EXHIBIT 10.1

AE BIOFUELS, INC.

2007 STOCK PLAN

(As Amended and Restated April 8, 2008)
 
1.  Purposes of the Plan. The purposes of this Plan are to attract and retain
the best available personnel for positions of substantial responsibility, to
provide additional incentive to Employees, Directors and Consultants and to
promote the success of the Company’s business.
 
The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock
Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units,
Performance Units, Performance Shares and other stock or cash awards as the
Administrator may determine.
 
2.  Definitions. As used herein, the following definitions shall apply:
 
(a)  “Administrator” means the Board or any of its Committees as shall be
administering the Plan in accordance with Section 4 hereof.
 
(b)  “Applicable Laws” means the requirements relating to the administration of
equity-based awards under U.S. state corporate laws, U.S. federal and state
securities laws, the Code, any stock exchange or quotation system on which the
Common Stock is listed or quoted and the applicable laws of any other country or
jurisdiction where Awards are, or will be, granted under the Plan.
 
(c)  “Award” means, individually or collectively, a grant under the Plan of
Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units,
Performance Units, Performance Shares and other stock or cash awards as the
Administrator may determine.
 
(d)  “Award Agreement” means the written or electronic agreement setting forth
the terms and provisions applicable to each Award granted under the Plan. The
Award Agreement is subject to the terms and conditions of the Plan.
 
(e)  “Board” means the Board of Directors of the Company.
 
(f)  “Change in Control” means the occurrence of any of the following events:
 
(i)  A change in the ownership of the Company which occurs on the date that any
one person, or more than one person acting as a group, (“Person”) acquires
ownership of the stock of the Company that, together with the stock held by such
Person, constitutes more than fifty percent (50%) of the total voting power of
the stock of the Company; provided, however, that for purposes of this
subsection (i), the acquisition of additional stock by any one Person, who is
considered to own more than fifty percent (50%) of the total voting power of the
stock of the Company will not be considered a Change in Control; or
 
(ii)  A change in the ownership of a substantial portion of the Company’s assets
which occurs on the date that any Person acquires (or has acquired during the
twelve (12) month period ending on the date of the most recent acquisition by
such person or persons) assets from the Company that have a total gross fair
market value equal to or more than fifty percent (50%) of the total gross fair
market value of all of the assets of the Company immediately prior to such
acquisition or acquisitions; provided, however, that for purposes of this
subsection (iii), the following will not constitute a change in the ownership of
a substantial portion of the Company’s assets: (A) a transfer to an entity that
is controlled by the Company’s stockholders immediately after the transfer, or
(B) a transfer of assets by the Company to: (1) a stockholder of the Company
(immediately before the asset transfer) in exchange for or with respect to the
Company’s stock, (2) an entity, fifty percent (50%) or more of the total value
or voting power of which is owned, directly or indirectly, by the Company, (3) a
Person, that owns, directly or indirectly, fifty percent (50%) or more of the
total value or voting power of all the outstanding stock of the Company, or (4)
an entity, at least fifty percent (50%) of the total value or voting power of
which is owned, directly or indirectly, by a Person described in this subsection
(iii)(B)(3). For purposes of this subsection (iii), gross fair market value
means the value of the assets of the Company, or the value of the assets being
disposed of, determined without regard to any liabilities associated with such
assets.
 
 
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For purposes of this Section 2(f), persons will be considered to be acting as a
group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar business transaction
with the Company.
 
(g)  “Code” means the Internal Revenue Code of 1986, as amended.
 
(h)  “Committee” means a committee of Directors or of other individuals
satisfying Applicable Laws appointed by the Board in accordance with Section 4
hereof.
 
(i)  “Common Stock” means the Common Stock of the Company.
 
(j)   “Company” means AE Biofuels, Inc., a Nevada corporation, or any successor
thereto.
 
(k)  “Consultant” means any person who is engaged by the Company or any Parent
or Subsidiary to render consulting or advisory services to such entity.
 
(l)  “Determination Date” means the latest possible date that will not
jeopardize the qualification of an Award granted under the Plan as
“performance-based compensation” under Section 162(m) of the Code.
 
(m)  “Director” means a member of the Board.
 
(n)  “Disability” means total and permanent disability as defined in
Section 22(e)(3) of the Code, , provided that in the case of Awards other than
Incentive Stock Options, the Administrator in its discretion may determine
whether a permanent and total disability exists in accordance with uniform and
non-discriminatory standards adopted by the Administrator from time to time.
 
(o)  “Employee” means any person, including Officers and Directors, employed by
the Company or any Parent or Subsidiary of the Company. Neither service as a
Director nor payment of a director’s fee by the Company shall be sufficient to
constitute “employment” by the Company.
 
(p)  “Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
(q)  “Exchange Program” means a program under which (i) outstanding Awards are
surrendered or cancelled in exchange for Awards of the same type (which may have
lower exercise prices and different terms), Awards of a different type, and/or
cash, (ii) Participants would have the opportunity to transfer any outstanding
Awards to a financial institution or other person or entity selected by the
Administrator, and/or (iii) the exercise price of an outstanding Award is
reduced. The Administrator will determine the terms and conditions of any
Exchange Program in its sole discretion.
 
 
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(r)  “Fair Market Value” means, as of any date, the value of Common Stock
determined as follows:
 
(i)  If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the Nasdaq National Market
or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such exchange or system on the day of determination,
as reported in The Wall Street Journal or such other source as the Administrator
deems reliable;
 
(ii)  If the Common Stock is regularly quoted by a recognized securities dealer
but selling prices are not reported, its Fair Market Value shall be the mean
between the high bid and low asked prices for the Common Stock on the day of
determination; or
 
(iii)  In the absence of an established market for the Common Stock, the Fair
Market Value thereof shall be determined in good faith by the Administrator.
 
(s)  “Fiscal Year” means the fiscal year of the Company.
 
(t)  “Incentive Stock Option” means an Option that by its terms qualifies and is
otherwise intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code and the regulations promulgated thereunder.
 
(u)  “Nonstatutory Stock Option” means an Option not intended to qualify as an
Incentive Stock Option.
 
(v)  “Officer” means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
 
(w)  “Option” means a stock option granted pursuant to Section 8 of the Plan.
 
(x)  “Parent” means a “parent corporation,” whether now or hereafter existing,
as defined in Section 424(e) of the Code.
 
(y)  “Participant” means the holder of an outstanding Award.
 
(z)  “Performance Goals” will have the meaning set forth in Section 13 of the
Plan.
 
(aa)  “Performance Period” means any Fiscal Year of the Company or such other
period as determined by the Administrator in its sole discretion.
 
(bb)  “Performance Share” means an Award denominated in Shares which may be
earned in whole or in part upon attainment of Performance Goals or other vesting
criteria as the Administrator may determine pursuant to Section 12.
 
 
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(cc)  “Performance Unit” means an Award which may be earned in whole or in part
upon attainment of Performance Goals or other vesting criteria as the
Administrator may determine and which may be settled for cash, Shares or other
securities or a combination of the foregoing pursuant to Section 12.
 
(dd)  “Period of Restriction” means the period during which the transfer of
Shares of Restricted Stock are subject to restrictions and therefore, the Shares
are subject to a substantial risk of forfeiture. Such restrictions may be based
on the passage of time, the achievement of target levels of performance, or the
occurrence of other events as determined by the Administrator.
 
(ee)  “Plan” means this 2007 Stock Plan.
 
(ff)  “Restricted Stock” means Shares issued pursuant to an Award of Restricted
Stock under Section 10 of the Plan, or issued pursuant to an early exercise of
an Option.
 
(gg)  “Restricted Stock Unit” means a bookkeeping entry representing an amount
equal to the Fair Market Value of one Share, granted pursuant to Section 11.
Each Restricted Stock Unit represents an unfunded and unsecured obligation of
the Company.
 
(hh)  “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule
16b-3, as in effect when discretion is being exercised with respect to the Plan.
 
(ii)  “Section 16(b)” means Section 16(b) of the Exchange Act.
 
(jj)  “Service Provider” means an Employee, Director or Consultant.
 
(kk)  “Share” means a share of the Common Stock, as adjusted in accordance with
Section 16 below.
 
(ll)  “Stock Appreciation Right” means an Award, granted alone or in connection
with an Option, that pursuant to Section 9 is designated as a Stock Appreciation
Right.
 
(mm)  “Subsidiary” means a “subsidiary corporation,” whether now or hereafter
existing, as defined in Section 424(f) of the Code.
  
3.  Stock Subject to the Plan.
 
(a)  Subject to the provisions of Section 16 of the Plan, the maximum aggregate
number of Shares that may be awarded and sold under the Plan is 4,000,000
Shares. The Shares may be authorized but unissued, or reacquired Common Stock.
 
(b)      Automatic Share Reserve Increase. The number of Shares available for
issuance under the Plan will be increased on the first day of each Fiscal Year
beginning with the 2009 Fiscal Year, in an amount equal to the least of
(i) 1,000,000 Shares, (ii) one percent (1%) of the number of Shares on the last
day of the immediately preceding Fiscal Year that (A) are outstanding, and (B)
are issuable pursuant to outstanding Awards, or (iii) such number of Shares
determined by the Board.
 
 
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(c)  Lapsed Awards. If an Award expires or becomes unexercisable without having
been exercised in full, or, with respect to Restricted Stock, Restricted Stock
Units, Performance Shares or Performance Units, is forfeited to or repurchased
by the Company, the unpurchased Shares (or for Awards other than Options and
Stock Appreciation Rights, the forfeited or repurchased Shares) which were
subject thereto will become available for future grant or sale under the Plan
(unless the Plan has terminated). Upon exercise of a Stock Appreciation Right
settled in Shares, the gross number of Shares covered by the portion of the
Award so exercised will cease to be available under the Plan. Shares that have
actually been issued under the Plan under any Award will not be returned to the
Plan and will not become available for future distribution under the Plan;
provided, however, that if unvested Shares of Restricted Stock, Restricted Stock
Units, Performance Shares or Performance Units are repurchased by the Company or
are forfeited to the Company, such Shares will become available for future grant
under the Plan. Shares used to pay the tax and/or exercise price of an Award
will become available for future grant or sale under the Plan. To the extent an
Award under the Plan is paid out in cash rather than Shares, such cash payment
will not result in reducing the number of Shares available for issuance under
the Plan. Notwithstanding the foregoing provisions of this Section 3(c), subject
to adjustment provided in Section 16, the maximum number of Shares that may be
issued upon the exercise of Incentive Stock Options will equal the aggregate
Share number stated in Section 3(a), plus, to the extent allowable under
Section 422 of the Code, any Shares that become available for issuance under the
Plan under this Section 3(c).
 
4.  Administration of the Plan.
 
(a)  Administrator. The Plan shall be administered by the Board or a Committee
appointed by the Board, which Committee shall be constituted to comply with
Applicable Laws. Different Committees with respect to different groups of
Service Providers may administer the Plan
 
(i)  Section 162(m). To the extent that the Administrator determines it to be
desirable to qualify Awards granted hereunder as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the Plan will be
administered by a Committee of two (2) or more “outside directors” within the
meaning of Section 162(m) of the Code.
  
(ii)  Rule 16b-3. To the extent desirable to qualify transactions hereunder as
exempt under Rule 16b-3, the transactions contemplated hereunder will be
structured to satisfy the requirements for exemption under Rule 16b-3.
 
(b)  Powers of the Administrator. Subject to the provisions of the Plan and, in
the case of a Committee, the specific duties delegated by the Board to such
Committee, and subject to the approval of any relevant authorities, the
Administrator shall have the authority in its discretion:
 
(i)  to determine the Fair Market Value;
 
(ii)  to select the Service Providers to whom Awards may from time to time be
granted hereunder;
 
(iii)  to determine the number of Shares to be covered by each such Award
granted hereunder;
 
(iv)  to determine the terms and conditions of any, and to institute an Exchange
Program;
 
(v)  to approve forms of agreement for use under the Plan;
 
(vi)  to determine the terms and conditions, not inconsistent with the terms of
the Plan, of any Award granted hereunder. Such terms and conditions include, but
are not limited to, the exercise price, the time or times when Awards may be
exercised (which may be based on performance criteria), any vesting acceleration
or waiver of forfeiture restrictions, and any restriction or limitation
regarding any Award or the Common Stock relating thereto, based in each case on
such factors as the Administrator, in its sole discretion, shall determine;
 
 
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(vii)  to prescribe, amend and rescind rules and regulations relating to the
Plan, including rules and regulations relating to sub-plans established for the
purpose of satisfying applicable foreign laws;
 
(viii)  to construe and interpret the terms of the Plan and Awards granted
pursuant to the Plan;
 
(ix)  to modify or amend each Award (subject to Section 18(c) of the Plan); and 
 
(x)  to make all other determinations deemed necessary or advisable for
administering the Plan.
 
(c)  Effect of Administrator’s Decision. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all
Participants.
 
5.  Eligibility. Nonstatutory Stock Options, Restricted Stock, Restricted Stock
Units, Stock Appreciation Rights, Performance Units, Performance Shares, and
such other cash or stock awards as the Administrator determines may be granted
to Service Providers. Incentive Stock Options may be granted only to Employees.
 
6.  At-Will Employment. Neither the Plan nor any Award shall confer upon any
Participant any right with respect to continuing the Participant’s relationship
as a Service Provider with the Company, nor shall it interfere in any way with
his or her right or the Company’s right to terminate such relationship at any
time, with or without cause, and with or without notice.
 
7.  Term of Plan. Subject to stockholder approval in accordance with Section 24,
the Plan shall become effective upon its adoption by the Board. Unless sooner
terminated under Section 19, it shall continue in effect for a term of ten (10)
years.
 
8.  Stock Options.
 
(a)  Limitations.
 
(i)  Incentive Stock Option Limit. Each Option shall be designated in the Award
Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designation, to the extent that the aggregate Fair
Market Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Participant during any calendar year
(under all plans of the Company and any Parent or Subsidiary) exceeds $100,000,
such Options shall be treated as Nonstatutory Stock Options. For purposes of
this Section 8(a), Incentive Stock Options shall be taken into account in the
order in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
 
(ii)  Number of Shares. The Administrator will have complete discretion to
determine the number of Shares subject to an Option granted to any Participant,
provided that during any Fiscal Year, no Participant will be granted an Option
covering more than 1,000,000 Shares. Notwithstanding the limitation in the
previous sentence, in connection with his or her initial service as an Employee,
an Employee may be granted Options covering up to an additional 1,000,000
Shares.
 
 
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(b)  Term of Option. The term of each Option shall be stated in the Award
Agreement; provided, however, that the term shall be no more than ten (10) years
from the date of grant thereof. In the case of an Incentive Stock Option granted
to a Participant who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five (5)
years from the date of grant or such shorter term as may be provided in the
Award Agreement.
 
(c)  Option Exercise Price and Consideration.
 
(i)  Exercise Price. The per share exercise price for the Shares to be issued
upon exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:
 
(A)  In the case of an Incentive Stock Option
 
a)  granted to an Employee who, at the time of grant of such Option, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of grant.
 
b)  granted to any other Employee, the per Share exercise price shall be no less
than 100% of the Fair Market Value per Share on the date of grant.
 
(B)  In the case of a Nonstatutory Stock Option, the per Share exercise price
shall be no less than 100% of the Fair Market Value per Share on the date of
grant.
 
(ii)  Notwithstanding the foregoing provisions of this Section 6(c), Options may
be granted with a per Share exercise price of less than 100% of the Fair Market
Value per Share on the date of grant pursuant to a transaction described in, and
in a manner consistent with, Section 424(a) of the Code.
 
(iii)  Forms of Consideration. The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option,
shall be determined at the time of grant). Such consideration may consist of,
without limitation, (i) cash, (ii) check, (iii) promissory note, (iv) surrender
of other Shares which (x) shall be valued at its Fair Market Value on the date
of exercise, and (y) must be owned free and clear of any liens, claims,
encumbrances or security interests, if accepting such Shares, in the sole
discretion of the Administrator, shall not result in any adverse accounting
consequences to the Company, (v) consideration received by the Company under a
cashless exercise program implemented by the Company in connection with the
Plan, or (vi) any combination of the foregoing methods of payment. In making its
determination as to the type of consideration to accept, the Administrator shall
consider if acceptance of such consideration may be reasonably expected to
benefit the Company.
 
(d)  Exercise of Option.
 
(i)  Procedure for Exercise; Rights as a Stockholder. Any Option granted
hereunder shall be exercisable according to the terms hereof at such times and
under such conditions as determined by the Administrator and set forth in the
Award Agreement. An Option may not be exercised for a fraction of a Share.
 
An Option shall be deemed exercised when the Company receives: (i) written or
electronic notice of exercise (in accordance with the Award Agreement) from the
person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised (together with any applicable
withholding taxes). Full payment may consist of any consideration and method of
payment authorized by the Administrator and permitted by the Award Agreement and
the Plan. Shares issued upon exercise of an Option shall be issued in the name
of the Participant or, if requested by the Participant, in the name of the
Participant and his or her spouse. Until the Shares are issued (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Shares,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such Shares promptly after the Option is exercised. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Shares are issued, except as provided in Section 16 of the Plan.
 
Exercise of an Option in any manner shall result in a decrease in the number of
Shares thereafter available for sale under the Option, by the number of Shares
as to which the Option is exercised.
 
 
 
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(ii)  Termination of Relationship as a Service Provider. If a Participant ceases
to be a Service Provider, other than upon the Participant’s termination as the
result of the Participant’s death or Disability, the Participant may exercise
his or her Option within thirty (30) days of termination, or such longer period
of time as is specified in the Award Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Award Agreement). In the absence of
a specified time in the Award Agreement, the Option shall remain exercisable for
three (3) months following the Participant’s termination. Unless otherwise
provided by the Administrator, if, on the date of termination, the Participant
is not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Participant does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.
 
(iii)  Disability of Participant. If a Participant ceases to be a Service
Provider as a result of the Participant’s Disability, the Participant may
exercise his or her Option within six (6) months of termination, or such longer
period of time as is specified in the Award Agreement to the extent the Option
is vested on the date of termination (but in no event later than the expiration
of the term of such Option as set forth in the Award Agreement). In the absence
of a specified time in the Award Agreement, the Option shall remain exercisable
for twelve (12) months following the Participant’s termination. Unless otherwise
provided by the Administrator, if, on the date of termination, the Participant
is not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Participant does not exercise his or her Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
 
(iv)  Death of Participant. If a Participant dies while a Service Provider, the
Option may be exercised within six (6) months following the Participant’s death,
or within such longer period of time as is specified in the Award Agreement to
the extent that the Option is vested on the date of death (but in no event may
the Option be exercised later than the expiration of the term of such Option as
set forth in the Award Agreement), by the Participant’s designated beneficiary,
provided such beneficiary has been designated prior to Participant’s death in a
form acceptable to the Administrator. If no such beneficiary has been designated
by the Participant, then such Option may be exercised by the personal
representative of the Participant’s estate or by the person(s) to whom the
Option is transferred pursuant to the Participant’s will or in accordance with
the laws of descent and distribution. In the absence of a specified time in the
Award Agreement, the Option shall remain exercisable for twelve (12) months
following the Participant’s termination. Unless otherwise provided by the
Administrator, if, at the time of death, the Participant is not vested as to his
or her entire Option, the Shares covered by the unvested portion of the Option
shall immediately revert to the Plan. If the Option is not so exercised within
the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
 
9.  Stock Appreciation Rights.
 
(a)  Grant of Stock Appreciation Rights. Subject to the terms and conditions of
the Plan, a Stock Appreciation Right may be granted to Service Providers at any
time and from time to time as will be determined by the Administrator, in its
sole discretion.
 
(b)  Number of Shares. The Administrator will have complete discretion to
determine the number of Stock Appreciation Rights granted to any Participant,
provided that during any Fiscal Year, no Participant will be granted Stock
Appreciation Rights covering more than 1,000,000 Shares. Notwithstanding the
limitation in the previous sentence, in connection with his or her initial
service as an Employee, an Employee may be granted Stock Appreciation Rights
covering up to an additional 1,000,000 Shares.
 
(c)  Exercise Price and Other Terms. The Administrator, subject to the
provisions of the Plan, will have complete discretion to determine the terms and
conditions of Stock Appreciation Rights granted under the Plan, provided,
however, that the exercise price will be not less than 100% of the Fair Market
Value of a Share on the date of grant.
 
(d)  Stock Appreciation Right Agreement. Each Stock Appreciation Right grant
will be evidenced by an Award Agreement that will specify the exercise price,
the term of the Stock Appreciation Right, the conditions of exercise, and such
other terms and conditions as the Administrator, in its sole discretion, will
determine.
 
(e)  Expiration of Stock Appreciation Rights. A Stock Appreciation Right granted
under the Plan will expire upon the date determined by the Administrator, in its
sole discretion, and set forth in the Award Agreement; provided, however, that
the term will be no more than ten (10) years from the date of grant thereof.
Notwithstanding the foregoing, the rules of Section 8(d) also will apply to
Stock Appreciation Rights.
 
(f)  Payment of Stock Appreciation Right Amount. Upon exercise of a Stock
Appreciation Right, a Participant will be entitled to receive payment from the
Company in an amount determined by multiplying:
 
(i)  The difference between the Fair Market Value of a Share on the date of
exercise over the exercise price; times
 
(ii)  The number of Shares with respect to which the Stock Appreciation Right is
exercised.
 
At the discretion of the Administrator, the payment upon Stock Appreciation
Right exercise may be in cash, in Shares of equivalent value, or in some
combination thereof.
 
 
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10.  Restricted Stock.
 
(a)  Grant of Restricted Stock. Subject to the terms and provisions of the Plan,
the Administrator, at any time and from time to time, may grant Shares of
Restricted Stock to Service Providers in such amounts as the Administrator, in
its sole discretion, will determine.
 
 (b)  Restricted Stock Agreement. Each Award of Restricted Stock will be
evidenced by an Award Agreement that will specify the Period of Restriction, the
number of Shares granted, and such other terms and conditions as the
Administrator, in its sole discretion, will determine. Notwithstanding the
foregoing sentence, for restricted stock intended to qualify as
“performance-based compensation” within the meaning of Section 162(m) of the
Code, during any Fiscal Year no Participant will receive more than an aggregate
of 1,000,000 Shares of Restricted Stock. Notwithstanding the foregoing
limitation, in connection with his or her initial service as an Employee, for
restricted stock intended to qualify as “performance-based compensation” within
the meaning of Section 162(m) of the Code, an Employee may be granted an
aggregate of up to an additional 1,000,000 Shares of Restricted Stock. Unless
the Administrator determines otherwise, Shares of Restricted Stock will be held
by the Company as escrow agent until the restrictions on such Shares have
lapsed.
 
(c)  Transferability. Except as provided in this Section 10, Shares of
Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable Period of Restriction.
 
(d)  Other Restrictions. The Administrator, in its sole discretion, may impose
such other restrictions on Shares of Restricted Stock as it may deem advisable
or appropriate.
 
(e)  Removal of Restrictions. Except as otherwise provided in this Section 10,
Shares of Restricted Stock covered by each Restricted Stock grant made under the
Plan will be released from escrow as soon as practicable after the last day of
the Period of Restriction. The Administrator, in its discretion, may accelerate
the time at which any restrictions will lapse or be removed.
 
(f)  Voting Rights. During the Period of Restriction, Service Providers holding
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares, unless the Administrator determines otherwise.
 
(g)  Dividends and Other Distributions. During the Period of Restriction,
Service Providers holding Shares of Restricted Stock will be entitled to receive
all dividends and other distributions paid with respect to such Shares unless
otherwise provided in the Award Agreement. If any such dividends or
distributions are paid in Shares, the Shares will be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted
Stock with respect to which they were paid.
 
(h)  Return of Restricted Stock to Company. On the date set forth in the Award
Agreement, the Restricted Stock for which restrictions have not lapsed will
revert to the Company and again will become available for grant under the Plan.
 
(i)  Section 162(m) Performance Restrictions. For purposes of qualifying grants
of Restricted Stock as “performance-based compensation” under Section 162(m) of
the Code, the Administrator, in its discretion, may set restrictions based upon
the achievement of Performance Goals. The Performance Goals will be set by the
Administrator on or before the Determination Date. In granting Restricted Stock
which is intended to qualify under Section 162(m) of the Code, the Administrator
will follow any procedures determined by it from time to time to be necessary or
appropriate to ensure qualification of the Award under Section 162(m) of the
Code (e.g., in determining the Performance Goals).
 
 
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11.  Restricted Stock Units.
 
(a)  Grant. Restricted Stock Units may be granted at any time and from time to
time as determined by the Administrator. Each Restricted Stock Unit grant will
be evidenced by an Award Agreement that will specify such other terms and
conditions as the Administrator, in its sole discretion, will determine,
including all terms, conditions, and restrictions related to the grant, the
number of Restricted Stock Units and the form of payout, which, subject to
Section 11(d), may be left to the discretion of the Administrator.
Notwithstanding anything to the contrary in this subsection (a), for Restricted
Stock Units intended to qualify as “performance-based compensation” within the
meaning of Section 162(m) of the Code, during any Fiscal Year of the Company, no
Participant will receive more than an aggregate of 1,000,000 Restricted Stock
Units. Notwithstanding the limitation in the previous sentence, for Restricted
Stock Units intended to qualify as “performance-based compensation” within the
meaning of Section 162(m) of the Code, in connection with his or her initial
service as an Employee, an Employee may be granted an aggregate of up to an
additional 1,000,000 Restricted Stock Units.
 
(b)  Vesting Criteria and Other Terms. The Administrator will set vesting
criteria in its discretion, which, depending on the extent to which the criteria
are met, will determine the number of Restricted Stock Units that will be paid
out to the Participant. After the grant of Restricted Stock Units, the
Administrator, in its sole discretion, may reduce or waive any restrictions for
such Restricted Stock Units. Each Award of Restricted Stock Units will be
evidenced by an Award Agreement that will specify the vesting criteria, and such
other terms and conditions as the Administrator, in its sole discretion will
determine. The Administrator, in its discretion, may accelerate the time at
which any restrictions will lapse or be removed.
 
(c)  Earning Restricted Stock Units. Upon meeting the applicable vesting
criteria, the Participant will be entitled to receive a payout as specified in
the Award Agreement.
 
(d)  Form and Timing of Payment. Payment of earned Restricted Stock Units will
be made as soon as practicable after the date(s) set forth in the Award
Agreement. The Administrator, in its sole discretion, may pay earned Restricted
Stock Units in cash, Shares, or a combination thereof. Shares represented by
Restricted Stock Units that are fully paid in cash again will be available for
grant under the Plan.
 
(e)  Cancellation. On the date set forth in the Award Agreement, all unearned
Restricted Stock Units will be forfeited to the Company.
 
(f)  Section 162(m) Performance Restrictions. For purposes of qualifying grants
of Restricted Stock Units as “performance-based compensation” under
Section 162(m) of the Code, the Administrator, in its discretion, may set
restrictions based upon the achievement of Performance Goals. The Performance
Goals will be set by the Administrator on or before the Determination Date. In
granting Restricted Stock Units which are intended to qualify under
Section 162(m) of the Code, the Administrator will follow any procedures
determined by it from time to time to be necessary or appropriate to ensure
qualification of the Award under Section 162(m) of the Code (e.g., in
determining the Performance Goals).
 
12.  Performance Units and Performance Shares.
 
(a)  Grant of Performance Units/Shares. Performance Units and Performance Shares
may be granted to Service Providers at any time and from time to time, as will
be determined by the Administrator, in its sole discretion. The Administrator
will have complete discretion in determining the number of Performance
Units/Shares granted to each Participant provided that during any Fiscal Year,
for Performance Units or Performance Shares intended to qualify as
“performance-based compensation” within the meaning of Section 162(m) of the
Code, (i) no Participant will receive Performance Units having an initial value
greater than $10,000,000, and (ii) no Participant will receive more than
1,000,000 Performance Shares. Notwithstanding the foregoing limitation, for
Performance Shares intended to qualify as “performance-based compensation”
within the meaning of Section 162(m) of the Code, in connection with his or her
initial service, a Service Provider may be granted up to an additional 1,000,000
Performance Shares.
 
 
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(b)  Value of Performance Units/Shares. Each Performance Unit will have an
initial value that is established by the Administrator on or before the date of
grant. Each Performance Share will have an initial value equal to the Fair
Market Value of a Share on the date of grant.
 
(c)  Performance Objectives and Other Terms. The Administrator will set
performance objectives or other vesting provisions. The Administrator may set
vesting criteria based upon the achievement of Company-wide, business unit, or
individual goals (including, but not limited to, continued employment), or any
other basis determined by the Administrator in its discretion. Each Award of
Performance Units/Shares will be evidenced by an Award Agreement that will
specify the Performance Period, and such other terms and conditions as the
Administrator, in its sole discretion, will determine. The Administrator, in its
sole discretion, may provide at the time of or following the date of grant for
accelerated vesting for an Award of Performance Units/Shares.
 
(d)  Earning of Performance Units/Shares. After the applicable Performance
Period has ended, the holder of Performance Units/Shares will be entitled to
receive a payout of the number of Performance Units/Shares earned by the
Participant over the Performance Period, to be determined as a function of the
extent to which the corresponding performance objectives or other vesting
provisions have been achieved. After the grant of a Performance Unit/Share, the
Administrator, in its sole discretion, may reduce or waive any performance
objectives or other vesting provisions for such Performance Unit/Share.
 
(e)  Form and Timing of Payment of Performance Units/Shares. Payment of earned
Performance Units/Shares will be made as soon as practicable after the
expiration of the applicable Performance Period. The Administrator, in its sole
discretion, may pay earned Performance Units/Shares in the form of cash, in
Shares (which have an aggregate Fair Market Value equal to the value of the
earned Performance Units/Shares at the close of the applicable Performance
Period) or in a combination thereof.
 
 (f)  Cancellation of Performance Units/Shares. On the date set forth in the
Award Agreement, all unearned or unvested Performance Units/Shares will be
forfeited to the Company, and again will be available for grant under the Plan.
 
(g)  Section 162(m) Performance Restrictions. For purposes of qualifying grants
of Performance Units/Shares as “performance-based compensation” under
Section 162(m) of the Code, the Administrator, in its discretion, may set
restrictions based upon the achievement of Performance Goals. The Performance
Goals will be set by the Administrator on or before the Determination Date. In
granting Performance Units/Shares which are intended to qualify under
Section 162(m) of the Code, the Administrator will follow any procedures
determined by it from time to time to be necessary or appropriate to ensure
qualification of the Award under Section 162(m) of the Code (e.g., in
determining the Performance Goals).
 
13.  Performance-Based Compensation Under Code Section 162(m).
 
(a)  General. If the Administrator, in its discretion, decides to grant an Award
intended to qualify as “performance-based compensation” under Code Section
162(m), the provisions of this Section 13 will control over any contrary
provision in the Plan; provided, however, that the Administrator may in its
discretion grant Awards that are not intended to qualify as “performance-based
compensation” under Section 162(m) of the Code to such Participants that are
based on Performance Goals or other specific criteria or goals but that do not
satisfy the requirements of this Section 13.
 
 
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(b)  Performance Goals. The granting and/or vesting of Awards of Restricted
Stock, Restricted Stock Units, Performance Shares and Performance Units and
other incentives under the Plan may be made subject to the attainment of
performance goals relating to one or more business criteria within the meaning
of Code Section 162(m) and may provide for a targeted level or levels of
achievement (“Performance Goals”) including (i) annual revenue, (ii) cash
collections, (iii) earnings per Share, (iv) net income, (v) new orders, (vi)
operating cash flow, (vii) operating income, (viii) pro forma net income, (ix)
product shipments, (x) profit after taxes, (xi) profit before taxes,
(xii) return on assets, (xiii) return on equity, (xiv) return on sales,
(xv) revenue, (xvi) total shareholder return, (xvii) capital market activity,
and (xviii) debt to equity ratio. Any Performance Goals may be used to measure
the performance of the Company as a whole or a business unit of the Company and
may be measured relative to a peer group or index. The Performance Goals may
differ from Participant to Participant and from Award to Award. Prior to the
Determination Date, the Administrator will determine whether any significant
element(s) will be included in or excluded from the calculation of any
Performance Goal with respect to any Participant.
 
(c)  Procedures. To the extent necessary to comply with the performance-based
compensation provisions of Code Section 162(m), with respect to any Award
granted subject to Performance Goals, within the first twenty-five percent (25%)
of the Performance Period, but in no event more than ninety (90) days following
the commencement of any Performance Period (or such other time as may be
required or permitted by Code Section 162(m)), the Administrator will, in
writing, (i) designate one or more Participants to whom an Award will be made,
(ii) select the Performance Goals applicable to the Performance Period, (iii)
establish the Performance Goals, and amounts of such Awards, as applicable,
which may be earned for such Performance Period, and (iv) specify the
relationship between Performance Goals and the amounts of such Awards, as
applicable, to be earned by each Participant for such Performance Period.
Following the completion of each Performance Period, the Administrator will
certify in writing whether the applicable Performance Goals have been achieved
for such Performance Period. In determining the amounts earned by a Participant,
the Administrator will have the right to reduce or eliminate (but not to
increase) the amount payable at a given level of performance to take into
account additional factors that the Administrator may deem relevant to the
assessment of individual or corporate performance for the Performance Period. A
Participant will be eligible to receive payment pursuant to an Award for a
Performance Period only if the Performance Goals for such period are achieved.
 
 (d)  Additional Limitations. Notwithstanding any other provision of the Plan,
any Award which is granted to a Participant and is intended to constitute
qualified performance based compensation under Code Section 162(m) will be
subject to any additional limitations set forth in the Code (including any
amendment to Section 162(m)) or any regulations and ruling issued thereunder
that are requirements for qualification as qualified performance-based
compensation as described in Section 162(m) of the Code, and the Plan will be
deemed amended to the extent necessary to conform to such requirements.
 
14.  Leaves of Absence. Unless the Administrator provides otherwise, vesting of
Awards granted hereunder will be suspended during any unpaid leave of absence. A
Service Provider will not cease to be an Employee in the case of (i) any leave
of absence approved by the Company, or (ii) transfers between locations of the
Company or between the Company, its Parent, or any Subsidiary. For purposes of
Incentive Stock Options, no such leave may exceed three (3) months, unless
reemployment upon expiration of such leave is guaranteed by statute or contract.
If reemployment upon expiration of a leave of absence approved by the Company is
not so guaranteed, then six (6) months and one (1) day following the
commencement of such leave any Incentive Stock Option held by the Participant
will cease to be treated as an Incentive Stock Option and will be treated for
tax purposes as a Nonstatutory Stock Option.
 
15.  Transferability of Awards. Unless determined otherwise by the
Administrator, Awards may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or the laws of
descent and distribution, and may be exercised during the lifetime of the
Participant, only by the Participant. If the Administrator makes an Award
transferable, such Award may only be transferred (i) by will, (ii) by the laws
of descent and distribution, (iii) to a revocable trust, or (iii) as permitted
by Rule 701 of the Securities Act of 1933, as amended.
 
16.  Adjustments; Dissolution or Liquidation; Merger or Change in Control.
 
(a)  Adjustments. In the event that any dividend or other distribution (whether
in the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Shares or other securities of the Company, or other change in the corporate
structure of the Company affecting the Shares occurs, the Administrator, in
order to prevent diminution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, shall adjust the number and class
of Shares that may be delivered under the Plan and/or the number, class, price
of Shares covered by each outstanding Award, and the numerical Share limits set
forth in Sections 3, 8, 9, 10, 11, and 12.
 
 
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 (b)  Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Participant as
soon as practicable prior to the effective date of such proposed transaction. To
the extent it has not been previously exercised, an Option or Stock Purchase
Right will terminate immediately prior to the consummation of such proposed
action.
 
(c)  Merger or Change in Control. In the event of a merger of the Company with
or into another corporation, or a Change in Control, each outstanding Award
shall be assumed or an equivalent option substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the event
that the successor corporation in a merger or Change in Control refuses to
assume or substitute for the Award, then the Participant will fully vest in and
have the right to exercise all of his or her outstanding Options and Stock
Appreciation Rights, including Shares as to which such Awards would not
otherwise be vested or exercisable, all restrictions on Restricted Stock will
lapse, and, with respect to Restricted Stock Units, Performance Shares and
Performance Units, all Performance Goals or other vesting criteria will be
deemed achieved at target levels and all other terms and conditions met. In
addition, if an Option or Stock Appreciation Right is not assumed or substituted
for in the event of a Change in Control, the Administrator will notify the
Participant in writing or electronically that the Option or Stock Appreciation
Right will be fully vested and exercisable for fifteen (15) days, and the Option
or Stock Appreciation Right will terminate upon the expiration of such period. 
 
For the purposes of this Section 16(c), an Award will be considered assumed if,
following the Change in Control, the Award confers the right to purchase or
receive, for each Share subject to the Award immediately prior to the Change in
Control, the consideration (whether stock, cash, or other securities or
property) or, in the case of a Stock Appreciation Right upon the exercise of
which the Administrator determines to pay cash or a Performance Share or
Performance Unit which the Administrator can determine to pay in cash, the fair
market value of the consideration received in the merger or Change in Control by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the Change in Control
is not solely common stock of the Successor Corporation, the Administrator may,
with the consent of the Successor Corporation, provide for the consideration to
be received upon the exercise of an Option or Stock Appreciation Right or upon
the payout of a Performance Share or Performance Unit, for each Share subject to
such Award (or in the case of Performance Units, the number of implied shares
determined by dividing the value of the Performance Units by the per share
consideration received by holders of Common Stock in the Change in Control), to
be solely common stock of the Successor Corporation equal in fair market value
to the per share consideration received by holders of Common Stock in the Change
in Control.
 
Notwithstanding anything in this Section 16(c) to the contrary, an Award that
vests, is earned or paid-out upon the satisfaction of one or more Performance
Goals will not be considered assumed if the Company or its successor modifies
any of such Performance Goals without the Participant’s consent; provided,
however, a modification to such Performance Goals only to reflect the Successor
Corporation’s post-Change in Control corporate structure will not be deemed to
invalidate an otherwise valid Award assumption.
 
17.  Time of Granting Awards. The date of grant of an Award shall, for all
purposes, be the date on which the Administrator makes the determination
granting such Award, or such later date as is determined by the Administrator.
Notice of the determination shall be given to each Service Provider to whom an
Award is so granted within a reasonable time after the date of such grant.
 
18.  Amendment and Termination of the Plan.
 
(a)  Amendment and Termination. The Board may at any time amend, alter, suspend
or terminate the Plan.
 
(b)  Stockholder Approval. The Board shall obtain stockholder approval of any
Plan amendment to the extent necessary and desirable to comply with Applicable
Laws.
 
(c)  Effect of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Participant, unless
mutually agreed otherwise between the Participant and the Administrator, which
agreement must be in writing and signed by the Participant and the Company.
Termination of the Plan shall not affect the Administrator’s ability to exercise
the powers granted to it hereunder with respect to Awards granted under the Plan
prior to the date of such termination.
 
 
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19.  Tax Withholding
 
(a)  Withholding Requirements. Prior to the delivery of any Shares or cash
pursuant to an Award (or exercise thereof), the Company will have the power and
the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, local, foreign or other
taxes (including the Participant’s FICA obligation) required to be withheld with
respect to such Award (or exercise thereof).
 
(b)  Withholding Arrangements. The Administrator, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may permit a
Participant to satisfy such tax withholding obligation, in whole or in part by
(without limitation) (i) paying cash, (ii) electing to have the Company withhold
otherwise deliverable cash or Shares having a Fair Market Value equal to the
minimum amount required to be withheld, (iii) delivering to the Company
already-owned Shares having a Fair Market Value equal to the amount required to
be withheld, or (iv) selling a sufficient number of Shares otherwise deliverable
to the Participant through such means as the Administrator may determine in its
sole discretion (whether through a broker or otherwise) equal to the amount
required to be withheld. The amount of the withholding requirement will be
deemed to include any amount which the Administrator agrees may be withheld at
the time the election is made, not to exceed the amount determined by using the
maximum federal, state or local marginal income tax rates applicable to the
Participant with respect to the Award on the date that the amount of tax to be
withheld is to be determined. The Fair Market Value of the Shares to be withheld
or delivered will be determined as of the date that the taxes are required to be
withheld.
 

20.  Conditions Upon Issuance of Shares.
 
(a)  Legal Compliance. Shares shall not be issued pursuant to the exercise of an
Award unless the exercise of such Award and the issuance and delivery of such
Shares shall comply with Applicable Laws and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
 
(b)  Investment Representations. As a condition to the exercise of an Award, the
Administrator may require the person exercising such Award to represent and
warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required.
 
21.  No Effect on Employment or Service. Neither the Plan nor any Award will
confer upon a Participant any right with respect to continuing the Participant’s
relationship as a Service Provider with the Company, nor will they interfere in
any way with the Participant’s right or the Company’s right to terminate such
relationship at any time, with or without cause, to the extent permitted by
Applicable Laws.
 
22.  Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company’s counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
 
23.  Reservation of Shares. The Company, during the term of this Plan, shall at
all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
 
24.  Stockholder Approval. The Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted. Such stockholder approval shall be obtained in the degree and manner
required under Applicable Laws.
 
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