Exhibit 10.9


 


MAUNA KEA ENTERPRISES,
INC.


2007 EQUITY INCENTIVE PLAN


 


Section 1.              Purpose;
Definitions


 


The
purpose of the Plan is to give the Company a competitive advantage in
attracting, retaining and motivating officers, employees, directors and/or consultants
and to provide the Company and its Subsidiaries and Affiliates with a stock
plan providing incentives directly linked to the profitability of the Company’s
businesses and increases in Company shareholder value.


 


For
purposes of the Plan, the following terms shall have the respective meanings
indicated:


 


(a)           “Affiliate”
means a corporation or other entity controlled by, controlling or under common
control with the Company.


 


(b)           “Award”
means a Stock Option, Restricted Stock, Performance Unit, or other stock-based
award granted pursuant to the terms of the Plan.


 


(c)           “Award
Agreement” means any written or electronic agreement, contract or other
instrument or document evidencing the grant of an Award, which may, but is not
required to be, signed by a Participant.


 


(d)           “Award Cycle” means a period
of consecutive fiscal years or portions thereof designated by the Plan
Administrator over which Performance Units are to be earned.


 


(e)           “Board” means the Board of
Directors of the Company.


 


(f)            “Cause” means, unless
otherwise provided by the Plan Administrator in an Award Agreement, (i) “Cause”
as defined in any Individual Agreement to which the Participant is a party, or (ii) if
there is no such Individual Agreement or if it does not define Cause:  (A) conviction of the Participant for
committing a felony under federal law or the law of the state in which such
action occurred, (B) fraud or dishonesty against the Company or in the
course of fulfilling the Participant’s employment duties, (C) willful and
deliberate failure on the part of the Participant to perform his or her
employment or service-provider duties in any material respect, (D) illegal
drug use or alcohol abuse on Company premises or at a Company sponsored event, (E) conduct
by the Participant which in the good faith and reasonable determination of the
Plan Administrator demonstrates gross unfitness to serve, (F) intentional,
material violation by the Participant of any contract between the employee and
the Company or of any statutory duty of the Participant to the Company, or (G) prior
to a Change in Control, such other events as shall be determined by the Plan
Administrator.  The Plan Administrator
shall, unless otherwise provided in an Individual Agreement with the
Participant, have the sole discretion to determine whether “Cause” exists, and
its determination shall be final.  The
foregoing definition shall not in any way 


 

















 


preclude or restrict the right of the Company to
discharge or dismiss the Participant for any other acts or omissions, but such
other acts or omissions shall not be deemed, for purposes of the Plan, to
constitute grounds for termination for Cause.


 


(g)           “Change in Control” shall have
the meaning set forth in Section 9(b).


 


(h)           “Code” means the Internal
Revenue Code of 1986, as amended from time to time, and any successor thereto.


 


(i)            “Commission” means the
Securities and Exchange Commission or any successor agency.


 


(j)            “Common Stock” means common
stock, no par value, of the Company.


 


(k)           “Company” means Mauna Kea
Enterprises, Inc., a Colorado corporation.


 


(l)            “Covered Employee” means a
Participant designated prior to the grant of Restricted Stock or Performance
Units by the Plan Administrator who is or may be a “covered employee” within
the meaning of Section 162(m)(3) of the Code in the year in such
Award is expected to be taxable to such Participant.


 


(m)          “Disability” means, unless
otherwise provided by the Plan Administrator, (i) “Disability” as defined
in any Individual Agreement to which the Participant is a party, or (ii) if
there is no such Individual Agreement or it does not define “Disability,” (y) if
applicable, permanent and total disability as determined under any Long Term
Disability Plan maintained by the Company and applicable to the Participant, or
otherwise (z) the inability of the Participant to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment which is expected to result in death or has lasted or can
be expected to last for a continuous period of twelve (12) months or more and
shall be determined by the Plan Administrator on the basis of such medical
evidence as the Plan Administrator deems warranted under the circumstances.


 


(n)           “Effective Date” shall have
the meaning set forth in Section 14.


 


(o)           “Eligible Individual”  mean any director, officer, employee and
consultant (including advisors) of the Company or any of its Subsidiaries or
Affiliates, and prospective employees and consultants who have accepted offers
of employment or consultancy from the Company or its Subsidiaries or
Affiliates, whom the Plan Administrator determines to be an Eligible
Individual.


 


(p)           “Exchange Act” means the
Securities Exchange Act of 1934, as amended from time to time, and any
successor thereto.


 


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(q)           “Fair Market Value” means the
following:  If the Common Stock is traded
publicly, the Fair Market Value of a share of Common Stock on any date shall be
the average of the representative closing bid and asked prices, as quoted by
the National Association of Securities Dealers, Inc. through NASDAQ (its
automated system for reporting quotes), for the date in question, or, if the
Common Stock is listed on the NASDAQ National System or is listed on a national
stock exchange, the officially quoted closing price on NASDAQ or such exchange,
as the case may be, on the date in question. 
If the Common Stock is not traded publicly, the Fair Market Value shall
be what the Plan Administrator determines in good faith and in writing to be 100%
of the fair market value of a share of Common Stock as of the date in question.
For purposes of this Plan, the “Fair Market Value” of a share at a specified
date shall, unless otherwise expressly provided in this Plan, be determined by
the Plan Administrator’s  application of
a reasonable valuation method under the facts and circumstances as of the
valuation date, taking into consideration all available information material to
the value of the Company, including: (i) the value of tangible and
intangible assets of the Company; (ii) the present value of future
cash-flows of the Company; (iii) the market value of stock or equity
interests in similar corporations and other entities engaged in substantially
similar trades or businesses, where the value can be readily determined through
objective means; and (iv) other relevant factors such as control premiums,
discounts for lack of marketability, and whether the valuation method is used
for other purposes that have a material economic effect on the Company, its
shareholders, or creditors.  A previous
Fair Market Value determination may not be used in determining Fair Market
Value as of the date in question if the previously determined Fair Market Value
fails to reflect information available after the date of calculation that may
materially affect the value of the Company, or if the value was calculated with
respect to a date that is more than 12 months earlier than the date for which
Fair Market Value is currently being determined.  This definition of “Fair Market Value” is
intended to comply with guidance under Section 409A of the Code with
respect to fair market value of stock rights, and the Plan Administrator shall
construe this definition and determine “Fair Market Value” accordingly.


 


(r)            “Incentive Stock Option”
means any Stock Option designated as, and qualified as, an “incentive stock
option” within the meaning of Section 422 of the Code.


 


(s)           “Individual Agreement” means
an employment, consulting or similar written agreement between a Participant
and the Company or one of its Subsidiaries or Affiliates.


 


(t)            “NonQualified Stock Option”
means any Stock Option that is not an Incentive Stock Option.


 


(u)           “Option Price” shall have the
meaning set forth in Section 5(d).


 


(v)           “Outside Director” means a
director who qualifies as an “independent director” within the meaning of
Nasdaq Marketplace Rule 4200(a)(15), as an “outside director” within the
meaning of Section 162(m) of the Code, and as a “non-


 


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employee director” within the meaning of Rule 16b-3
promulgated under the Exchange Act.


 


(w)          “Participant” means an Eligible
Individual to whom an Award is or has been made in accordance with and pursuant
to the Plan or, if applicable, and if permitted in accordance with the terms
and provisions of the Plan, such other person who holds outstanding Award.


 


(x)            “Performance Goals” means the
performance goals established by the Plan Administrator in connection with the
grant of an Award.  In the case of
Qualified Performance-Based Awards, (i) such goals shall be based on the
attainment of specified levels of one or more of the following measures with
respect to the Company or such subsidiary, division or department of the
Company for or within which the Participant performs services: market share;
sales; asset quality; non-performing assets; revenue growth; earnings before
interest, taxes, depreciation, and amortization; earnings before interest and
taxes; operating income; pre- or after-tax income; earnings per share; cash
flow; cash flow per share; return on equity; return on invested capital; return
on assets; return on operating assets; economic value added (or an equivalent
metric); share price performance; total shareholder return; improvement in or
attainment of expense levels or cost savings; or improvement in or attainment
of working capital levels and (ii) such Performance Goals shall be set by
the Plan Administrator within the time period prescribed by Section 162(m) of
the Code and related regulations.  Such
Performance Goals also may be based upon the attaining of specified levels of
Company performance under one or more of the measures described above relative
to the performance of other corporations.


 


(y)           “Permitted Transferee” means,
in the case of a Participant, (i) such Participant’s children or family
members, whether directly or indirectly or by means of a trust or partnership
or otherwise or (ii) any transferee of all or a portion of such
Participant’s Award pursuant to a qualified domestic relations order as defined
in the Code or Title 1 of the Employee Retirement Income Security Act of 1974,
as amended.  For purposes of this Plan,
unless otherwise determined by the Plan Administrator, “family member”
shall have the meaning given to such term in General Instructions A.1(a)(5) to
Form S-8 under the Securities Act, or any successor thereto.


 


(z)            “Performance Units” means an
Award granted under Section 7.


 


(aa)         “Plan” means this Mauna Kea
Enterprises, Inc. 2007 Equity Incentive Plan, as set forth herein and as
hereinafter amended from time to time.


 


(bb)         “Plan Administrator” means the
Plan Administrator referred to in Section 2(a).


 


(cc)         “Qualified Performance-Based Award”
means an Award of Restricted Stock or Performance Units designated as such by
the Plan Administrator at the time of grant, based upon a determination that (i) the
recipient is or may be a “covered employee” within the meaning of Section 162(m)(3) of
the Code in the year in 


 


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which the Company would expect to be able to claim a
tax deduction with respect to such Restricted Stock or Performance Units and (ii) the
Plan Administrator wishes such Award to qualify for the Section 162(m) Exemption.


 


(dd)         “Restricted Stock” means an
Award granted under Section 6.


 


(ee)         “Retirement” means retirement
from active employment with the Company, a Subsidiary or Affiliate at or after
age 65.


 


(ff)           “Rule 16b-3” means Rule 16b-3,
as promulgated by the Commission under Section 16(b) of the Exchange
Act, as amended from time to time.


 


(gg)         “Section 162(m) Exemption”
means the exemption from the limitation on deductibility imposed by Section 162(m) of
the Code that is set forth in Section 162(m)(4)(C) of the Code.


 


(hh)         “Securities Act” means the
Securities Act of 1933, as amended.


 


(ii)           “Stock Option” means an Award
granted under Section 5.


 


(jj)           “Subsidiary” means any
corporation, partnership, joint venture or other entity during any period in
which at least a 50% voting or profits interest is owned, directly or indirectly,
by the Company or any successor to the Company.


 


(kk)         “Termination of Employment”
means the termination of the Participant’s employment with, or performance of
services for, the Company and any of its Subsidiaries or Affiliates.  A change in the capacity in which the
Participant renders services to the Company or a Subsidiary or Affiliate as a
director, officer, employee or consultant or a change in the entity for which
the Participant renders such service, provided that there is no interruption or
termination of the Participant’s service with the Company or a Subsidiary or
Affiliate, shall not constitute a Termination of Employment.  For example, a change in status from an
employee of the Company to a consultant to a Subsidiary or Affiliate shall not
constitute a Termination of Employment. 
A Participant employed by, or performing services for, a Subsidiary or
an Affiliate shall be deemed to incur a Termination of Employment if the
Subsidiary or Affiliate ceases to be such a Subsidiary or an Affiliate, as the
case may be, and the Participant does not immediately thereafter become an
employee of, or service-provider for, the Company or another Subsidiary or
Affiliate.  The Plan Administrator or the
chief executive officer of the Company, in that party’s sole discretion, may
determine whether a Termination of Employment shall be considered to have
occurred (and whether vesting in any outstanding Awards shall continue or be
suspended) in the case of any leave of absence approved by that party,
including sick leave, military leave or any other personal leave.


 


Section 2.              Administration


 


(a)           The Plan shall be administered by (i) the
Board or (ii) one or more committees of the Board to whom the Board has
delegated all or part of its authority under the Plan (the “Plan
Administrator”).  If administration
is delegated to a committee, 


 


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the committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board, including
the power to delegate to a subcommittee any of the administrative powers the
committee is authorized to exercise (and references in the Plan to the Plan
Administrator shall thereafter be to the subcommittee), subject, however, to
such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. 
The Board may abolish any committee at any time and revest in the Board
the administration of the Plan.  Any
committee under clause (ii) hereof which makes grants to “officers” of the
Company (as that term is defined in Rule 16a-1(f) promulgated under
the Exchange Act) or which makes Awards that are intended to be Qualified
Performance-Based Awards shall be composed solely of two or more Outside
Directors.  For purposes of the preceding
provisions, if one or more members of the committee is not an Outside Director,
but recuses himself or herself or abstains from voting with respect to a
particular action taken by the committee, then the committee, with respect to
the action, will be deemed to consist only of the members of the committee who
have not recused themselves or abstained from voting.


 


(b)           The Plan Administrator shall have
plenary authority to grant Awards pursuant to the terms of the Plan to
Participants.


 


(c)           Among other things, the Plan
Administrator shall have the authority, subject to the terms of the Plan:


 


(i)            To
select the Participants to whom Awards may from time to time be granted;


 


(ii)           To
determine whether and to what extent any type of Award is to be granted
hereunder;


 


(iii)          To
determine the number of shares of Common Stock to be covered by each Award
granted hereunder;


 


(iv)          To
determine the terms and conditions of any Award granted hereunder (including,
but not limited to, the Option Price (subject to Section 5(a)), any
vesting condition, restriction or limitation (which may be related to the
performance of the Participant, the Company or any Subsidiary or Affiliate) and
any vesting acceleration or forfeiture waiver regarding any Award and the
shares of Common Stock relating thereto, based on such factors as the Plan
Administrator shall determine);


 


(v)           Subject
to the terms of the Plan, including without limitation Section 11, to
modify, amend or adjust the terms and conditions of any Award, at any time or
from time to time, including but not limited to Performance Goals; provided,
however, that the Plan Administrator may not adjust upwards the amount payable
to a Covered Employee with respect to a Qualified Performance-Based Award or
waive or alter the Performance Goals associated therewith in a manner that
would violate Section 162(m) of the Code;


 


(vi)          To
determine to what extent and under what circumstances Common Stock and other
amounts payable with respect to an Award shall be deferred;


 


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(vii)         To
effect, at any time and from time to time, with the consent of any adversely
affected Participant, (1) the reduction of the exercise price of any
outstanding Award under the Plan, (2) the cancellation of any outstanding
Award under the Plan and the grant in substitution therefor of (A) a new
Award under the Plan with a lower Option Price covering the same or a different
number of shares of Common Stock, (B) the right to acquire restricted
stock, and/or (C) cash, or (3) any other action that is treated as a “repricing”
under generally accepted accounting principles; and


 


(viii)        To
determine under what circumstances an Award may be settled in cash or Common
Stock under Section 5(l) and Section 7(b)(iii).


 


(d)           The Plan Administrator shall have the
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan as it shall from time to time deem advisable, to
interpret the terms and provisions of the Plan and any Award issued under the
Plan (and any agreement relating thereto) and to otherwise supervise the
administration of the Plan.  The Plan
Administrator, in the exercise of this power, may correct any defect, omission
or inconsistency in the Plan or in any Award Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective.


 


(e)           The Plan Administrator may act only
by a majority of its members then in office. 
Except to the extent prohibited by applicable law or the applicable rules of
a stock exchange on which the Company’s shares are traded, the Plan
Administrator may (i) allocate all or any portion of its responsibilities
and powers to any one or more of its members and (ii) delegate all or any
part of its responsibilities and powers to any person or persons selected by
it, provided that no such delegation may be made that would cause Awards or
other transactions under the Plan to cease to be exempt from Section 16(b) of
the Exchange Act or cause an Award designated as a Qualified Performance-Based
Award not to qualify for, or to cease to qualify for, the Section 162(m) Exemption.  Any such allocation or delegation may be
revoked by the Plan Administrator at any time.


 


(f)            Any determination made by the Plan
Administrator with respect to any Award shall be made in the sole discretion of
the Plan Administrator at the time of the grant of the Award or, unless in
contravention of any express term of the Plan, at any time thereafter.  All decisions made by the Plan Administrator
or any appropriately delegated officer pursuant to the provisions of the Plan
shall be final and binding on all persons, including the Company, its
Affiliates, Subsidiaries, shareholders and Participants.


 


(g)           Any authority granted to the Plan
Administrator may also be exercised by the full Board, except to the extent
that the grant or exercise of such authority would cause any Award or
transaction to become subject to (or lose an exemption under) the short-swing
profit recovery provisions of Section 16 of the Exchange Act or cause an
Award designated as a Qualified Performance-Based Award not to qualify for, or
to cease to qualify for, the Section 162(m) Exemption.  To the extent that any permitted action taken
by the Board conflicts with action taken by the Plan Administrator, the Board
action shall control.


 


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(h)           To the maximum extent permitted by
law, the Company shall indemnify each member of the Board who acts as a member
of the Plan Administrator, as well as any other employee of the Company with
duties under the Plan, against expenses and liabilities (including any amount
paid in settlement) reasonably incurred by the individual in connection with
any claims against the individual by reason of the performance of the
individual’s duties under the Plan, unless the losses are due to the individual’s
gross negligence or lack of good faith. 
The Company will have the right to select counsel and to control the
prosecution or defense of the suit.  In
the event that more than one person who is entitled to indemnification is
subject to the same claim, all such persons shall be represented by a single
counsel, unless such counsel advises the Company in writing that he or she
cannot represent all such persons under applicable rules of professional
responsibility.  The Company will not be
required to indemnify any person for any amount incurred through any settlement
unless the Company consents in writing to the settlement.


 


Section 3.              Common
Stock Subject to Plan


 


(a)           The maximum number of shares of
Common Stock that may be delivered to Participants and their beneficiaries
under the Plan shall be Two Million (2,000,000) shares.


 


(b)           For purposes of this Section 3,
if an Award entitles the holder thereof to receive or purchase shares, the
number of shares of Common Stock covered by such Award or to which such Award
relates shall be counted on the date of grant of such Award against the
aggregate number of shares available for granting Awards under the Plan.  If any Award is forfeited, or if any Stock
Option terminates, expires or lapses without being exercised, shares of Common
Stock subject to such Awards shall again be available for distribution in
connection with Awards under the Plan. 
If the Option Price of any Stock Option is satisfied by delivering
shares of Common Stock to the Company (by either actual delivery or by
attestation), only the number of shares of Common Stock delivered to the
Participant net of the shares of Common Stock delivered to the Company or
attested to shall be deemed delivered for purposes of determining the maximum
numbers of shares of Common Stock available for delivery under the Plan.  To the extent any shares of Common Stock
subject to an Award are not delivered to a Participant because such shares are
used to satisfy an applicable tax-withholding obligation, such shares shall not
be deemed to have been delivered for purposes of determining the maximum number
of shares of Common Stock available for delivery under the Plan.  If any shares of Common Stock issued to a
Participant pursuant to an Award are forfeited back to or repurchased by the
Company because of or in connection with the failure to meet a contingency or
condition required to vest such shares in the Participant, the shares of Common
Stock forfeited or repurchased under such Award shall revert to and again
become available for issuance under the Plan.


 


(c)           In the event of any change in
corporate capitalization (including, but not limited to, a change in the number
of shares of Common Stock outstanding), such as a stock split or a corporate
transaction, such as any merger, consolidation, separation, including a
spin-off, or other distribution of stock or property of the Company (including 


 


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any extraordinary cash or stock dividend), any
reorganization (whether or not such reorganization comes within the definition
of such term in Section 368 of the Code) or any partial or complete
liquidation of the Company, the Plan Administrator or Board may make such
substitution or adjustments in the aggregate number and kind of shares reserved
for issuance under the Plan, and the maximum limitation upon Stock Options and
other Awards to be granted to any Participant, in the number, kind and Option
Price of shares subject to outstanding Stock Options, in the number and kind of
shares subject to other outstanding Awards granted under the Plan and/or such
other equitable substitution or adjustments as it may determine to be
appropriate in its sole discretion (including, without limitation, an amount in
cash therefor); provided, however, that the number of shares subject to any
Award shall always be a whole number.


 


(d)           No fractional shares may be issued
under the Plan.  Cash shall be paid in
lieu of any fractional share in settlement of an Award.


 


Section 4.              Eligibility


 


Awards
may be granted under the Plan to Eligible Individuals; provided, however, that
a consultant shall not be eligible for the grant of an Award of a Stock Option
or Restricted Stock if, at the time of grant, a Form S-8 Registration
Statement under the Securities Act (“Form S-8”) is not available to
register either the offer or the sale of the Company’s securities to such
consultant because of the nature of the services that the consultant is
providing to the Company, because the consultant is not a natural person, or
because of any other rule governing the use of Form S-8, unless the
Plan Administrator determines both (i) that such grant (A) shall be
registered in another manner under the Securities Act (e.g.,
on a Form S-3 Registration Statement) or (B) does not require
registration under the Securities Act in order to comply with the requirements
of the Securities Act, if applicable, and (ii) that such grant complies with
the securities laws of all other relevant jurisdictions.


 


Section 5.              Stock
Options


 


(a)           Stock Options may be granted alone or
in addition to other Awards granted under the Plan and may be of two
types:  Incentive Stock Options and
NonQualified Stock Options.  Any Stock
Option granted under the Plan shall be in such form as the Plan Administrator
may from time to time approve.


 


(b)           The Plan Administrator shall have the
authority to grant any Participant Incentive Stock Options, NonQualified Stock
Options or both types of Stock Options; provided, however, that grants
hereunder are subject to the limits on grants set forth in Section 3.  To the extent that any Stock Option is not
designated as an Incentive Stock Option or even if so designated does not qualify
as an Incentive Stock Option on or subsequent to its grant date, it shall
constitute a NonQualified Stock Option.


 


(c)           Stock Options shall be evidenced by
Award Agreements, the terms and provisions of which may differ.  An Award Agreement shall indicate on its face
whether it is intended to be an agreement for an Incentive Stock Option or a 


 


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NonQualified Stock Option.  The grant of a Stock Option shall occur on
the date the Plan Administrator by resolution selects a Participant to receive
a grant of a Stock Option, determines the number of shares of Common Stock to
be subject to such Stock Option to be granted to such Participant and specifies
the terms and provisions of the Stock Option. 
The Company shall notify a Participant of any grant of a Stock Option,
and such Award shall be confirmed by, and subject to the terms of, an Award
Agreement.


 


(d)           Stock Options granted under the Plan
shall be subject to the following terms and conditions and shall contain such
additional terms and conditions as the Plan Administrator shall deem desirable:


 


(i)            Option Price.  The
Plan Administrator shall determine the option price per share of Common Stock
purchasable under a Stock Option (the “Option Price”).  The Option Price per share of Common Stock
subject to a Stock Option shall not be less than the Fair Market Value of the
Common Stock subject to such Stock Option on the date of grant.


 


(ii)           Option Term.  The term
of each Stock Option shall be fixed by the Plan Administrator, but no Incentive
Stock Option shall be exercisable more than 10 years after the date the Stock
Option is granted.


 


(iii)          Exercisability. 
Except as otherwise provided herein, Stock Options shall be exercisable
at such time or times and subject to such terms and conditions as shall be
determined by the Plan Administrator.  If
the Plan Administrator provides that any Stock Option is subject to vesting
conditions, restrictions or limitations and therefore exercisable only in
installments, the Plan Administrator may at any time waive such installment
exercise provisions, in whole or in part, based on such factors as the Plan
Administrator may determine.  An Award
Agreement may, but need not, include a provision whereby the Participant may
elect at any time before the Participant’s Termination of Employment to
exercise the Stock Option as to any part or all of the shares of Common Stock
subject to the Stock Option prior to the full vesting of the Stock Option.  Any unvested shares of Common Stock so purchased
may be subject to a repurchase option in favor of the Company or to any other
restriction the Plan Administrator determines to be appropriate.  The Company will not exercise its repurchase
option until at least six (6) months (or such longer or shorter period of
time required to avoid a charge to earnings for financial accounting purposes)
have elapsed following exercise of the Stock Option unless the Plan
Administrator otherwise specifically provides in the Stock Option.


 


(iv)          Method of Exercise.  Subject
to the provisions of this Section 5, Stock Options may be exercised, in
whole or in part, at any time during the option term by giving written notice
of exercise to the Company specifying the number of shares of Common Stock
subject to the Stock Option to be purchased. 
Such notice shall be accompanied by payment in full of the Option Price
by certified or bank check or such other instrument as the Company may
accept.  If approved by the Plan
Administrator, payment, in full or in part, may also be made in the form of
unrestricted Common Stock (by delivery of such shares or by attestation)
already owned by the Participant of the 


 


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same class as the Common Stock subject to the Stock
Option (based on the Fair Market Value of the Common Stock on the date the
Stock Option is exercised); provided, that such already owned shares have been
held by the Participant for at least six months (or such longer or shorter
period of time required to avoid a charge to earnings for financial accounting
purposes) at the time of exercise or had been purchased on the open market; and
provided, further, that, in the case of an Incentive Stock Option, the right to
make a payment in the form of already owned shares of Common Stock of the same
class as the Common Stock subject to the Stock Option may be authorized only at
the time the Stock Option is granted.  If
approved by the Plan Administrator, to the extent permitted by applicable law,
payment in full or in part may also be made by delivering a properly executed
exercise notice to the Company, together with a copy of irrevocable
instructions to a broker to deliver promptly to the Company the amount of sale
or loan proceeds necessary to pay the Option Price, and, if requested, the
amount of any federal, state, local or foreign withholding taxes.  To facilitate the foregoing, the Company may
enter into agreements for coordinated procedures with one or more brokerage
firms.  No shares of Common Stock shall
be delivered until full payment therefor has been made.  Except as otherwise provided in this Section 5
below, a Participant shall have all of the rights of a shareholder of the
Company holding the class or series of Common Stock that is subject to such
Stock Option (including, if applicable, the right to vote the shares and the
right to receive dividends), when the Participant has given written notice of
exercise, has paid in full for such shares and, if requested by the Company,
has given the representation described in Section 12(f).


 


(v)           Special Rules Applicable to Incentive Stock Options.  Notwithstanding the foregoing, the following
terms shall be applicable to all Incentive Stock Options.


 


(A)          Incentive Stock Options may only be
granted to employees of the Company and its subsidiaries or parent corporation
(within the meaning of Section 424(f) of the Code).


 


(B)           The aggregate Fair Market Value of
the shares of Common Stock (determined as of the respective date or dates of
grant) for which one or more options granted to any employee under the Plan (or
any other option plan of the Company or any subsidiaries or parent corporation)
may for the first time become exercisable as Incentive Stock Options during any
one (1) calendar year shall not exceed the sum of One Hundred Thousand
Dollars ($100,000).  To the extent an
employee holds two (2) or more such options which become exercisable for
the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Stock Options shall be applied on
the basis of the order in which such options are granted.  Any Stock Options or portions thereof that
exceed such limit shall be treated as NonQualified Stock Options,
notwithstanding any other provision of an Award Agreement, but only to the extent
of such excess.


 


(C)           If any employee to whom an Incentive
Stock Option is granted is the owner of stock (as determined under Code Section 424(d))



 


11

















 


possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company (or any subsidiary or
parent corporation (within the meaning of Section 424(f) of the
Code)), then the option term shall not exceed five (5) years measured from
the option grant date and the Option Price shall not be less than one hundred
ten percent (110%) of the Fair Market Value of Common Stock on the option grant
date.


 


(D)          If an Incentive Stock Option is
exercised after the post-termination exercise periods that apply for purposes
of Section 422 of the Code, such Stock Option will thereafter be treated
as a NonQualified Stock Option.


 


(e)           Nontransferability of
Stock Options.  No Stock
Option shall be transferable by the Participant other than (i) by will or
by the laws of descent and distribution or any other testamentary distribution;
or (ii) in the case of a NonQualified Stock Option, unless otherwise
determined by the Plan Administrator, to a Permitted Transferee.  All Stock Options shall be exercisable,
subject to the terms of this Plan, only by the Participant, the guardian or
legal representative of the Participant, or any person  to whom such option is transferred pursuant
to this paragraph, it being understood that the term “holder” and “Participant”
include such guardian, legal representative and other transferee; provided,
however, that Termination of Employment shall continue to refer to the
Termination of Employment of the original Participant and provided further that
any Award held by transferee shall continue to be subject to the same terms and
conditions that were applicable to that Award immediately before the transfer
to the transferee.  Notwithstanding the
foregoing, a Participant may, by delivering written notice to the Company, in a
form satisfactory to the Company, designate a third party who, in the event of
death of the Participant, shall thereafter be entitled to exercise the
Participant’s Stock Options.


 


(f)            Termination by Death.  Unless otherwise determined by the Plan
Administrator at the time of grant, if a Participant incurs a Termination of
Employment by reason of death, any Stock Option held by such Participant may
thereafter be exercised, to the extent then exercisable, or on such accelerated
basis as the Plan Administrator may determine, until the expiration of the stated
term of such Stock Option.


 


(g)           Termination by Reason of
Disability.  Unless otherwise
determined by the Plan Administrator at the time of grant or, if a longer
period of exercise is desired, thereafter, if a Participant incurs a
Termination of Employment by reason of Disability, any Stock Option held by
such Participant (or the appointed fiduciary of such Participant) may
thereafter be exercised by the Participant (or the appointed fiduciary of such
Participant), to the extent it was exercisable at the time of termination, or
on such accelerated basis as the Plan Administrator may determine, for a period
of one year from the date of such Termination of Employment or until the
expiration of the stated term of such Stock Option, whichever period is shorter;
provided, however, that if the Participant dies within such period, any
unexercised Stock Option held by such Participant shall, notwithstanding the
expiration of such period, continue to be exercisable to the extent to 


 


12

















 


which it was exercisable at the time of death until
the expiration of the stated term of such Stock Option.


 


(h)           Termination by Reason of
Retirement.  Unless otherwise
determined by the Plan Administrator at the time of grant or, if a longer
period of exercise is desired, thereafter, if a Participant incurs a
Termination of Employment by reason of Retirement, any Stock Option held by
such Participant may thereafter be exercised by the Participant, to the extent
it was exercisable at the time of such Retirement, or on such accelerated basis
as the Plan Administrator may determine, for a period of one year from the date
of such Termination of Employment or until the expiration of the stated term of
such Stock Option, whichever period is shorter; provided, however, that if the
Participant dies within such period any unexercised Stock Option held by such
Participant shall, notwithstanding the expiration of such period, continue to
be exercisable to the extent to which it was exercisable at the time of death
for until the expiration of the stated term of such Stock Option.


 


(i)            Other Termination.  Unless otherwise determined by the Plan
Administrator at the time of grant or, if a longer period of exercise is
desired, thereafter:  (A) if a Participant
incurs a Termination of Employment for Cause, all Stock Options held by such
Participant shall thereupon terminate; and (B) if a Participant incurs a
Termination of Employment for any reason other than death, Disability,
Retirement or for Cause, any Stock Option held by such Participant, to extent
it was then exercisable at the time of termination, or on such accelerated
basis as the Plan Administrator may determine, may be exercised for a period of
three months from the date of such Termination of Employment or until the
expiration of the stated term of such Stock Option, whichever period is
shorter; provided, however, that if the Participant dies within such
three-month period, any unexercised Stock Option held by such Participant
shall, notwithstanding the expiration of such three-month period, continue to
be exercisable to the extent to which it was exercisable at the time of death
until the expiration of the stated term of such Stock Option.


 


(j)            Extension of Termination
Date.  An Award Agreement may
also provide that if the exercise of any Stock Option following the termination
of the Participant’s Termination of Employment (other than upon the Participant’s
death) would be prohibited at any time solely because the issuance of shares of
Common Stock would violate the registration requirements under the Securities
Act, then the Stock Option held by such Participant may be exercised, in lieu
of the periods specified in Section 5(f) through 5(i), during the
three (3) month period after the Participant’s Termination of Employment
in which the exercise of the Stock Option would not be in violation of such
registration requirements or until the expiration of the stated term of such
Stock Option, whichever period is shorter.


 


(k)           Change of Control Termination.  A Stock Option held by any Participant who
has not suffered a Termination of Employment prior to the effective time of a
Change in Control may be subject to additional acceleration of vesting and
exercisability upon or after such event as may be provided in the Award
Agreement for such Stock Option or as may be provided in any other written
agreement between the 


 


13

















 


Company or any Subsidiary or Affiliate and the
Participant, but in the absence of such provision, no such acceleration shall
occur.  Notwithstanding the preceding
sentence, the vesting schedules of all Awards shall be automatically
accelerated so that the Stock Options shall become exercisable as to all shares
subject to the Award if the Participant’s employment is terminated without
Cause by the Company within one (1) year following a Change in Control.


 


(l)            Cashing Out of Stock
Option.  On receipt of written
notice of exercise, the Plan Administrator may elect to cash out all or part of
the portion of the shares of Common Stock for which a Stock Option is being
exercised by paying the Participant an amount, in cash or Common Stock, equal
to the excess of the Fair Market Value of the Common Stock over the Option
Price times the number of shares of Common Stock for which the Option is being
exercised on the effective date of such cash-out.


 


Section 6.              Restricted
Stock


 


(a)           Administration.  Shares of Restricted Stock may be awarded
either alone or in addition to other Awards granted under the Plan.  The Plan Administrator shall determine the
Participants to whom and the time or times at which grants of Restricted Stock
will be awarded, the number of shares to be awarded to any Participant, the
conditions for vesting, the time or times within which such Awards may be
subject to forfeiture and any other terms and conditions of the Awards, in
addition to those contained in Section 6(c).


 


(b)           Awards and Certificates.  Shares of Restricted Stock shall be evidenced
in such manner as the Plan Administrator may deem appropriate, including
book-entry registration or issuance of one or more stock certificates.  Any certificate issued in respect of shares
of Restricted Stock shall be registered in the name of such Participant and
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Award, substantially in the following form:


 


“The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of Mauna Kea Enterprises, Inc. 2007 Equity Incentive Plan and
an Award Agreement.  Copies of such Plan
and Agreement are on file at the offices of the Company.”


 


The Plan Administrator may require that the
certificates evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed and that, as a condition of any Award of
Restricted Stock, the Participant shall have delivered a stock power, endorsed
in blank, relating to the Common Stock covered by such Award.


 


(c)           Terms and Conditions.  Shares of Restricted Stock shall be subject
to the following terms and conditions:


 


(i)            The Plan
Administrator may, prior to or at the time of grant, designate an Award of
Restricted Stock as a Qualified Performance-Based Award, in 


 


14

















 


which event it shall condition the grant or vesting,
as applicable, of such Restricted Stock upon the attainment of Performance
Goals.  If the Plan Administrator does
not designate an Award of Restricted Stock as a Qualified Performance-Based
Award, it may also condition the grant or vesting thereof upon the attainment
of Performance Goals.  Regardless of
whether an Award of Restricted Stock is a Qualified Performance-Based Award,
the Plan Administrator may also condition the grant or vesting thereof upon the
continued service of the Participant. 
The conditions for grant or vesting and the other provisions of
Restricted Stock Awards (including without limitation any applicable
Performance Goals) need not be the same with respect to each recipient.  The Plan Administrator may at any time, in
its sole discretion, accelerate or waive, in whole or in part, any of the
foregoing restrictions; provided, however, that in the case of Restricted Stock
that is a Qualified Performance-Based Award, the applicable Performance Goals
have been satisfied.


 


(ii)           Subject to the
provisions of the Plan and the Award Agreement referred to in Section 6(c)(vi),
during the period, if any, set by the Plan Administrator, commencing with the
date of such Award for which such Participant’s continued service is required
(the “Restriction Period”), and until the later of (A) the
expiration of the Restriction Period and (B) the date the applicable
Performance Goals (if any) are satisfied, the Participant shall not be
permitted to sell, assign, transfer, pledge or otherwise encumber shares of
Restricted Stock; provided that, to the extent permitted by applicable law, the
foregoing shall not prevent a Participant from pledging Restricted Stock as
security for a loan, the sole purpose of which is to provide funds to pay the
Option Price for Stock Options.


 


(iii)          Except as provided
in this paragraph (iii) and Section 6(c)(i) and 7(c)(ii) and
the Award Agreement, the Participant shall have, with respect to the shares of
Restricted Stock, all of the rights of a shareholder of the Company holding the
class or series of Common Stock that is the subject of the Restricted Stock,
including, if applicable, the right to vote the shares and the right to receive
any cash dividends.  If so determined by
the Plan Administrator in the applicable Award Agreement and subject to Section 15(h) of
the Plan, (A) cash dividends on the class or series of Common Stock that
is the subject of the Restricted Stock Award shall be automatically deferred
and reinvested in additional Restricted Stock, held subject to the vesting of
the underlying Restricted Stock, or held subject to meeting Performance Goals,
and (B) dividends payable in Common Stock shall be paid in the form of
Restricted Stock of the same class as the Common Stock with which such dividend
was paid, held subject to the vesting of the underlying Restricted Stock, or
held subject to meeting Performance Goals.


 


(iv)          Except to the extent
otherwise provided in the applicable Award Agreement or Section 6(c)(i),
7(c)(ii), 7(c)(v) or 11(a), upon a Participant’s Termination of Employment
for any reason during the Restriction Period or before the applicable
Performance Goals are satisfied, all shares still subject to restriction shall
be forfeited by the Participant; provided, however, that the Plan Administrator
shall have the discretion to waive, in whole or in part, any or all remaining
restrictions (other than, in the case of Restricted Stock with respect to which
a Participant is a Covered Employee, satisfaction of the applicable Performance
Goals unless the Participant’s employment is terminated 


 


15

















 


by reason of death or Disability by the Company
without Cause) with respect to any or all of such Participant’s shares of
Restricted Stock.


 


(v)           If and when any
applicable Performance Goals are satisfied and the Restriction Period expires
without a prior forfeiture of the Restricted Stock, unlegended certificates for
such shares shall be delivered to the Participant upon surrender of the
legended certificates.


 


(vi)          Each Award shall be
confirmed by, and be subject to, the terms of an Award Agreement.


 


Section 7.              Performance
Units


 


(a)           Administration.  Performance Units may be awarded either alone
or in addition to other Awards granted under the Plan.  The Plan Administrator shall determine the
Participants to whom and the time or times at which Performance Units shall be
awarded, the number of Performance Units to be awarded to any Participant), the
duration of the Award Cycle and any other terms and conditions of the Award, in
addition to those contained in Section 7(b).


 


(b)           Terms and Conditions.  Performance Units Awards shall be subject to
the following terms and conditions:


 


(i)            The Plan
Administrator may, prior to or at the time of the grant, designate Performance
Units as Qualified Performance-Based Awards, in which event it shall condition
the settlement thereof upon the attainment of Performance Goals.  If the Plan Administrator does not designate
Performance Units as Qualified Performance-Based Awards, it may also condition
the settlement thereof upon the attainment of Performance Goals.  Regardless of whether Performance Units are
Qualified Performance-Based Awards, the Plan Administrator may also condition
the settlement thereof upon the continued service of the Participant.  The provisions of such Awards (including
without limitation any applicable Performance Goals) need not be the same with
respect to each recipient.  Subject to
the provisions of the Plan and the Award Agreement referred to in Section 7(b)(iv),  Performance Units may not be sold, assigned,
transferred, pledged or otherwise encumbered during the Award Cycle.


 


(ii)           Except to the
extent otherwise provided in the applicable Award Agreement or Section 7(b)(ii) or
Section 9(a), upon a Participant’s Termination of Employment for any
reason during the Award Cycle or before any applicable Performance Goals are
satisfied, all rights to receive cash or stock in settlement of the Performance
Units shall be forfeited by the Participant; provided, however, that the Plan
Administrator shall have the discretion to waive, in whole or in part, any or
all remaining payment limitations (other than, in the case of Performance Units
that are Qualified Performance-Based Awards, satisfaction of the applicable
Performance Goals unless the Participant’s employment is terminated by reason
of death or Disability by the Company without Cause) with respect to any or all
of such Participant’s Performance Units.


 


16

















 


(iii)          At the expiration
of the Award Cycle, the Plan Administrator shall evaluate the Company’s
performance in light of any Performance Goals for such Award, and shall
determine the number of Performance Units granted to the Participant which have
been earned, and the Plan Administrator shall then cause to be delivered (A) a
number of shares of Common Stock equal to the number of Performance Units
determined by the Plan Administrator to have been earned, or (B) cash
equal to the Fair Market Value of such number of shares of Common Stock to the
Participant, as the Plan Administrator shall elect.


 


(iv)          Each Award shall be
confirmed by, and be subject to, the terms of an Award Agreement.


 


Section 8.              Other
Stock-Based Awards


 


Other
Awards of Common Stock and other Awards that are valued in whole or in part by
reference to, or are otherwise based upon, Common Stock, including (without
limitation) dividend equivalents and convertible debentures, may be granted
either alone or in conjunction with other Awards granted under the Plan.


 


Section 9.              Change
in Control Provisions


 


(a)           Impact of Event.  An
Award held by any Participant who has not suffered a Termination of Employment
prior to the effective time of a Change in Control may be subject to additional
acceleration of vesting and exercisability upon or after such event as may be
provided in the Award Agreement or as may be provided in any other written
agreement between the Company or any Subsidiary or Affiliate and the
Participant, but in the absence of such provision, no such acceleration shall
occur.


 


(b)           Definition of Change in Control.  For purposes of the Plan, a “Change in
Control” shall mean the happening of any of the following events:


 


(i)            An acquisition by
any individual, entity or “group” (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
50% or more of either (1) the then outstanding shares of common stock of
the Company (the “Outstanding Company Common Stock”) or (2) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); excluding, however, the following:  (1) any acquisition directly from the
Company, other than an acquisition by virtue of the exercise of a conversion
privilege unless the security being so converted was itself acquired directly
from the Company, (2) any acquisition by the Company, (3) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any entity controlled by the Company, (4) any
acquisition pursuant to a transaction which complies with clauses (1), (2) and
(3) of subsection (iii) of this Section 9(b), or (5) any
Change in Control triggered solely because the percentage of Outstanding
Company Common Stock or Outstanding Company Voting Securities held by any
Person (the “Subject Person”) exceeds the designated 


 


17

















 


percentage threshold thereof as a result of a
repurchase or other acquisition of securities by the Company reducing the number
of shares outstanding, provided that if a Change in Control would occur (but
for the operation of this sentence) as a result of the acquisition of
securities by the Company, and after such share acquisition, the Subject Person
becomes the owner of any additional voting securities that, assuming the
repurchase or other acquisition had not occurred, increases the percentage of
the then outstanding voting securities owned by the Subject Person over the
designated percentage threshold, then a Change in Control shall be deemed to
occur; or


 


(ii)           A change in the
composition of the Board such that the individuals who, as of the Effective
Date, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent
Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, for purposes of this Section 9(b)(ii), that any
individual who becomes a member of the Board subsequent to the Effective Date,
whose election, or nomination for election by the Company’s shareholders, was
approved by a vote of at least a majority of those individuals who are members
of the Board and who were also members of the Incumbent Board (or deemed to be
such pursuant to this proviso) shall be considered as though such individual
were a member of the Incumbent Board; but, provided, further, that any such
individual whose initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board shall not be so considered as a
member of the Incumbent Board; or


 


(iii)          Consummation of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (“Corporate Transaction”);
excluding, however, such a Corporate Transaction pursuant to which (1) all
or substantially all of the individuals and entities who are the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 50% of, respectively, the
outstanding shares of common stock, and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Corporate
Transaction (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such Corporate
Transaction, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (2) no Person (other than the
Company, any employee benefit plan (or related trust) of the Company or such
corporation resulting from such Corporate Transaction) will beneficially own,
directly or indirectly, 331⁄3% or more of, respectively, the outstanding
shares of common stock of the corporation resulting from such Corporate
Transaction or the combined voting power of the outstanding voting securities
of such corporation entitled to vote generally in the election of directors
except to the extent that such ownership existed prior to the Corporate
Transaction, and (3) individuals who were members of the Incumbent Board
will constitute at least a majority of the members of the board of directors of
the corporation resulting from such Corporate Transaction; or


 


18

















 


(iv)          The approval by the
shareholders of the Company of a complete liquidation or dissolution of the
Company, or a complete dissolution or liquidation of the Company shall
otherwise occur.


 


The
term Change in Control shall not include a sale of assets, merger or other
transaction effected exclusively for the purpose of changing the domicile of
the Company.


 


Notwithstanding the foregoing or any other provision
of the Plan, the definition of Change in Control (or any analogous term) in an
Award Agreement between the Company or any Subsidiary and the Participant shall
supersede the foregoing definition with respect to Awards subject to such
agreement (it being understood, however, that if no definition of Change in
Control or any analogous term is set forth in such an Award Agreement, the
foregoing definition shall apply).


 


Section 10.            Forfeiture
of Awards


 


Notwithstanding
anything in the Plan to the contrary, the Plan Administrator shall have the
authority under the Plan to provide in any Award Agreement that in the event of
serious misconduct by a Participant (including, without limitation, any
misconduct prejudicial to or in conflict with the Company or its Subsidiaries
or Affiliates, or any Termination of Employment for Cause), or any activity of
a Participant in competition with the business of the Company or any Subsidiary
or Affiliate, any outstanding Award granted to such Participant shall be cancelled,
in whole or in part, whether or not vested or deferred.  The determination of whether a Participant
has engaged in a serious breach of conduct or any activity in competition with
the business of the Company or any Subsidiary or Affiliate shall be determined
by the Plan Administrator in good faith and in its sole discretion.


 


Section 11.            Term,
Amendment and Termination


 


The
Plan will terminate on the tenth (10th) anniversary of the Effective Date.  Under the Plan, Awards outstanding as of such
date shall not be affected or impaired by the termination of the Plan.


 


The
Board may amend, alter, or discontinue the Plan, but no amendment, alteration
or discontinuation shall be made which would impair the rights of a Participant
under a Stock Option, Restricted Stock Award, Performance Unit Award or other
Award theretofore granted without the Participant’s or recipient’s consent,
except such an amendment made to comply with applicable law, stock exchange rules or
accounting rules.  In addition, no such
amendment shall be made without the approval of the Company’s shareholders to
the extent such approval is required by applicable law or stock exchange rules.


 


The
Plan Administrator may amend the terms of any Stock Option or other Award
theretofore granted, prospectively or retroactively, but no such amendment
shall cause a Qualified Performance-Based Award to cease to qualify for the Section 162(m) Exemption
or impair the rights of any holder without the holder’s consent except such an 


 


19

















 


amendment made to cause the Plan or Award to comply
with applicable law, stock exchange rules or accounting rules.


 


Subject
to the above provisions, the Board shall have authority to amend the Plan to
take into account changes in law and tax and accounting rules as well as
other developments, and to grant Awards which qualify for beneficial treatment
under such rules without shareholder approval.


 


Section 12.            Unfunded
Status of Plan


 


It is
presently intended that the Plan constitute an “unfunded” plan for incentive
and deferred compensation.  The Plan
Administrator may authorize the creation of trusts or other arrangements to
meet the obligations created under the Plan to deliver Common Stock or make
payments; provided, however, that unless the Plan Administrator otherwise
determines, the existence of such trusts or other arrangements is consistent
with the “unfunded” status of the Plan.


 


Section 13.            General
Provisions


 


(a)           Availability
of Shares.  During the terms
of any Awards under the Plan, the Company shall keep available at all times the
number of shares of Common Stock required to satisfy such Awards.


 


(b)           Securities
Law Compliance.  The Company
shall seek to obtain from each regulatory commission or agency having jurisdiction
over the Plan such authority as may be required to grant Awards and to issue
and sell shares of Common Stock upon exercise of the Awards; provided, however,
that this undertaking shall not require the Company to register under the
Securities Act the Plan, any Award or any Common Stock issued or issuable
pursuant to any such Award. 
Notwithstanding any other provision of the Plan or agreements made
pursuant thereto, the Company shall not be required to issue or deliver any
certificate or certificates for shares of Common Stock under the Plan prior to
fulfillment of all of the following conditions:


 


(i)            Listing
or approval for listing upon notice of issuance, of such shares on NASDAQ, or
such other securities exchange as may at the time be the principal market for
the Common Stock;


 


(ii)           Any
registration or other qualification of such shares of the Company under any
state or federal law or regulation, or the maintaining in effect of any such
registration or other qualification which the Plan Administrator shall, in its
absolute discretion upon the advice of counsel, deem necessary or advisable;
and


 


(iii)          Obtaining
any other consent, approval, or permit from any state or federal governmental
agency which the Plan Administrator shall, in its absolute discretion after
receiving the advice of counsel, determine to be necessary or advisable.


 


(c)           Investment
Assurances.  The Company may
require a Participant, as a condition of acquiring Common Stock under any
Award, (i) to give written 


 


20

















 


assurances
satisfactory to the Company as to the Participant’s knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
exercising the Award; and (ii) to give written assurances satisfactory to
the Company stating that the Participant is acquiring Common Stock subject to
the Award for the Participant’s own account and not with any present intention
of selling or otherwise distributing the Common Stock.  The foregoing requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (1) the
issuance of the shares of Common Stock upon the exercise or acquisition of
Common Stock under the Award has been registered under a then currently
effective registration statement under the Securities Act or (2) as to any
particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then applicable
securities laws.  The Company may, upon
advice of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order to
comply with applicable securities laws, including, but not limited to, legends
restricting the transfer of the Common Stock.


 


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


 


(e)           No Limit of
Other Arrangements.  Nothing
contained in the Plan shall prevent the Company or any Subsidiary or Affiliate
from adopting other or additional compensation arrangements for its employees.


 


(f)            No Contract of Employment. 
The Plan shall not constitute a contract of employment, and adoption of
the Plan shall not confer upon any employee any right to continued employment,
nor shall it interfere in any way with the right of the Company or any
Subsidiary or Affiliate to terminate the employment of any employee at any time.


 


(g)           Tax
Withholding.  No later than
the date as of which an amount first becomes includible in the gross income of
the Participant for federal income tax purposes with respect to any Award under
the Plan, the Participant shall pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any federal, state, local
or foreign taxes of any kind required by law to be withheld with 


 


21

















 


respect to such
amount.  Unless otherwise determined by
the Company, withholding obligations may be settled with Common Stock,
including Common Stock that is part of the Award that gives rise to the
withholding requirement; provided, that not more than the legally required
minimum withholding may be settled with Common Stock.  The obligations of the Company under the Plan
shall be conditional on such payment or arrangements, and the Company and its
Affiliates shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment otherwise due to the Participant.  The Plan Administrator may establish such
procedures as it deems appropriate, including making irrevocable elections, for
the settlement of withholding obligations with Common Stock.


 


(h)           Dividends.  Reinvestment of dividends in additional
Restricted Stock at the time of any dividend payment shall only be permissible
if sufficient shares of Common Stock are available under Section 3 for
such reinvestment (taking into account then outstanding Stock Options and other
Awards).


 


(i)            Death Beneficiary. 
The Plan Administrator shall establish such procedures as it deems
appropriate for a Participant to designate a beneficiary  to whom any amounts payable in the event of
the Participant’s death are to be paid or by whom any rights of the
Participant, after the Participant’s death, may be exercised.


 


(j)            Subsidiary Employees. 
In the case of a grant of an Award to any employee of a Subsidiary of
the Company, the Company may, if the Plan Administrator so directs, issue or transfer
the shares of Common Stock, if any, covered by the Award to the Subsidiary, for
such lawful consideration as the Plan Administrator may specify, upon the
condition or understanding that the Subsidiary will transfer the shares of
Common Stock to the employee in accordance with the terms of the Award
specified by the Plan Administrator pursuant to the provisions of the
Plan.  All shares of Common Stock
underlying Awards that are forfeited or canceled should revert to the Company.


 


(k)           Use of
Proceeds From Stock.  Proceeds
from the sale of Common Stock pursuant to Awards shall constitute general funds
of the Company.


 


(l)            Governing Law.  The
Plan and all Awards made and actions taken thereunder shall be governed by and
construed in accordance with the laws of the State of Colorado, without
reference to principles of conflict of laws.


 


(m)          Nontransferability.  Except as otherwise provided hereunder or by
the Plan Administrator, Awards under the Plan are not transferable except by
will or by laws of descent and distribution.


 


(n)           Application
to Participants Outside of the United States.  In the event an Award is granted to
Participant who is employed or providing services outside the United States and
who is not compensated from a payroll maintained in the United States, the Plan
Administrator may, in its sole discretion, modify the provisions of the Plan as
they pertain to such individual to comply with applicable foreign law.


 


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Section 14.             Effective Date of Plan.


 


The Plan shall be
effective as of the date that it is approved by the shareholders of the Company
(the “Effective Date”).


 


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