Exhibit 10.19

 

 

 

 

ITERIS, INC.

 

2007 OMNIBUS INCENTIVE PLAN
(amended and restated as of October 21, 2010)

 

 

 

 

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Table of Contents

 

Section 1.

 

Purpose

 

1

 

 

 

 

 

Section 2.

 

Definitions

 

1

 

 

 

 

 

Section 3.

 

Administration

 

4

(a)

 

Power and Authority of the Committee

 

4

(b)

 

Power and Authority of the Board

 

5

 

 

 

 

 

Section 4.

 

Shares Available for Awards

 

5

(a)

 

Shares Available

 

5

(b)

 

Accounting for Awards

 

5

(c)

 

Adjustments

 

5

(d)

 

Section 162(m) Award Limitations Under the Plan

 

6

 

 

 

 

 

Section 5.

 

Eligibility

 

6

 

 

 

 

 

Section 6.

 

Awards

 

6

(a)

 

Options

 

6

(b)

 

Stock Appreciation Rights

 

8

(c)

 

Restricted Stock and Restricted Stock Units

 

8

(d)

 

Performance Awards

 

9

(e)

 

Dividend Equivalents

 

9

(f)

 

Other Stock Grants

 

9

(g)

 

Other Stock-Based Awards

 

9

(h)

 

General

 

10

(i)

 

Directors’ Automatic Option Grant Program

 

11

 

 

 

 

 

Section 7.

 

Amendment and Termination; Adjustments

 

13

(a)

 

Amendments to the Plan

 

13

(b)

 

Amendments to Awards

 

14

(c)

 

Correction of Defects, Omissions and Inconsistencies

 

14

 

 

 

 

 

Section 8.

 

Income Tax Withholding

 

14

 

 

 

 

 

Section 9.

 

General Provisions

 

14

(a)

 

No Rights to Awards

 

14

(b)

 

Award Agreements

 

14

(c)

 

Plan Provisions Control

 

14

(d)

 

No Rights of Stockholders

 

15

(e)

 

No Limit on Other Compensation Arrangements

 

15

(f)

 

No Right to Employment

 

15

(g)

 

Governing Law

 

15

(h)

 

Severability

 

15

(i)

 

No Trust or Fund Created

 

16

 

ii

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(j)

 

Other Benefits

 

16

(k)

 

No Fractional Shares

 

16

(l)

 

Headings

 

16

(m)

 

Section 16 Compliance; Section 162(m) Administration

 

16

(n)

 

Conditions Precedent to Issuance of Shares

 

16

 

 

 

 

 

Section 10.

 

Effective Date of the Plan

 

17

 

 

 

 

 

Section 11.

 

Term of the Plan

 

17

 

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ITERIS, INC.
2007 OMNIBUS INCENTIVE PLAN
(amended and restated as of October 21, 2010)

 

Section 1.              Purpose

 

The purpose of the Plan is to promote the interests of the Company and its
stockholders by aiding the Company in attracting and retaining employees,
officers, consultants, independent contractors, advisors and directors capable
of assuring the future success of the Company, to offer such persons incentives
to continue in the Company’s employ or service and to afford such persons an
opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Company.

 

Section 2.              Definitions

 

As used in the Plan, the following terms shall have the meanings set forth
below:

 

(a)           “Affiliate” shall mean (i) any entity that, directly or indirectly
through one or more intermediaries, is controlled by the Company and (ii) any
entity in which the Company has a significant equity interest, in each case as
determined by the Committee.

 

(b)           “Award” shall mean any Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent,
Other Stock Grant or Other Stock-Based Award granted under the Plan.

 

(c)           “Award Agreement” shall mean any written agreement, contract or
other instrument or document evidencing an Award granted under the Plan.  Each
Award Agreement shall be subject to the applicable terms and conditions of the
Plan and any other terms and conditions (not inconsistent with the Plan)
determined by the Committee.

 

(d)           “Board” shall mean the Board of Directors of the Company.

 

(e)           “Change in Control” shall mean a change in ownership or control of
the Company effected through any of the following transactions: (i) a merger,
consolidation or other reorganization unless securities representing more than
50% of the total combined voting power of the voting securities of the successor
corporation are immediately thereafter beneficially owned, directly or
indirectly and in substantially the same proportion, by the persons who
beneficially owned the Company’s outstanding voting securities immediately prior
to such transaction; (ii) a sale, transfer or other disposition of all or
substantially all of the Company’s assets; or (iii) the acquisition, directly or
indirectly, by any person or related group of persons (other than the Company or
a person that directly or indirectly controls, is controlled by, or is under
common control with, the Company), of beneficial ownership (within the meaning
of Rule 13d-3 of the Exchange Act) of securities possessing more than 50% of the
total combined voting power of the Company’s outstanding securities pursuant to
a tender or exchange offer made directly to the Company’s stockholders.

 

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(f)            “Code” shall mean the Internal Revenue Code of 1986, as amended
from time to time, and any regulations promulgated thereunder.

 

(g)           “Committee” shall mean one or more committees of Directors
designated by the Board to administer the Plan, of which the Company’s
compensation committee shall initially be the primary committee.  The primary
Committee shall be comprised of at least two Directors but not less than such
number of Directors as shall be required to permit Awards granted under the Plan
to qualify under Rule 16b-3 and Section 162(m) of the Code, and each member of
the primary Committee shall be a “Non-Employee Director” and an “Outside
Director.”  Any secondary Committee shall be comprised of at least two
Directors.

 

(h)           “Company” shall mean Iteris, Inc., a Delaware corporation, and any
successor corporation.

 

(i)            “Director” shall mean a member of the Board, including any
Non-Employee Director.

 

(j)            “Dividend Equivalent” shall mean any right granted under
Section 6(e) of the Plan.

 

(k)           “Eligible Person” shall mean any employee, officer, consultant,
independent contractor, advisor or director providing services to the Company or
any Affiliate who the Committee determines to be an Eligible Person.

 

(l)            “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended.

 

(m)          “Fair Market Value” shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair market
value of such property determined by such methods or procedures as shall be
established from time to time by the Committee.  Notwithstanding the foregoing
and unless otherwise determined by the Committee, if the Shares are at the time
listed on any stock exchange in the United States, the Fair Market Value of a
Share as of a given date shall be the closing sale price of one Share as
reported on the principal United States exchange on which the Shares are listed
on the date as of which Fair Market Value is being determined, or, if there is
no closing sales price for the Shares on the date in question, then the Fair
Market Value shall be the closing sales price on the last preceding date for
which such price exists.

 

(n)           “Incentive Stock Option” shall mean an option granted under
Section 6(a) of the Plan that is intended to qualify as an “incentive stock
option” in accordance with the terms of Section 422 of the Code or any successor
provision.

 

(o)           “Non-Employee Director” shall mean any Director who is not also an
employee of the Company or an Affiliate within the meaning of Rule 16b-3.

 

(p)           “Non-Qualified Stock Option” shall mean an option granted under
Section 6(a) of the Plan that is not an Incentive Stock Option.

 

(q)           “Option” shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.

 

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(r)            “Other Stock Grant” shall mean any right granted under
Section 6(f) of the Plan.

 

(s)            “Other Stock-Based Award” shall mean any right granted under
Section 6(g) of the Plan.

 

(t)            “Outside Director” shall mean any Director who is an “outside
director” within the meaning of Section 162(m) of the Code.

 

(u)           “Participant” shall mean an Eligible Person designated to be
granted an Award under the Plan.

 

(v)           “Performance Award” shall mean any right granted under
Section 6(d) of the Plan.

 

(w)          “Performance Goal” shall mean one or more of the following
performance goals, either individually, alternatively or in any combination,
applied on a corporate, subsidiary or business unit basis:  revenue, cash flow,
gross profit, earnings before interest and taxes, earnings before interest,
taxes, depreciation and amortization and net earnings, earnings per share,
margins (including one or more of gross, operating and net income margins),
returns (including one or more of return on assets, equity, investment, capital
and revenue and total stockholder return), stock price, economic value added,
working capital, market share, cost reductions, workforce satisfaction and
diversity goals, employee retention, customer satisfaction, completion of key
projects and strategic plan development and implementation.  Such goals may
reflect absolute entity or business unit performance or a relative comparison to
the performance of a peer group of entities or other external measure of the
selected performance criteria.  Pursuant to rules and conditions adopted by the
Committee on or before the 90th day of the applicable performance period for
which Performance Goals are established, the Committee may appropriately adjust
any evaluation of performance under such goals to exclude the effect of certain
events, including any of the following events:  asset write-downs; litigation or
claim judgments or settlements; changes in tax law, accounting principles or
other such laws or provisions affecting reported results; severance, contract
termination and other costs related to exiting certain business activities; and
gains or losses from the disposition of businesses or assets or from the early
extinguishment of debt.

 

(x)           “Person” shall mean any individual or entity, including a
corporation, partnership, limited liability company, association, joint venture
or trust.

 

(y)           “Plan” shall mean the Iteris, Inc. 2007 Omnibus Incentive Plan, as
amended from time to time, the provisions of which are set forth herein.

 

(z)           “Qualified Performance Based Award” shall have the meaning set
forth in Section 6(d) of the Plan.

 

(aa)         “Restricted Stock” shall mean any Share granted under
Section 6(c) of the Plan.

 

(bb)         “Restricted Stock Unit” shall mean any unit granted under
Section 6(c) of the Plan evidencing the right to receive a Share (or evidencing
the right to receive a cash payment equal to the Fair Market Value of a Share if
explicitly so provided in the Award Agreement) at some future date.

 

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(cc)         “Rule 16b-3” shall mean Rule 16b-3 promulgated by the Securities
and Exchange Commission under the Exchange Act, or any successor rule or
regulation.

 

(dd)         “Section 162(m)” shall mean Section 162(m) of the Code and the
applicable Treasury Regulations promulgated thereunder.

 

(ee)         “Securities Act” shall mean the Securities Act of 1933, as amended.

 

(ff)          “Service” shall mean the performance of services for the Company
(or any Affiliate) by a person in the capacity of an employee, a member of the
board of directors or a consultant, except to the extent otherwise specifically
provided in the Award Agreement.

 

(gg)         “Share” or “Shares” shall mean a share or shares of common stock,
$0.10 par value per share, of the Company or such other securities or property
as may become subject to Awards pursuant to an adjustment made under
Section 4(c) of the Plan.

 

(hh)         “Stock Appreciation Right” shall mean any right granted under
Section 6(b) of the Plan.

 

Section 3.              Administration

 

(a)           Power and Authority of the Committee.  The Plan shall be
administered by the Board and the primary Committee.  The Board may designate a
secondary Committee to have concurrent authority to administer the Plan,
provided that the secondary Committee shall not have any authority (i) with
regard to grants of Options to be made to officers or directors of the Company
or any Affiliate who are subject to Section 16 of the Exchange Act, (ii) in such
a manner as would cause the Plan not to comply with the requirements of
Section 162(m) of the Code or (iii) in such a manner as would contravene
Section 157 of the Delaware General Corporation Law.  Any Awards made to members
of the Committee, however, should be authorized by a disinterested majority of
the Board.  Subject to the express provisions of the Plan and to applicable law,
the Committee (or the Board, as applicable) shall have full power and authority
to:  (i) designate Participants; (ii) determine the type or types of Awards to
be granted to each Participant under the Plan; (iii) determine the number of
Shares to be covered by (or the method by which payments or other rights are to
be determined in connection with) each Award; (iv) determine the terms and
conditions of any Award or Award Agreement; (v) amend the terms and conditions
of any Award or Award Agreement and accelerate the exercisability of any Option
or waive any restrictions relating to any Award; (vi) determine whether, to what
extent and under what circumstances Awards may be exercised in cash, Shares,
other securities, other Awards or other property, or canceled, forfeited or
suspended; (vii) interpret and administer the Plan and any instrument or
agreement, including an Award Agreement, relating to the Plan; (viii) establish,
amend, suspend or waive such rules and regulations and appoint such agents as it
shall deem appropriate for the proper administration of the Plan; and (ix) make
any other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan.  Unless otherwise
expressly provided in the Plan, all designations, determinations,
interpretations and other decisions under or with respect to the Plan or any
Award or Award Agreement shall be within the sole discretion of the Committee,
may be made at any time and shall be final, conclusive and binding upon any
Eligible Person and any holder or beneficiary of any Award.

 

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(b)           Power and Authority of the Board.  Notwithstanding anything to the
contrary contained herein, the Board may, at any time and from time to time,
without any further action of the Committee, exercise the powers and duties of
the Committee under the Plan.

 

Section 4.              Shares Available for Awards

 

(a)           Shares Available.  Subject to adjustment as provided in
Section 4(c) of the Plan, the aggregate number of Shares that may be issued
under the Plan shall be One Million Six Hundred Fifty Thousand (1,650,000). 
Shares to be issued under the Plan may be either authorized but unissued Shares
or Shares re-acquired and held in treasury.  Notwithstanding the foregoing,
(x) the number of Shares available for granting Incentive Stock Options under
the Plan shall not exceed One Million Six Hundred Fifty Thousand (1,650,000),
subject to adjustment as provided in Section 4(c) of the Plan and subject to the
provisions of Section 422 or 424 of the Code or any successor provision and
(y) the number of Shares available for granting Restricted Stock and Restricted
Stock Units shall not exceed One Million Six Hundred Fifty Thousand (1,650,000),
subject to adjustment as provided in Section 4(c) of the Plan.

 

(b)           Accounting for Awards.  For purposes of this Section 4, if an
Award entitles the holder thereof to receive or purchase Shares, the number of
Shares covered by such Award or to which such Award relates shall be counted on
the date of grant of such Award against the aggregate number of Shares available
for granting Awards under the Plan.  In addition, if any Shares covered by an
Award or to which an Award relates are not purchased or are forfeited, or if an
Award otherwise terminates without delivery of any Shares, then the number of
Shares counted against the aggregate number of Shares available under the Plan
with respect to such Award, to the extent of any such forfeiture or termination,
shall again be available for granting Awards under the Plan.

 

(c)           Adjustments.  In the event 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, issuance of warrants or other rights to
purchase Shares or other securities of the Company or other similar corporate
transaction or event affects the Shares such that an adjustment is necessary in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Committee shall, in such
manner as it may deem equitable, adjust any or all of (i) the number and type of
Shares (or other securities or other property) that thereafter may be made the
subject of Awards, (ii) the number and type of Shares (or other securities or
other property) subject to outstanding Awards, (iii) the purchase price or
exercise price with respect to any Award and (iv) the limitations contained in
Section 4(d) of the Plan; provided, however, that the number of Shares covered
by any Award or to which such Award relates shall always be a whole number.

 

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(d)           Section 162(m) Award Limitations Under the Plan.  Notwithstanding
any other provision of the Plan other than Section 4(c), if the Committee
provides that this Section 4(d) is applicable to a particular Award, no
Participant receiving such an Award shall be granted: (i) Options or SARs with
respect to more than 500,000 Shares in the aggregate within any fiscal year of
the Company; or (ii) Qualified Performance Based Awards which could result in
such Participant receiving more than $1,500,000 in cash or the equivalent Fair
Market Value of Shares determined at the date of grant for each full or partial
fiscal year of the Company contained in the performance period of a particular
Qualified Performance Based Award; provided, however, that, if any other
Qualified Performance Based Awards are outstanding for such Participant for a
given fiscal year, such dollar limitation shall be reduced for each such given
fiscal year by the amount that could be received by the Participant under all
such Qualified Performance Based Awards, divided, for each such Qualified
Performance Based Award, by the number of full or partial fiscal years of the
Company contained in the performance period of each such outstanding Qualified
Performance Based Award; provided, however, that the limitations set forth in
this Section 4(d) shall be subject to adjustment under Section 4(c) of the Plan
only to the extent that such adjustment does not affect the status of any Award
intended under Section 6(d) to qualify as “performance based compensation” under
Section 162(m) of the Code.

 

Section 5.              Eligibility

 

Any Eligible Person shall be eligible to be designated a Participant.  In
determining which Eligible Persons shall receive an Award and the terms of any
Award, the Committee may take into account the nature of the services rendered
by the respective Eligible Persons, their present and potential contributions to
the success of the Company or such other factors as the Committee, in its
discretion, shall deem relevant.  Notwithstanding the foregoing, an Incentive
Stock Option may only be granted to full-time or part-time employees (which term
as used herein includes, without limitation, officers and directors who are also
employees), and an Incentive Stock Option shall not be granted to an employee of
an Affiliate unless such Affiliate is also a “subsidiary corporation” of the
Company within the meaning of Section 424(f) of the Code or any successor
provision.

 

Section 6.              Awards

 

(a)           Options.  The Committee is hereby authorized to grant Options to
Eligible Persons with the following terms and conditions and with such
additional terms and conditions not inconsistent with the provisions of the Plan
as the Committee shall determine:

 

(i)            Exercise Price.  The purchase price per Share purchasable under
an Option shall be determined by the Committee; provided, however, that such
purchase price shall not be less than 100% of the Fair Market Value of a Share
on the date of grant of such Option.

 

(ii)           Option Term.  The term of each Option shall be fixed by the
Committee at the time of grant, but shall not be longer than 10 years from the
date of grant.

 

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(iii)          Time and Method of Exercise.  The Committee shall determine the
time or times at which an Option may be exercised in whole or in part and the
method or methods by which, and the form or forms (including, without
limitation, cash, Shares, other securities, other Awards or other property, or
any combination thereof, having a Fair Market Value on the exercise date equal
to the applicable exercise price) in which, payment of the exercise price with
respect thereto may be made or deemed to have been made.  The Committee shall
have the discretion to grant Options that are exercisable for unvested Shares. 
Should the Participant’s Service cease while the Shares issued upon the early
exercise of the Participant’s Options are still unvested, the Company shall have
the right to repurchase any or all of those unvested Shares at a price per share
determined by the Committee.  The terms upon which such repurchase right shall
be exercisable (including the period and procedure for exercise and the
appropriate vesting schedule for the purchased shares) shall be established by
the Committee and set forth in the Award Agreement.  Any repurchases must be
made in compliance with the relevant provisions of Delaware law.

 

(iv)          Incentive Stock Options.  Notwithstanding anything in the Plan to
the contrary, the following additional provisions shall apply to the grant of
stock options which are intended to qualify as Incentive Stock Options:

 

(A)          The Committee will not grant Incentive Stock Options in which the
aggregate Fair Market Value (determined as of the time the option is granted) of
the Shares with respect to which Incentive Stock Options are exercisable for the
first time by any Participant during any calendar year (under this Plan and all
other plans of the Company and its Affiliates) shall exceed $100,000.

 

(B)          All Incentive Stock Options must be granted within ten years from
the earlier of the date on which this Plan was adopted by the Board or the date
this Plan was approved by the stockholders of the Company.

 

(C)          Unless sooner exercised, all Incentive Stock Options shall expire
and no longer be exercisable no later than 10 years after the date of grant;
provided, however, that in the case of a grant of an Incentive Stock Option to a
Participant who, at the time such Option is granted, owns (within the meaning of
Section 422 of the Code) stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of its Affiliate, such
Incentive Stock Option shall expire and no longer be exercisable no later than 5
years from the date of grant.

 

(D)          The purchase price per Share for an Incentive Stock Option shall be
not less than 100% of the Fair Market Value of a Share on the date of grant of
the Incentive Stock Option; provided, however, that, in the case of the grant of
an Incentive Stock Option to a Participant who, at the time such Option is
granted, owns (within the meaning of Section 422 of the Code) stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company or of its Affiliate, the purchase price per Share purchasable under an
Incentive Stock Option shall be not less than 110% of the Fair Market Value of a
Share on the date of grant of the Inventive Stock Option.

 

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(E)           Any Incentive Stock Option authorized under the Plan shall contain
such other provisions as the Committee shall deem advisable, but shall in all
events be consistent with and contain all provisions required in order to
qualify the Option as an Incentive Stock Option.

 

(b)           Stock Appreciation Rights.  The Committee is hereby authorized to
grant Stock Appreciation Rights to Eligible Persons subject to the terms of the
Plan and any applicable Award Agreement.  Each Stock Appreciation Right granted
under the Plan shall confer on the holder upon exercise the right to receive a
number of Shares equal to the excess of (a) the Fair Market Value of one Share
on the date of exercise (or, if the Committee shall so determine, at any time
during a specified period before or after the date of exercise) over (b) the
grant price of the Stock Appreciation Right as determined by the Committee,
which grant price shall not be less than 100% of the Fair Market Value of one
Share on the date of grant of the Stock Appreciation Right.  Subject to the
terms of the Plan, the grant price, term, methods of exercise, dates of exercise
and any other terms and conditions (including conditions or restrictions on the
exercise thereof) of any Stock Appreciation Right shall be as determined by the
Committee.

 

(c)           Restricted Stock and Restricted Stock Units.  The Committee is
hereby authorized to grant Restricted Stock and Restricted Stock Units to
Eligible Persons with the following terms and conditions and with such
additional terms and conditions not inconsistent with the provisions of the Plan
as the Committee shall determine:

 

(i)            Restrictions.  Shares of Restricted Stock and Restricted Stock
Units shall be subject to such restrictions as the Committee may impose
(including, without limitation, a restriction on or prohibition against the
right to receive any dividend or other right or property with respect thereto),
which restrictions may lapse separately or in combination at such time or times,
in such installments or otherwise as the Committee may deem appropriate.

 

(ii)           Issuance of Shares.  Any Restricted Stock granted under the Plan
may be evidenced in such manner as the Board may deem appropriate, including
book-entry registration or issuance of a stock certificate or certificates which
certificate or certificates shall be held by the Company.  Such certificate or
certificates shall be registered in the name of the Participant and shall bear
an appropriate legend referring to the restrictions applicable to such
Restricted Stock.

 

(iii)          Forfeiture.  Except as otherwise determined by the Committee,
upon a Participant’s termination of Service (as determined under criteria
established by the Committee) during the applicable restriction period, all
Shares of Restricted Stock and Restricted Stock Units at such time subject to
restriction shall be forfeited and reacquired by the Company; provided, however,
that the Committee may, when it finds that a waiver would be in the best
interest of the Company, waive in whole or in part any or all remaining
restrictions with respect to Shares of Restricted Stock or Restricted Stock
Units.

 

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(d)           Performance Awards.  The Committee is hereby authorized to grant
Performance Awards to Eligible Persons subject to the terms of the Plan.  A
Performance Award granted under the Plan (i) may be denominated or payable in
cash, Shares (including, without limitation, Restricted Stock and Restricted
Stock Units), other securities, other Awards or other property and (ii) shall
confer on the holder thereof the right to receive payments, in whole or in part,
upon the achievement of such performance goals during such performance periods
as the Committee shall establish.  Subject to the terms of the Plan, the
performance goals to be achieved during any performance period, the length of
any performance period, the amount of any Performance Award granted, the amount
of any payment or transfer to be made pursuant to any Performance Award and any
other terms and conditions of any Performance Award shall be determined by the
Committee.  From time to time, the Committee may designate an Award granted
pursuant to the Plan as an award of “qualified performance-based compensation”
within the meaning of Section 162(m) of the Code (a “Qualified Performance Based
Award”).  Qualified Performance Based Awards shall, to the extent required by
Section 162(m), be conditioned solely on the achievement of one or more
objective Performance Goals, and such Performance Goals shall be established by
the Committee within the time period prescribed by, and shall otherwise comply
with the requirements of, Section 162(m).  The Committee shall also certify in
writing that such Performance Goals have been met prior to payment of the
Qualified Performance Based Awards to the extent required by Section 162(m).

 

(e)           Dividend Equivalents.  The Committee is hereby authorized to grant
Dividend Equivalents to Eligible Persons under which the Participant shall be
entitled to receive payments (in cash, Shares, other securities, other Awards or
other property as determined in the discretion of the Committee) equivalent to
the amount of cash dividends paid by the Company to holders of Shares with
respect to a number of Shares determined by the Committee.  Subject to the terms
of the Plan, such Dividend Equivalents may have such terms and conditions as the
Committee shall determine.

 

(f)            Other Stock Grants.  The Committee is hereby authorized, subject
to the terms of the Plan, to grant to Eligible Persons Shares without
restrictions thereon (“Other Stock Grants”) as are deemed by the Committee to be
consistent with the purpose of the Plan.  Subject to the terms of the Plan and
any applicable Award Agreement, such Other Stock Grant may have such terms and
conditions as the Committee shall determine.

 

(g)           Other Stock-Based Awards.  The Committee is hereby authorized to
grant to Eligible Persons, subject to the terms of the Plan, such other Awards
that are denominated or payable in, valued in whole or in part by reference to,
or otherwise based on or related to, Shares (including, without limitation,
securities convertible into Shares), as are deemed by the Committee to be
consistent with the purpose of the Plan.  Shares or other securities delivered
pursuant to a purchase right granted under this Section 6(g) shall be purchased
for such consideration, which may be paid by such method or methods and in such
form or forms (including, without limitation, cash, Shares, other securities,
other Awards or other property or any combination thereof), as the Committee
shall determine, the value of which consideration, as established by the
Committee, shall not be less than 100% of the Fair Market Value of such Shares
or other securities as of the date such purchase right is granted.

 

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(h)           General.

 

(i)            Consideration for Awards.  Awards may be granted for no cash
consideration or for any cash or other consideration as determined by the
Committee and required by applicable law.

 

(ii)           Awards May Be Granted Separately or Together.  Awards may, in the
discretion of the Committee, be granted either alone or in addition to, in
tandem with or in substitution for any other Award or any award granted under
any plan of the Company or any Affiliate.  Awards granted in addition to or in
tandem with other Awards or in addition to or in tandem with awards granted
under any such other plan of the Company or any Affiliate may be granted either
at the same time as or at a different time from the grant of such other Awards
or awards.

 

(iii)          Forms of Payment under Awards.  Subject to the terms of the Plan
and of any applicable Award Agreement, payments or transfers to be made by the
Company or an Affiliate upon the grant, exercise or payment of an Award may be
made in such form or forms as the Committee shall determine (including, without
limitation, cash, Shares, other securities, other Awards or other property or
any combination thereof), and may be made in a single payment or transfer, in
installments or on a deferred basis, in each case in accordance with rules and
procedures established by the Committee.  Such rules and procedures may include,
without limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or crediting of
Dividend Equivalents with respect to installment or deferred payments.

 

(iv)          Limits on Transfer of Awards.  No Award (other than Other Stock
Grants) and no right under any such Award shall be transferable by a Participant
other than by will or by the laws of descent and distribution and the Company
shall not be required to recognize any attempted assignment of such rights by
any Participant; provided, however, that, if so determined by the Committee, a
Participant may, in the manner established by the Committee, designate a
beneficiary or beneficiaries to exercise the rights of the Participant and
receive any property distributable with respect to any Award upon the death of
the Participant; provided, further, that, if so determined by the Committee, a
Participant may, at any time that such Participant holds such Option, transfer a
Non-Qualified Stock Option to any “Family Member” (as such term is defined in
the General Instructions to Form S-8, or any successor to such Instructions or
such Form), or to an inter vivos or testamentary trust in which Family Members
have a beneficial interest of more than 50% and which provides that such Option
is to be transferred to the beneficiaries upon the Participant’s death, provided
that the Participant may not receive any consideration for such transfer, the
Family Member may not make any subsequent transfers other than by will or by the
laws of descent and distribution and the Company receives written notice of such
transfer, provided, further, that, if so determined by the Committee and except
in the case of an Incentive Stock Option, Awards may be transferable as
determined by the Committee.  Except as otherwise determined by the Committee,
each Award (other than an Incentive Stock Option) or right under any such Award
shall be exercisable during the Participant’s lifetime only by the Participant
or, if permissible under applicable law, by the Participant’s guardian or legal
representative.

 

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Except as otherwise determined by the Committee, no Award (other than an
Incentive Stock Option) or right under any such Award may be pledged, alienated,
attached or otherwise encumbered, and any purported pledge, alienation,
attachment or other encumbrance thereof shall be void and unenforceable against
the Company or any Affiliate.

 

(v)           Term of Awards.  The term of each Award shall be fixed by the
Committee at the time of grant, but shall not be longer than 10 years from the
date of grant.

 

(vi)          Restrictions; Securities Exchange Listing.  All Shares or other
securities delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the Plan, applicable federal or state
securities laws and regulatory requirements, and the Committee may direct
appropriate stop transfer orders and cause other legends to be placed on the
certificates for such Shares or other securities to reflect such restrictions. 
If the Shares or other securities are traded on a securities exchange, the
Company shall not be required to deliver any Shares or other securities covered
by an Award unless and until such Shares or other securities have been and
continue to be admitted for trading on such securities exchange.  No Shares or
other assets shall be issued or delivered pursuant to the Plan unless and until
there shall have been compliance with all applicable requirements of applicable
securities laws, including the filing and effectiveness of the Form S-8
registration statement for the Shares issuable pursuant to the Plan, and all
applicable listing requirements of any stock exchange or trading system on which
Common Stock is then traded.  No Shares shall be issued or delivered pursuant to
the Plan if doing so would violate any internal policies of the Company.

 

(vii)         Prohibition on Repricing.  Except as provided in Section 4(c) of
the Plan, no Option or Stock Appreciation Right may be amended to reduce its
initial exercise or grant price and no Option or Stock Appreciation Right shall
be canceled and replaced with Options or Stock Appreciation Rights having a
lower exercise or grant price, without the approval of the stockholders of the
Company or unless there would be no material adverse effect on the Company’s
financial statements as prepared in accordance with generally accepted
accounting principles in the United States.

 

(i)            Directors’ Automatic Option Grant Program.

 

(i)            Annual Grant.  Beginning with the 2011 Annual Stockholders
Meeting, each Non-Employee Director shall receive annually on the date of each
annual stockholders’ meeting a Non-Qualified Stock Option to purchase Ten
Thousand (10,000) Shares, provided that such Non-Employee Director has served as
a Non-Employee Director for at least six (6) months and is to continue to serve
as a Non-Employee Director, whether or not he or she is standing for reelection
at that particular Annual Meeting.  The exercise price for the Shares shall be
100% of the Fair Market Value of the Shares on the date of grant.  Each Option
shall be exercisable immediately upon grant, shall be exercisable for ten
(10) years following the date of grant and shall be generally subject to the
terms and conditions set forth in the Plan.  Each such Option shall initially

 

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be unvested and shall vest in full upon the Non-Employee Director’s completion
of one (1) year of Board service measured from the grant date.  There shall be
no limit on the number of such automatic Option grants any one Non-Employee
Director may receive over his or her period of Board service, and Non-Employee
Directors who have previously been employees of the Company (or any Affiliate)
or who have received one or more Option grants from the Company prior to
becoming a Non-Employee Director shall be eligible to receive one or more such
automatic Option grants over their period of continued Board service.

 

(ii)           Initial Grant.  Upon appointment or initial election to the
Board, each Non-Employee Director shall receive a Non-Qualified Stock Option to
purchase Twenty Thousand (20,000) Shares, provided such individual was not
previously in the Company’s employ.  The exercise price for such Shares shall be
100% of the Fair Market Value of the Shares on the date of grant.  Each Option
shall be exercisable immediately upon grant, shall be exercisable for 10 years
following the date of grant and shall be generally subject to the terms and
conditions set forth in the Plan.  Each such Option shall initially be unvested
and shall vest in full upon the Non-Employee Director’s completion of one
(1) year of Board service measured from the grant date.

 

(iii)          Termination of Board Service.  The following provisions shall
govern the exercise of any options granted to Non-Employee Directors pursuant to
the Automatic Option Grant Program that are outstanding at the time the
Non-Employee Director ceases to serve as a Board member:

 

(A)          Should the Non-Employee Director’s service as a Board member cease
for any reason while one or more Options granted pursuant to this Automatic
Option Grant Program are outstanding, then each such Option shall remain
exercisable, for any or all of the vested Shares for which the Option is
exercisable at the time of such cessation of Board service, until the earlier of
(i) the termination date of the Option or (ii) the expiration of the one-year
period measured from the date the Non-Employee Director’s Board service ceases. 
Upon the expiration of the one-year post-termination exercise period, or (if
earlier) upon the termination date of the Option, the Option shall terminate
with respect to any vested Shares for which the Option has not been exercised.

 

(B)          Should the Non-Employee Director cease to serve as a Board member
by reason of death or Permanent Disability, then all shares at the time subject
to the Option granted pursuant to this Automatic Option Grant Program shall
immediately vest so that such Option may, during the twelve (12) month exercise
period following such cessation of Board service, be exercised for all or any
portion of those shares as fully vested shares of Common Stock.  “Permanent
Disability” for purposes of this section shall mean the inability of the
Non-Employee Director to perform his or her usual duties as a Board member by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of twelve (12) months or more.

 

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(C)          Each Option granted pursuant to this Automatic Option Grant Program
that is outstanding at the time of the Non-Employee Director’s cessation of
Board service shall immediately terminate and cease to remain outstanding with
respect to any and all unvested Shares for which the Option is not otherwise at
that time exercisable.

 

(iv)          Change in Control.  In the event of a Change in Control effected
during the Non-Employee Director’s period of Board service, the vesting, if any,
of each Option granted pursuant to this Automatic Option Grant Program at the
time held by such Non-Employee Director shall automatically accelerate so that
each such Option shall, immediately prior to the specified effective date for
the Change in Control, become exercisable for all of the Shares at the time
subject to such Option and may be exercised for all or any portion of such
Shares.  Upon the consummation of the Change in Control, all Options granted
pursuant to this Automatic Option Grant Program shall terminate and cease to be
outstanding.

 

(v)           Remaining Terms.  The remaining terms and conditions of each
Option granted pursuant to this Automatic Option Grant Program shall be
substantially the same as the terms in effect for Options made under the Plan
and shall be set forth in an Option Agreement.

 

Section 7.              Amendment and Termination; Adjustments

 

(a)           Amendments to the Plan.  The Board may amend, alter, suspend,
discontinue or terminate the Plan at any time; provided, however, that,
notwithstanding any other provision of the Plan or any Award Agreement, without
the approval of the stockholders of the Company, no such amendment, alteration,
suspension, discontinuation or termination shall be made that, absent such
approval:

 

(i)            violates the rules or regulations of the Financial Industry
Regulatory Authority, Inc. or any other regulatory organization or securities
exchange that are applicable to the Company;

 

(ii)           causes the Company to be unable, under the Code, to grant
Incentive Stock Options under the Plan;

 

(iii)          increases the number of shares authorized under the Plan as
specified in Section 4(a);

 

(iv)          permits the award of Options or Stock Appreciation Rights at a
price less than 100% of the Fair Market Value of a Share on the date of grant of
such Option or Stock Appreciation Right, as prohibited by Sections 6(a)(i) and
6(b) of the Plan or the repricing of Options or Stock Appreciation Rights, as
prohibited by Section 6(h)(vii) of the Plan; or

 

(v)           would prevent the grant of Options or Stock Appreciation Rights
that would qualify under Section 162(m) of the Code.

 

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(b)           Amendments to Awards.  The Committee may waive any conditions of
or rights of the Company under any outstanding Award, prospectively or
retroactively.  Except as otherwise provided herein or in an Award Agreement,
the Committee may not amend, alter, suspend, discontinue or terminate any
outstanding Award, prospectively or retroactively, if such action would
adversely affect the rights of the holder of such Award, without the consent of
the Participant or holder or beneficiary thereof.  Notwithstanding the
foregoing, the Committee shall not waive any conditions or rights of the
Company, or otherwise amend or alter any outstanding Qualified Performance Based
Awards in such a manner as to cause such Award not to qualify as performance
based compensation within the meaning of Section 162(m) of the Code.

 

(c)           Correction of Defects, Omissions and Inconsistencies.  The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any Award or Award Agreement in the manner and
to the extent it shall deem desirable to implement or maintain the effectiveness
of the Plan.

 

Section 8.              Income Tax Withholding

 

In order to comply with all applicable federal, state or local income tax laws
or regulations, the Company may take such action as it deems appropriate to
ensure that all applicable federal, state or local payroll, withholding, income
or other taxes, which are the sole and absolute responsibility of a Participant,
are withheld or collected from such Participant.  In order to assist a
Participant in paying all or a portion of the federal, state and local taxes to
be withheld or collected upon exercise or receipt of (or the lapse of
restrictions relating to) an Award, the Committee, in its discretion and subject
to such additional terms and conditions as it may adopt, may permit the
Participant to satisfy such tax obligation by (i) electing to have the Company
withhold a portion of the Shares otherwise to be delivered upon exercise or
receipt of (or the lapse of restrictions relating to) such Award with a Fair
Market Value equal to the amount of such taxes or (ii) delivering to the Company
Shares other than Shares issuable upon exercise or receipt of (or the lapse of
restrictions relating to) such Award with a Fair Market Value equal to the
amount of such taxes.  The election, if any, must be made on or before the date
that the amount of tax to be withheld is determined.

 

Section 9.              General Provisions

 

(a)           No Rights to Awards.  No Eligible Person or other Person shall
have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Eligible Persons or holders or
beneficiaries of Awards under the Plan.  The terms and conditions of Awards need
not be the same with respect to any Participant or with respect to different
Participants.

 

(b)           Award Agreements.  No Participant will have rights under an Award
granted to such Participant unless and until an Award Agreement shall have been
duly executed on behalf of the Company and, if requested by the Company, signed
by the Participant.

 

(c)           Plan Provisions Control.  In the event that any provision of an
Award Agreement conflicts with or is inconsistent in any respect with the terms
of the Plan as set forth herein or subsequently amended, the terms of the Plan
shall control.

 

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(d)           No Rights of Stockholders.  Except with respect to Shares of
Restricted Stock as to which the Participant has been granted the right to vote,
neither a Participant nor the Participant’s legal representative shall be, or
have any of the rights and privileges of, a stockholder of the Company with
respect to any Shares issuable to such Participant upon the exercise or payment
of any Award, in whole or in part, unless and until such Shares have been issued
in the name of such Participant or such Participant’s legal representative
without restrictions thereto.

 

(e)           No Limit on Other Compensation Arrangements.  Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or continuing
in effect other or additional compensation arrangements, and such arrangements
may be either generally applicable or applicable only in specific cases.

 

(f)            No Right to Employment.  The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ, or as
giving a director of the Company or an Affiliate the right to continue as a
director or an Affiliate of the Company or any Affiliate, nor will it affect in
any way the right of the Company or an Affiliate to terminate a Participant’s
employment or Service at any time, with or without cause.  In addition, the
Company or an Affiliate may at any time dismiss a Participant from employment,
or terminate the term of a director of the Company or an Affiliate, free from
any liability or any claim under the Plan or any Award, unless otherwise
expressly provided in the Plan or in any Award Agreement.  Nothing in this Plan
shall confer on any person any legal or equitable right against the Company or
any Affiliate, directly or indirectly, or give rise to any cause of action at
law or in equity against the Company or an Affiliate.  The Awards granted
hereunder shall not form any part of the wages or salary of any Eligible Person
for purposes of severance pay or termination indemnities, irrespective of the
reason for termination of employment.  Under no circumstances shall any person
ceasing to be an employee of the Company or any Affiliate be entitled to any
compensation for any loss of any right or benefit under the Plan which such
employee might otherwise have enjoyed but for termination of employment, whether
such compensation is claimed by way of damages for wrongful or unfair dismissal,
breach of contract or otherwise.  By participating in the Plan, each Participant
shall be deemed to have accepted all the conditions of the Plan and the terms
and conditions of any rules and regulations adopted by the Committee and shall
be fully bound thereby.

 

(g)           Governing Law.  The validity, construction and effect of the Plan
or any Award, and any rules and regulations relating to the Plan or any Award,
shall be determined in accordance with the internal laws, and not the law of
conflicts, of the State of Delaware.

 

(h)           Severability.  If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the purpose or intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction
or Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.

 

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(i)            No Trust or Fund Created.  Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and an Eligible
Person or any other Person.  To the extent that any Person acquires a right to
receive payments from the Company or any Affiliate pursuant to an Award, such
right shall be no greater than the right of any unsecured general creditor of
the Company or any Affiliate.

 

(j)            Other Benefits.  No compensation or benefit awarded to or
realized by any Participant under the Plan shall be included for the purpose of
computing such Participant’s compensation under any compensation-based
retirement, disability, or similar plan of the Company unless required by law or
otherwise provided by such other plan.

 

(k)           No Fractional Shares.  No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash shall be paid in lieu of any fractional Shares or whether such
fractional Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.

 

(l)            Headings.  Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference.  Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.

 

(m)          Section 16 Compliance; Section 162(m) Administration.  The Plan is
intended to comply in all respects with Rule 16b-3 or any successor provision,
as in effect from time to time, and in all events the Plan shall be construed in
accordance with the requirements of Rule 16b-3.  If any Plan provision does not
comply with Rule 16b-3 as hereafter amended or interpreted, the provision shall
be deemed inoperative.  The Board of Directors, in its absolute discretion, may
bifurcate the Plan so as to restrict, limit or condition the use of any
provision of the Plan with respect to persons who are officers or directors
subject to Section 16 of the Exchange Act without so restricting, limiting or
conditioning the Plan with respect to other Eligible Persons.  With respect to
Options and Stock Appreciation Rights, the Company intends to have the Plan
administered in accordance with the requirements for the award of “qualified
performance-based compensation” within the meaning of Section 162(m) of the
Code.

 

(n)           Conditions Precedent to Issuance of Shares.  Shares shall not be
issued pursuant to the exercise or payment of the purchase price relating to an
Award unless such exercise or payment and the issuance and delivery of such
Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act, the Exchange Act, the
rules and regulations promulgated thereunder, the requirements of any applicable
Stock Exchange and the Delaware General Corporation Law.  As a condition to the
exercise or payment of the purchase price relating to such Award, the Company
may require that the person exercising or paying the purchase price represent
and warrant 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 and warranty is required by law.

 

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Section 10.            Effective Date of the Plan

 

The Plan became effective on September 21, 2007, the date of approval of the
Plan by the Company’s stockholders.

 

Section 11.            Term of the Plan

 

No Award shall be granted under the Plan after (i) July 19, 2017 or (ii) any
earlier date of discontinuation or termination established pursuant to
Section 7(a) of the Plan.  However, unless otherwise expressly provided in the
Plan or in an applicable Award Agreement, any Award theretofore granted may
extend beyond such date, and the authority of the Committee provided for
hereunder with respect to the Plan and any Awards, and the authority of the
Board to amend the Plan, shall extend beyond the termination of the Plan.

 

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