted to an individual if, at
the time the Option is granted, such individual owns stock possessing more than
10% of the total combined voting power of all classes of stock of the Company or
of its parent or subsidiary corporation, within the meaning of section 422(b)(6)
of the Code, unless (1) at the time such Option is granted the option price is
at least 110% of the Fair Market Value of the Common Stock subject to the Option
and (2) such Option by its terms is not exercisable after the expiration of five
years from the date of grant.

 

(c)          If an Option is designated as an Incentive Stock Option in the
Notice of Grant of Stock Option, to the extent that such Option (together with
all Incentive Stock Options granted to the Optionee under the Plan and all other
stock option plans of the Company and its parent and subsidiaries) becomes
exercisable for the first time during any calendar year for shares having a Fair
Market Value greater than $100,000, the portion of each such Incentive Stock
Option that exceeds such amount will be treated as a Nonstatutory Stock Option.
For purposes of this Subsection, Options designated as Incentive Stock Options
are taken into account in the order in which they were granted, and the Fair
Market Value of Common Stock is determined as of the time the Option with
respect to such Common Stock is granted. If the Code is amended to provide for a
different limitation from that set forth in this Subsection, such different
limitation will be deemed incorporated in the Plan effective as of the date
required or permitted by such amendment to the Code. If the Option is treated as
an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by
reason of the limitation set forth in this Subsection, the Optionee may
designate which portion of such Option the Optionee is exercising. In the
absence of such designation, the Optionee will be deemed to have exercised the
Incentive Stock Option portion of the Option first. Separate certificates
representing each such portion will be issued upon the exercise of the Option.

 

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(d)          An Incentive Stock Option (1) will not be transferable otherwise
than by will or the laws of descent and distribution and (2) will be exercisable
during the Holder’s lifetime only by such Holder or his guardian or legal
representative.

 

(e)          The price at which a share of Common Stock may be purchased upon
exercise of an Incentive Stock Option will not be less than 100% of the Fair
Market Value of a share of Common Stock on the date such Option is granted.

 

7.4          Option Agreement.

 

(a)          Each Option will be evidenced by an Option Agreement in such form
and containing such provisions not inconsistent with the provisions of the Plan
as the Committee from time to time will approve, including, without limitation,
provisions to qualify an Incentive Stock Option under section 422 of the Code
and provisions relating to vesting and exercisability, including, but not
limited to, rules pertaining to the termination of employment or service as a
Consultant or Director by retirement, disability, death or otherwise. The terms
and conditions of the Options and respective Option Agreements need not be
identical. Subject to the consent of the Holder, the Committee may, in its sole
discretion, amend an outstanding Option Agreement from time to time in any
manner that is not inconsistent with the provisions of the Plan (including,
without limitation, an amendment that accelerates the time at which the Option,
or a portion of the Option, may be exercisable, provided, however, that no
Option may be amended to provide for a period of less than one year from date of
grant (except as provided in Section 9.3)).

 

(b)          Each Option Agreement will specify the effect of termination of (1)
employment, (2) the consulting, advisory, or other non-common law employee
relationship, or (3) membership on the Board, as applicable, on the vesting
and/or exercisability of the Option.

 

(c)          An Option Agreement may provide for the payment of the option
price, in whole or in part, by the delivery of a number of shares of Common
Stock (plus cash if necessary) having a Fair Market Value equal to such option
price. Moreover, an Option Agreement may provide for a “cashless exercise” of
the Option through procedures satisfactory to, and approved by and in the sole
discretion of, the Committee. Generally, and without limiting the Committee’s
absolute discretion, a “cashless exercise” will only be permitted at such times
in which the shares underlying this Option are publicly traded.

 

7.5          Option Price, Payment, and Exercise. Subject to Subsection 7.3(b)
with respect to Incentive Stock Options, the price at which a share of Common
Stock may be purchased upon exercise of an Option will be determined by the
Committee, but in no event will the price be less than 100% of the Fair Market
Value of a share of Common Stock on the date such Option is granted. The Option
or portion of the Option may be exercised by delivery of an irrevocable notice
of exercise to the Secretary of the Company, except as may otherwise be provided
in the Option Agreement. The purchase price of the Option or portion of the
Option will be paid in full in the manner prescribed by the Committee. Separate
stock certificates will be issued by the Company for those shares acquired
pursuant to the exercise of an Incentive Stock Option and for those shares
acquired pursuant to the exercise of a Nonstatutory Stock Option.

 

7.6          Repricing Prohibited. Except in connection with an adjustment as
provided in Section 9, the Committee may not authorize the amendment of an
outstanding Option to reduce the per share exercise price of the shares subject
to such Option below the per share exercise price as of the date of grant, and
no outstanding Option may be exchanged for Options having a lower exercise
price, in each case without stockholder approval.

 

7.7          Stockholder Rights and Privileges. The Holder will be entitled to
all the privileges and rights of a stockholder only with respect to such shares
of Common Stock as have been purchased under the Option and for which
certificates of stock have been registered in the Holder’s name.

 

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7.8           Options and Rights in Substitution for Stock Options Granted by
Other Corporations. Options may be granted under the Plan from time to time in
substitution for stock options held by individuals employed by corporations who
become Employees, Consultants, or Directors as a result of a merger,
consolidation, or other business combination of the employing corporation with
the Company or any subsidiary.

 

Section 8.              RESTRICTED STOCK AWARDS

 

8.1           Restricted Stock Agreement. At the time any Award is made under
this Section, the Company and the Holder will enter into a Restricted Stock
Agreement setting forth each of the matters contemplated by the Plan and such
other matters as the Committee may determine to be appropriate. The terms and
provisions of the respective Restricted Stock Agreements need not be identical.

 

8.2           Forfeiture Restrictions. Shares of Common Stock that are the
subject of a Restricted Stock Award will be subject to restrictions on
disposition by the Holder and an obligation of the Holder to forfeit and
surrender the shares to the Company under certain circumstances (the “Forfeiture
Restrictions”). The Forfeiture Restrictions will be determined by the Committee
in its sole discretion, and the Committee may provide that the Forfeiture
Restrictions will lapse upon (1) the attainment of one or more performance goals
or targets established by the Committee, which are based on (i) the price of a
share of Common Stock, (ii) the Company’s earnings per share, (iii) the
Company’s market share, (iv) the market share of a business unit of the Company
designated by the Committee, (v) the Company’s sales, (vi) the sales of a
business unit of the Company designated by the Committee, (vii) the net income
(before or after taxes) of the Company or a business unit of the Company
designated by the Committee, (viii) the cash flow return on investment of the
Company or any business unit of the Company designated by the Committee, (ix)
the earnings before or after interest, taxes, depreciation, and/or amortization
of the Company or any business unit of the Company designated by the Committee,
(x) the economic value added, or (xi) the return on stockholders’ equity
achieved by the Company; (2) the Holder’s continued employment as an Employee
with the Company or continued service as a Consultant or Director for a
specified period of time; (3) the occurrence of any event or the satisfaction of
any other condition specified by the Committee in its sole discretion; or (4) a
combination of any of the foregoing; provided, however, that such Forfeiture
Restrictions will remain in place for a minimum one-year vesting period before
lapsing (except as provided in Section 9.3). Each Restricted Stock Award may, in
the discretion of the Committee, have different Forfeiture Restrictions.

 

8.3           Other Terms and Conditions. Common Stock awarded pursuant to a
Restricted Stock Award will be represented by a stock certificate registered in
the name of the Holder of such Restricted Stock Award. Unless otherwise provided
in the Restricted Stock Agreement, the Holder will have the right to receive
dividends with respect to Common Stock subject to a Restricted Stock Award, to
vote Common Stock subject to such Restricted Stock Agreement, and to enjoy all
other stockholder rights, except that (1) the Holder will not be entitled to
delivery of the stock certificate until the Forfeiture Restrictions have lapsed,
(2) the Company will retain custody of the stock until the Forfeiture
Restrictions have lapsed, (3) the Holder may not sell, transfer, pledge,
exchange, hypothecate, or otherwise dispose of the stock until the Forfeiture
Restrictions have lapsed, and (4) a breach of the terms and conditions
established by the Committee pursuant to the Restricted Stock Agreement will
cause a forfeiture of the Restricted Stock Award. At the time of such Award, the
Committee may, in its sole discretion, prescribe additional terms, conditions,
or restrictions relating to Restricted Stock Awards, including, but not limited
to, rules pertaining to the termination of employment or service as a Consultant
or Director (by retirement, disability, death, or otherwise) of a Holder prior
to lapse of the Forfeitures Restrictions. Such additional terms, conditions, or
restrictions will be set forth in the Restricted Stock Agreement made in
conjunction with the Award. Subject to the consent of the Holder and the
restriction set forth in the last sentence of Section 8.4 below, the Committee
may, in its sole discretion, amend an outstanding Restricted Stock Agreement
from time to time in any manner that is not inconsistent with the provisions of
the Plan.

 

8.4           Committee’s Discretion to Accelerate Vesting of Restricted Stock
Awards. The Committee may, in its discretion and as of a date determined by the
Committee, fully vest any or all Common Stock awarded to a Holder pursuant to a
Restricted Stock Award, and, upon such vesting, all restrictions applicable to
such Restricted Stock Award will lapse as of such date provided that the
Committee shall not fully vest any Common Stock awarded to a holder pursuant to
a Restricted Stock Award such that the vesting period shall be less than a
minimum of one-year from the date of grant (except as provided in Section 9.3).
Any action by the Committee pursuant to this Section may vary among individual
Holders and may vary among the Restricted Stock Awards held by any individual
Holder. Notwithstanding the preceding provisions of this Section, from and after
the date upon which the Company becomes a “publicly held corporation” (as
defined in section 162(m) of the Code and applicable interpretive authority
under the Code), the Committee may not take any action described in this Section
with respect to a Restricted Stock Award that has been granted after such date
to a “covered employee” (within the meaning of Treasury Regulation section
1.162-27(c)(2)) if such Award has been designed to meet the exception for
performance-based compensation under section 162(m) of the Code.

 

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8.5           Payment for Restricted Stock. The Committee will determine the
amount and form of any payment for Common Stock received pursuant to a
Restricted Stock Award, provided that, in the absence of such a determination, a
Holder will not be required to make any payment for Common Stock received
pursuant to a Restricted Stock Award, except to the extent otherwise required by
law.

 

Section 9.              RECAPITALIZATION OR REORGANIZATION

 

9.1           No Effect on Board’s or Stockholders’ Power. The existence of the
Plan and the Awards granted under the Plan will not affect in any way the right
or power of the Board or the stockholders of the Company to make or authorize
(1) any adjustment, recapitalization, reorganization, or other change in the
Company’s capital structure or its business, (2) any merger, share exchange, or
consolidation of the Company or any subsidiary, (3) any issue of debt or equity
securities ranking senior to or affecting Common Stock or the rights of Common
Stock, (4) the dissolution or liquidation of the Company or any subsidiary, (5)
any sale, lease, exchange, or other disposition of all or any part of the
Company’s assets or business, or (6) any other corporate act or proceeding.

 

9.2           Adjustment in the Event of Stock Subdivision, Consolidation, or
Dividend. The shares with respect to which Options may be granted are shares of
Common Stock as presently constituted, but if, and whenever, prior to the
expiration of an Option theretofore granted, the Company shall effect a
subdivision or consolidation of shares of Common Stock or the payment of a stock
dividend on Common Stock without receipt of consideration by the Company, the
number of shares of Common Stock with respect to which such Option may
thereafter be exercised (1) in the event of an increase in the number of
outstanding shares, will be proportionately increased, and the purchase price
per share will be proportionately reduced, and (2) in the event of a reduction
in the number of outstanding shares, will be proportionately reduced, and the
purchase price per share will be proportionately increased, without changing the
aggregate purchase price or value as to which outstanding Awards remain
exercisable or subject to restrictions. No fractional share resulting from such
adjustment shall be issued under the Plan.

 

9.3           Adjustment in the Event of Recapitalization or Corporate Change.

 

 (a)          If the Company recapitalizes, reclassifies its capital stock, or
otherwise changes its capital structure (a “recapitalization”), the number and
class of shares of Common Stock covered by an Award theretofore granted will be
adjusted so that such Option will thereafter cover the number and class of
shares of stock and securities to which the Holder would have been entitled
pursuant to the terms of the recapitalization if, immediately prior to the
recapitalization, the Holder had been the holder of record of the number of
shares of Common Stock then covered by such Award.

 

 (b)          If a Corporate Change occurs, then no later than (1) 10 days after
the approval by the stockholders of the Company of a Corporate Change, other
than a Corporate Change resulting from a person or entity acquiring or gaining
ownership or control of more than 50% of the outstanding shares of the Company’s
voting stock, or (2) 30 days after a Corporate Change resulting from a person or
entity acquiring or gaining ownership or control of more than 50% of the
outstanding shares of the Company’s voting stock, the Committee, acting in its
sole discretion and without the consent or approval of any Holder and
notwithstanding any provision of the Plan to the contrary, will effect one or
more of the following alternatives, which alternatives may vary among individual
Holders and which may vary among Awards held by any individual Holder:

 

(i)          Accelerate the vesting of any Awards (or any portion of any Award)
then outstanding;

 

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(ii)         Accelerate the time at which some or all of the Options (or any
portion of the Options) then outstanding may be exercised so that such Options
(or any portion of such Options) may be exercised for a limited period of time
on or before a specified date (before or after such Corporate Change) fixed by
the Committee, after which specified date all unexercised Options and all rights
of Holders under such Options will terminate;

 

(iii)        Require the mandatory surrender to the Company by selected Holders
of some or all of the outstanding Options (or any portion of such Options) held
by such Holders (irrespective of whether such Options (or any portion of such
Options) are then vested or exercisable under the provisions of the Plan) as of
a date, before or after such Corporate Change, specified by the Committee, in
which event the Committee will then cancel such Options (or any portion of such
Options) and cause the Company to pay each Holder an amount of cash per share
equal to the excess, if any, of the Change of Control Value of the shares
subject to such Option over the exercise price(s) under such Options for such
shares;

 

(iv)        Make such adjustments to Awards (or any portion of such Options)
then outstanding as the Committee deems appropriate to reflect such Corporate
Change (provided, however, that the Committee may determine in its sole
discretion that no adjustment is necessary to one or more Awards (or any portion
of such Awards) then outstanding); or

 

(v)         Provide that the number and class of shares of Common Stock covered
by an Option (or any portion of such Option) theretofore granted will be
adjusted so that such Option will thereafter cover the number and class of
shares of stock or other securities or property (including, without limitation,
cash) to which the Holder would have been entitled pursuant to the terms of the
agreement of merger, consolidation, or sale of assets or dissolution if,
immediately prior to such merger, consolidation, or sale of assets or
dissolution, the Holder had been the holder of record of the number of shares of
Common Stock then covered by such Option.

 

9.4           Change of Control Value. For purposes of Subsection 9.3(b)(iii)
above, the “Change of Control Value” will equal the amount determined in one of
the following clauses, whichever is applicable:

 

 (a)          The per share price offered to stockholders of the Company in any
such merger, consolidation, sale of assets, or dissolution transaction;

 

 (b)          The price per share offered to stockholders of the Company in any
tender offer or exchange offer whereby a Corporate Change takes place; or

 

 (c)          If such Corporate Change occurs other than pursuant to a tender or
exchange offer, the fair market value per share of the shares into which such
Options being surrendered are exercisable, as determined by the Committee as of
the date determined by the Committee to be the date of cancellation and
surrender of such Options.

 

In the event that the consideration offered to stockholders of the Company in
any transaction described in this Section or in Section 9.3 above consists of
anything other than cash, the Committee will determine in its discretion the
fair cash equivalent of the portion of the consideration offered that is other
than cash.

 

9.5           Other Adjustments. In the event of changes in the outstanding
Common Stock by reason of recapitalizations, mergers, consolidations,
reorganizations, liquidations, combinations, split-ups, split-offs, spin-offs,
exchanges, issuances of rights or warrants, or other relevant changes in
capitalization or distributions to the holders of Common Stock occurring after
the date of grant of any Award and not otherwise provided for by this Section,
(1) such Award and any agreement evidencing such Award shall be adjusted by the
Committee as it deems appropriate as to the number and price of shares of Common
Stock or other consideration subject to such Award, without changing the
aggregate purchase price or value as to which outstanding Awards remain, and (2)
the aggregate number of shares available under the Plan and the maximum number
of shares that may be subject to Awards to any one individual shall be adjusted
by the Committee as it deems appropriate, whose determination with respect to
the adjustment shall be conclusive and binding on all parties.

 

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9.6           Stockholder Action. If any event giving rise to an adjustment
provided for in this Section requires stockholder action, such adjustment will
not be effective until such stockholder action has been taken.

 

9.7           No Adjustment Except as Provided in the Plan. Except as expressly
provided in the Plan, the issuance by the Company of shares of stock of any
class or securities convertible into shares of stock of any class for cash,
property, labor, or services, upon direct sale, upon the exercise of rights or
warrants to subscribe for such shares or other securities, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, will not affect, and
no adjustment by reason thereof will be made with respect to, the number of
shares of Common Stock subject to Awards theretofore granted or the purchase
price per share, if applicable.

 

Section 10.            AMENDMENT AND TERMINATION OF THE PLAN

 

10.1         Termination of Plan. The Board in its discretion may terminate the
Plan at any time with respect to any shares of Common Stock for which Awards
have not theretofore been granted. In the absence of Board action, the Plan will
terminate ten years from the effective date.

 

10.2         Amendment of Plan. The Board will have the right to alter or amend
the Plan or any part of the Plan from time to time; provided that no change in
any Award theretofore granted may be made that would impair in a material manner
the rights of the Holder without the consent of the Holder; and provided,
further, that the Board may not, without approval of the stockholders, amend the
Plan to (1) increase the maximum aggregate number of shares that may be issued
under the Plan (other than as provided in Section 9); (2) change the class of
individuals eligible to receive Awards under the Plan; (3) change the granting
corporation; (4) change the type of stock; (5) permit the Committee to extend
the exercise period for an Option beyond ten (10) years from date of grant; or
(6) otherwise modify the Plan in a manner that would require shareholder
approval under applicable exchange rules.

 

Section 11.           MISCELLANEOUS

 

11.1         No Right To An Award. Neither the adoption of the Plan nor any
action of the Board or of the Committee will be deemed to give an Employee,
Consultant, or Director any right to be granted an Option, any right to a
Restricted Stock Award, or any other rights under the Plan except as may be
evidenced by an Option Agreement or a Restricted Stock Agreement duly executed
on behalf of the Company, and then only to the extent and on the terms and
conditions expressly set forth in such Agreement.

 

11.2         Unfunded Plan. The Plan will be unfunded. The Company will not be
required to establish any special or separate fund or to make any other
segregation of funds or assets to insure the payment of any Award.

 

11.3         No Employment/Consulting/Membership Rights Conferred. Nothing
contained in the Plan will (1) confer upon any Employee or Consultant any right
with respect to continuation of employment or of a consulting, advisory, or
other non-common law relationship with the Company or any subsidiary or (2)
interfere in any way with the right of the Company or any subsidiary to
terminate any Employee’s employment or any Consultant’s consulting, advisory, or
other non-common law relationship at any time. Nothing contained in the Plan
will confer upon any Director any right with respect to continuation of
membership on the Board.

 

11.4         Compliance with Other Laws. The Company will not be obligated to
issue any Common Stock pursuant to any Award granted under the Plan at any time
when the shares covered by such Award have not been registered under the
Securities Act of 1933, as amended, and such other state and federal laws,
rules, or regulations as the Company or the Committee deems applicable and, in
the opinion of legal counsel to the Company, there is no exemption from the
registration requirements of such laws, rules, or regulations available for the
issuance and sale of such shares. No fractional shares of Common Stock will be
delivered, nor will any cash in lieu of fractional shares be paid.

 

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11.5         Withholding. The Company will have the right to deduct or cause to
be deducted in connection with all Awards any taxes required by law to be
withheld and to require any payments required to satisfy applicable withholding
obligations.

 

11.6         No Restriction on Corporate Action. Nothing contained in the Plan
will be construed to prevent the Company or any subsidiary from taking any
corporate action that is deemed by the Company or such subsidiary to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on the Plan or any Award made under the Plan. No Employee,
Consultant, Director, beneficiary, or other person will have any claim against
the Company or any subsidiary as a result of any such action.

 

11.7         Restrictions on Transfer. An Award (other than an Incentive Stock
Option, which will be subject to the transfer restrictions set forth in
Section 7.3) will not be transferable otherwise than (1) by will or the laws of
descent and distribution or (2) with the consent of the Committee.

 

11.8         Governing Law. The Plan will be construed in accordance with the
laws of the state of Delaware.

 

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