altair_10k-ex1003.htm


        Exhibit 10.3

     

    ALTAIR
NANOTECHNOLOGIES INC.

    


    2005
STOCK INCENTIVE PLAN

    (Amended
and Restated)

    


     

    1.      Purpose.  The
purpose of this 2005 Stock Incentive Plan (the “Plan”) is to enable Altair
Nanotechnologies Inc. (the “Company”) to attract and retain the services of (i)
selected employees, officers and directors of the Company or any parent or
subsidiary of the Company and (ii) selected nonemployee agents, consultants,
advisers and independent contractors of the Company or any parent or subsidiary
of the Company.  For purposes of this Plan, a person is considered to
be employed by or in the service of the Company if the person is employed by or
in the service of any entity (the “Employer”) that is either the Company or a
direct or indirect subsidiary of the Company.

     

    2.      Shares Subject to the
Plan.  Subject to adjustment as provided below and in
Section 10, the shares to be offered under the Plan shall consist of Common
Stock of the Company, and the total number of shares of Common Stock that may be
issued under the Plan shall be 9,000,000 shares.  If an option or
Performance-Based Award granted under the Plan expires, terminates or is
canceled, the unissued shares subject to that option or Performance-Based Award
shall again be available under the Plan.  If shares awarded as a bonus
pursuant to Section 7 or sold pursuant to Section  8 under the Plan
are forfeited to or repurchased by the Company, the number of shares forfeited
or repurchased shall again be available under the Plan.

     

    3.      Effective Date and Duration of
Plan.

     

    3.1           Effective
Date.  The Plan shall become effective as of the date it is
approved by the stockholders of the Company.  No Incentive Stock
Option (as defined in Section 5 below) granted under the Plan shall become
exercisable and no payments shall be made under a Performance-Based Award,
however, until the Plan is approved by the affirmative vote of the holders of a
majority of the shares of Common Stock represented at a shareholders meeting at
which a quorum is present or by means of unanimous consent resolutions, and the
exercise of any Incentive Stock Options granted under the Plan before approval
shall be conditioned on and subject to that approval.  Subject to this
limitation, options and Performance-Based Awards may be granted and shares may
be awarded as bonuses or sold under the Plan at any time after the effective
date and before termination of the Plan.

     

    3.2           Duration.  The
Plan shall continue in effect until all shares available for issuance under the
Plan have been issued and all restrictions on the shares have
lapsed.  The Board of Directors may suspend or terminate the Plan at
any time except with respect to options, Performance-Based Awards and shares
subject to restrictions then outstanding under the Plan.  Termination
shall not affect any outstanding options, any outstanding Performance-Based
Awards or any right of the Company to repurchase shares or the forfeitability of
shares issued under the Plan.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    4.      Administration.

     

    4.1           Board of
Directors.  The Plan shall be administered by the Board of
Directors of the Company, which shall determine and designate the individuals to
whom awards shall be made, the amount of the awards and the other terms and
conditions of the awards.  Subject to the provisions of the Plan, the
Board of Directors may adopt and amend rules and regulations relating to
administration of the Plan, advance the lapse of any waiting period, accelerate
any exercise date, waive or modify any restriction applicable to shares (except
those restrictions imposed by law) and make all other determinations in the
judgment of the Board of Directors necessary or desirable for the administration
of the Plan.  The interpretation and construction of the provisions of
the Plan and related agreements by the Board of Directors shall be final and
conclusive.  The Board of Directors may correct any defect or supply
any omission or reconcile any inconsistency in the Plan or in any related
agreement in the manner and to the extent it deems expedient to carry the Plan
into effect, and the Board of Directors shall be the sole and final judge of
such expediency.

     

    4.2           Committee.  The
Board of Directors may delegate to any committee of the Board of Directors (the
“Committee”) any or all authority for administration of the Plan.  If
authority is delegated to the Committee, all references to the Board of
Directors in the Plan shall mean and relate to the Committee, except (i) as
otherwise provided by the Board of Directors and (ii) that only the Board of
Directors may amend or terminate the Plan as provided in Sections 3 and
11.

     

    5.      Types of Awards, Eligibility,
Limitations.  The Board of Directors may, from time to time,
take the following actions, separately or in combination, under the
Plan:  (i) grant Incentive Stock Options, as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”),
as provided in Sections 6.1 and 6.2; (ii) grant options other than
Incentive Stock Options (“Non-Statutory Stock Options”) as provided in
Sections 6.1 and 6.3; (iii) award stock bonuses as provided in
Section 7; (iv) sell shares subject to restrictions as provided in
Section 8; and (v) award Performance-Based Awards as provided in
Section 9.  Awards may be made to employees, including employees
who are officers or directors, and to other individuals described in
Section 1 selected by the Board of Directors; provided, however, that only
employees of the Company or any parent or subsidiary of the Company (as defined
in subsections 424(e) and 424(f) of the Code) are eligible to receive
Incentive Stock Options under the Plan.  The Board of Directors shall
select the individuals to whom awards shall be made and shall specify the action
taken with respect to each individual to whom an award is made.  At
the discretion of the Board of Directors, an individual may be given an election
to surrender an award in exchange for the grant of a new award.

     

    6.      Option Grants.

     

    6.1           General Rules
Relating to Options.

     

    6.1-1                      Terms of Grant.  The
Board of Directors may grant options under the Plan.  With respect to
each option grant, the Board of Directors shall determine the number of shares
subject to the option, the exercise price, the period of the option, the time or
times at which the option may be exercised and whether the option is an
Incentive Stock Option or a Non-Statutory Stock Option.  At the time
of the grant of an option or at any time thereafter, the Board of Directors may
provide that an optionee who exercised an option with Common Stock of the
Company shall automatically receive a new option to purchase additional shares
equal to the number of shares surrendered and may specify the terms and
conditions of such new options.

     


    
      
         


      

      
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    6.1-2                      Exercise of
Options.  Except as provided in Section 6.1-4 or as
determined by the Board of Directors, no option granted under the Plan may be
exercised unless at the time of exercise the optionee is employed by or in the
service of the Company and shall have been so employed or provided such service
continuously since the date the option was granted.  Except as
provided in Sections 6.1-4 and 10, options granted under the Plan may be
exercised from time to time over the period stated in each option in amounts and
at times prescribed by the Board of Directors, provided that options may not be
exercised for fractional shares.  Unless otherwise determined by the
Board of Directors, if an optionee does not exercise an option in any one year
for the full number of shares to which the optionee is entitled in that year,
the optionee’s rights shall be cumulative and the optionee may purchase those
shares in any subsequent year during the term of the option.

     

    6.1-3                      Nontransferability.  Each
Incentive Stock Option and, unless otherwise determined by the Board of
Directors (either at, or at any time following, the time of grant), each other
option granted under the Plan by its terms (i) shall be nonassignable and
nontransferable by the optionee, either voluntarily or by operation of law,
except by will or by the laws of descent and distribution of the state or
country of the optionee’s domicile at the time of death, and (ii) during the
optionee’s lifetime, shall be exercisable only by the optionee.

     

    6.1-4                      Termination of Employment or
Service.

     

    6.1-4(a)                      General
Rule.  Unless otherwise determined by the Board of Directors
(either at, or at any time following, the time of grant), if an optionee’s
employment or service with the Company terminates for any reason other than
because of total disability or death as provided in Sections 6.1-4(b) and
(c), his or her option may be exercised at any time before the expiration date
of the option or the expiration of 30 days after the date of termination,
whichever is the shorter period, but only if and to the extent the optionee was
entitled to exercise the option at the date of termination.

     

    6.1-4(b)                      Termination Because of Total
Disability.  Unless otherwise determined by the Board of
Directors, if an optionee’s employment or service with the Company terminates
because of total disability, his or her option may be exercised at any time
before the expiration date of the option or before the date 12 months after
the date of termination, whichever is the shorter period, but only if and to the
extent the optionee was entitled to exercise the option at the date of
termination.  The term “total disability” means a medically
determinable mental or physical impairment that is expected to result in death
or has lasted or is expected to last for a continuous period of 12 months
or more and that, in the opinion of the Company and two independent physicians,
causes the optionee to be unable to perform his or her duties as an employee,
director, officer or consultant of the Employer and unable to be engaged in any
substantial gainful activity.  Total disability shall be deemed to
have occurred on the first day after the two independent physicians have
furnished their written opinion of total disability to the Company and the
Company has reached an opinion of total disability.

     


    
      
         


      

      
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    6.1-4(c)                      Termination Because of
Death.  Unless otherwise determined by the Board of Directors,
if an optionee dies while employed by or providing service to the Company, his
or her option may be exercised at any time before the expiration date of the
option or before the date 12 months after the date of death, whichever is
the shorter period, but only if and to the extent the optionee was entitled to
exercise the option at the date of death and only by the person or persons to
whom the optionee’s rights under the option shall pass by the optionee’s will or
by the laws of descent and distribution of the state or country of domicile at
the time of death.

     

    6.1-4(d)                      Amendment of Exercise Period
Applicable to Termination.  The Board of Directors may at any
time extend the 30-day and 12-month exercise periods any length of time not
longer than the original expiration date of the option.  The Board of
Directors may at any time increase the portion of an option that is exercisable,
subject to terms and conditions determined by the Board of
Directors.

     

    6.1-4(e)                      Failure to Exercise
Option.  To the extent that the option of any deceased optionee
or any optionee whose employment or service terminates is not exercised within
the applicable period, all further rights to purchase shares pursuant to the
option shall cease and terminate.

     

    6.1-4(f)                  Leave of
Absence.  Absence on leave approved by the Employer or on
account of illness or disability shall not be deemed a termination or
interruption of employment or service.  Unless otherwise determined by
the Board of Directors, vesting of options shall continue during a medical,
family or military leave of absence, whether paid or unpaid, and vesting of
options shall be suspended during any other unpaid leave of
absence.

     

    6.1-5                      Purchase of
Shares.

     

    6.1-5(a)                      Notice of
Exercise.  Unless the Board of Directors determines otherwise,
shares may be acquired pursuant to an option granted under the Plan only upon
the Company’s receipt of written notice from the optionee of the optionee’s
binding commitment to purchase shares, specifying the number of shares the
optionee desires to purchase under the option and the date on which the optionee
agrees to complete the transaction, and, if required to comply with the
Securities Act of 1933 and/or governing state securities laws of laws of foreign
countries with jurisdiction, containing a representation that it is the
optionee’s intention to acquire the shares for investment and not with a view to
distribution.

     

    6.1-5(b)                      Payment.  Unless the
Board of Directors determines otherwise (either at, or at any time following,
the time of grant), on or before the date specified for completion of the
purchase of shares pursuant to an option exercise, the optionee must pay the
Company the full purchase price of those shares in cash or by check or, with the
consent of the Board of Directors, in whole or in part, in Common Stock of the
Company valued at fair market value, restricted stock or other contingent awards
denominated in either stock or cash, promissory notes (to the extent permitted
by governing law) and other forms of consideration.  Unless otherwise
determined by the Board of Directors, any Common Stock provided in payment of
the purchase price must have been previously acquired and held by the optionee
for at least six months. The fair market value of Common Stock provided in
payment of the purchase price shall be the closing price of the Common Stock
last reported before the time payment in Common Stock is made or, if earlier,
committed to be made, if the Common Stock is publicly traded, or another value
of the Common Stock as specified by the Board of Directors.  No shares
shall be issued until full payment for the shares has been made, including all
amounts owed for tax withholding.  With the consent of the Board of
Directors (either at, or at any time following, the time of grant), an optionee
may request the Company to apply automatically the shares to be received upon
the exercise of a portion of a stock option (even though stock certificates have
not yet been issued) to satisfy the purchase price for additional portions of
the option.

     


    
      
         


      

      
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    6.1-5(c)                      Tax
Withholding.  Each optionee who has exercised an option shall,
immediately upon notification of the amount due, if any, pay to the Company in
cash or by check amounts necessary to satisfy any applicable federal, state and
local tax withholding requirements.  If additional withholding is or
becomes required (as a result of exercise of an option or as a result of
disposition of shares acquired pursuant to exercise of an option) beyond any
amount deposited before delivery of the certificates, the optionee shall pay
such amount, in cash or by check, to the Company on demand.  If the
optionee fails to pay the amount demanded, the Company or the Employer may
withhold that amount from other amounts payable to the optionee, including
salary, subject to applicable law.  With the consent of the Board of
Directors, an optionee may satisfy this obligation, in whole or in part, by
instructing the Company to withhold from the shares to be issued upon exercise
or by delivering to the Company other shares of Common Stock; provided, however,
that the number of shares so withheld or delivered shall not exceed the minimum
amount necessary to satisfy the required withholding obligation.

     

    6.1-5(d)                      Reduction of Reserved
Shares.  Upon the exercise of an option, the number of shares
reserved for issuance under the Plan shall be reduced by the number of shares
issued upon exercise of the option (less the number of any shares surrendered in
payment for the exercise price or withheld to satisfy withholding
requirements).

     

    6.1-6                      Limitations on Grants to Non-Exempt
Employees.  Unless otherwise determined by the Board of
Directors, if an employee of the Company or any parent or subsidiary of the
Company is a non-exempt employee subject to the overtime compensation provisions
of Section 7 of the Fair Labor Standards Act (the “FLSA”), any option
granted to that employee shall be subject to the following restrictions: (i) the
option price shall be at least 85 percent of the fair market value, as
described in Section 6.2-4, of the Common Stock subject to the option on
the date it is granted; and (ii) the option shall not be exercisable until at
least six months after the date it is granted; provided, however, that this
six-month restriction on exercisability will cease to apply if the employee
dies, becomes disabled or retires, there is a change in ownership of the
Company, or in other circumstances permitted by regulation, all as prescribed in
Section 7(e)(8)(B) of the FLSA.

     

    6.2           Incentive Stock
Options.  Incentive Stock Options shall be subject to the
following additional terms and conditions:

     

    6.2-1                      Limitation on Amount of
Grants.  If the aggregate fair market value of stock
(determined as of the date the option is granted) for which Incentive Stock
Options granted under this Plan (and any other stock incentive plan of the
Company or its parent or subsidiary corporations, as defined in
subsections 424(e) and 424(f) of the Code) are exercisable for the first
time by an employee during any calendar year exceeds $100,000, the portion of
the option or options not exceeding $100,000, to the extent of whole shares,
will be treated as an Incentive Stock Option and the remaining portion of the
option or options will be treated as a Non-Statutory Stock
Option.  The preceding sentence will be applied by taking options into
account in the order in which they were granted.  If, under the
$100,000 limitation, a portion of an option is treated as an Incentive Stock
Option and the remaining portion of the option is treated as a Non-Statutory
Stock Option, unless the optionee designates otherwise at the time of exercise,
the optionee’s exercise of all or a portion of the option will be treated as the
exercise of the Incentive Stock Option portion of the option to the full extent
permitted under the $100,000 limitation.  If an optionee exercises an
option that is treated as in part an Incentive Stock Option and in part a
Non-Statutory Stock Option, the Company will designate the portion of the stock
acquired pursuant to the exercise of the Incentive Stock Option portion as
Incentive Stock Option stock by issuing a separate certificate for that portion
of the stock and identifying the certificate as Incentive Stock Option stock in
its stock records.

     


    
      
         


      

      
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    6.2-2                      Limitations on Grants to
10 percent Shareholders.  An Incentive Stock Option may be
granted under the Plan to an employee possessing more than 10 percent of
the total combined voting power of all classes of stock of the Company or any
parent or subsidiary (as defined in subsections 424(e) and 424(f) of the
Code) only if the option price is at least 110 percent of the fair market
value, as described in Section 6.2-4, of the Common Stock subject to the
option on the date it is granted and the option by its terms is not exercisable
after the expiration of five years from the date it is granted.

     

    6.2-3                      Duration of
Options.  Subject to Sections 6.1-2, 6.1-4 and 6.2-2,
Incentive Stock Options granted under the Plan shall continue in effect for the
period fixed by the Board of Directors, except that by its terms no Incentive
Stock Option shall be exercisable after the expiration of 10 years from the
date it is granted.

     

    6.2-4                      Option Price.  The
option price per share shall be determined by the Board of Directors at the time
of grant.  Except as provided in Section 6.2-2, the option price
shall not be less than 100 percent of the fair market value of the Common
Stock covered by the Incentive Stock Option at the date the option is
granted.  The fair market value shall be the closing price of the
Common Stock last reported before the time the option is granted, if the stock
is publicly traded, or another value of the Common Stock as specified by the
Board of Directors.

     

    6.2-5                      Limitation on Time of
Grant.  No Incentive Stock Option shall be granted on or after
the tenth anniversary of the last action by the Board of Directors adopting the
Plan or approving an increase in the number of shares available for issuance
under the Plan, which action was subsequently approved within 12 months by
the shareholders.

     

    6.2-6                      Early
Dispositions.  If within two years after an Incentive Stock
Option is granted or within 12 months after an Incentive Stock Option is
exercised, the optionee sells or otherwise disposes of Common Stock acquired on
exercise of the Option, the optionee shall within 30 days of the sale or
disposition notify the Company in writing of (i) the date of the sale or
disposition, (ii) the amount realized on the sale or disposition and (iii) the
nature of the disposition (e.g., sale, gift, etc.).

     


    
      
         


      

      
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    6.3           Non-Statutory
Stock Options.  Non-Statutory Stock Options shall be subject to
the following terms and conditions, in addition to those set forth in
Section 6.1 above:

     

    6.3-1                      Option Price.  The
option price for Non-Statutory Stock Options shall be determined by the Board of
Directors at the time of grant and may be any amount determined by the Board of
Directors.

     

    6.3-2                      Duration of
Options.  Non-Statutory Stock Options granted under the Plan
shall continue in effect for the period fixed by the Board of
Directors.

     

    7.      Stock Bonuses.  The
Board of Directors may award shares under the Plan as stock
bonuses.  Shares awarded as a bonus shall be subject to the terms,
conditions and restrictions determined by the Board of Directors.  The
restrictions may include restrictions concerning transferability and forfeiture
of the shares awarded, together with any other restrictions determined by the
Board of Directors.  The Board of Directors may require the recipient
to sign an agreement as a condition of the award, but may not require the
recipient to pay any monetary consideration other than amounts necessary to
satisfy tax withholding requirements.  The agreement may contain any
terms, conditions, restrictions, representations and warranties required by the
Board of Directors.  The certificates representing the shares awarded
shall bear any legends required by the Board of Directors.  The
Company may require any recipient of a stock bonus to pay to the Company in cash
or by check upon demand amounts necessary to satisfy any applicable federal,
state or local tax withholding requirements.  If the recipient fails
to pay the amount demanded, the Company or the Employer may withhold that amount
from other amounts payable to the recipient, including salary, subject to
applicable law.  With the consent of the Board of Directors, a
recipient may satisfy this obligation, in whole or in part, by instructing the
Company to withhold from any shares to be issued or by delivering to the Company
other shares of Common Stock; provided, however, that the number of shares so
withheld or delivered shall not exceed the minimum amount necessary to satisfy
the required withholding obligation.  Upon the issuance of a stock
bonus, the number of shares reserved for issuance under the Plan shall be
reduced by the number of shares issued, less the number of shares withheld or
delivered to satisfy withholding obligations.

     

    8.      Restricted
Stock.  The Board of Directors may issue shares under the Plan
for any consideration (including promissory notes and services) determined by
the Board of Directors.  Shares issued under the Plan shall be subject
to the terms, conditions and restrictions determined by the Board of
Directors.  The restrictions may include restrictions concerning
transferability, repurchase by the Company and forfeiture of the shares issued,
together with any other restrictions determined by the Board of
Directors.  All Common Stock issued pursuant to this Section 8
shall be subject to a purchase agreement, which shall be executed by the Company
and the prospective purchaser of the shares before the delivery of certificates
representing the shares to the purchaser.  The purchase agreement may
contain any terms, conditions, restrictions, representations and warranties
required by the Board of Directors.  The certificates representing the
shares shall bear any legends required by the Board of Directors.  The
Company may require any purchaser of restricted stock to pay to the Company in
cash or by check upon demand amounts necessary to satisfy any applicable
federal, state or local tax withholding requirements.  If the
purchaser fails to pay the amount demanded, the Company or the Employer may
withhold that amount from other amounts payable to the purchaser, including
salary, subject to applicable law.  With the consent of the Board of
Directors, a purchaser may satisfy this obligation, in whole or in part, by
instructing the Company to withhold from any shares to be issued or by
delivering to the Company other shares of Common Stock; provided, however, that
the number of shares so withheld or delivered shall not exceed the minimum
amount necessary to satisfy the required withholding obligation.  Upon
the issuance of restricted stock, the number of shares reserved for issuance
under the Plan shall be reduced by the number of shares issued, less the number
of shares withheld or delivered to satisfy withholding obligations.

     


    
      
         


      

      
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    9.      Performance-Based
Awards.  The Board of Directors may grant awards intended to
qualify as qualified performance-based compensation under Section 162(m) of
the Code and the regulations thereunder (“Performance-Based
Awards”).  Performance-Based Awards shall be denominated at the time
of grant either in Common Stock (“Stock Performance Awards”) or in dollar
amounts (“Dollar Performance Awards”).  Payment under a Stock
Performance Award or a Dollar Performance Award shall be made, at the discretion
of the Board of Directors, in Common Stock (“Performance Shares”), or in cash or
in any combination thereof.  Performance-Based Awards shall be subject
to the following terms and conditions:

     

    9.1           Award
Period.  The Board of Directors shall determine the period of
time for which a Performance-Based Award is made (the “Award
Period”).

     

    9.2           Performance Goals
and Payment.  The Board of Directors shall establish in writing
objectives (“Performance Goals”) that must be met by the Company or any
subsidiary, division or other unit of the Company (“Business Unit”) during the
Award Period as a condition to payment being made under the Performance-Based
Award.  The Performance Goals for each award shall be one or more
targeted levels of performance with respect to one or more of the following
objective measures with respect to the Company or any Business
Unit:  earnings, earnings per share, stock price increase, total
shareholder return (stock price increase plus dividends), return on equity,
return on assets, return on capital, economic value added, revenues, operating
income, inventories, inventory turns, cash flows or any of the foregoing before
the effect of acquisitions, divestitures, accounting changes, and restructuring
and special charges (determined according to criteria established by the Board
of Directors).  The Board of Directors shall also establish the number
of Performance Shares or the amount of cash payment to be made under a
Performance-Based Award if the Performance Goals are met or exceeded, including
the fixing of a maximum payment (subject to Section 9.4).  The
Board of Directors may establish other restrictions to payment under a
Performance-Based Award, such as a continued employment requirement, in addition
to satisfaction of the Performance Goals.  Some or all of the
Performance Shares may be issued at the time of the award as restricted shares
subject to forfeiture in whole or in part if Performance Goals or, if
applicable, other restrictions are not satisfied.

     

    9.3           Computation of
Payment.  During or after an Award Period, the performance of
the Company or Business Unit, as applicable, during the period shall be measured
against the Performance Goals.  If the Performance Goals are not met,
no payment shall be made under a Performance-Based Award.  If the
Performance Goals are met or exceeded, the Board of Directors shall certify that
fact in writing and certify the number of Performance Shares earned or the
amount of cash payment to be made under the terms of the Performance-Based
Award.

     


    
      
         


      

      
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    9.4           Maximum
Awards.  No participant may receive in any fiscal year Stock
Performance Awards under which the aggregate amount payable under the Awards
exceeds the equivalent of 500,000 shares of Common Stock or Dollar Performance
Awards  under which the aggregate amount payable under the Awards
exceeds $1,000,000.

     

    9.5           Tax
Withholding.  Each participant who has received Performance
Shares shall, upon notification of the amount due, pay to the Company in cash or
by check amounts necessary to satisfy any applicable federal, state and local
tax withholding requirements.  If the participant fails to pay the
amount demanded, the Company or the Employer may withhold that amount from other
amounts payable to the participant, including salary, subject to applicable
law.  With the consent of the Board of Directors, a participant may
satisfy this obligation, in whole or in part, by instructing the Company to
withhold from any shares to be issued or by delivering to the Company other
shares of Common Stock; provided, however, that the number of shares so
delivered or withheld shall not exceed the minimum amount necessary to satisfy
the required withholding obligation.

     

    9.6           Effect on Shares
Available.  The payment of a Performance-Based Award in cash
shall not reduce the number of shares of Common Stock reserved for issuance
under the Plan.  The number of shares of Common Stock reserved for
issuance under the Plan shall be reduced by the number of shares issued upon
payment of an award, less the number of shares delivered or withheld to satisfy
withholding obligations.

     

    10.           Changes in Capital
Structure.

     

    10.1           Stock Splits,
Stock Dividends.  If the outstanding Common Stock of the
Company is hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of any stock split, combination of shares, dividend payable in shares,
recapitalization or reclassification, appropriate adjustment shall be made by
the Board of Directors in the number and kind of shares available for grants
under the Plan and in all other share amounts set forth in the
Plan.  In addition, the Board of Directors shall make appropriate
adjustment in the number and kind of shares as to which outstanding options, or
portions thereof then unexercised, shall be exercisable, so that the optionee’s
proportionate interest before and after the occurrence of the event is
maintained.  Notwithstanding the foregoing, the Board of Directors
shall have no obligation to effect any adjustment that would or might result in
the issuance of fractional shares, and any fractional shares resulting from any
adjustment may be disregarded or provided for in any manner determined by the
Board of Directors.  Any such adjustments made by the Board of
Directors shall be conclusive.

     

    10.2           Mergers,
Reorganizations, Etc.  In the event of a merger, consolidation,
plan of exchange, acquisition of property or stock, split-up, split-off,
spin-off, reorganization or liquidation to which the Company is a party, any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company, or the transfer by one or more shareholders, in one transfer or several
related transfers, of 50% of more of the Common Stock outstanding on the date of
such transfer (or the first of such related transfers) to persons, other than
wholly-owned subsidiaries or family trusts,  who were not shareholders
of the Company prior to the first such transfer (each, a “Transaction”), the
Board of Directors shall, in its sole discretion and to the extent possible
under the structure of the Transaction, select one of the following alternatives
for treating outstanding options under the Plan prior to the consummation of the
Transaction:

     


    
      
         


      

      
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    10.2-1                      Outstanding
options shall remain in effect in accordance with their terms.

     

    10.2-2                      Outstanding
options shall be converted into options to purchase stock in one or more of the
corporations, including the Company, that are the surviving or acquiring
corporations in the Transaction.  The amount, type of securities
subject thereto and exercise price of the converted options shall be determined
by the Board of Directors of the Company, taking into account the relative
values of the companies involved in the Transaction and the exchange rate, if
any, used in determining shares of the surviving corporation(s) to be held by
holders of shares of the Company following the Transaction.  Unless
otherwise determined by the Board of Directors, the converted options shall be
vested only to the extent that the vesting requirements relating to options
granted hereunder have been satisfied.

     

    10.2-3                      The
Board of Directors shall provide a period of at least 10 days before the
completion of the Transaction during which outstanding options may be exercised
to the extent then exercisable, and upon the expiration of that period, all
unexercised options shall immediately terminate.  The Board of
Directors may, in its sole discretion, accelerate the exercisability of options
so that they are exercisable in full during that period.

     

    10.3           Dissolution of
the Company.  In the event of the dissolution of the Company,
options shall be treated in accordance with Section 10.2-3.

     

    10.4           Rights Issued by
Another Corporation.  The Board of Directors may also grant
options and stock bonuses and Performance-Based Awards and issue restricted
stock under the Plan with terms, conditions and provisions that vary from those
specified in the Plan, provided that any such awards are granted in substitution
for, or in connection with the assumption of, existing options, stock bonuses,
Performance-Based Awards and restricted stock granted, awarded or issued by
another corporation and assumed or otherwise agreed to be provided for by the
Company pursuant to or by reason of a Transaction.

     

    11.           Amendment of the
Plan.  The Board of Directors may at any time modify or amend
the Plan in any respect.  Except as provided in Section 10,
however, no change in an award already granted shall be made without the written
consent of the holder of the award if the change would adversely affect the
holder.

     

    12.           Approvals.  The
Company’s obligations under the Plan are subject to the approval of state and
federal authorities or agencies with jurisdiction in the matter.  The
Company will use its best efforts to take steps required by state or federal law
or applicable regulations, including rules and regulations of the Securities and
Exchange Commission and any stock exchange on which the Company’s shares may
then be listed, in connection with the grants under the Plan.  The
foregoing notwithstanding, the Company shall not be obligated to issue or
deliver Common Stock under the Plan if such issuance or delivery would violate
state or federal securities laws. Unless the Company determines, with advice of
counsel that such legend is not necessary, certificates representing all shares
of Common Stock issued in connection with the Plan will contain a legend
indicating that such shares of Common Stock are “restricted securities,” as
defined under Rule 144 promulgated under the Securities Act of 1933, as amended,
and that such shares may not be transferred unless such transfer is registered
under the Securities Act and governing state securities laws or exempt from the
registration requirements of the same.

     

    


     


    
      
         


      

      
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    13.           Employment and Service
Rights.  Nothing in the Plan or any award pursuant to the Plan
shall (i) confer upon any employee any right to be continued in the employment
of an Employer or interfere in any way with the Employer’s right to terminate
the employee’s employment at will at any time, for any reason, with or without
cause, or to decrease the employee’s compensation or benefits, or (ii) confer
upon any person engaged by an Employer any right to be retained or employed by
the Employer or to the continuation, extension, renewal or modification of any
compensation, contract or arrangement with or by the Employer.

     

    14.           Rights as a
Shareholder.  The recipient of any award under the Plan shall
have no rights as a shareholder with respect to any shares of Common Stock until
the date the recipient becomes the holder of record of those
shares.  Except as otherwise expressly provided in the Plan, no
adjustment shall be made for dividends or other rights for which the record date
occurs before the date the recipient becomes the holder of record.

     

     

     

     

     

     

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