Exhibit 10.7

 

EXAR CORPORATION

1997 EQUITY INCENTIVE PLAN

Adopted by the Board June 12, 1997

Approved by the Stockholders September 18, 1997

Amended by the Board September 18, 1997

Amended and Restated September 10, 1998

Amended and Restated September 9, 1999

Amended and Restated June 23, 2004

Amended September 9, 2004

 

1. PURPOSE.

 

(a) The purpose of the 1997 Equity Incentive Plan (the “Plan”) is to provide a
means by which selected employees and directors of and consultants to Exar
Corporation, a Delaware corporation (the “Company”), and its Affiliates, as
defined in subparagraph 1(b), may be given an opportunity to benefit from
increases in value of the stock of the Company through the granting of (i)
incentive stock options, (ii) nonstatutory stock options, and (iii) stock
bonuses, all as defined below and collectively referred to as “Stock Awards”.

 

(b) The word “Affiliate” as used in the Plan means any parent corporation or
subsidiary corporation of the Company, as those terms are defined in Sections
424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended
(the “Code”).

 

(c) The Company, by means of the Plan, seeks to retain the services of persons
now employed by or serving as consultants or directors to the Company, to secure
and retain the services of persons capable of filling such positions, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.

 

(d) The Company intends that the Stock Awards issued under the Plan shall, in
the discretion of the Board of Directors of the Company (the “Board”) or any
committee to which responsibility for administration of the Plan has been
delegated pursuant to subparagraph 2(c), be either incentive stock options as
that term is used in Section 422 of the Code (“Incentive Stock Options”),
options which do not qualify as Incentive Stock Options (“Nonstatutory Stock
Options”) or stock bonuses as described in paragraph 6 hereof (“Stock Bonuses”).
All options shall be separately designated Incentive Stock Options or
Nonstatutory Stock Options at the time of grant, and in such form as issued
pursuant to paragraph 5, and a separate certificate or certificates will be
issued for shares purchased on exercise of each type of option. An option
designated as a Nonstatutory Stock Option shall not be treated as an Incentive
Stock Option.

--------------------------------------------------------------------------------

2. ADMINISTRATION.

 

(a) The Plan shall be administered by the Board unless and until the Board
delegates administration to a committee, as provided in subparagraph 2(c).

 

(b) The Board shall have the power, subject to, and within the limitations of,
the express provisions of the Plan:

 

(1) To determine from time to time which of the persons eligible under the Plan
shall be granted Stock Awards; when and how Stock Awards shall be granted;
whether a Stock Award will be an Incentive Stock Option, a Nonstatutory Stock
Option, a Stock Bonus or a combination of the foregoing; the provisions of each
Stock Award granted (which need not be identical), including the time or times
when a person shall be permitted to receive stock pursuant to a Stock Award; and
the number of shares with respect to which Stock Awards shall be granted to each
such person.

 

(2) To construe and interpret the Plan and Stock Awards granted under it, and to
establish, amend and revoke rules and regulations for its administration. The
Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any Stock Award Agreement in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective.
“Stock Award Agreement” means a written agreement between the Company and a
holder of a Stock Award evidencing the terms and conditions of an individual
Stock Award grant. Each Stock Award Agreement shall be subject to the terms and
conditions of the Plan.

 

(3) To amend the Plan as provided in paragraph 12.

 

(4) Generally, to exercise such powers and to perform such acts as the Board
deems necessary or expedient to promote the best interests of the Company.

 

(c) The Board may delegate administration of the Plan to one or more committees,
provided, however, that if such a committee is authorized to administer Stock
Awards with respect to officers and directors of the Company, such committee
shall be composed of not fewer than two (2) members of the Board, all of whom
may be, in the discretion of the Board, non-employee directors as defined in
subparagraph 2(d) or outside directors as defined in subparagraph 2(e). These
committees are referred to herein as the “Committee,” as applicable. If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan or the administration of Stock
Awards with respect to officers and directors, as the case may be, the powers
theretofore possessed by the Board, subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest in
the Board the administration of the Plan. Notwithstanding anything in this
paragraph to the contrary, the Board or the Committee may delegate to a
committee of one or more members of the Board the authority to grant options to
eligible persons who (1) are not then subject to Section 16 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and/or (2) are either (i)
not then covered employees (as defined in subparagraph 2(f)) and are not
expected to be covered employees at the time of recognition of income resulting
from such option, or (ii) not persons with respect to whom the Company wishes to
comply with Section 162(m) of the Code.

 

2

--------------------------------------------------------------------------------

(d) The term “non-employee director,” as used in this Plan, shall mean a
director who either (i) is not a current employee or officer of the Company or
its parent or subsidiary, does not receive compensation (directly or indirectly)
from the Company or its parent or subsidiary for services rendered as a
consultant or in any capacity other than as director (except for an amount as to
which disclosure would not be required under Item 404(a) of Regulation S-K
promulgated pursuant to the Securities Act (“Regulation S-K”)), does not possess
an interest in any other transaction as to which disclosure would be required
under Item 404(a) of Regulation S-K, and is not engaged in a business
relationship as to which disclosure would be required under Item 404(b) of
Regulation S-K; or (ii) is otherwise considered a “non-employee director” for
purposes of Rule 16b-3 promulgated under the Exchange Act.

 

(e) The term “outside director,” as used in this Plan, shall mean a director who
either (i) is not a current employee of the Company or an “affiliated
corporation” (as defined in the Treasury regulations promulgated under Section
162(m) of the Code), is not a former employee of the Company or an affiliated
corporation receiving compensation for prior services (other than benefits under
a tax qualified pension plan), was not an officer of the Company or an
affiliated corporation at any time, and is not currently receiving direct or
indirect enumeration from the Company or an affiliated corporation for personal
services in any capacity other than as a director, or (ii) is otherwise
considered an “outside director” for purposes of Section 162(m) of the Code.

 

(f) The term “covered employee,” as used in this Plan, shall mean the chief
executive officer and the four (4) other highest compensated officers of the
Company.

 

3. SHARES SUBJECT TO THE PLAN.

 

(a) Subject to the provisions of paragraph 11 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to Stock Awards granted
under the Plan shall not exceed in the aggregate Seven Million One Hundred
Seventy-Five Thousand (7,175,000) shares of the Company’s $.0001 par value
common stock, plus any shares of such common stock that would have become
available under the Company’s 1991 Stock Option Plan due to the expiration or
other termination of any stock award thereunder. If any Stock Award granted
under the Plan shall for any reason expire or otherwise terminate prior to the
issuance of the stock subject to such Stock Award (or fail to vest in the case
of a Stock Bonus), the stock not issued pursuant to such Stock Award shall again
become available for the Plan.

 

(b) The stock subject to the Plan may be unissued shares or reacquired shares,
bought on the market or otherwise.

 

4. ELIGIBILITY.

 

(a) Incentive Stock Options may be granted only to employees (including
officers) of the Company or its Affiliates. A director of the Company shall not
be eligible

 

3

--------------------------------------------------------------------------------

to receive Incentive Stock Options unless such director is also an employee
(including an officer) of the Company or any Affiliate. Nonstatutory Stock
Options and Stock Bonuses may be granted only to employees (including officers)
of, directors of or consultants to the Company or its Affiliates.

 

(b) No person shall be eligible for the grant of an Incentive Stock Option under
the Plan if, at the time of grant, such person owns (or is deemed to own
pursuant to Section 424(d) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of any of its Affiliates unless the exercise price of such Incentive Stock
Option is at least one hundred ten percent (110%) of the fair market value of
such stock at the date of grant and the option is not exercisable after the
expiration of five (5) years from the date of grant.

 

(c) Subject to the provisions of paragraph 11 relating to adjustments upon
changes in stock, no person shall be eligible to be granted options covering
more than Three Hundred Thousand (300,000) shares of the Company’s common stock
in any calendar year.

 

5. OPTION PROVISIONS.

 

Each option shall be in such form and shall contain such terms and conditions as
the Board or the Committee shall deem appropriate. The provisions of separate
options need not be identical, but each option shall include (through
incorporation of provisions hereof by reference in the option or otherwise) the
substance of each of the following provisions:

 

(a) No option shall be exercisable after the expiration of a date specified in
the option (which date shall be no more than ten (10) years from the date the
option was granted).

 

(b) The exercise price of each Incentive Stock Option shall be not less than one
hundred percent (100%) of the fair market value of the stock subject to the
option on the date the option is granted. Except as provided with respect to
Deferred Salary Grants under paragraph 7. The exercise price of each
Nonstatutory Stock Option shall be not less than fifty percent (50%) of the fair
market value of the stock subject to the option on the date the option is
granted. Notwithstanding the foregoing, an option (whether an Incentive Stock
Option or a Nonstatutory Stock Option) may be granted with an exercise price
lower than that set forth in the preceding sentence if such option is granted
pursuant to an assumption or substitution for another option in a manner
satisfying the provisions of Section 424(a) of the Code.

 

(c) The purchase price of stock acquired pursuant to an option shall be paid, to
the extent permitted by applicable statutes and regulations, either (i) in cash
at the time the option is exercised, or (ii) at the discretion of the Board or
the Committee, either at the time of the grant or exercise of the option, (A) by
delivery to the Company

 

4

--------------------------------------------------------------------------------

of other common stock of the Company, (B) according to a deferred payment or
other arrangement (which may include, without limiting the generality of the
foregoing, the use of other common stock of the Company) with the person to whom
the option is granted or to whom the option is transferred pursuant to
subparagraph 5(d), or (C) in any other form of legal consideration that may be
acceptable to the Board or the Committee.

 

In the case of any deferred payment arrangement, interest shall be payable at
least annually and shall be charged at the minimum rate of interest necessary to
avoid the treatment as interest, under any applicable provisions of the Code, of
any amounts other than amounts stated to be interest under the deferred payment
arrangement.

 

(d) An option shall not be transferable except by will or by the laws of descent
and distribution, and shall be exercisable during the lifetime of the person to
whom the option is granted only by such person; provided, however, that a
Nonstatutory Stock Option may be transferred to the extent provided in the
option agreement. The person to whom the option is granted may designate, by
delivering written notice of the same to the Company (in a form acceptable to
the Company) during such person’s lifetime, a third party who, in the event of
the death of the optionee, shall thereafter be entitled to exercise the option
and receive any and all proceeds thereof.

 

(e) The total number of shares of stock subject to an option may, but need not,
be allotted in periodic installments (which may, but need not, be equal). From
time to time during each of such installment periods, the option may become
exercisable (“vest”) with respect to some or all of the shares allotted to that
period, and may be exercised with respect to some or all of the shares allotted
to such period and/or any prior period as to which the option was not fully
exercised. During the remainder of the term of the option (if its term extends
beyond the end of the installment periods), the option may be exercised from
time to time with respect to any shares then remaining subject to the option.
The provisions of this subparagraph 5(e) are subject to any option provisions
governing the minimum number of shares as to which an option may be exercised.

 

(f) The Company may require any optionee, or any person to whom an option is
transferred under subparagraph 5(d), as a condition of exercising any such
option, (1) to give written assurances satisfactory to the Company as to the
optionee’s knowledge and experience in financial and business matters and/or to
employ a purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters, and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the option; and (2) to give
written assurances satisfactory to the Company stating that such person is
acquiring the stock subject to the option for such person’s own account and not
with any present intention of selling or otherwise distributing the stock. These
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (i) the issuance of the shares upon the exercise of the option
has been registered under a then currently effective registration statement
under the Securities Act of 1933, as amended (the “Securities Act”), or (ii) as
to any particular

 

5

--------------------------------------------------------------------------------

requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable
securities laws.

 

(g) An option shall terminate three (3) months after termination of the
optionee’s employment or relationship as a consultant or director with the
Company or an Affiliate, unless (i) such termination is due to such person’s
permanent and total disability, within the meaning of Section 422(c)(6) of the
Code, in which case the option may, but need not, provide that it may be
exercised at any time within one (1) year following such termination of
employment or relationship as a consultant or director; or (ii) the optionee
dies while in the employ of or while serving as a consultant or director to the
Company or an Affiliate, or within not more than three (3) months after
termination of such relationship, in which case the option may, but need not,
provide that it may be exercised at any time within eighteen (18) months
following the death of the optionee by the person or persons entitled to
exercise the option pursuant to subparagraph 5(d) hereof; or (iii) the option by
its terms specifies either (A) that it shall terminate sooner than three (3)
months after termination of the optionee’s employment or relationship as a
consultant or director, or (B) that it may be exercised more than three (3)
months after termination of such relationship with the Company or an Affiliate.
This subparagraph 5(g) shall not be construed to extend the term of any option
or to permit anyone to exercise the option after expiration of its term, nor
shall it be construed to increase the number of shares as to which any option is
exercisable from the amount exercisable on the date of termination of the
optionee’s employment or relationship as a consultant or director.

 

(h) The option may, but need not, include a provision whereby the optionee may
elect at any time during the term of his or her employment or relationship as a
consultant or director with the Company or any Affiliate to exercise the option
as to any part or all of the shares subject to the option prior to the stated
vesting date of the option or of any installment or installments specified in
the option. Any shares so purchased from any unvested installment or option may
be subject to a repurchase right in favor of the Company or to any other
restriction the Board or the Committee determines to be appropriate.

 

(i) To the extent provided by the terms of an option, the optionee may satisfy
any federal, state or local tax withholding obligation relating to the exercise
of such option by any of the following means or by a combination of such means:
(1) tendering a cash payment; (2) authorizing the Company to withhold from the
shares of the common stock otherwise issuable to the participant as a result of
the exercise of the stock option a number of shares having a fair market value
equal to the amount of the withholding tax obligation; or (3) delivering to the
Company owned and unencumbered shares of the common stock having a fair market
value equal to the amount of the withholding tax obligation.

 

6

--------------------------------------------------------------------------------

6. STOCK BONUS PROVISIONS.

 

Each Stock Bonus agreement shall be in such form and shall contain such terms
and conditions as the Board or the Committee shall deem appropriate. The terms
and conditions of Stock Bonus agreements may change from time to time, and the
terms and conditions of separate agreements need not be identical, but each
Stock Bonus agreement shall include (through incorporation of provisions hereof
by reference in the agreement or otherwise) the substance of each of the
following provisions as appropriate:

 

(a) The purchase price of stock under each Stock Bonus agreement shall be such
amount as the Board or Committee shall determine and designate in such
agreement. Notwithstanding the foregoing, the Board or the Committee may
determine that eligible participants in the Plan may be awarded stock pursuant
to a Stock Bonus agreement in consideration for past services actually rendered
to the Company or for its benefit.

 

(b) No rights under a Stock Bonus agreement shall be assignable by any
participant under the Plan, either voluntarily or by operation of law, except
where such assignment is required by law or expressly authorized by the terms of
the applicable Stock Bonus agreement.

 

(c) The purchase price, if any, of stock acquired pursuant to a Stock Bonus
agreement shall be paid either: (i) in cash at the time of purchase; (ii) at the
discretion of the Board or the Committee, according to a deferred payment or
other arrangement with the person to whom the stock is sold; or (iii) in any
other form of legal consideration that may be acceptable to the Board or the
Committee in their discretion. Notwithstanding the foregoing, the Board or the
Committee to which administration of the Plan has been delegated may award stock
pursuant to a Stock Bonus agreement in consideration for past services actually
rendered to the Company or for its benefit.

 

(d) Shares of stock sold or awarded under a Stock Bonus agreement may, but need
not, be subject to a repurchase option in favor of the Company in accordance
with a vesting schedule to be determined by the Board or the Committee.

 

(e) In the event an employee, director or consultant’s employment or
relationship with the Company is interrupted or terminated by the Company or any
Affiliate, the Company may repurchase or otherwise reacquire any or all of the
shares of stock held by that person which have not vested as of the date of
termination under the terms of the Stock Bonus agreement between the Company and
such person.

 

(f) To the extent provided by the terms of the Stock Bonus agreement, the
recipient may satisfy any federal, state or local tax withholding obligation
relating to the receipt of the Stock Bonus by any of the following means or by a
combination of such means: (1) tendering a cash payment; (2) authorizing the
Company to withhold from the shares of the common stock otherwise issuable to
the recipient as a result of the

 

7

--------------------------------------------------------------------------------

Stock Bonus a number of shares having a fair market value equal to the amount of
the withholding tax obligation; or (3) delivering to the Company owned and
unencumbered shares of the common stock having a fair market value equal to the
amount of the withholding tax obligation.

 

7. DEFERRED SALARY GRANTS.

 

(a) Any employee (including officers), director or consultant who is selected by
the Board or Committee (“Deferral Participant”) may elect to apply a portion of
his or her base salary, in an amount equal to at least five thousand dollars
($5,000) but in no event more than fifty thousand dollars ($50,000), to the
acquisition of an option to purchase shares of the Company’s common stock
pursuant to the terms of this paragraph 7 (“Deferred Salary Option”). Such
election is irrevocable and must be filed with the Company prior to the
commencement of the calendar year in which the base salary to be deferred is
earned. Notwithstanding the foregoing, a newly hired, elected or appointed
Deferral Participant may file an irrevocable election with the Company within
thirty (30) days of the date the Deferral Participant commences service to the
Company.

 

Each Deferral Participant who files such a timely election shall automatically
be granted an option under this paragraph 7 on (i) the first trading day in
January of the calendar year for which the deferral election is to be in effect;
or (ii) for a newly hired, elected or appointed Deferral Participant, the first
trading day of the month following the month the Deferral Participant files such
election.

 

(b) The number of shares of Company common stock subject to a Deferred Salary
Option shall be determined pursuant to the following formula (rounded down to
the nearest whole number):

 

X = A / (B x 66-2/3%), where

X is the number of option shares,

A is the maximum amount of base salary subject to the deferral election,

and

 

B is the fair market value per share of the common stock on the option

grant date.

 

(c) The purchase price per share of common stock of the Company for the shares
to be purchased pursuant to the exercise of any Deferred Salary Option shall be
thirty three and one third percent (33-1/3%) of the fair market value of the
Company’s common stock on the date such Deferred Salary Option is granted.

 

(d) Each Deferred Salary Option shall vest (become exercisable) equally over the
twelve (12) month period that is the calendar year in which salary is deferred,
and shall terminate on the earlier of (i) ten (10) years from the date the
option was granted, or (ii) three (3) years following termination of the
Deferral Participant’s employment or

 

8

--------------------------------------------------------------------------------

relationship as a consultant or director with the Company or an Affiliate. If
the Deferred Salary Option is not exercised during the applicable period, it
shall be deemed to have been forfeited and of no further force or effect.

 

8. COVENANTS OF THE COMPANY.

 

(a) During the terms of the Stock Awards, the Company shall keep available at
all times the number of shares of stock required to satisfy such Stock Awards up
to the number of shares of stock authorized under the Plan.

 

(b) The Company shall seek to obtain from each regulatory commission or agency
having jurisdiction over the Plan such authority as may be required to issue and
sell shares of stock under the Stock Awards granted under the Plan; provided,
however, that this undertaking shall not require the Company to register under
the Securities Act either the Plan, any Stock Award granted under the Plan or
any stock issued or issuable pursuant to any such Stock Award. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell stock under such Stock
Awards unless and until such authority is obtained.

 

9. USE OF PROCEEDS FROM STOCK.

 

Proceeds from the sale of stock pursuant to Stock Awards granted under the Plan
shall constitute general funds of the Company.

 

10. MISCELLANEOUS.

 

(a) The Board or the Committee shall have the power to accelerate the time at
which a Stock Award may first be exercised or the time during which a Stock
Award or any part thereof will vest, notwithstanding the provisions in the Stock
Award stating the time at which it may first be exercised or the time during
which it will vest.

 

(b) The holder of a Stock Award (including any person to whom an option is
transferred under subparagraph 5(d)) shall not be deemed to be the holder of, or
to have any of the rights of a holder with respect to, any shares subject to
such Stock Award unless and until such person has satisfied all requirements for
acquisition of the shares subject to the Stock Award pursuant to the terms of
the Stock Award Agreement.

 

(c) Nothing in the Plan or any instrument executed or Stock Award granted
pursuant thereto shall confer upon any eligible employee, consultant or director
or the holder of Stock Awards any right to continue in the employ of the Company
or any Affiliate (or to continue acting as a consultant or director) or shall
affect the right of the Company or any Affiliate to terminate the employment or
consulting relationship or directorship of any eligible employee, consultant or
director or other holder of Stock Awards with or without cause. In the event
that a holder of Stock Awards is permitted or

 

9

--------------------------------------------------------------------------------

otherwise entitled to take a leave of absence, the Company shall have the
unilateral right to (i) determine whether such leave of absence will be treated
as a termination of employment or relationship as consultant or director for
purposes of the Plan and corresponding provisions of any outstanding Stock
Awards, and (ii) suspend or otherwise delay the time or times at which the
shares subject to the Stock Awards would otherwise vest.

 

(d) To the extent that the aggregate fair market value (determined at the time
of grant) of stock with respect to which incentive stock options (as defined in
the Code) granted after 1986 are exercisable for the first time by any optionee
during any calendar year under all plans of the Company and its Affiliates
exceeds one hundred thousand dollars ($100,000), the options or portions thereof
which exceed such limit (according to the order in which they were granted)
shall be treated as Nonstatutory Stock Options.

 

11. ADJUSTMENTS UPON CHANGES IN STOCK.

 

(a) If any change is made in the stock subject to the Plan, or subject to any
Stock Award granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and outstanding
Stock Awards will be appropriately adjusted in the class(es) and maximum number
of shares subject to the Plan and the class(es) and number of shares and price
per share of stock subject to outstanding Stock Awards.

 

(b) In the event of: (1) a dissolution or liquidation of the Company; (2) a
merger or consolidation in which the Company is not the surviving corporation;
(3) a reverse merger in which the Company is the surviving corporation but the
shares of the Company’s common stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise; or (4) any other capital reorganization
in which more than fifty percent (50%) of the shares of the Company entitled to
vote are exchanged, excluding in each case a capital reorganization in which the
sole purpose is to change the state of incorporation on the Company, then all
outstanding options shall become exercisable in full for a period of at least
ten (10) days, and all stock bonuses shall be fully vested, prior to such event.
Outstanding options which have not been exercised prior to such event shall
terminate on the date of such event unless assumed by a successor corporation.

 

12. AMENDMENT OF THE PLAN.

 

(a) The Board at any time, and from time to time, may amend the Plan. However,
except as provided in paragraph 11 relating to adjustments upon changes in
stock, no amendment shall be effective unless approved by the stockholders of
the Company to the extent such amendment requires stockholder approval in order
for the Plan to satisfy the requirements of Section 422 of the Code, to comply
with the requirements of Rule 16b-3 promulgated under the Exchange Act or to
satisfy any Nasdaq or securities exchange listing requirements.

 

10

--------------------------------------------------------------------------------

(b) The Board may in its sole discretion submit any other amendment to the Plan
for stockholder approval, including, but not limited to, amendments to the Plan
intended to satisfy the requirements of Section 162(m) of the Code and the
regulations promulgated thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
certain executive officers.

 

(c) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide optionees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to employee Incentive Stock
Options and/or to bring the Plan and/or Incentive Stock Options granted under it
into compliance therewith.

 

(d) Rights under any Stock Award granted before amendment of the Plan shall not
be impaired by any amendment of the Plan unless (i) the Company requests the
consent of the person to whom the Stock Award was granted and (ii) such person
consents in writing.

 

13. TERMINATION OR SUSPENSION OF THE PLAN.

 

(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on the day before the tenth anniversary of
the date the Plan is adopted or the date the Plan is approved by the
stockholders, whichever is earlier. No Stock Awards may be granted under the
Plan while the Plan is suspended or after it is terminated.

 

(b) Rights and obligations under any Stock Award granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the Stock Award was granted.

 

14. EFFECTIVE DATE OF PLAN.

 

The Plan becomes effective on the date approved by the Board, but no stock
bonuses shall be granted and no options shall be exercised unless and until the
Plan has been approved by the stockholders of the Company, which approval shall
be within twelve (12) months before or after the date the Plan is adopted by the
Board.

 

11