Exhibit 10.2

UNI-PIXEL, INC.

 

2007 STOCK INCENTIVE PLAN

 

1.             Purposes of the Plan.  The purposes of this Stock Incentive Plan
are to attract and retain the best available personnel, to provide additional
incentive to Employees, Directors and Consultants and to promote the success of
the Corporation’s business.

 

2.             Definitions.

 

2.01.        Certain Defined Terms. As used herein, the following definitions
shall apply:

 

“Administrator” means the Board or any of the Committees appointed to administer
the Plan.

 

“Affiliate” and “Associate” shall have the respective meanings ascribed to such
terms in Rule 12b-2 promulgated under the Exchange Act.

 

“Applicable Laws” means the legal requirements relating to the administration of
stock incentive plans, if any, under applicable provisions of federal securities
laws, state corporate and securities laws, the Code, the rules of any applicable
stock exchange or national market system, and the rules of any foreign
jurisdiction applicable to Awards granted to residents therein.

 

“Assumed” means that (i) pursuant to a Corporate Transaction (as defined in
section (i), (ii), or (iii) of the definition of such term) or a Related Entity
Disposition, the contractual obligations represented by the Award are assumed by
the successor entity or its Parent in connection with the Corporate Transaction
or Related Entity Disposition or (ii) pursuant to a Corporate Transaction (as
defined in sections (iv) or (v) of the definition of such term), the Award is
affirmed by the Corporation. The Award shall not be deemed “Assumed” for
purposes of terminating the Award (in the case of a Corporate Transaction) and
the termination of the Continuous Service of the Grantee (in the case of a
Related Entity Disposition) if pursuant to a Corporate Transaction or a Related
Entity Disposition the Award is replaced with a comparable award with respect to
shares of capital stock of the successor entity or its Parent.  However, for
purposes of determining whether the vesting of the Award accelerates, the Award
shall be deemed “Assumed” if the Award is replaced with such a comparable stock
award or the Award is replaced with a cash incentive program of the successor
entity or Parent thereof which preserves the compensation element of such Award
existing at the time of the Corporate Transaction or Related Entity Disposition
and provides for subsequent payout in accordance with the same vesting schedule
applicable to such Award.

 

The determination of Award comparability shall be made by the Administrator and
its determination shall be final, binding and conclusive.

 

“Award” means the grant of an Option, SAR, Dividend Equivalent Right, Restricted
Stock, Performance Unit, Performance Share, or other right or benefit under the
Plan.

 

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“Award Agreement” means the written agreement evidencing the grant of an Award
executed by the Corporation and the Grantee, including any amendments thereto.

 

“Board” means the Board of Directors of the Corporation.

 

“Cause” means, with respect to the termination by the Corporation or a Related
Entity of the Grantee’s Continuous Service, that such termination is for “Cause”
as such term is expressly defined in a then-effective written agreement between
the Grantee and the Corporation or such Related Entity, or in the absence of
such then-effective written agreement and definition, is based on, in the
determination of the Administrator, the Grantee’s: (i) performance of any act or
failure to perform any act in bad faith and to the detriment of the Corporation
or a Related Entity; (ii) dishonesty, intentional misconduct or material breach
of any agreement with the Corporation or a Related Entity; or (iii) commission
of a crime involving dishonesty, breach of trust, or physical or emotional harm
to any person.

 

“Change in Control” means a change in ownership or control of the Corporation
after the Registration Date effected through either of the following
transactions: (i) the direct or indirect acquisition by any person or related
group of persons (other than an acquisition from or by the Corporation or by a
Corporation-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation’s outstanding securities pursuant
to a tender or exchange offer made directly to the Corporation’s stockholders
which a majority of the Continuing Directors who are not Affiliates or
Associates of the offeror do not recommend such stockholders accept, or (ii) a
change in the composition of the Board over a period of thirty-six (36) months
or less such that a majority of the Board members (rounded up to the next whole
number) ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who are Continuing Directors.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Committee” means any committee appointed by the Board to administer the Plan.

 

“Common Stock” means the common stock of the Corporation.

 

“Corporation” means Uni-Pixel, Inc., a Delaware corporation.

 

“Consultant” means any person (other than an Employee or a Director, solely with
respect to rendering services in such person’s capacity as a Director) who is
engaged by the Corporation or any Related Entity to render consulting or
advisory services to the Corporation or such Related Entity.

 

“Continuing Directors” means members of the Board who either (i) have been Board
members continuously for a period of at least thirty-six (36) months or (ii)
have been Board members for less than thirty-six (36) months and were elected or
nominated for election as Board members by at least a majority of the Board
members described in clause (i) who were still in office at the time such
election or nomination was approved by the Board.

 

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“Continuous Service” means that the provision of services to the Corporation or
a Related Entity in any capacity of Employee, Director or Consultant, is not
interrupted or terminated. Continuous Service shall not be considered
interrupted in the case of (i) any approved leave of absence, (ii) transfers
among the Corporation, any Related Entity, or any successor, in any capacity of
Employee, Director or Consultant, or (iii) any change in status as long as the
individual remains in the service of the Corporation or a Related Entity in any
capacity of Employee, Director or Consultant (except as otherwise provided in
the Award Agreement). An approved leave of absence shall include sick leave,
military leave, or any other authorized personal leave.  For purposes of each
Incentive Stock Option granted under the Plan, if such leave exceeds ninety (90)
days, and reemployment upon expiration of such leave is not guaranteed by
statute or contract, then the Incentive Stock Option shall be treated as a
Non-Qualified Stock Option on the day three (3) months and one (1) day following
the expiration of such ninety (90) day period.

 

“Corporate Transaction” means any of the following transactions: (i) a merger or
consolidation in which the Corporation is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the
Corporation is incorporated; (ii) the sale, transfer or other disposition of all
or substantially all of the assets of the Corporation (including the capital
stock of the Corporation’s subsidiary corporations); (iii) approval by the
Corporation’s stockholders of any plan or proposal for the complete liquidation
or dissolution of the Corporation; (iv) any reverse merger in which the
Corporation is the surviving entity but in which securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation’s
outstanding securities are transferred to a person or persons different from
those who held such securities immediately prior to such merger; or (v)
acquisition by any person or related group of persons (other than the
Corporation or by a Corporation-sponsored employee benefit plan) of beneficial
ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of
the Corporation’s outstanding securities (whether or not in a transaction also
constituting a Change in Control) but excluding any such transaction that the
Administrator determines shall not be a Corporate Transaction.

 

“Covered Employee” means an Employee who is a “covered employee” under Section
162(m)(3) of the Code.

 

“Director” means a member of the Board or the board of directors of any Related
Entity.

 

“Disability” means as defined under the long-term disability policy of the
Corporation or the Related Entity to which the Grantee provides services
regardless of whether the Grantee is covered by such policy. If the Corporation
or the Related Entity to which the Grantee provides service does not have a
long-term disability plan in place, “Disability” means that a Grantee is unable
to carry out the responsibilities and functions of the position held by the
Grantee by reason of any medically determinable physical or mental impairment. A
Grantee will not be considered to have incurred a Disability unless he or she
furnishes proof of such impairment sufficient to satisfy the Administrator in
its discretion.

 

“Dividend Equivalent Right” means a right entitling the Grantee to compensation
measured by dividends paid with respect to Common Stock.

 

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“Employee” means any person, including an Officer or Director, who is in the
employ of the Corporation or any Related Entity, subject to the control and
direction of the Corporation or any Related Entity as to both the work to be
performed and the manner and method of performance. The payment of a director’s
fee by the Corporation or a Related Entity shall not be sufficient to constitute
“employment” by the Corporation.

 

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

 

“Fair Market Value” means, as of any date, the value of Common Stock determined
as follows: (i) where there exists a public market for the Common Stock, the
Fair Market Value shall be (A) the closing price for a Share on the date of the
determination (or, if no closing price was reported on that date, on the last
trading date on which a closing price was reported) on the stock exchange
determined by the Administrator to be the primary market for the Common Stock or
the NASDAQ National Market, whichever is applicable or (B) if the Common Stock
is not traded on any such exchange or national market system, the average of the
closing bid and asked prices of a Share on the NASDAQ Small Cap Market on the
date of the determination (or, if no such prices were reported on that date, on
the last date on which such prices were reported), in each case, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable; or (ii) in the absence of an established market for the Common Stock
of the type described in (i), above, the Fair Market Value thereof shall be
determined by the Administrator in good faith.

 

“Good Reason” means the occurrence after a Corporate Transaction, Change in
Control or Related Entity Disposition of any of the following events or
conditions unless consented to by the Grantee (and the Grantee shall be deemed
to have consented to any such event or condition unless the Grantee provides
written notice of the Grantee’s non-acquiescence within 30 days of the effective
time of such event or condition): (i) a change in the Grantee’s responsibilities
or duties which represents a material and substantial diminution in the
Grantee’s responsibilities or duties as in effect immediately preceding the
consummation of a Corporate Transaction, Change in Control or Related Entity
Disposition; (ii) a reduction in the Grantee’s base salary to a level below that
in effect at any time within six (6) months preceding the consummation of a
Corporate Transaction, Change in Control or Related Entity Disposition or at any
time thereafter; or (iii) requiring the Grantee to be based at any place outside
a [____]-mile radius from the Grantee’s job location prior to the Corporate
Transaction, Change in Control or Related Entity Disposition except for
reasonably required travel on business which is not materially greater than such
travel requirements prior to the Corporate Transaction, Change in Control or
Related Entity Disposition.

 

“Grantee” means an Employee, Director or Consultant who receives an Award under
the Plan.

 

“Immediate Family” means any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in law, daughter-in-law, brother-in-law, or sister-in-law,
including adoptive relationships, any person sharing the Grantee’s household
(other than a tenant or employee), a trust in which these persons (or the
Grantee) have more than fifty percent (50%) of the beneficial interest, a
foundation in which these persons (or the Grantee) control the management of
assets, and any other entity in which these persons (or the Grantee) own more
than fifty percent (50%) of the voting interests.

 

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“Incentive Stock Option” means an Option intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.

 

“Non-Qualified Stock Option” means an Option not intended to qualify as an
Incentive Stock Option.

 

“Officer” means a person who is an officer of the Corporation or a Related
Entity within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

 

“Option” means an option to purchase Shares pursuant to an Award Agreement
granted under the Plan.

 

“Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.

 

“Performance-Based Compensation” means compensation qualifying as
“performance-based compensation” under Section 162(m) of the Code.

 

“Performance Shares” means Shares or an Award denominated in Shares which may be
earned in whole or in part upon attainment of performance criteria established
by the Administrator.

 

“Performance Units” means an Award which may be earned in whole or in part upon
attainment of performance criteria established by the Administrator and which
may be settled for cash, Shares or other securities or a combination of cash,
Shares or other securities as established by the Administrator.

 

“Plan” means this 2007 Stock Incentive Plan.

 

“Registration Date” means the first to occur of (i) the closing of the first
sale to the general public pursuant to a registration statement filed with and
declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended, of (A) the Common Stock or (B) the same
class of securities of a successor corporation (or its Parent) issued pursuant
to a Corporate Transaction in exchange for or in substitution of the Common
Stock; and (ii) in the event of a Corporate Transaction, the date of the
consummation of the Corporate Transaction if the same class of securities of the
successor corporation (or its Parent) issuable in such Corporate Transaction
shall have been sold to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended, on or prior to the date of
consummation of such Corporate Transaction.

 

“Related Entity” means any Parent, Subsidiary and any business, corporation,
partnership, limited liability company or other entity in which the Corporation,
a Parent or a Subsidiary holds a substantial ownership interest, directly or
indirectly.

 

“Related Entity Disposition” means the sale, distribution or other disposition
by the Corporation, a Parent or a Subsidiary of all or substantially all of the
interests

 

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of the Corporation, a Parent or a Subsidiary in any Related Entity effected by a
sale, merger or consolidation or other transaction involving that Related Entity
or the sale of all or substantially all of the assets of that Related Entity,
other than any Related Entity Disposition to the Corporation, a Parent or a
Subsidiary.

 

“Restricted Stock” means Shares issued under the Plan to the Grantee for such
consideration, if any, and subject to such restrictions on transfer, rights of
first refusal, repurchase provisions, forfeiture provisions, and other terms and
conditions as established by the Administrator.

 

“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any
successor thereto.

 

“SAR” means a stock appreciation right entitling the Grantee to Shares or cash
compensation, as established by the Administrator, measured by appreciation in
the value of Common Stock.

 

“Share” means a share of the Common Stock.

 

“Subsidiary” means a “subsidiary corporation,” whether now or hereafter
existing, as defined in Section 424(f) of the Code.

 

2.02.        Other Defined Terms. Other capitalized terms not defined above in
Section 2.01 of this plan shall have the meanings provided elsewhere in this
plan.

 

3.             Stock Subject to the Plan.

 

3.01.        Fixed Share Limit.  Subject to the provisions of Section 10, below,
the maximum aggregate number of Shares which may be issued pursuant to all
Awards (including Incentive Stock Options) is Four Million (4,000,000) Shares.
The Shares to be issued pursuant to Awards may be authorized, but unissued, or
reacquired Common Stock.

 

3.02.        Shares Deemed Not Issued.  Any Shares covered by an Award (or
portion of an Award) which is forfeited or canceled, expires or is settled in
cash, shall be deemed not to have been issued for purposes of  determining the
maximum aggregate number of Shares which may be issued under the Plan. Shares
that actually have been issued under the Plan pursuant to an Award shall not be
returned to the Plan and shall not become available for future issuance under
the Plan, except that if unvested Shares are forfeited, or repurchased by the
Corporation at their original purchase price, such Shares shall become available
for future grant under the Plan.

 

4.             Administration of the Plan.

 

4.01.        Plan Administrator.

 

(a)           Administration with Respect to Directors and Officers. With
respect to grants of Awards to Directors or Employees who are also Officers or
Directors of the Corporation, the Plan shall be administered by (i) the Board or
(ii) a Committee designated by the Board, which Committee shall be constituted
in such a manner as to satisfy the Applicable Laws and to permit such grants and
related transactions under the Plan to be exempt from

 

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Section 16(b) of the Exchange Act in accordance with Rule 16b-3. Once appointed,
such Committee shall continue to serve in its designated capacity until
otherwise directed by the Board.

 

(b)           Administration with Respect to Consultants and Other Employees. 
With respect to grants of Awards to Employees or Consultants who are neither
Directors nor Officers of the Corporation, the Plan shall be administered by (i)
the Board or (ii) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy the Applicable Laws. Once appointed,
such Committee shall continue to serve in its designated capacity until
otherwise directed by the Board. The Board may authorize one or more Officers to
grant such Awards and may limit such authority as the Board determines from time
to time.

 

(c)           Administration with Respect to Covered Employees.  Notwithstanding
the foregoing, grants of Awards to any Covered Employee intended to qualify as
Performance-Based Compensation shall be made only by a Committee (or
subcommittee of a Committee) which is comprised solely of two or more Directors
eligible to serve on a committee making Awards qualifying as Performance-Based
Compensation. In the case of such Awards granted to Covered Employees,
references to the “Administrator” or to a “Committee” shall be deemed to be
references to such Committee or subcommittee.

 

(d)           Administration Errors.  In the event an Award is granted in a
manner inconsistent with the provisions of this Section 4.01, such Award shall
be presumptively valid as of its grant date to the extent permitted by the
Applicable Laws.

 

4.02.        Powers of the Administrator.  Subject to Applicable Laws and the
provisions of the Plan (including any other powers given to the Administrator
hereunder), and except as other wise provided by the Board, the Administrator
shall have the authority, in its discretion:

 

(a)           to select the Employees, Directors and Consultants to whom Awards
may be granted from time to time hereunder;

 

(b)           to determine whether and to what extent Awards are granted
hereunder;

 

(c)           to determine the number of Shares or the amount of other
consideration to be covered by each Award granted hereunder;

 

(d)           to approve forms of Award Agreements for use under the Plan;

 

(e)           to determine the terms and conditions of any Award granted
hereunder;

 

(f)            to amend the terms of any outstanding Award granted under the
Plan, provided that any amendment that would adversely affect the Grantee’s
rights under an outstanding Award shall not be made without the Grantee’s
written consent;

 

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(g)           to construe and interpret the terms of the Plan and Awards,
including with out limitation, any notice of Award or Award Agreement, granted
pursuant to the Plan;

 

(h)           to establish additional terms, conditions, rules or procedures to
accommodate the rules or laws of applicable foreign jurisdictions and to afford
Grantees favorable treatment under such rules or laws; provided, however, that
no Award shall be granted under any such additional terms, conditions, rules or
procedures with terms or conditions which are inconsistent with the provisions
of the Plan; and

 

(i)            to take such other action, not inconsistent with the terms of the
Plan, as the Administrator deems appropriate.

 

5.             Eligibility.  Awards other than Incentive Stock Options may be
granted to Employees, Directors and Consultants. Incentive Stock Options may be
granted only to Employees of the Corporation, a Parent or a Subsidiary. An
Employee, Director or Consultant who has been granted an Award may, if otherwise
eligible, be granted additional Awards. Awards may be granted to such Employees,
Directors or Consultants who are residing in foreign jurisdictions as the
Administrator may determine from time to time.

 

6.             Terms and Conditions of Awards.

 

6.01.        Type of Awards.  The Administrator is authorized under the Plan to
award any type of arrangement to an Employee, Director or Consultant that is not
inconsistent with the provisions of the Plan and that by its terms involves or
might involve the issuance of (i) Shares, (ii) an Option, a SAR, or similar
right with a fixed or variable price related to the Fair Market Value of the
Shares and with an exercise or conversion privilege related to the passage of
time, the occurrence of one or more events, or the satisfaction of performance
criteria or other conditions, or (iii) any other security with the value derived
from the value of the Shares. Such awards include, without limitation, Options,
SARs, or sales or bonuses of Restricted Stock, Dividend Equivalent Rights,
Performance Units or Performance Shares, and an Award may consist of one such
security or benefit, or two (2) or more of them in any combination or
alternative.

 

6.02.        Designation of Award.  Each Award shall be designated in the Award
Agreement.  In the case of an Option, the Option shall be designated as either
an Incentive Stock Option or a Non-Qualified Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of Shares subject to Options designated as Incentive Stock Options which
become exercisable for the first time by a Grantee during any calendar year
(under all plans of the Corporation or any Parent or Subsidiary) exceeds
$100,000, such excess Options, to the extent of the Shares covered thereby in
excess of the foregoing limitation, shall be treated as Non-Qualified Stock
Options. For this purpose, Incentive Stock Options shall be taken into account
in the order in which they were granted, and the Fair Market Value of the Shares
shall be determined as of the grant date of the relevant Option.

 

6.03.        Conditions of Award.  Subject to the terms of the Plan, the
Administrator shall determine the provisions, terms, and conditions of each
Award including, but not limited to, the Award vesting schedule, repurchase
provisions, rights of first refusal, forfeiture provisions, form of payment
(cash, Shares, or other consideration) upon settlement of the Award, payment

 

 

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contingencies, and satisfaction of any performance criteria. The performance
criteria established by the Administrator may be based on any one of, or
combination of, increase in share price, earnings per share, total stockholder
return, return on equity, return on assets, return on investment, net operating
income, cash flow, revenue, economic value added, personal management
objectives, or other measure of performance selected by the Administrator.
Partial achievement of the specified criteria may result in a payment or vesting
corresponding to the degree of achievement as specified in the Award Agreement.

 

6.04.        Acquisitions and Other Transactions.  The Administrator may issue
Awards under the Plan in settlement, assumption or substitution for, outstanding
awards or obligations to grant future awards in connection with the Corporation
or a Related Entity acquiring another entity, an interest in another entity or
an additional interest in a Related Entity whether by merger, stock purchase,
asset purchase or other form of transaction.

 

6.05         Deferral of Award Payment.  The Administrator may establish one or
more programs under the Plan to permit selected Grantees the opportunity to
elect to defer receipt of consideration upon exercise of an Award, satisfaction
of performance criteria, or other event that absent the election would entitle
the Grantee to payment or receipt of Shares or other consideration under an
Award (but only to the extent that such deferral programs would not result in an
accounting compensation charge unless otherwise determined by the
Administrator). The Administrator may establish the election procedures, the
timing of such elections, the mechanisms for payments of, and accrual of
interest or other earnings, if any, on amounts, Shares or other consideration so
deferred, and such other terms, conditions, rules and procedures that the
Administrator deems advisable for the administration of any such deferral
program.

 

6.06.        Separate Programs.  The Administrator may establish one or more
separate programs under the Plan for the purpose of issuing particular forms of
Awards to one or more classes of Grantees on such terms and conditions as
determined by the Administrator from time to time.

 

6.07.        Individual Option and SAR Limit.  There shall be no limit to the
maximum number of Shares with respect to which Options and SARs may be granted
to any Grantee in any fiscal year of the Corporation, except to the extent
required by Section 162(m) of the Code or the regulations thereunder.

 

6.08.        Early Exercise.  The Award Agreement may, but need not, include a
provision whereby the Grantee may elect at any time while an Employee, Director
or Consultant to exercise any part or all of the Award prior to full vesting of
the Award. Any unvested Shares received pursuant to such exercise may be subject
to a repurchase right in favor of the Corporation or a Related Entity or to any
other restriction the Administrator determines to be appropriate.

 

6.09.        Term of Award.  The term of each Award shall be the term stated in
the Award Agreement, provided, however, that the term of an Incentive Stock
Option shall be no more than ten (10) years from the date of grant thereof.
However, in the case of an Incentive Stock Option granted to a Grantee 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 Corporation or any
Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5)

 

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years from the date of grant thereof or such shorter term as may be provided in
the Award Agreement.

 

6.10.        Transferability of Awards.  Incentive Stock Options may not be
sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Grantee, only by the Grantee; provided,
however, that the Grantee may designate a beneficiary of the Grantee’s Incentive
Stock Option in the event of the Grantee’s death on a beneficiary designation
form provided by the Administrator. Other Awards shall be transferred by will
and by the laws of descent and distribution, and during the lifetime of the
Grantee, by gift and/or pursuant to a domestic relations order to members of the
Grantee’s Immediate Family to the extent and in the manner determined by the
Administrator.

 

6.11.        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 to
grant such Award, or such other date as is determined by the Administrator.
Notice of the grant determination shall be given to each Employee, Director or
Consultant to whom an Award is so granted within a reasonable time after the
date of such grant.

 

7.             Award Exercise or Purchase Price, Consideration and Taxes.

 

7.01.        Exercise or Purchase Price.  The exercise or purchase price, if
any, for an Award shall be as follows:

 

(a)           In the case of an Incentive Stock Option:

 

(i)            granted to an Employee who, at the time of the grant of such
Incentive Stock Option owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Corporation or any Parent or
Subsidiary, the per Share exercise price shall be not less than one hundred ten
percent (110%) of the Fair Market Value per Share on the date of grant; or

 

(ii)           granted to any Employee other than an Employee described in the
preceding paragraph, the per Share exercise price shall be not less than one
hundred percent (100%) of the Fair Market Value per Share on the date of grant.

 

(b)           In the case of a Non-Qualified Stock Option, the per Share
exercise price shall be not less than eighty-five percent (85%) of the Fair
Market Value per Share on the date of grant unless otherwise determined by the
Administrator.

 

(c)           In the case of Awards intended to qualify as Performance-Based
Compensation, the exercise or purchase price, if any, shall be not less than one
hundred percent (100%) of the Fair Market Value per Share on the date of grant.

 

(d)           In the case of other Awards, such price as is determined by the
Administrator.

 

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(e)           Notwithstanding the foregoing provisions of this Section 7.01, in
the case of an Award issued pursuant to Section 6.04, above, the exercise or
purchase price for the Award shall be determined in accordance with the
principles of Section 424(a) of the Code.

 

7.02.        Consideration.  Subject to Applicable Laws, the consideration to be
paid for the Shares to be issued upon exercise or purchase of an Award 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). In
addition to any other types of consideration the Administrator may determine,
the Administrator is authorized to accept as consideration for Shares issued
under the Plan the following; provided, however, that the portion of the
consideration equal to the par value of the Shares must be paid in cash or other
legal consideration permitted by the Delaware General Corporation Law:

 

(a)           cash;

 

(b)           check;

 

(c)           delivery of Grantee’s promissory note with such recourse,
interest, security, and redemption provisions as the Administrator determines as
appropriate;

 

(d)           if the exercise or purchase occurs on or after the Registration
Date, surrender of Shares or delivery of a properly executed form of attestation
of ownership of Shares as the Administrator may require (including withholding
of Shares otherwise deliverable upon exercise of the Award) which have a Fair
Market Value on the date of surrender or attestation equal to the aggregate
exercise price of the Shares as to which said Award shall be exercised (but only
to the extent that such exercise of the Award would not result in an accounting
compensation charge with respect to the Shares used to pay the exercise price
unless otherwise determined by the Administrator);

 

(e)           with respect to Options, if the exercise occurs on or after the
Registration Date, payment through a broker-dealer sale and remittance procedure
pursuant to which the Grantee (A) shall provide written instructions to a
Corporation-designated brokerage firm to effect the immediate sale of some or
all of the purchased Shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased Shares and (B) shall provide
written directives to the Corporation to deliver the certificates for the
purchased Shares directly to such brokerage firm in order to complete the sale
transaction; or

 

(f)            any combination of the foregoing methods of payment.

 

7.03.        Taxes.  No Shares shall be delivered under the Plan to any Grantee
or other person until such Grantee or other person has made arrangements
acceptable to the Administrator for the satisfaction of any foreign, federal,
state, or local income and employment tax withholding obligations, including,
without limitation, obligations incident to the receipt of Shares or the
disqualifying disposition of Shares received on exercise of an Incentive Stock
Option. Upon exercise of an Award, the Corporation shall withhold or collect
from Grantee an amount sufficient to satisfy such tax obligations.

 

8.             Exercise of Award.

 

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8.01.        Procedure for Exercise; Rights as a Stockholder.

 

(a)           Any Award granted hereunder shall be exercisable at such times and
under such conditions as determined by the Administrator under the terms of the
Plan and specified in the Award Agreement.

 

(b)           An Award shall be deemed to be exercised when written notice of
such exercise has been given to the Corporation in accordance with the terms of
the Award by the person entitled to exercise the Award and full payment for the
Shares with respect to which the Award is exercised, including, to the extent
selected, use of the broker-dealer sale and remittance procedure to pay the
purchase price as provided in Section 7.02(e). Until the issuance (as evidenced
by the appropriate entry on the books of the Corporation or of a duly authorized
transfer agent of the Corporation) of the stock certificate evidencing such
Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to Shares subject to an Award,
notwithstanding the exercise of an Option or other Award. The Corporation shall
issue (or cause to be issued) such stock certificate promptly upon exercise of
the Award. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except as
provided in the Award Agreement or Section 10, below.

 

8.02.        Exercise of Award Following Termination of Continuous Service.

 

(a)           An Award may not be exercised after the termination date of such
Award set forth in the Award Agreement and may be exercised following the
termination of a Grantee’s Continuous Service only to the extent provided in the
Award Agreement.

 

(b)           Where the Award Agreement permits a Grantee to exercise an Award
following the termination of the Grantee’s Continuous Service for a specified
period, the Award shall terminate to the extent not exercised on the last day of
the specified period or the last day of the original term of the Award,
whichever occurs first.

 

(c)           Any Award designated as an Incentive Stock Option to the extent
not exercised within the time permitted by law for the exercise of Incentive
Stock Options following the termination of a Grantee’s Continuous Service shall
convert automatically to a Non-Qualified Stock Option and thereafter shall be
exercisable as such to the extent exercisable by its terms for the period
specified in the Award Agreement.

 

9.             Conditions upon Issuance of Shares. 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 pursuant thereto shall comply with all
Applicable Laws, and shall be further subject to the approval of counsel for the
Corporation with respect to such compliance. As a condition to the exercise of
an Award, the Corporation 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 Corporation, such a
representation is required by any Applicable Laws.

 

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10.           Adjustments upon Changes in Capitalization.  Subject to any
required action by the stockholders of the Corporation, the number of Shares
covered by each outstanding Award, and the number of Shares which have been
authorized for issuance under the Plan but as to which no Awards have yet been
granted or which have been returned to the Plan, the exercise or purchase price
of each such outstanding Award, the maximum number of Shares with respect to
which Options and SARs may be granted to any Grantee in any fiscal year of the
Corporation, as well as any other terms that the Administrator determines
require adjustment shall be proportionately adjusted for (a) any increase or
decrease in the number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Shares, or
similar transaction affecting the Shares, (b) any other increase or decrease in
the number of issued Shares effected without receipt of consideration by the
Corporation, or (c) as the Administrator may determine in its discretion, any
other transaction with respect to Common Stock to which Section 424(a) of the
Code applies or a similar transaction; provided, however that conversion of any
convertible securities of the Corporation shall not be deemed to have been
“effected without receipt of consideration.” Such adjustment shall be made by
the Administrator and its determination shall be final, binding and conclusive.
Except as the Administrator determines, no issuance by the Corporation of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason hereof shall be made with
respect to, the number or price of Shares subject to an Award.

 

11.           Corporate Transactions/Changes in Control /Related Entity
Dispositions.

 

11.01.      Termination of Award to Extent Not Assumed.

 

(a)           Corporate Transaction.  Effective upon the consummation of a
Corporate Transaction, all outstanding Awards under the Plan shall terminate;
provided, however, that all such Awards shall not terminate to the extent they
are Assumed in connection with the Corporate Transaction.

 

(b)           Related Entity Disposition.  Effective upon the consummation of a
Related Entity Disposition, for purposes of the Plan and all Awards, there shall
be a deemed termination of Continuous Service of each Grantee who is at the time
engaged primarily in service to the Related Entity involved in such Related
Entity Disposition and each Award of such Grantee which is at the time
outstanding under the Plan shall be exercisable in accordance with the terms of
the Award Agreement evidencing such Award. However, such Continuous Service
shall not be deemed to terminate as to the portion of any such award that is
Assumed.

 

11.02.      Acceleration of Award upon Corporate Transaction/Change in
Control/Related Entity Disposition.

 

(a)           Corporate Transaction.  Except as provided otherwise in an
individual Award Agreement, in the event of a Corporate Transaction and:

 

(i)            for the portion of each Award that is Assumed, then such Award
(if assumed), the replacement Award (if replaced), or the cash incentive program
automatically shall become fully vested, exercisable and payable and be released
from any repurchase or forfeiture rights (other than repurchase rights
exercisable at Fair Market Value) for all of the Shares at the time represented
by such Assumed portion of the Award, immediately upon termination of the
Grantee’s Continuous Service (substituting the successor employer

 

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corporation, if any, for “Corporation or Related Entity” for the definition of
“Continuous Service”) if such Continuous Service is terminated by the successor
company or the Corporation without Cause or voluntarily by the Grantee with Good
Reason within twelve (12) months of the Corporate Transaction; and

 

(ii)           for the portion of each Award that is not Assumed, such portion
of the Award shall automatically become fully vested and exercisable and be
released from any repurchase or forfeiture rights (other than repurchase rights
exercisable at Fair Market Value) for all of the Shares at the time represented
by such portion of the Award, immediately prior to the specified effective date
of such Corporate Transaction.

 

(b)           Change in Control.  Except as provided otherwise in an individual
Award Agreement, following a Change in Control (other than a Change in Control
which also is a Corporate Transaction) and upon the termination of the
Continuous Service of a Grantee if such Continuous Service is terminated by the
Corporation or Related Entity without Cause or voluntarily by the Grantee with
Good Reason within twelve (12) months of a Change in Control, each Award of such
Grantee which is at the time outstanding under the Plan automatically shall
become fully vested and exercisable and be released from any repurchase or
forfeiture rights (other than repurchase rights exercisable at Fair Market
Value), immediately upon the termination of such Continuous Service.

 

(c)           Related Entity Disposition  Except as provided otherwise in an
individual Award Agreement, in the event of a Related Entity Disposition and:

 

(i)            for the portion of each Award that is Assumed, then such Award
(if assumed), the replacement Award (if replaced), or the cash incentive program
automatically shall become vested, exercisable and payable and be released from
any repurchase or forfeiture rights (other than repurchase rights exercisable at
Fair Market Value) for all of the Shares at the time represented by such Assumed
portion of the Award, immediately upon termination of the Grantee’s Continuous
Service (substituting the successor employer corporation, if any, for
“Corporation or Related Entity” for the definition of “Continuous Service”) if
such Continuous Service is terminated by the successor company without Cause or
voluntarily by the Grantee with Good Reason within twelve (12) months of the
Related Entity Disposition; and

 

(ii)           for the portion of each Award of a Grantee who is at the time
engaged primarily in service to the Related Entity involved in such Related
Entity Disposition that is not Assumed, such portion of the Award of such
Grantee automatically shall become fully vested and exercisable and be released
from any repurchase or forfeiture rights (other than repurchase rights
exercisable at Fair Market Value) for all of the Shares at the time represented
by such portion of the Award, immediately prior to the specified effective date
of such Related Entity Disposition.

 

(d)           Effect of Acceleration on Incentive Stock Options.  The portion of
any Incentive Stock Option accelerated under this Section 11 in connection with
a Corporate Transaction, Change in Control or Related Entity Disposition shall
remain exercisable as an Incentive Stock Option under the Code only to the
extent the $100,000 dollar limitation of Section 422(d) of the Code is not
exceeded. To the extent such dollar limitation is exceeded, the accelerated
excess portion of such Option shall be exercisable as a Non-Qualified Stock
Option.

 

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12.           Effective Date and Term of Plan.  The Plan shall become effective
upon the earlier to occur of its adoption by the Board or its approval by the
stockholders of the Corporation. It shall continue in effect for a term of ten
(10) years unless sooner terminated. Subject to Section 17, below, and
Applicable Laws, Awards may be granted under the Plan upon its becoming
effective.

 

13.           Amendment, Suspension or Termination of the Plan. The Board may at
any time amend, suspend or terminate the Plan. To the extent necessary to comply
with Applicable Laws, the Corporation shall obtain stockholder approval of any
Plan amendment in such a manner and to such a degree as required. No Award may
be granted during any suspension of the Plan or after termination of the Plan.
Any amendment, suspension or termination of the Plan (including termination of
the Plan under Section 12, above) shall not affect Awards already granted, and
such Awards shall remain in full force and effect as if the Plan had not been
amended, suspended or terminated, unless mutually agreed otherwise between the
Grantee and the Administrator, which agreement must be in writing and signed by
the Grantee and the Corporation.

 

14.           Reservation of Shares. The Corporation, during the term of the
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan. The inability of
the Corporation to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Corporation’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Corporation 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.

 

15.           No Effect on Terms of Employment/Consulting Relationship.  The
Plan shall not confer upon any Grantee any right with respect to the Grantee’s
Continuous Service, nor shall it interfere in any way with his or her right or
the Corporation’s right to terminate the Grantee’s Continuous Service at any
time, with or without Cause, and with or without notice. The Corporation’s
ability to terminate the employment of a Grantee who is employed at will is in
no way affected by its determination that the Grantee’s Continuous Service has
been terminated for Cause for the purposes of this Plan.

 

16.           No Effect on Retirement and Other Benefit Plans.  Except as
specifically provided in a retirement or other benefit plan of the Corporation
or a Related Entity, Awards shall not be deemed compensation for purposes of
computing benefits or contributions under any retirement plan of the Corporation
or a Related Entity, and shall not affect any benefits under any other benefit
plan of any kind or any benefit plan subsequently instituted under which the
availability or amount of benefits is related to level of compensation. The Plan
is not a “Retirement Plan” or “Welfare Plan” under the Employee Retirement
Income Security Act of 1974, as amended.

 

17.           Stockholder Approval.  The grant of Incentive Stock Options under
the Plan shall be subject to approval by the stockholders of the Corporation
within twelve (12) months before or after the date the Plan is adopted excluding
Incentive Stock Options issued in substitution for outstanding Incentive Stock
Options pursuant to Section 424(a) of the Code. Such stockholder approval shall
be obtained in the degree and manner required under Applicable Laws. The
Administrator may grant Incentive Stock Options under the Plan prior to approval
by the stockholders, but until such approval is obtained, no such Incentive
Stock Option shall be exercisable. In the event that stockholder approval is not
obtained within the twelve (12) month

 

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period provided above, all Incentive Stock Options previously granted under the
Plan shall be exercisable as Non-Qualified Stock Options.

 

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