Exhibit
10.1


 


CASCADE
MICROTECH, INC.


2000
STOCK INCENTIVE PLAN


AS
AMENDED


 


1.             Purposes of the Plan.  The
purposes of this Stock Incentive Plan are to attract, retain and reward
individuals who can and do contribute to the Company’s success by providing Employees
and Consultants an opportunity to share in the equity of the Company and to
more closely align their interests with the Company and its shareholders.


 


Options
granted hereunder may be either “incentive stock options,” as defined in Section 422
of the Internal Revenue Code of 1986, as amended, or “nonqualified stock
options,” at the discretion of the Board and as reflected in the terms of the
written option agreement.  In addition,
shares of the Company’s Common Stock may be Sold hereunder independent of any
Option grant.


 


2.             Definitions.  As used
herein, the following definitions shall apply:


 


2.1           “Administrator” shall mean the Board or any
of its Committees as shall be administering the Plan, in accordance with Section 4.1
of the Plan.


 


2.2           “Board” shall mean the Board of Directors
of the Company.


 


2.3           “Code” shall mean the Internal Revenue Code
of 1986, as amended.


 


2.4           “Committee” shall mean a committee
appointed by the Board in accordance with Section 4.1 of the Plan.


 


2.5           “Common Stock” shall mean the Common Stock
of the Company.


 


2.6           “Company” shall mean Cascade Microtech, Inc.,
an Oregon corporation.


 


2.7           “Consultant” shall mean any person who is
engaged by the Company or any Parent or Subsidiary to render consulting
services and is compensated for such consulting services and any Director of
the Company whether compensated for such services or not.


 


2.8           “Continuous Status as an Employee or Consultant”
shall mean the absence of any interruption or termination of service as an
Employee or Consultant.  Continuous
Status as an Employee or Consultant shall not be considered interrupted in the
case of: (i) any sick leave, military leave, or any other leave of absence
approved by the Company; provided, however, that for purposes of Incentive
Stock Options, any such leave is for a period of not more than ninety days or
reemployment upon the expiration of such leave is guaranteed by contract or
statute, provided, further, that on the ninety-first day of such leave (where
re-employment is not guaranteed by contract or statute) the Optionee’s
Incentive Stock Option shall automatically convert to a Nonqualified Stock
Option; or (ii) transfers between locations of the Company or between the
Company, its Parent, its Subsidiaries or its successor.


 


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2.9           “Director” shall mean a member of the
Board.


 


2.10         “Disability” shall mean total and permanent
disability as defined in Section 22(e)(3) of the Code.


 


2.11         “Employee” shall mean any person, including
Officers and Directors, employed by the Company or any Parent or
Subsidiary.  Neither the payment of a
director’s fee by the Company nor service as a Director shall be sufficient to
constitute “employment” by the Company.


 


2.12         “Exchange Act” shall mean the Securities Exchange
Act of 1934, as amended.


 


2.13         “Fair Market Value” shall mean, as of any
date, the value of Common Stock determined as follows:


 


2.13.1      If
the Common Stock is listed on any established stock exchange or a national
market system, including without limitation the Nasdaq National Market or the
Nasdaq SmallCap Market of the Nasdaq Stock Market, its Fair Market Value shall
be the closing sales price for the Common Stock (or the closing bid, if no
sales were reported) as quoted on such exchange or system for the last market
trading day prior to the date of determination, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;


 


2.13.2      If
the Common Stock is regularly quoted by a recognized securities dealer but
selling prices are not reported, its Fair Market Value shall be the mean
between the high bid and low asked prices for the Common Stock on the last
market trading day prior to the date of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable;


 


2.13.3      In
the absence of an established market for the Common Stock, the Fair Market
Value shall be determined in good faith by the Administrator.


 


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


 


2.15         “Nonqualified Stock Option” shall mean an
Option not intended to qualify as an incentive stock option within the meaning
of Section 422 of the Code.


 


2.16         “Notice of Grant” shall mean a written
notice evidencing certain terms and conditions of an individual Option
grant.  The Notice of Grant is part of
the Option Agreement.


 


2.17         “Officer” shall mean a person who is an
officer of the Company within the meaning of Section 16 of the Exchange
Act and the rules and regulations promulgated thereunder.


 


2.18         “Option” shall mean a stock option granted
pursuant to the Plan.


 


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2.19         “Option Agreement” shall mean a written
agreement between the Company and an Optionee evidencing the terms and
conditions of an individual Option grant. 
The Option Agreement is subject to the terms and conditions of the Plan.


 


2.20         “Optioned Stock” shall mean the Common
Stock subject to an Option.


 


2.21         “Optionee” shall mean an Employee or
Consultant who holds an Option.


 


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


 


2.23         “Plan” shall mean this 2000 Stock Incentive
Plan.


 


2.24         “Rule 16b-3”  shall mean Rule 16b-3 of the Exchange
Act or any successor to Rule 16b-3, as in effect when discretion is being
exercised with respect to the Plan.


 


2.25         “Sale” or “Sold” shall include, with
respect to the sale of Shares under the Plan, the sale of Shares for any form
of consideration specified in Section 8.2, as well as a grant of Shares
for consideration in the form of past or future services.


 


2.26         “Share” shall mean a share of the Common
Stock, as adjusted in accordance with Section 11 of the Plan.


 


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


 


3.             Stock Subject to the Plan.


 


3.1           Subject
to the provisions of paragraphs 3.2 and 3.3 of this Section 3 and the
provisions of Section 11 of the Plan, the maximum aggregate number of
Shares which may be optioned and/or Sold under the Plan is 2,400,000 shares of
Common Stock.  The Shares may be
authorized, but unissued, or reacquired Common Stock.


 


3.2           If
an Option should expire or become unexercisable for any reason, or is otherwise
terminated or forfeited, without having been exercised in full, the unpurchased
Shares which were subject thereto shall, unless the Plan shall have been
terminated, become available for future Option grants and/or Sales under the
Plan.  If any Shares issued pursuant to a
Sale shall be reacquired, canceled or forfeited for any reason, such Shares
shall become available for future Option grants and/or Sales under the Plan,
unless the Plan shall have been terminated. 
If the exercise price of any Option granted under the Plan is satisfied
by tendering Shares of Common Stock to the Company (by either actual delivery
or by attestation), only the number of shares of Common Stock issued net of the
Shares of Common Stock tendered shall be deemed delivered for purposes of
determining the maximum number of Shares available for delivery under the Plan.


 


3.3           Notwithstanding
any other provision of this Section 3, but subject to the provisions of Section 11
of the Plan, the maximum number of Shares that may be issued upon the exercise
of Incentive Stock Options shall be 1,200,000.


 


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4.             Administration of the Plan.


 


4.1           Procedure.


 


4.1.1        Multiple Administrative Bodies.  If permitted by Rule 16b-3, the Plan may
be administered by different bodies with respect to Directors, Officers who are
not Directors, and Employees who are neither Directors nor Officers.


 


4.1.2        Administration With Respect to Directors and Officers
Subject to Section 16(b). 
With respect to Option grants made to Employees who are also Officers or
Directors subject to Section 16(b) of the Exchange Act, the Plan
shall be administered by (A) the Board, if the Board may administer the
Plan in compliance with the rules governing a plan intended to qualify as
a discretionary plan under Rule 16b-3, or (B) a Committee designated
by the Board to administer the Plan, which Committee shall be constituted to
comply with the rules, if any, governing a plan intended to qualify as a
discretionary plan under Rule 16b-3. 
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. 
From time to time the Board may increase the size of the Committee and appoint
additional members, remove members (with or without cause) and substitute new
members, fill vacancies (however caused), and remove all members of the
Committee and thereafter directly administer the Plan, all to the extent
permitted by the rules, if any, governing a plan intended to qualify as a
discretionary plan under Rule 16b-3. 
With respect to persons subject to Section 16 of the Exchange Act,
transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3.  To the
extent any provision of the Plan or action by the Administrator fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Administrator.


 


4.1.3        Administration With Respect to Other Persons.  With respect to Option grants made to
Employees or Consultants who are neither Directors nor Officers of the Company,
the Plan shall be administered by the Board or a Committee designated by the
Board, which Committee shall be constituted to satisfy the legal requirements
relating to the administration of stock option plans under applicable corporate
and securities laws and the Code.  Once
appointed, such Committee shall serve in its designated capacity until
otherwise directed by the Board.  The
Board may increase the size of the Committee and appoint additional members,
remove members (with or without cause) and substitute new members, fill
vacancies (however caused), and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by the
legal requirements relating to the administration of stock option plans under
state corporate and securities laws and the Code.


 


4.2           Powers of the Administrator.  Subject to the provisions of the Plan, and in
the case of a Committee, subject to the specific duties delegated by the Board
to such Committee, the Administrator shall have the authority, in its
discretion:


 


4.2.1        to
grant Incentive Stock Options in accordance with Section 422 of the Code,
or Nonqualified Stock Options;


 


4.2.2        to
authorize Sales of Shares of Common Stock hereunder;


 


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4.2.3        to
determine, upon review of relevant information, the Fair Market Value of the
Common Stock;


 


4.2.4        to
determine the exercise/purchase price per Share of Options to be granted or
Shares to be Sold, which exercise/purchase price shall be determined in
accordance with Section 8.1 of the Plan;


 


4.2.5        to
determine the Employees or Consultants to whom, and the time or times at which,
Options shall be granted and the number of Shares to be represented by each
Option;


 


4.2.6        to
determine the Employees or Consultants to whom, and the time or times at which,
Shares shall be Sold and the number of Shares to be Sold;


 


4.2.7        to
interpret the Plan;


 


4.2.8        to
prescribe, amend and rescind rules and regulations relating to the Plan;


 


4.2.9        to
determine the terms and provisions of each Option granted (which need not be
identical) and, with the consent of the holder thereof, modify or amend each
Option;


 


4.2.10      to
determine the terms and provisions of each Sale of Shares (which need not be
identical) and, with the consent of the purchaser thereof, modify or amend each
Sale;


 


4.2.11      to
accelerate or defer (with the consent of the Optionee) the exercise date of any
Option;


 


4.2.12      to
accelerate or defer (with the consent of the Optionee or purchaser of Shares)
the vesting restrictions applicable to Shares Sold under the Plan or pursuant
to Options granted under the Plan;


 


4.2.13      to
authorize any person to execute on behalf of the Company any instrument
required to effectuate the grant of an Option or Sale of Shares previously
granted or authorized by the Administrator;


 


4.2.14      to
determine the restrictions on transfer, vesting restrictions, repurchase
rights, or other restrictions applicable to Shares issued under the Plan;


 


4.2.15      to
effect, at any time and from time to time, with the consent of the affected
Optionees, the cancellation of any or all outstanding Options under the Plan
and to grant in substitution therefor new Options under the Plan covering the
same or different numbers of Shares, but having an Option price per Share
consistent with the provisions of Section 8 of this Plan as of the date of
the new Option grant;


 


4.2.16      to
establish, on a case-by-case basis, different terms and conditions pertaining
to exercise or vesting rights upon termination of employment, whether at the
time of an Option grant or Sale of Shares, or thereafter;


 


4.2.17      to
approve forms of agreement for use under the Plan;


 


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4.2.18      to
reduce the exercise price of any Option to the then current Fair Market Value
if the Fair Market Value of the Common Stock covered by such Option shall have
declined since the date the Option was granted;


 


4.2.19      to
determine whether and under what circumstances an Option may be settled in cash
under subsection 9.6 instead of Common Stock; and


 


4.2.20      to
make all other determinations deemed necessary or advisable for the
administration of the Plan.


 


4.3           Effect of Administrator’s Decision.  All decisions, determinations and
interpretations of the Administrator shall be final and binding on all
Optionees and any other holders of any Options granted under the Plan or Shares
Sold under the Plan.


 


5.             Eligibility.


 


5.1           Persons Eligible.  Options may be granted and/or Shares Sold
only to Employees and Consultants. 
Incentive Stock Options may be granted only to Employees.  An Employee or Consultant who has been
granted an Option or Sold Shares may, if he or she is otherwise eligible, be
granted an additional Option or Options or Sold additional Shares.


 


5.2           ISO Limitation.  To the extent that the aggregate Fair Market
Value of Shares subject to an Optionee’s Incentive Stock Options granted by the
Company, any Parent or Subsidiary which become exercisable for the first time
during any calendar year (under all plans of the Company or any Parent or
Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonqualified Stock Options.  For purposes
of this Section 5.2, Incentive Stock Options shall be taken into account
in the order in which they were granted, and the Fair Market Value of the
Shares shall be determined as of the time of grant.


 


5.3           Section 5.2 Limitations.  Section 5.2 of the Plan shall apply only
to an Incentive Stock Option evidenced by an Option Agreement which sets forth
the intention of the Company and the Optionee that such Option shall qualify as
an Incentive Stock Option.  Section 5.2
of the Plan shall not apply to any Option evidenced by a Option Agreement which
sets forth the intention of the Company and the Optionee that such Option shall
be a Nonqualified Stock Option.


 


5.4           No Right to Continued Employment.  The Plan shall not confer upon any Optionee
any right with respect to continuation of employment or consulting relationship
with the Company, nor shall it interfere in any way with his or her right or
the Company’s right to terminate his employment or consulting relationship at
any time, with or without cause.


 


5.5           Other Limitations.  The following limitations shall apply to
grants of Options to Employees:


 


5.5.1        No
Employee shall be granted, in any fiscal year of the Company, Options to
purchase more than 500,000 Shares.


 


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5.5.2        In
connection with his or her initial employment, an Employee may be granted
Options to purchase up to an additional 500,000 Shares which shall not count
against the limit set forth in subsection 5.51 above.


 


5.5.3        The
foregoing limitations shall be adjusted proportionately in connection with any
change in the Company’s capitalization as described in Section 11.


 


5.5.4        If
an Option is canceled in the same fiscal year of the Company in which it was
granted (other than in connection with a transaction described in Section 11),
the canceled Option shall be counted against the limits set forth in
subsections 5.51 and 5.52 above.  For
this purpose, if the exercise price of an Option is reduced, the transaction
will be treated as a cancellation of the Option and the grant of a new Option.


 


6.             Term of Plan.  The Plan
shall become effective upon the earlier to occur of its adoption by the Board
or its approval by the shareholders of the Company as described in Section 17
of the Plan.  It shall continue in effect
for a term of ten (10) years, unless sooner terminated under Section 13
of the Plan.


 


7.             Term of Option.  The term
of each Option shall be stated in the Notice of Grant; provided, however, that
in the case of an Incentive Stock Option, the term shall be ten (10) years
from the date of grant or such shorter term as may be provided in the Notice of
Grant.  However, in the case of an
Incentive Stock Option granted to an Optionee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Incentive Stock Option shall be five (5) years
from the date of grant thereof or such shorter term as may be provided in the
Notice of Grant.


 


8.             Exercise/Purchase Price and
Consideration.


 


8.1           Exercise/Purchase Price.  The per-Share exercise/purchase price for the
Shares to be issued pursuant to exercise of an Option or a Sale shall be such
price as is determined by the Administrator, but shall be subject to the
following:


 


8.1.1        In
the case of an Incentive Stock Option


 


(a)           granted
to an Employee who, at the time of the grant of such Incentive Stock Option,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price shall be no less than one hundred ten percent (110%) of the Fair
Market Value per Share on the date of the grant.


 


(b)           granted
to any other Employee, the per Share exercise price shall be no less than one
hundred percent (100%) of the Fair Market Value per Share on the date of grant.


 


8.1.2        In
the case of a Nonqualified Stock Option or Sale, the per Share
exercise/purchase price shall be determined by the Administrator.


 


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8.1.3        Any
determination to establish an Option exercise price or effect a Sale of Common
Stock at less than Fair Market Value on the date of the Option grant or
authorization of Sale shall be accompanied by an express finding by the
Administrator specifying that the Option grant or Sale is in the best interest
of the Company, and specifying both the Fair Market Value and the Option
exercise price or Sale price of the Common Stock.


 


8.2           Consideration.  The consideration to be paid for the Shares
to be issued upon exercise of an Option or pursuant to a Sale, including the
method of payment, shall be determined by the Administrator.  In the case of an Incentive Stock Option, the
Administrator shall determine the acceptable form of consideration at the time
of grant.  Such consideration may consist
of:


 


8.2.1        cash;


 


8.2.2        check;


 


8.2.3        promissory
note;


 


8.2.4        transfer
to the Company of Shares which


 


(a)           in
the case of Shares acquired upon exercise of an Option, have been owned by the
Optionee for more than six months on the date of surrender, and


 


(b)           have
a Fair Market Value on the date of surrender equal to the aggregate exercise
price of the Shares to be acquired;


 


8.2.5        if
and so long as the Common Stock is registered under Section 12(b) or
12(g) of the Exchange Act, delivery of a properly executed exercise notice
together with irrevocable instructions to a broker to promptly deliver to the
Company the amount of sale or loan proceeds required to pay the exercise price;


 


8.2.6        such
other consideration and method of payment for the issuance of Shares to the
extent permitted by legal requirements relating to the administration of stock
option plans and issuances of capital stock under applicable corporate and securities
laws and the Code; or


 


8.2.7        any
combination of the foregoing methods of payment.


 


If the Fair
Market Value of the number of whole Shares transferred or the number of whole
Shares surrendered is less than the total exercise price of the Option, the
shortfall must be made up in cash or by check. 
Notwithstanding the foregoing provisions of this Section 8.2, the
consideration for Shares to be issued pursuant to a Sale may not include, in
whole or in part, the consideration set forth in subsection 8.2.5 above.


 


9.             Exercise of Option.


 


9.1           Procedure for Exercise; Rights as a Shareholder.  Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined by the


 


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Administrator,
including performance criteria with respect to the Company and/or the Optionee,
and as shall be permissible under the terms of the Plan.


 


An Option may
not be exercised for a fraction of a Share.


 


An Option
shall be deemed to be exercised when written notice of such exercise has been
given to the Company in accordance with the terms of the Option by the person
entitled to exercise the Option and full payment for the Shares with respect to
which the Option is exercised has been received by the Company.  Full payment may, as authorized by the
Administrator, consist of any consideration and method of payment allowable
under the Option Agreement and Section 8.2 of the Plan.  Each Optionee who exercises an Option shall,
upon notification of the amount due (if any) and prior to or concurrent with
delivery of the certificate representing the Shares, pay to the Company amounts
necessary to satisfy applicable federal, state and local tax withholding
requirements.  An Optionee must also
provide a duly executed copy of any stock transfer agreement then in effect and
determined to be applicable by the Administrator.  Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock represented by such stock certificate,
notwithstanding the exercise of the Option. 
No adjustment will be made for a dividend or other right for which the
record date is prior to the date the stock certificate is issued, except as
provided in Section 11 of the Plan.


 


9.2           Termination of Employment or Consulting Relationship.  In the event that an Optionee’s Continuous
Status as an Employee or Consultant terminates (other than upon the Optionee’s
death or Disability), the Optionee may exercise his or her Option, but only
within such period of time as is determined by the Administrator, and only to
the extent that the Optionee was entitled to exercise it at the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant). 
In the case of an Incentive Stock Option, the Administrator shall
determine such period of time (in no event to exceed three (3) months from
the date of termination) when the Option is granted.  If, at the date of termination, the Optionee
is not entitled to exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall revert to the Plan.  If, after termination, the Optionee does not
exercise his or her Option with the time specified by the Administrator, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.


 


9.3           Disability of Optionee.  In the event that an Optionee’s Continuous
Status as an Employee or Consultant terminates as a result of the Optionee’s
Disability, the Optionee may exercise his or her Option at any time within
twelve (12) months from the date of such termination, but only to the extent
that the Optionee was entitled to exercise it at the date of such termination
(but in no event later than the expiration of the term of such Option as set
forth in the Notice of Grant).  If, at
the date of termination, the Optionee is not entitled to exercise his or her
entire Option, the Shares covered by the unexercisable portion of the Option
shall revert to the Plan.  If, after
termination, the Optionee does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.


 


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9.4           Death of Optionee.  In the event of the death of an Optionee, the
Option may be exercised at any time within twelve (12) months following the
date of death (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee’s estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent that the Optionee was entitled to exercise the Option at
the date of death.  If, at the time of
death, the Optionee was not entitled to exercise his or her entire Option, the
Shares covered by the unexercisable portion of the Option shall revert to the
Plan.  If, after death, the Optionee’s
estate or a person who acquired the right to exercise the Option by bequest or
inheritance does not exercise the Option within the time specified herein, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.


 


9.5           Rule 16b-3.  Options granted to persons subject to Section 16(b) of
the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect
to Plan transactions.


 


9.6           Buyout Provisions.  The Administrator may at any time offer to
buy out, in whole or in part, for a payment in cash or Shares, an Option
previously granted, based on such terms and conditions as the Administrator
shall establish and communicate to the Optionee at the time that such offer is
made.


 


10.           Nontransferability of Options.  Except as
otherwise specifically provided in the Option Agreement, an Option may not be
sold, pledged, assigned, hypothecated, transferred or disposed of in any manner
other than by will, or by the laws of descent and distribution, and may be
exercised during the lifetime of the Optionee only by the Optionee or, if
incapacitated, by his or her legal guardian or legal representative.


 


11.           Adjustments Upon Changes in
Capitalization or Merger.


 


11.1         Changes in Capitalization.  Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or Sales made or which have been returned to the Plan upon
cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
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; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.”  Such
adjustment shall be made by the Administrator, whose determination in that
respect shall be final, binding and conclusive. 
Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.


 


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11.2         Dissolution or Liquidation.  In the event of the proposed dissolution or
liquidation of the Company, each outstanding Option will terminate immediately
prior to the consummation of such proposed action, unless otherwise provided by
the Administrator.  The Administrator
may, in the exercise of its sole discretion in such instances, declare that any
Option shall terminate as of a date fixed by the Board and give each Optionee
the right to exercise Optionee’s Option as to all or any part of the Common
Stock subject to the Option, including Shares as to which the Option would not
otherwise be exercisable.


 


11.3         Merger or Asset Sale. Except as otherwise
provided in an Option Agreement, in the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each outstanding Option shall be assumed or
an equivalent option shall be substituted by such successor corporation or a
Parent or Subsidiary of such successor corporation, unless the Administrator
determines, in the exercise of its sole discretion and in lieu of such assumption
or substitution, that each Optionee shall have the right to exercise Optionee’s
Option as to all or any part of the Common Stock subject to the Option,
including Shares as to which the Option would not otherwise be
exercisable.  If the Administrator
determines that an Option shall be exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator
shall notify the Optionee that the Option shall be so exercisable for a period
of thirty (30) days from the date of such notice or such shorter period as the
Administrator may specify in the notice, and the Option will terminate upon the
expiration of such period.  For the
purposes of this paragraph, the Option shall be considered assumed if,
following the merger or sale of assets, the Option confers the right to
purchase, for each Share of Optioned Stock subject to the Option immediately
prior to the merger or sale of assets, the consideration (whether stock, cash,
or other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets was not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation and the
Optionee, provide for the consideration to be received upon the exercise of the
Option, for each Share of Optioned Stock subject to the Option, to be solely
common stock of the successor corporation or its Parent equal in Fair Market
Value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.


 


12.           Time of Granting Options.  The date
of grant of an Option shall, for all purposes, be the date on which the
Administrator makes the determination granting such Option.  Notice of the determination shall be given to
each Optionee within a reasonable time after the date of such grant.


 


13.           Amendment and Termination of the
Plan.


 


13.1         Amendment and Termination.  The Board may amend or terminate the Plan
from time to time in such respects as the Board may deem advisable.


 


13.2         Shareholder Approval.  The Company shall obtain shareholder approval
of any Plan amendment to the extent necessary and desirable to comply with Rule 16b-3
or with Section


 


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422 of the
Code (or any successor rule or statute or other applicable law, rule or
regulation, including the requirements of any exchange or quotation system on
which the Common Stock is listed or quoted). 
Such shareholder approval, if required, shall be obtained in such a
manner and to such a degree as is required by the applicable law, rule or
regulation.


 


13.3         Effect of Amendment or Termination.  Any such amendment or termination of the Plan
shall not affect Options already granted, and such Options shall remain in full
force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Administrator, which
agreement must be in writing and signed by the Optionee and the Company.


 


14.           Conditions Upon Issuance of
Shares.  Shares shall not be issued pursuant to the
exercise of an Option or a Sale unless the exercise of such Option or
consummation of the Sale and the issuance and delivery of such Shares pursuant
thereto shall comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended, applicable state securities
laws, the Exchange Act, the rules and regulations promulgated thereunder,
and the requirements of any stock exchange (including NASDAQ) upon which the
Shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.


 


15.           Reservation of Shares.  The
Company, during the term of this Plan, will at all times reserve and keep
available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.


 


16.           Liability of Company.


 


16.1         Inability to Obtain Authority.  Inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not
have been obtained.


 


As a condition
to the exercise of an Option or a Sale, the Company may require the person
exercising such Option or to whom Shares are being Sold to represent and
warrant at the time of any such exercise or Sale that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required by any of the aforementioned relevant provisions of law.


 


16.2         Grants Exceeding Allotted Shares.  If the Optioned Stock covered by an Option
exceeds, as of the date of grant, the number of Shares which may be issued
under the Plan without additional shareholder approval, such Option shall be
void with respect to such excess Optioned Stock, unless shareholder approval of
an amendment sufficiently increasing the number of Shares subject to the Plan
is timely obtained in accordance with Section 13 of the Plan.


 


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17.           Shareholder Approval. 
Continuance of the Plan shall be subject to approval by the shareholders
of the Company within twelve (12) months before or after the date the Plan is
adopted.  Such shareholder approval shall
be obtained in the manner and to the degree required under applicable federal
and state law.


 


18.           Market Standoff.


 


In connection
with any underwritten public offering by the Company of its equity securities
pursuant to an effective registration statement filed under the Securities Act,
including the Company’s initial public offering, an Optionee or other
participant in the Plan shall not sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the purchase of, or otherwise dispose
or transfer for value or otherwise agree to engage in any of the foregoing
transactions with respect to, any shares issuable or issued under the Plan,
whether pursuant to an Option or a Sale, without the prior written consent of
the Company or its underwriters.  Such
limitations shall be in effect for such period of time as may be requested by
the Company or such underwriters and agreed to by the Company’s officers and
directors with respect to their shares; provided, however, that in no event
shall such period exceed 180 days.  The
limitations of this paragraph shall in all events terminate five years after
the effective date of the Company’s initial public offering.  Participants shall be subject to the market
standoff provisions of this Section 18 only if the officers and directors
of the Company are also subject to similar arrangements.


 


In the event
of any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the Company’s outstanding Common
Stock effected as a class without the Company’s receipt of consideration, then
any new, substituted or additional securities distributed with respect to the
purchased shares shall be immediately subject to the provisions of this Section 18,
to the same extent the purchased shares are at such time covered by such
provisions.


 


In order to
enforce the limitations of this Section 18, the Company may impose
stop-transfer instructions with respect to the purchased shares until the end
of the applicable standoff period.


 


Amended by the Board of
Directors on March 31, 2006


Amendment approved by Shareholders
on May 19, 2006


 


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