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.


 


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(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. In no event shall any Awards, except for
nonqualified stock options, be granted prior to the date this Plan is approved
by the stockholders of the Company. 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.


 


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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.


 


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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 


 


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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


 


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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


 


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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


 


8

















 


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.


 


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(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


 


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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


 


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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


 


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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 


 


13

















 


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


 


14

















 


(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


 


15

















 


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.


 


16

















 


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.


 


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