Exhibit 10.2


 


TOWER TECH HOLDINGS INC.


2007 EQUITY INCENTIVE PLAN


 


SECTION 1.


DEFINITIONS


 


As used herein, the following terms shall have the meanings indicated
below:


 


(a)           “Administrator”  shall mean the Board of Directors of the
Company (herein after referred to as the “Board”), or one or more Committees
appointed by the Board, as the case may be.


 


(b)           “Affiliate(s)” shall
mean a Parent or Subsidiary of the Company.


 


(c)           “Award” shall mean any grant of an
Option, Restricted Stock Award, Stock Appreciation Right or Performance Award.


 


(d)           “Committee” shall mean a Committee of
two or more directors who shall be appointed by and serve at the pleasure of
the Board.  To the extent necessary for
compliance with Rule 16b-3, or any successor provision, each of the members
of the Committee shall be a “non-employee director.”  Solely for purposes of this Section 1(d),
“non-employee director” shall have the same meaning as set forth in Rule 16b-3,
or any successor provision, as then in effect, of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended.


 


(e)           The “Company” shall mean Tower Tech
Holdings Inc., a Nevada corporation.


 


(f)            “Fair Market Value”
as of any date shall mean (i) if such stock is listed on the Nasdaq Global
Market, Nasdaq Capital Market, or an established stock exchange, the price of
such stock at the close of the regular trading session of such market or
exchange on such date, as reported by The Wall Street Journal or a
comparable reporting service, or, if no sale of such stock shall have occurred
on such date, on the next preceding date on which there was a sale of stock; (ii) if
such stock is not so listed on the Nasdaq Global Market, Nasdaq Capital Market,
or an established stock exchange, the average of the closing “bid” and “asked”
prices quoted by the OTC Bulletin Board, the National Quotation Bureau, or any
comparable reporting service on such date or, if there are no quoted “bid” and “asked”
prices on such date, on the next preceding date for which there are such
quotes; or (iii) if such stock is not publicly traded as of such date, the
per share value as determined by the Board, or the Committee, in its sole
discretion by applying principles of valuation with respect to the Company’s
Common Stock.


 


(g)           The “Internal
Revenue Code” or “Code” is the Internal Revenue Code of 1986, as amended from
time to time.


 

















 


(h)           “Option” means an
incentive stock option or nonqualified stock option granted pursuant to the
Plan.


 


(i)            “Parent” shall mean
any corporation which owns, directly or indirectly in an unbroken chain, fifty
percent (50%) or more of the total voting power of the Company’s outstanding
stock.


 


(j)            The “Participant”
means (i) a key employee or officer of the Company or any Affiliate to
whom an incentive stock option has been granted pursuant to Section 9; (ii) a
consultant or advisor to, or director, key employee or officer, of the Company
or any Affiliate to whom a nonqualified stock option has been granted pursuant
to Section 10; (iii) a consultant or advisor to, or director, key
employee or officer, of the Company or any Affiliate to whom a Restricted Stock
Award has been granted pursuant to Section 11; (iv) a consultant or
advisor to, or director, key employee or officer, of the Company or any
Affiliate to whom a Performance Award has been granted pursuant to Section 12;
or (v) a consultant or advisor to, or director, key employee or officer,
of the Company or any Affiliate to whom a Stock Appreciation Right has been
granted pursuant to Section 13.


 


(k)           “Performance Award”
shall mean any Performance Shares or Performance Units granted pursuant to Section 12
hereof.


 


(l)            “Performance Objective(s)” shall
mean one or more performance objectives established by the Administrator, in
its sole discretion, for Awards granted under this Plan.  Performance Objectives may include, but shall
not be limited to, any one, or a combination of, (i) revenue, (ii) net
income, (iii) earnings per share, (iv) return on equity, (v) return
on assets, (vi) increase in revenue, (vii) increase in share price or
earnings, (viii) return on investment, or (ix) increase in market
share, in all cases including, if selected by the Administrator, threshold,
target and maximum levels.


 


(m)          “Performance Period”
shall mean the period, established at the time any Performance Award is granted
or at any time thereafter, during which any Performance Objectives specified by
the Administrator with respect to such Performance Award are to be measured.


 


(n)           “Performance Share”
shall mean any grant pursuant to Section 12 hereof of an Award, which
value, if any, shall be paid to a Participant by delivery of shares of Common
Stock of the Company upon achievement of such Performance Objectives during the
Performance Period as the Administrator shall establish at the time of such
grant or thereafter.


 


(o)           “Performance Unit”
shall mean any grant pursuant to Section 12 hereof of an Award, which
value, if any, shall be paid to a Participant by delivery of cash upon
achievement of such Performance Objectives during the Performance Period as the
Administrator shall establish at the time of such grant or thereafter.


 

















 


(p)           The “Plan” means the
Tower Tech Holdings Inc. 2007 Equity Incentive Plan, as amended hereafter from
time to time, including the form of Agreements as they may be modified by the
Administrator from time to time.


 


(q)           “Restricted Stock
Award” shall mean any grant of restricted shares of Stock of the Company
pursuant to Section 11 hereof.


 


(r)            “Stock,” “Option
Stock” or “Common Stock” shall mean the common stock, $0.001 par value of the
Company reserved for Options and Awards pursuant to this Plan.


 


(s)           “Stock Appreciation
Right” shall mean a grant pursuant to Section 13 hereof.


 


(t)            A “Subsidiary”
shall mean any corporation of which fifty percent (50%) or more of the total
voting power of the Company’s outstanding Stock is owned, directly or
indirectly in an unbroken chain, by the Company.


 


SECTION 2.


PURPOSE


 


The purpose of the Plan is to promote the success of the Company and
its Affiliates by facilitating the employment and retention of competent
personnel and by furnishing incentive to officers, directors, employees,
consultants, and advisors upon whose efforts the success of the Company and its
Affiliates will depend to a large degree.


 


It is the intention of the Company to carry out the Plan through the
granting of Options which will qualify as “incentive stock options” under the
provisions of Section 422 of the Internal Revenue Code, or any successor
provision, pursuant to Section 9 of this Plan; through the granting of “nonqualified
stock options” pursuant to Section 10 of this Plan; through the granting
of Restricted Stock Awards pursuant to Section 11 of this Plan; through
the granting of Performance Awards pursuant to Section 12 of this Plan;
and through the granting of Stock Appreciation Rights pursuant to Section 13
of this Plan.  Adoption of this Plan
shall be and is expressly subject to the condition of approval by the
stockholders of the Company within twelve (12) months before or after the adoption
of the Plan by the Board.  Any incentive
stock options granted after adoption of the Plan by the Board shall be treated
as nonqualified stock options if stockholder approval is not obtained within
such twelve-month period.


 


SECTION 3.


EFFECTIVE DATE OF PLAN


 


The Plan shall be effective as of the date of adoption by the Board,
subject to approval by the stockholders of the Company as required in Section 2.


 

















 


SECTION 4.


ADMINISTRATION


 


The Plan shall be administered by the Board or by a Committee which may
be appointed by the Board from time to time to administer the Plan (hereinafter
collectively referred to as the “Administrator”).  Except as otherwise provided herein, the
Administrator shall have all of the powers vested in it under the provisions of
the Plan, including but not limited to exclusive authority to determine, in its
sole discretion, whether an Award shall be granted; the individuals to whom,
and the time or times at which, Awards shall be granted; the number of shares
subject to each Award; the option price, if any; and the performance criteria,
if any, and any other terms and conditions of each Award.  The Administrator shall have full power and
authority to administer and interpret the Plan, to make and amend rules,
regulations and guidelines for administering the Plan, to prescribe the form
and conditions of the respective agreements evidencing each Award (which may
vary from Participant to Participant), and to make all other determinations
necessary or advisable for the administration of the Plan.  The Administrator’s interpretation of the
Plan, and all actions taken and determinations made by the Administrator
pursuant to the power vested in it hereunder, shall be conclusive and binding
on all parties concerned.


 


No member of the Board or the Committee shall be liable for any action
taken or determination made in good faith in connection with the administration
of the Plan.  In the event the Board
appoints a Committee as provided hereunder, any action of the Committee with
respect to the administration of the Plan shall be taken pursuant to a majority
vote of the Committee members or pursuant to the written resolution of all
Committee members.


 


SECTION 5.


PARTICIPANTS


 


The Administrator shall from time to time, at its discretion and without
approval of the stockholders, designate those employees, officers, directors,
consultants, and advisors of the Company or of any Affiliate to whom Awards
shall be granted under this Plan; provided, however, that consultants or
advisors shall not be eligible to receive Awards hereunder unless such
consultant or advisor renders bona fide services to the Company or any
Affiliate and such services are not in connection with the offer or sale of
securities in a capital raising transaction and do not directly or indirectly
promote or maintain a market for the Company’s securities.  The Administrator may grant additional Awards
under this Plan to some or all Participants then holding Awards, or may grant
Awards solely or partially to new Participants. In designating Participants,
the Administrator shall also determine the number of shares to be optioned or
awarded to each such Participant and the performance criteria applicable to
each Performance Award. The Administrator may from time to time designate
individuals as being ineligible to participate in the Plan.


 

















 


SECTION 6.


STOCK


 


The Stock to be optioned
under this Plan shall consist of authorized but unissued shares of common
stock.  Four million two hundred thousand
(4,200,000) shares of common stock shall be reserved and available for Awards
under the Plan; provided, however, that the total number of shares reserved for
Awards under this Plan shall be subject to adjustment as provided in Section 14
of the Plan; and provided, further, that all shares reserved and available
under the Plan shall constitute the maximum aggregate number of shares of Stock
that may be issued through incentive stock options.  The following shares of Stock shall continue
to be reserved and available for Awards granted pursuant to the Plan: (i) any
outstanding Award that expires for any reason, (ii) any portion of an
outstanding Option or Stock Appreciation Right that is terminated prior to
exercise, (iii) any portion of an Award that is terminated prior to the
lapsing of the risks of forfeiture on such Award, (iv) shares of common
stock used to pay the exercise price under any Award, (v) shares of common
stock used to satisfy any tax withholding obligation attributable to any Award,
whether such shares are withheld by the Company or tendered by the Participant,
and (vi) shares of Stock covered by an Award to the extent the Award is
settled in cash.


 


SECTION 7.


DURATION OF PLAN


 


Incentive stock options may be granted pursuant to the Plan from time
to time during a period of ten (10) years from the effective date as
defined in Section 3.  Other Awards
may be granted pursuant to the Plan from time to time after the effective date
of the Plan and until the Plan is discontinued or terminated by the
Administrator.


 


SECTION 8.


PAYMENT


 


Participants may pay for shares upon exercise of Options granted
pursuant to this Plan with cash, personal check, certified check or, if
approved by the Administrator in its sole discretion, previously-owned shares
of the Company’s common stock, or any combination thereof.  Any stock so tendered as part of such payment
shall be valued at such stock’s then Fair Market Value, or such other form of
payment as may be authorized by the Administrator.  The Administrator may, in its sole
discretion, limit the forms of payment available to the Participant and may
exercise such discretion any time prior to the termination of the Option
granted to the Participant or upon any exercise of the Option by the
Participant.  “Previously-owned shares”
means shares of the Company’s common stock which the Participant has owned for
at least six (6) months prior to the exercise of the Option, or for such
other period of time as may be required by generally accepted accounting
principles.


 


With respect to payment in the form of common stock of the Company, the
Administrator may require advance approval or adopt such rules as it deems
necessary to assure compliance 


 

















 


with
Rule 16b-3, or any successor provision, as then in effect, of the General Rules and
Regulations under the Securities Exchange Act of 1934, if applicable.


 


SECTION 9.


TERMS
AND CONDITIONS OF INCENTIVE STOCK OPTIONS


 


Each incentive stock option
granted pursuant to this Section 9 shall be evidenced by a written
incentive stock option agreement (the “Option Agreement”).  The Option Agreement shall be in such form as
may be approved from time to time by the Administrator and may vary from
Participant to Participant; provided, however, that each Participant and each
Option Agreement shall comply with and be subject to the following terms and
conditions:


 


(a)           Number of Shares
and Option Price.  The Option
Agreement shall state the total number of shares covered by the incentive stock
option.  Except as permitted by Code Section 424(a),
or any successor provision, the option price per share shall not be less than
one hundred percent (100%) of the per share Fair Market Value of the Common
Stock on the date the Administrator grants the Option; provided, however, that
if a Participant owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of its Parent
or any Subsidiary, the option price per share of an incentive stock option
granted to such Participant shall not be less than one hundred ten percent
(110%) of the per share Fair Market Value of the Company’s Common Stock on the
date of the grant of the Option.  The
Administrator shall have full authority and discretion in establishing the
option price and shall be fully protected in so doing.


 


(b)          Term and
Exercisability of Incentive Stock Option. 
The term during which any incentive stock option granted under the Plan
may be exercised shall be established in each case by the Administrator.  Except as permitted by Code Section 424(a),
in no event shall any incentive stock option be exercisable during a term of
more than ten (10) years after the date on which it is granted; provided,
however, that if a Participant owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of its Parent or any Subsidiary, the incentive stock option granted to such
Participant shall be exercisable during a term of not more than five (5) years
after the date on which it is granted.


 


The Option Agreement shall state when the incentive stock option
becomes exercisable and shall also state the maximum term during which the
Option may be exercised.  In the event an
incentive stock option is exercisable immediately, the manner of exercise of the
Option in the event it is not exercised in full immediately shall be specified
in the Option Agreement.  The
Administrator may accelerate the exercisability of any incentive stock option
granted hereunder which is not immediately exercisable as of the date of grant.


 


(c)           Nontransferability.  No incentive stock option shall be
transferable, in whole or in part, by the Participant other than by will or by
the laws of descent and distribution. 
During the Participant’s lifetime, the incentive stock option may be
exercised only by the Participant.  If
the Participant shall attempt any transfer of any incentive stock option
granted under the Plan during 


 

















 


the
Participant’s lifetime, such transfer shall be void and the incentive stock
option, to the extent not fully exercised, shall terminate.


 


(d)           No Rights as Stockholder.  A Participant (or the Participant’s successor
or successors) shall have no rights as a stockholder with respect to any shares
covered by an incentive stock option until the date the Participant is recorded
on the stock transfer books of the Company as the owner of the Stock.  No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property),
distributions or other rights for which the record date is prior to the date
such transfer is actually recorded (except as otherwise provided in Section 14
of the Plan).


 


(e)           Withholding.  The Company or its Affiliate shall be
entitled to withhold and deduct from future wages of the Participant all
legally required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Participant’s exercise of an
incentive stock option or a “disqualifying disposition” of shares acquired
through the exercise of an incentive stock option as defined in Code Section 421(b).  In the event the Participant is required
under the Option Agreement to pay the Company, or make arrangements
satisfactory to the Company respecting payment of, such withholding and
employment-related taxes, the Administrator may, in its discretion and pursuant
to such rules as it may adopt, require the Participant to satisfy such
obligation, in whole or in part, by delivering shares of the Company’s common
stock or by electing to have the Company withhold Common Stock otherwise
issuable to the Participant as a result of the exercise of the incentive stock
option.  Such shares shall have a Fair
Market Value equal to the minimum required tax withholding, based on the
minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes, that are applicable to the supplemental income
resulting from such exercise.  In no
event may the Company or any Affiliate withhold shares having a Fair Market
Value in excess of such statutory minimum required tax withholding.  The Participant’s election to deliver shares
or to have shares withheld for this purpose shall be made on or before the date
the incentive stock option is exercised or, if later, the date that the amount
of tax to be withheld is determined under applicable tax law.  Such election shall be approved by the
Administrator and otherwise comply with such rules as the Administrator
may adopt to assure compliance with Rule 16b-3, or any successor
provision, as then in effect, of the General Rules and Regulations under
the Securities Exchange Act of 1934, if applicable.


 


(f)            Other Provisions.  The Option Agreement authorized under this Section 9
shall contain such other provisions as the Administrator shall deem
advisable.  Any such Option Agreement
shall contain such limitations and restrictions upon the exercise of the Option
as shall be necessary to ensure that such Option will be considered an “incentive
stock option” as defined in Section 422 of the Internal Revenue Code or to
conform to any change therein.


 


SECTION 10.


TERMS AND CONDITIONS OF
NONQUALIFIED STOCK OPTIONS


 


Each nonqualified stock option granted pursuant to this Section 10
shall be evidenced by a written nonqualified stock option agreement (the “Option
Agreement”).  The Option 


 

















 


Agreement
shall be in such form as may be approved from time to time by the Administrator
and may vary from Participant to Participant; provided, however, that each
Participant and each Option Agreement shall comply with and be subject to the
following terms and conditions:


 


(a)           Number of Shares
and Option Price.  The Option
Agreement shall state the total number of shares covered by the nonqualified
stock option.  Unless otherwise
determined by the Administrator, the option price per share shall be one
hundred percent (100%) of the per share Fair Market Value of the Common Stock
on the date the Administrator grants the Option.


 


(b)           Term and Exercisability of
Nonqualified Stock Option.  The term
during which any nonqualified stock option granted under the Plan may be
exercised shall be established in each case by the Administrator.  The Option Agreement shall state when the
nonqualified stock option becomes exercisable and shall also state the maximum
term during which the Option may be exercised. 
In the event a nonqualified stock option is exercisable immediately, the
manner of exercise of the Option in the event it is not exercised in full
immediately shall be specified in the Option Agreement.   The Administrator may accelerate the
exercisability of any nonqualified stock option granted hereunder which is not
immediately exercisable as of the date of grant.


 


(c)           Transferability.  A nonqualified stock option shall be
transferable, in whole or in part, by the Participant by will or by the laws of
descent and distribution.  In addition,
the Administrator may, in its sole discretion, permit the Participant to
transfer any or all nonqualified stock options to any member of the Participant’s
“immediate family” as such term is defined in Rule 16a-1(e) promulgated
under the Securities Exchange Act of 1934, or any successor provision, or to
one or more trusts whose beneficiaries are members of such Participant’s “immediate
family” or partnerships in which such family members are the only partners;
provided, however, that the Participant cannot receive any consideration for
the transfer and such transferred nonqualified stock option shall continue to
be subject to the same terms and conditions as were applicable to such
nonqualified stock option immediately prior to its transfer.


 


(d)           No Rights as Stockholder.  A Participant (or the Participant’s successor
or successors) shall have no rights as a stockholder with respect to any shares
covered by a nonqualified stock option until the date the Participant is
recorded on the stock transfer books of the Company as the owner of the
Stock.  No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property), distributions or other rights for which the record date is prior to
the date such transfer is actually recorded (except as otherwise provided in Section 14
of the Plan).


 


(e)           Withholding.  The Company or its Affiliate shall be
entitled to withhold and deduct from future wages of the Participant all
legally required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Participant’s exercise of a
nonqualified stock option.  In the event
the Participant is required under the Option Agreement to pay the Company, or
make arrangements satisfactory to the Company respecting payment of, such
withholding and employment-related taxes, the Administrator may, in its
discretion and pursuant to such rules as it may adopt, require the
Participant to satisfy such obligation, in whole or in part, by delivering
shares of the Company’s common stock or by electing to have the Company
withhold Common Stock otherwise issuable to the Participant as a result of the 


 

















 


exercise
of the nonqualified stock option.  Such
shares shall have a Fair Market Value equal to the minimum required tax
withholding, based on the minimum statutory withholding rates for federal and
state tax purposes, including payroll taxes, that are applicable to the
supplemental income resulting from such exercise.  In no event may the Company or any Affiliate
withhold shares having a Fair Market Value in excess of such statutory minimum
required tax withholding.  The
Participant’s election to deliver shares or to have shares withheld for this
purpose shall be made on or before the date the nonqualified stock option is
exercised or, if later, the date that the amount of tax to be withheld is
determined under applicable tax law. 
Such election shall be approved by the Administrator and otherwise
comply with such rules as the Administrator may adopt to assure compliance
with Rule 16b-3, or any successor provision, as then in effect, of the
General Rules and Regulations under the Securities Exchange Act of 1934,
if applicable.


 


(f)            Other Provisions.  The Option Agreement authorized under this Section 10
shall contain such other provisions as the Administrator shall deem advisable.


 


SECTION 11.


RESTRICTED STOCK AWARDS


 


Each Restricted Stock Award granted pursuant to the Plan shall be
evidenced by a written restricted stock agreement (the “Restricted Stock
Agreement”).  The Restricted Stock
Agreement shall be in such form as may be approved from time to time by the
Administrator and may vary from Participant to Participant; provided, however,
that each Participant and each Restricted Stock Agreement  shall comply with and be subject to the
following terms and conditions:


 


(a)           Number of Shares.  The Restricted Stock Agreement shall state
the total number of shares of Stock covered by the Restricted Stock Award.


 


(b)           Risks of
Forfeiture.  The Restricted Stock
Agreement shall set forth the risks of forfeiture, if any, including risks of
forfeiture based on Performance Objectives, which shall apply to the shares of
Stock covered by the Restricted Stock Award, and shall specify the manner in
which such risks of forfeiture shall lapse. 
The Administrator may, in its sole discretion, modify the manner in
which such risks of forfeiture shall lapse but only with respect to those
shares of Stock which are restricted as of the effective date of the modification.


 


(c)           Issuance of
Shares; Rights as Stockholder. With respect to a Restricted Stock Award,
the Company may cause to be issued a stock certificate representing such shares
of Stock in the Participant’s name and deliver such certificate to the
Participant; provided, however, that the Company shall place a legend on such
certificate describing the risks of forfeiture and other transfer restrictions
set forth in the Participant’s Restricted Stock Agreement and providing for the
cancellation and return of such certificate if the Stock subject to the
Restricted Stock Award are forfeited. 
Until the risks of forfeiture have lapsed or the shares subject to such
Restricted Stock Award have been forfeited, the Participant shall be entitled
to vote the shares of Stock represented by such stock certificates and shall
receive all dividends attributable to such shares, but the Participant shall
not have any other rights as a stockholder with respect to such shares.


 

















 


(d)           Withholding Taxes.  The Company or its Affiliate shall be
entitled to withhold and deduct from future wages of the Participant all
legally required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Participant’s Restricted Stock
Award.  In the event the Participant is
required under the Restricted Stock Agreement to pay the Company, or make
arrangements satisfactory to the Company respecting payment of, such
withholding and employment-related taxes, the Administrator may, in its
discretion and pursuant to such rules as it may adopt, require the
Participant to satisfy such obligations, in whole or in part, by delivering
shares of common stock, including shares of Stock received pursuant to the
Restricted Stock Award on which the risks of forfeiture have lapsed.  Such shares shall have a Fair Market Value
equal to the minimum required tax withholding, based on the minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes,
that are applicable to the supplemental income resulting from the lapsing of the
risks of forfeiture on such restricted stock. 
In no event may the Participant deliver shares having a Fair Market
Value in excess of such statutory minimum required tax withholding.  The Participant’s election to deliver shares
of common stock for this purpose shall be made on or before the date that the
amount of tax to be withheld is determined under applicable tax law.  Such election shall be approved by the
Administrator and otherwise comply with such rules as the Administrator
may adopt to assure compliance with Rule 16b-3, or any successor
provision, as then in effect, of the General Rules and Regulations under
the Securities Exchange Act of 1934, if applicable.


 


(f)            Nontransferability.  No Restricted Stock Award shall be
transferable, in whole or in part, by the Participant, other than by will or by
the laws of descent and distribution, prior to the date the risks of forfeiture
described in the Restricted Stock Agreement have lapsed.  If the Participant shall attempt any transfer
of any Restricted Stock Award granted under the Plan prior to such date, such
transfer shall be void and the Restricted Stock Award shall terminate.


 


(g)           Other Provisions.  The Restricted Stock Agreement Agreement
authorized under this Section 11 shall contain such other provisions as
the Administrator shall deem advisable.


 


SECTION 12.


PERFORMANCE AWARDS


 


Each
Performance Award granted pursuant to this Section 12 shall be evidenced
by a written performance award agreement (the “Performance Award Agreement”).  The Performance Award Agreement shall be in
such form as may be approved from time to time by the Administrator and may
vary from Participant to Participant; provided, however, that each Participant
and each Performance Award Agreement shall comply with and be subject to the
following terms and conditions:


 


(a)           Awards.  Performance Awards in the form of Performance
Units or Performance Shares may be granted to any Participant in the Plan.
Performance Units shall consist of monetary awards which may be earned or
become vested in whole or in part if the Company or the Participant achieves
certain Performance Objectives established by the Administrator over a
specified Performance Period. 
Performance Shares shall consist of shares of Stock or other 


 

















 


Awards
denominated in shares of Stock that may be earned or become vested in whole or
in part if the Company or the Participant achieves certain Performance
Objectives established by the Administrator over a specified Performance
Period.


 


(b)           Performance Objectives,
Performance Period and Payment.  The
Performance Award Agreement shall set forth:


 


(i)            the number of Performance Units or
Performance Shares subject to the Performance Award, and the dollar value of
each Performance Unit;


 


(ii)           one or more Performance Objectives
established by the Administrator;


 


(iii)          the Performance Period over which
Performance Units or Performance Shares may be earned or may become vested;


 


(iv)          the extent to which partial
achievement of the Performance Objectives may result in a payment or vesting of
the Performance Award, as determined by the Administrator; and


 


(v)           the date upon which payment of
Performance Units will be made or Performance Shares will be issued, as the
case may be, and the extent to which such payment or the receipt of such Performance
Shares may be deferred.


 


(c)           Withholding Taxes.  The Company or its Affiliates shall be
entitled to withhold and deduct from future wages of the Participant all
legally required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Participant’s Performance
Award.  In the event the Participant is
required under the Performance Award Agreement to pay the Company or its
Affiliates, or make arrangements satisfactory to the Company or its Affiliates
respecting payment of, such withholding and employment-related taxes, the
Administrator may, in its discretion and pursuant to such rules as it may
adopt, require the Participant to satisfy such obligations, in whole or in
part, by delivering shares of the Company’s common stock or by electing to have
the Company withhold shares of Common Stock otherwise issuable to Participant
as a result of the grant of Performance Shares. 
Such shares shall have a Fair Market Value equal to the minimum required
tax withholding, based on the minimum statutory withholding rates for federal
and state tax purposes, including payroll taxes.  In no event may the Participant deliver
shares having a Fair Market Value in excess of such statutory minimum required
tax withholding.  The Participant’s
election to deliver shares or to have shares withheld for this purpose shall be
made on or before the date that the amount of tax to be withheld is determined
under applicable tax law.  Such election
shall be approved by the Administrator and otherwise comply with such rules as
the Administrator may adopt to assure compliance with Rule 16b-3, or any
successor provision, as then in effect, of the General Rules and
Regulations under the Securities Exchange Act of 1934, if applicable.


 


(d)           Nontransferability.  No Performance Award shall be transferable,
in whole or in part, by the Participant, other than by will or by the laws of
descent and distribution.  If the 


 

















 


Participant
shall attempt any transfer of any Performance Award granted under the Plan,
such transfer shall be void and the Performance Award shall terminate.


 


(e)           No Rights as Stockholder.  A Participant (or the Participant’s successor
or successors) shall have no rights as a stockholder with respect to any shares
covered by a Performance Award until the date Participant is recorded on the
stock transfer books of the Company as the owners of the shares.  No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property),
distributions or other rights for which the record date is prior to the date
such transfer is actually recorded (except as otherwise provided in Section 14
of the Plan).


 


(f)            Other Provisions.  The Performance Award Agreement authorized
under this Section 12 shall contain such other provisions as the
Administrator shall deem advisable.


 


SECTION 13.


STOCK APPRECIATION RIGHTS


 


Each
Stock Appreciation Right granted pursuant to this Section 13 shall be
evidenced by a written stock appreciation right agreement (the “Stock Appreciation
Right Agreement”).  The Stock
Appreciation Right Agreement shall be in such form as may be approved from time
to time by the Administrator and may vary from Participant to Participant;
provided, however, that each Participant and each Stock Appreciation Right
Agreement shall comply with and be subject to the following terms and
conditions:


 


(a)           Awards.  A Stock Appreciation Right shall entitle the
Participant to receive, upon exercise, cash, shares of Stock, or any
combination thereof, having a value equal to the excess of (i) the Fair
Market Value of a specified number of shares of Stock on the date of such
exercise, over (ii) a specified exercise price.  Unless otherwise determined by the
Administrator, the specified exercise price shall not be less than 100% of the
Fair Market Value of such shares of Stock on the date of grant of the Stock
Appreciation Right.  A Stock Appreciation
Right may be granted independent of or in tandem with a previously or contemporaneously
granted Option.


 


(b)           Term and Exercisability.  The term during which any Stock Appreciation
Right granted under the Plan may be exercised shall be established in each case
by the Administrator.  The Stock
Appreciation Right Agreement shall state when the Stock Appreciation Right
becomes exercisable and shall also state the maximum term during which such
Stock Appreciation Right may be exercised. 
In the event a Stock Appreciation Right is exercisable immediately, the
manner of exercise of such Stock Appreciation Right in the event it is not
exercised in full immediately shall be specified in the Stock Appreciation
Right Agreement.  The Administrator may
accelerate the exercisability of any Stock Appreciation Right granted hereunder
which is not immediately exercisable as of the date of grant.


 


(c)           Withholding Taxes.  The Company or its Affiliate shall be
entitled to withhold and deduct from future wages of the Participant all
legally required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Participant’s Stock 


 

















 


Appreciation
Right.  In the event the Participant is
required under the Stock Appreciation Right to pay the Company or its
Affiliate, or make arrangements satisfactory to the Company or its Affiliate
respecting payment of, such withholding and employment-related taxes, the
Administrator may, in its discretion and pursuant to such rules as it may
adopt, permit the Participant to satisfy such obligations, in whole or in part,
by delivering shares of common stock or by electing to have the Company
withhold Common Stock issuable to Participant as a result of the exercise of
the Stock Appreciation Right.  Such
shares shall have a Fair Market Value equal to the minimum required tax
withholding, based on the minimum statutory withholding rates for federal and
state tax purposes, including payroll taxes. 
In no event may the Participant deliver shares having a Fair Market
Value in excess of such statutory minimum required tax withholding.  The Participant’s election to deliver shares
of Common Stock for this purpose shall be made on or before the date that the
amount of tax to be withheld is determined under applicable tax law.  Such election shall be approved by the
Administrator and otherwise comply with such rules as the Administrator may
adopt to assure compliance with Rule 16b-3, or any successor provision, as
then in effect, of the General Rules and Regulations under the Securities
Exchange Act of 1934, if applicable.


 


(d)           Nontransferability.  No Stock Appreciation Right shall be transferable,
in whole or in part, by the Participant, other than by will or by the laws of
descent and distribution.  If the
Participant shall attempt any transfer of any Stock Appreciation Right granted
under the Plan, such transfer shall be void and the Stock Appreciation Right
shall terminate.


 


(e)           No Rights as Stockholder.  A Participant (or the Participant’s successor
or successors) shall have no rights as a stockholder with respect to any shares
covered by a Stock Appreciation Right until the date of the issuance of a stock
certificate evidencing such shares.  No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property), distributions or other rights for which
the record date is prior to the date such stock certificate is actually issued
(except as otherwise provided in Section 14 of the Plan).


 


(f)            Other Provisions.  The Stock Appreciation Right Agreement
authorized under this Section 13 shall contain such other provisions as
the Administrator shall deem advisable, including but not limited to any
restrictions on the exercise of the Stock Appreciation Right which may be
necessary to comply with Rule 16b-3 of the Securities Exchange Act of
1934, as amended.


 


SECTION 14.


RECAPITALIZATION,
SALE, MERGER, EXCHANGE


OR
LIQUIDATION


 


In
the event of an increase or decrease in the number of shares of Common Stock
resulting from a stock dividend, stock split, reverse split, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company, the Administrator may, in its sole discretion,
adjust the number of shares of Stock reserved under Section 6 hereof, the
number of shares of Stock covered by each outstanding Award, and, if
applicable, the price per share 


 

















 


thereof
to reflect such change.  Additional
shares which may become covered by the Award pursuant to such adjustment shall
be subject to the same restrictions as are applicable to the shares with
respect to which the adjustment relates.


 


Unless
otherwise provided in the agreement evidencing an Award, in the event of an
acquisition of the Company through: the sale of substantially all of the
Company’s assets and the consequent discontinuance of its business; an
acquisition of 50% or more of the total combined voting power of all classes of
securities of the Company; or a merger, consolidation, exchange,
reorganization, reclassification, extraordinary dividend, divestiture
(including a spin-off), liquidation, recapitalization, stock split, stock
dividend or otherwise (collectively referred to as a “transaction”), the
Administrator may provide for one or more of the following:


 


(a)           the equitable acceleration of the
exercisability of any outstanding Options or Stock Appreciation Rights, the
vesting and payment of any Performance Awards, or the lapsing of the risks of
forfeiture on any Restricted Stock Awards;


 


(b)           the complete termination of this
Plan, the cancellation of outstanding Options or Stock Appreciation Rights not
exercised prior to a date specified by the Board (which date shall give
Participants a reasonable period of time in which to exercise such Option or
Stock Appreciation Right prior to the effectiveness of such transaction), the
cancellation of any Performance Award and the cancellation of any Restricted
Stock Awards for which the risks of forfeiture have not lapsed;


 


(c)           that Participants holding outstanding
Options and Stock Appreciation Rights shall receive, with respect to each share
of Stock subject to such Option or Stock Appreciation Right, as of the
effective date of any such transaction, cash in an amount equal to the excess
of the Fair Market Value of such Stock on the date immediately preceding the
effective date of such transaction over the price per share of such Options or
Stock Appreciation Rights; provided that the Board may, in lieu of such cash
payment, distribute to such Participants shares of Common Stock of the Company
or shares of stock of any corporation succeeding the Company by reason of such
transaction, such shares having a value equal to the cash payment herein;


 


(d)           that Participants holding outstanding
Restricted Stock Awards and Performance Share Awards shall receive, with
respect to each share of Stock subject to such Awards, as of the effective date
of any such transaction, cash in an amount equal to the Fair Market Value of
such Stock on the date immediately preceding the effective date of such
transaction; provided that the Board may, in lieu of such cash payment,
distribute to such Participants shares of Common Stock of the Company or shares
of stock of any corporation succeeding the Company by reason of such
transaction, such shares having a value equal to the cash payment herein;


 


(e)           the continuance of the Plan with
respect to the exercise of Options or Stock Appreciation Rights which were
outstanding as of the date of adoption by the Board of such plan for such
transaction and the right to exercise such Options and Stock Appreciation
Rights as to an equivalent number of shares of stock of the corporation
succeeding the Company by reason of such transaction; and


 

















 


(f)            the continuance of the Plan with
respect to Restricted Stock Awards for which the risks of forfeiture have not
lapsed as of the date of adoption by the Board of such plan for such
transaction and the right to receive an equivalent number of shares of stock of
the corporation succeeding the Company by reason of such transaction.


 


(g)           the continuance of the Plan with
respect to Performance Awards and, to the extent applicable, the right to
receive an equivalent number of shares of stock of the corporation succeeding
the Company by reason for such transaction.


 


The
Administrator may condition any acceleration of exercisability or other right
to which Participant is not entitled upon any additional agreements from
Participant, including, without limitation, a Participant agreeing to
additional restrictive covenants (e.g., confidentiality, noncompetition,
non-solicitation, non-circumvention, etc.) and Participant agreeing to continue
to perform services for the Company, a successor or purchaser of all or any
portion of the Company’s business or related assets for substantially the same
base salary for a period of up to six months.


 


The
Administrator may restrict the rights of or the applicability of this Section 14
to the extent necessary to comply with Section 16(b) of the
Securities Exchange Act of 1934, the Internal Revenue Code or any other
applicable law or regulation.  The grant
of an Award pursuant to the Plan shall not limit in any way the right or power
of the Company to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure or to merge, exchange or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.


 


SECTION 15.


INVESTMENT PURPOSE


 


No shares of Stock shall be issued pursuant to the Plan unless and
until there has been compliance, in the opinion of Company’s counsel, with all
applicable legal requirements, including without limitation, those relating to
securities laws and stock exchange listing requirements.  As a condition to the issuance of Stock to
Participant, the Administrator may require Participant to (a) represent
that the shares of Stock are being acquired for investment and not resale and
to make such other representations as the Administrator shall deem necessary or
appropriate to qualify the issuance of the shares as exempt from the Securities
Act of 1933 and any other applicable securities laws, and (b) represent
that Participant shall not dispose of the shares of Stock in violation of the
Securities Act of 1933 or any other applicable securities laws.


 


As
a further condition to the grant of any Option or the issuance of Stock to
Participant, Participant agrees to the following:


 


(a)           In the event the Company advises
Participant that it plans an underwritten public offering of its Common Stock
in compliance with the Securities Act of 1933, as amended, and the underwriter(s) seek
to impose restrictions under which certain stockholders may not sell or
contract to sell or grant any option to buy or otherwise dispose of part or all
of their stock 


 

















 


purchase
rights of the Common Stock underlying Awards, Participant will not, for a period
not to exceed 180 days from the prospectus, sell or contract to sell or grant
an option to buy or otherwise dispose of any Option granted to Participant
pursuant to the Plan or any of the underlying shares of Common Stock without
the prior written consent of the underwriter(s) or its representative(s).


 


(b)           In the event the Company makes any
public offering of its securities and determines in its sole discretion that it
is necessary to reduce the number of issued but unexercised stock purchase
rights so as to comply with any state’s securities or Blue Sky law limitations
with respect thereto, the Board of Directors of the Company shall have the
right (i) to accelerate the exercisability of any Option and the date on
which such Option must be exercised, provided that the Company gives
Participant prior written notice of such acceleration, and (ii) to cancel
any Options or portions thereof which Participant does not exercise prior to or
contemporaneously with such public offering.


 


(c)           In the event of a transaction (as
defined in Section 14 of the Plan), Participant will comply with Rule 145
of the Securities Act of 1933 and any other restrictions imposed under other
applicable legal or accounting principles if Participant is an “affiliate” (as
defined in such applicable legal and accounting principles) at the time of the
transaction, and Participant will execute any documents necessary to ensure
compliance with such rules.


 


The
Company reserves the right to place a legend on any stock certificate issued in
connection with an Award pursuant to the Plan to assure compliance with this Section 15.


 


SECTION 16.


AMENDMENT OF THE PLAN


 


The Board may from time to time, insofar as permitted by law, suspend
or discontinue the Plan or revise or amend it in any respect; provided,
however, that no such revision or amendment, except as is authorized in Section 14,
shall impair the terms and conditions of any Award which is outstanding on the
date of such revision or amendment to the material detriment of the Participant
without the consent of the Participant. 
Notwithstanding the foregoing, no such revision or amendment shall (i) materially
increase the number of shares subject to the Plan except as provided in Section 14
hereof, (ii) change the designation of the class of employees eligible to
receive Awards, (iii) decrease the price at which Options may be granted,
or (iv) materially increase the benefits accruing to Participants under
the Plan without the approval of the stockholders of the Company if such
approval is required for compliance with the requirements of any applicable law
or regulation.  Furthermore, the Plan may
not, without the approval of the stockholders, be amended in any manner that
will cause incentive stock options to fail to meet the requirements of Section 422
of the Internal Revenue Code.


 

















 


SECTION 17.


NO OBLIGATION TO EXERCISE
OPTION


 


The granting of an Option
shall impose no obligation upon the Participant to exercise such Option.  Further, the granting of an Award hereunder
shall not impose upon the Company or any Affiliate any obligation to retain the
Participant in its employ for any period.