exv10w1



 








Exhibit 10.1




AMERICAN PACIFIC CORPORATION




2008 STOCK INCENTIVE PLAN




     1. Purposes of the Plan. The purposes of this Plan are to attract and retain the best
available personnel, to provide additional incentives to Employees, Directors and Consultants and
to promote the success of the Company’s business.



     2. Definitions. The following definitions shall apply as used herein and in the
individual Award Agreements except as defined otherwise in an individual Award Agreement. In the
event a term is separately defined in an individual Award Agreement, such definition shall
supersede the definition contained in this Section 2.



          (a) “Administrator” means the Board or any of the Committees appointed to administer
the Plan.




          (b) “Affiliate” and “Associate” shall have the respective meanings ascribed to
such terms in Rule 12b-2 promulgated under the Exchange Act.




          (c) “Applicable Laws” means the legal requirements relating to the Plan and the Awards
under applicable provisions of federal securities laws, state corporate and securities laws, the
Code, the rules of any applicable stock exchange or national market system, and the rules of any
non-U.S. jurisdiction applicable to Awards granted to residents therein.




          (d) “Assumed” means that pursuant to a Corporate Transaction either (i) the Award is
expressly affirmed by the Company or (ii) the contractual obligations represented by the Award are
expressly assumed (and not simply by operation of law) by the successor entity or its Parent in
connection with the Corporate Transaction with appropriate adjustments to the number and type of
securities of the successor entity or its Parent subject to the Award and the exercise or purchase
price thereof which at least preserves the compensation element of the Award existing at the time
of the Corporate Transaction as determined in accordance with the instruments evidencing the
agreement to assume the Award.




          (e) “Award” means the grant of an Option, SAR, Restricted Stock, Restricted Stock Unit
or other right or benefit under the Plan.




          (f) “Award Agreement” means the written agreement evidencing the grant of an Award
executed by the Company and the Grantee, including any amendments thereto.




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




          (h) “Cause” means, with respect to the termination by the Company or a Related Entity
of the Grantee’s Continuous Service, that such termination is for “Cause” as such term is expressly
defined in a then-effective written agreement between the Grantee and the Company or such Related
Entity, or in the absence of such then-effective written agreement and definition, is based on, in
the determination of the Administrator, the Grantee’s: (i) performance of any act or failure to
perform any act in bad faith and to the detriment of the Company or a Related Entity;
(ii) dishonesty, intentional misconduct or material breach of any agreement with the Company or a
Related Entity; or (iii) commission of a crime involving dishonesty, breach of trust, or physical
or emotional harm to any person.




 









 





          (i) “Change in Control” means a change in ownership or control of the Company effected
through either of the following transactions:





               (i) the direct or indirect acquisition by any person or related group of persons (other than
an acquisition from or by the Company or by a Company-sponsored employee benefit plan or by a
person that directly or indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of
securities possessing more than fifty percent (50%) of the total combined voting power of the
Company’s outstanding securities pursuant to a tender or exchange offer made directly to the
Company’s stockholders which a majority of the Continuing Directors who are not Affiliates or
Associates of the offeror do not recommend such stockholders accept, or




               (ii) a change in the composition of the Board over a period of twelve (12) months or less such
that a majority of the Board members (rounded up to the next whole number) ceases, by reason of one
or more contested elections for Board membership, to be comprised of individuals who are Continuing
Directors.



          (j) “Code” means the Internal Revenue Code of 1986, as amended.




          (k) “Committee” means any committee composed of members of the Board appointed by the
Board to administer the Plan.




          (l) “Common Stock” means the common stock of the Company.




          (m) “Company” means American Pacific Corporation, a Delaware corporation, or any
successor entity that adopts the Plan in connection with a Corporate Transaction.




          (n) “Consultant” means any person (other than an Employee or a Director, solely with
respect to rendering services in such person’s capacity as a Director) who is engaged by the
Company or any Related Entity to render consulting or advisory services to the Company or such
Related Entity.




          (o) “Continuing Directors” means members of the Board who either (i) have been Board
members continuously for a period of at least twelve (12) months or (ii) have been Board members
for less than twelve (12) months and were elected or nominated for election as Board members by at
least a majority of the Board members described in clause (i) who were still in office at the time
such election or nomination was approved by the Board.




          (p) “Continuous Service” means that the provision of services to the Company or a
Related Entity in any capacity of Employee, Director or Consultant is not interrupted or
terminated. In jurisdictions requiring notice in advance of an effective termination as an
Employee, Director or Consultant, Continuous Service shall be deemed terminated upon the actual
cessation of providing services to the Company or a Related Entity notwithstanding any required
notice period that must be fulfilled before a termination as an Employee, Director or Consultant
can be effective under Applicable Laws. A Grantee’s Continuous Service shall be deemed to have
terminated either upon an actual termination of Continuous Service or upon the entity for which the
Grantee provides services ceasing to be a Related Entity. Continuous Service shall not be
considered interrupted in the case of (i) any approved leave of absence, (ii) transfers among the
Company, any Related Entity, or any successor, in any capacity of Employee, Director or Consultant,
or (iii) any change in status as long as the individual remains in the service of the Company or a
Related Entity in any capacity of Employee, Director or Consultant (except as otherwise provided in
the Award Agreement). Notwithstanding the foregoing,



EXHIBIT 10.1 – Page 2









 






except as otherwise determined by the Administrator, in the event of any spin-off of a Related
Entity, service as an Employee, Director or Consultant for such Related Entity following such
spin-off shall be deemed to be Continuous Service for purposes of the Plan and any Award under the
Plan. An approved leave of absence shall include sick leave, military leave, or any other
authorized personal leave. For purposes of each Incentive Stock Option granted under the Plan, if
such leave exceeds three (3) months, and reemployment upon expiration of such leave is not
guaranteed by statute or contract, then the Incentive Stock Option shall be treated as a
Non-Qualified Stock Option on the day three (3) months and one (1) day following the expiration of
such three (3) month period.




          (q) “Corporate Transaction” means any of the following transactions, provided,
however, that the Administrator shall determine under parts (iv) and (v) whether multiple
transactions are related, and its determination shall be final, binding and conclusive:





               (i) a merger or consolidation in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the Company is
incorporated;




               (ii) the sale, transfer or other disposition of all or substantially all of the assets of the
Company;




               (iii) the complete liquidation or dissolution of the Company;




               (iv) any reverse merger or series of related transactions culminating in a reverse merger
(including, but not limited to, a tender offer followed by a reverse merger) in which the Company
is the surviving entity but (A) the shares of Common Stock outstanding immediately prior to such
merger are converted or exchanged by virtue of the merger into other property, whether in the form
of securities, cash or otherwise, or (B) in which securities possessing more than forty percent
(40%) of the total combined voting power of the Company’s outstanding securities are transferred to
a person or persons different from those who held such securities immediately prior to such merger
or the initial transaction culminating in such merger, but excluding any such transaction or series
of related transactions that the Administrator determines shall not be a Corporate Transaction; or




               (v) acquisition in a single or series of related transactions by any person or related group
of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial
ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company’s outstanding securities but
excluding any such transaction or series of related transactions that the Administrator determines
shall not be a Corporate Transaction.



          (r) “Covered Employee” means an Employee who is a “covered employee” under
Section 162(m)(3) of the Code.




          (s) “Director” means a member of the Board or the board of directors of any Related
Entity.




          (t) “Disability” means as defined under the long-term disability policy of the Company
or the Related Entity to which the Grantee provides services regardless of whether the Grantee is
covered by such policy. If the Company or the Related Entity to which the Grantee provides service
does not have a long-term disability plan in place, “Disability” means that a Grantee is unable to
carry out the responsibilities and functions of the position held by the Grantee by reason of any
medically determinable physical or mental impairment for a period of not less than ninety (90)
consecutive days. A



EXHIBIT 10.1 – Page 3









 






Grantee will not be considered to have incurred a Disability unless he or she furnishes proof
of such impairment sufficient to satisfy the Administrator in its discretion.




          (u) “Employee” means any person, including an Officer or Director, who is in the
employ of the Company or any Related Entity, subject to the control and direction of the Company or
any Related Entity as to both the work to be performed and the manner and method of performance.
The payment of a director’s fee by the Company or a Related Entity shall not be sufficient to
constitute “employment” by the Company.




          (v) “Exchange Act” means the Securities Exchange Act of 1934, as amended.




          (w) “Fair Market Value” means, as of any date, the value of Common Stock determined as
follows:





               (i) If the Common Stock is listed on one or more established stock exchanges or national
market systems, including without limitation The NASDAQ Global Select Market, The NASDAQ Global
Market or The NASDAQ Capital Market of The NASDAQ Stock Market LLC, its Fair Market Value shall be
the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on
the principal exchange or system on which the Common Stock is listed (as determined by the
Administrator) on the date of determination (or, if no closing sales price or closing bid was
reported on that date, as applicable, on the last trading date such closing sales price or closing
bid was reported), as reported in The Wall Street Journal or such other source as the Administrator
deems reliable;




               (ii) If the Common Stock is regularly quoted on an automated quotation system (including the
OTC Bulletin Board) or by a recognized securities dealer, its Fair Market Value shall be the
closing sales price for such stock as quoted on such system or by such securities dealer on the
date of determination, but if selling prices are not reported, the Fair Market Value of a share of
Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on
the date of determination (or, if no such prices were reported on that date, on the last date such
prices were reported), as reported in The Wall Street Journal or such other source as the
Administrator deems reliable; or




               (iii) In the absence of an established market for the Common Stock of the type described in
(i) and (ii), above, the Fair Market Value thereof shall be determined by the Administrator in good
faith.



          (x) “Grantee” means an Employee, Director or Consultant who receives an Award under
the Plan.




          (y) “Incentive Stock Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code




          (z) “Non-Qualified Stock Option” means an Option not intended to qualify as an
Incentive Stock Option.




          (aa) “Officer” means a person who is an officer of the Company or a Related Entity
within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.




          (bb) “Option” means an option to purchase Shares pursuant to an Award Agreement
granted under the Plan.




EXHIBIT 10.1 – Page 4









 





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




          (dd) “Performance-Based Compensation” means compensation qualifying as
“performance-based compensation” under Section 162(m) of the Code.




          (ee) “Plan” means this 2008 Stock Incentive Plan.




          (ff) “Related Entity” means any Parent or Subsidiary of the Company.




          (gg) “Replaced” means that pursuant to a Corporate Transaction the Award is replaced
with a comparable stock award or a cash incentive program of the Company, the successor entity (if
applicable) or Parent of either of them which preserves the compensation element of such Award
existing at the time of the Corporate Transaction and provides for subsequent payout in accordance
with the same (or a more favorable) vesting schedule applicable to such Award. The determination
of Award comparability shall be made by the Administrator and its determination shall be final,
binding and conclusive.




          (hh) “Restricted Stock” means Shares issued under the Plan to the Grantee for such
consideration, if any, and subject to such restrictions on transfer, rights of first refusal,
repurchase provisions, forfeiture provisions, and other terms and conditions as established by the
Administrator.




          (ii) “Restricted Stock Units” means an Award which may be earned in whole or in part
upon the passage of time or the attainment of performance criteria established by the Administrator
and which may be settled for cash, Shares or other securities or a combination of cash, Shares or
other securities as established by the Administrator.




          (jj) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor
thereto.




          (kk) “SAR” means a stock appreciation right entitling the Grantee to Shares or cash
compensation, as established by the Administrator, measured by appreciation in the value of Common
Stock.




          (ll) “Share” means a share of the Common Stock.




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




     3. Stock Subject to the Plan.



          (a) Subject to the provisions of Section 10, below, the maximum aggregate number of Shares
which may be issued pursuant to all Awards (including Incentive Stock Options) is 350,000 Shares.
Furthermore, no more than 200,000 Shares shall be granted pursuant to Awards of Restricted Stock
and Restricted Stock Units. The Shares to be issued pursuant to Awards may be authorized, but
unissued, or reacquired Common Stock.




          (b) Any Shares covered by an Award (or portion of an Award) which is forfeited, canceled or
expires (whether voluntarily or involuntarily) shall be deemed not to have been issued for purposes
of determining the maximum aggregate number of Shares which may be issued under the Plan. Shares
that actually have been issued under the Plan pursuant to an Award shall not be returned to the



EXHIBIT 10.1 – Page 5









 






Plan and shall not become available for future issuance under the Plan, except that if
unvested Shares are forfeited, or repurchased by the Company at the lower of their original
purchase price or their Fair Market Value at the time of repurchase, such Shares shall become
available for future grant under the Plan. Notwithstanding anything to the contrary contained
herein: (i) Shares tendered or withheld in payment of an Option exercise price shall not be
returned to the Plan and shall not become available for future issuance under the Plan; (ii) Shares
withheld by the Company to satisfy any tax withholding obligation shall not be returned to the Plan
and shall not become available for future issuance under the Plan; and (iii) all Shares covered by
the portion of an SAR that is exercised (whether or not Shares are actually issued to the Grantee
upon exercise of the SAR) shall be considered issued pursuant to the Plan.




     4. Administration of the Plan.



          (a) Plan Administrator.





               (i) Administration with Respect to Directors and Officers. With respect to grants of
Awards to Directors or Employees who are also Officers or Directors of the Company, the Plan shall
be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the Applicable Laws and to permit such grants and
related transactions under the Plan to be exempt from Section 16(b) of the Exchange Act in
accordance with Rule 16b-3. Once appointed, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board.




               (ii) Administration With Respect to Consultants and Other Employees. With respect to
grants of Awards to Employees or Consultants who are neither Directors nor Officers of the Company,
the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which
Committee shall be constituted in such a manner as to satisfy the Applicable Laws. Once appointed,
such Committee shall continue to serve in its designated capacity until otherwise directed by the
Board. The Board may authorize one or more Officers to grant such Awards and may limit such
authority as the Board determines from time to time.




               (iii) Administration With Respect to Covered Employees. Notwithstanding the
foregoing, grants of Awards to any Covered Employee intended to qualify as Performance-Based
Compensation shall be made only by a Committee (or subcommittee of a Committee) which is comprised
solely of two or more Directors eligible to serve on a committee making Awards qualifying as
Performance-Based Compensation. In the case of such Awards granted to Covered Employees,
references to the “Administrator” or to a “Committee” shall be deemed to be references to such
Committee or subcommittee.




               (iv) Administration Errors. In the event an Award is granted in a manner inconsistent
with the provisions of this subsection (a), such Award shall be presumptively valid as of its grant
date to the extent permitted by the Applicable Laws.



          (b) Powers of the Administrator. Subject to Applicable Laws and the provisions of the
Plan (including any other powers given to the Administrator hereunder), and except as otherwise
provided by the Board, the Administrator shall have the authority, in its discretion:





               (i) to select the Employees, Directors and Consultants to whom Awards may be granted from time
to time hereunder;




               (ii) to determine whether and to what extent Awards are granted hereunder;



EXHIBIT 10.1 – Page 6









 






               (iii) to determine the number of Shares or the amount of other consideration to be covered by
each Award granted hereunder;




               (iv) to approve forms of Award Agreements for use under the Plan;




               (v) to determine the terms and conditions of any Award granted hereunder;




               (vi) to amend the terms of any outstanding Award granted under the Plan, provided that (A) any
amendment that would adversely affect the Grantee’s rights under an outstanding Award shall not be
made without the Grantee’s written consent, provided, however, that an amendment or modification
that may cause an Incentive Stock Option to become a Non-Qualified Stock Option shall not be
treated as adversely affecting the rights of the Grantee (B) the reduction of the exercise price of
any Option awarded under the Plan and the base appreciation amount of any SAR awarded under the
Plan shall be subject to stockholder approval and (C) canceling an Option or SAR at a time when its
exercise price or base appreciation amount (as applicable) exceeds the Fair Market Value of the
underlying Shares, in exchange for another Option, SAR, Restricted Stock, or other Award shall be
subject to stockholder approval, unless the cancellation and exchange occurs in connection with a
Corporate Transaction. Notwithstanding the foregoing, canceling an Option or SAR in exchange for
another Option, SAR, Restricted Stock, or other Award with an exercise price, purchase price or
base appreciation amount (as applicable) that is equal to or greater than the exercise price or
base appreciation amount (as applicable) of the original Option or SAR shall not be subject to
stockholder approval;




               (vii) to construe and interpret the terms of the Plan and Awards, including without
limitation, any notice of award or Award Agreement, granted pursuant to the Plan;




               (viii) to grant Awards to Employees, Directors and Consultants employed outside the United
States on such terms and conditions different from those specified in the Plan as may, in the
judgment of the Administrator, be necessary or desirable to further the purpose of the Plan; and




               (ix) to take such other action, not inconsistent with the terms of the Plan, as the
Administrator deems appropriate.


The express grant in the Plan of any specific power to the Administrator shall not be construed as
limiting any power or authority of the Administrator; provided that the Administrator may not
exercise any right or power reserved to the Board. Any decision made, or action taken, by the
Administrator or in connection with the administration of this Plan shall be final, conclusive and
binding on all persons having an interest in the Plan.




          (c) Indemnification. In addition to such other rights of indemnification as they may
have as members of the Board or as Officers or Employees of the Company or a Related Entity,
members of the Board and any Officers or Employees of the Company or a Related Entity to whom
authority to act for the Board, the Administrator or the Company is delegated shall be defended and
indemnified by the Company to the extent permitted by law on an after-tax basis against all
reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection
with the defense of any claim, investigation, action, suit or proceeding, or in connection with any
appeal therein, to which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan, or any Award granted hereunder, and against
all amounts paid by them in settlement thereof (provided such settlement is approved by the
Company) or paid by them in satisfaction of a judgment in any such claim, investigation, action,
suit or proceeding, except in relation to matters as to which it shall be adjudged in such claim,
investigation, action, suit or proceeding that such person is liable for gross negligence, bad
faith or intentional misconduct; provided, however, that within thirty (30) days after the



EXHIBIT 10.1 – Page 7









 






institution of such claim, investigation, action, suit or proceeding, such person shall offer
to the Company, in writing, the opportunity at the Company’s expense to defend the same.




     5. Eligibility. Awards other than Incentive Stock Options may be granted to
Employees, Directors and Consultants. Incentive Stock Options may be granted only to Employees of
the Company or a Parent or a Subsidiary of the Company. An Employee, Director or Consultant who
has been granted an Award may, if otherwise eligible, be granted additional Awards. Awards may be
granted to such Employees, Directors or Consultants who are residing in non-U.S. jurisdictions as
the Administrator may determine from time to time.



     6. Terms and Conditions of Awards.



          (a) Types of Awards. The Administrator is authorized under the Plan to award any type
of arrangement to an Employee, Director or Consultant that is not inconsistent with the provisions
of the Plan and that by its terms involves or might involve the issuance of (i) Shares, (ii) cash
or (iii) an Option, a SAR, or similar right with a fixed or variable price related to the Fair
Market Value of the Shares and with an exercise or conversion privilege, which may be related to
the passage of time, the occurrence of one or more events, or the satisfaction of performance
criteria or other conditions. Such awards include, without limitation, Options, SARs, sales or
bonuses of Restricted Stock or Restricted Stock Units, and an Award may consist of one such
security or benefit, or two (2) or more of them in any combination or alternative.




          (b) Designation of Award. Each Award shall be designated in the Award Agreement. In
the case of an Option, the Option shall be designated as either an Incentive Stock Option or a
Non-Qualified Stock Option. However, notwithstanding such designation, an Option will qualify as
an Incentive Stock Option under the Code only to the extent the $100,000 dollar limitation of
Section 422(d) of the Code is not exceeded. The $100,000 limitation of Section 422(d) of the Code
is calculated based on the aggregate Fair Market Value of the Shares subject to Options designated
as Incentive Stock Options which become exercisable for the first time by a Grantee during any
calendar year (under all plans of the Company or any Parent or Subsidiary of the Company). For
purposes of this calculation, 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
grant date of the relevant Option. In the event that the Code or the regulations promulgated
thereunder are amended after the date the Plan becomes effective to provide for a different limit
on the Fair Market Value of Shares permitted to be subject to Incentive Stock Options, then such
different limit will be automatically incorporated herein and will apply to any Options granted
after the effective date of such amendment.




          (c) Conditions of Award. Subject to the terms of the Plan, the Administrator shall
determine the provisions, terms, and conditions of each Award including, but not limited to, the
Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form
of payment (cash, Shares, or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria. The performance criteria established
by the Administrator may be based on any one of, or combination of, the following: (i) increase in
share price, (ii) earnings per share, (iii) total stockholder return, (iv) operating margin, (v)
gross margin, (vi) return on equity, (vii) return on assets, (viii) return on investment, (ix)
operating income, (x) net operating income, (xi) pre-tax profit, (xii) cash flow, (xiii) revenue,
(xiv) expenses, (xv) earnings before interest, taxes and depreciation, (xvi) economic value added
and (xvii) market share. The performance criteria may be applicable to the Company, Related
Entities and/or any individual business units of the Company or any Related Entity. Partial
achievement of the specified criteria may result in a payment or vesting corresponding to the
degree of achievement as specified in the Award Agreement. In addition, the performance criteria
shall be calculated in accordance with generally accepted accounting principles, but excluding the
effect




EXHIBIT 10.1 – Page 8









 




(whether positive or negative) of any change in accounting standards and any extraordinary,
unusual or nonrecurring item, as determined by the Administrator, occurring after the establishment
of the performance criteria applicable to the Award intended to be performance-based compensation.
Each such adjustment, if any, shall be made solely for the purpose of providing a consistent basis
from period to period for the calculation of performance criteria in order to prevent the dilution
or enlargement of the Grantee’s rights with respect to an Award intended to be performance-based
compensation.




          (d) Acquisitions and Other Transactions. The Administrator may issue Awards under the
Plan in settlement, assumption or substitution for, outstanding awards or obligations to grant
future awards in connection with the Company or a Related Entity acquiring another entity, an
interest in another entity or an additional interest in a Related Entity whether by merger, stock
purchase, asset purchase or other form of transaction.




          (e) Deferral of Award Payment. The Administrator may establish one or more programs
under the Plan to permit selected Grantees the opportunity to elect to defer receipt of
consideration upon exercise of an Award, satisfaction of performance criteria, or other event that
absent the election would entitle the Grantee to payment or receipt of Shares or other
consideration under an Award. The Administrator may establish the election procedures, the timing
of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if
any, on amounts, Shares or other consideration so deferred, and such other terms, conditions, rules
and procedures that the Administrator deems advisable for the administration of any such deferral
program.




          (f) Separate Programs. The Administrator may establish one or more separate programs
under the Plan for the purpose of issuing particular forms of Awards to one or more classes of
Grantees on such terms and conditions as determined by the Administrator from time to time.




          (g) Individual Limitations on Awards.





               (i) Individual Limit for Options and SARs. The maximum number of Shares with respect
to which Options and SARs may be granted to any Grantee in any calendar year shall be 150,000
Shares. In connection with a Grantee’s commencement of Continuous Service, a Grantee may be
granted Options and SARs for up to an additional 75,000 Shares which shall not count against the
limit set forth in the previous sentence. The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company’s capitalization pursuant to
Section 10, below. To the extent required by Section 162(m) of the Code or the regulations
thereunder, in applying the foregoing limitations with respect to a Grantee, if any Option or SAR
is canceled, the canceled Option or SAR shall continue to count against the maximum number of
Shares with respect to which Options and SARs may be granted to the Grantee. For this purpose, the
repricing of an Option (or in the case of a SAR, the base amount on which the stock appreciation is
calculated is reduced to reflect a reduction in the Fair Market Value of the Common Stock) shall be
treated as the cancellation of the existing Option or SAR and the grant of a new Option or SAR.




               (ii) Individual Limit for Restricted Stock and Restricted Stock Units. For awards of
Restricted Stock and Restricted Stock Units that are intended to be Performance-Based Compensation,
the maximum number of Shares with respect to which such Awards may be granted to any Grantee in any
calendar year shall be 150,000 Shares. The foregoing limitation shall be adjusted proportionately
in connection with any change in the Company’s capitalization pursuant to Section 10, below.




               (iii) Deferral. If the vesting or receipt of Shares under an Award is deferred to a
later date, any amount (whether denominated in Shares or cash) paid in addition to the original
number



EXHIBIT 10.1 – Page 9









 




of Shares subject to such Award will not be treated as an increase in the number of Shares
subject to the Award if the additional amount is based either on a reasonable rate of interest or
on one or more predetermined actual investments such that the amount payable by the Company at the
later date will be based on the actual rate of return of a specific investment (including any
decrease as well as any increase in the value of an investment).




          (h) Early Exercise. The Award Agreement may, but need not, include a provision
whereby the Grantee may elect at any time while an Employee, Director or Consultant to exercise any
part or all of the Award prior to full vesting of the Award. Any unvested Shares received pursuant
to such exercise may be subject to a repurchase right in favor of the Company or a Related Entity
or to any other restriction the Administrator determines to be appropriate.




          (i) Term of Award. The term of each Award shall be the term stated in the Award
Agreement, provided, however, that the term of an Award shall be no more than ten (10) years from
the date of grant thereof. However, in the case of an Incentive Stock Option granted to a Grantee
who, at the time the 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 of the Company, 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 Award Agreement. Notwithstanding the foregoing, the
specified term of any Award shall not include any period for which the Grantee has elected to defer
the receipt of the Shares or cash issuable pursuant to the Award.




          (j) Transferability of Awards. Incentive Stock Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws
of descent or distribution and may be exercised, during the lifetime of the Grantee, only by the
Grantee. Other Awards shall be transferable (i) by will and by the laws of descent and
distribution and (ii) during the lifetime of the Grantee, to the extent and in the manner
authorized by the Administrator. Notwithstanding the foregoing, the Grantee may designate one or
more beneficiaries of the Grantee’s Award in the event of the Grantee’s death on a beneficiary
designation form provided by the Administrator.




          (k) Time of Granting Awards. The date of grant of an Award shall for all purposes be
the date on which the Administrator makes the determination to grant such Award, or such other
later date as is determined by the Administrator.




     7. Award Exercise or Purchase Price, Consideration and Taxes.



          (a) Exercise or Purchase Price. The exercise or purchase price, if any, for an Award
shall be as follows:





               (i) 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 of the Company, the per Share exercise price shall be not less
than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant; or




                    (B) granted to any Employee other than an Employee described in the preceding paragraph, the
per Share exercise price shall be not less than one hundred percent (100%) of the Fair Market Value
per Share on the date of grant.



EXHIBIT 10.1 – Page 10









 






               (ii) In the case of a Non-Qualified Stock Option, the per Share exercise price shall be not
less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.




               (iii) In the case of SARs, the base appreciation amount shall be not less than one hundred
percent (100%) of the Fair Market Value per Share on the date of grant.




               (iv) In the case of Awards intended to qualify as Performance-Based Compensation, the exercise
or purchase price, if any, shall be not less than one hundred percent (100%) of the Fair Market
Value per Share on the date of grant.




               (v) In the case of other Awards, such price as is determined by the Administrator.




               (vi) Notwithstanding the foregoing provisions of this Section 7(a), in the case of an Award
issued pursuant to Section 6(d), above, the exercise or purchase price for the Award shall be
determined in accordance with the provisions of the relevant instrument evidencing the agreement to
issue such Award.



          (b) Consideration. Subject to Applicable Laws, the consideration to be paid for the
Shares to be issued upon exercise or purchase of an Award including the method of payment, shall be
determined by the Administrator. In addition to any other types of consideration the Administrator
may determine, the Administrator is authorized to accept as consideration for Shares issued under
the Plan the following, provided that the portion of the consideration equal to the par value of
the Shares must be paid in cash or other legal consideration permitted by the Delaware General
Corporation Law:





               (i) cash;




               (ii) check;




               (iii) surrender of Shares or delivery of a properly executed form of attestation of ownership
of Shares as the Administrator may require which have a Fair Market Value on the date of surrender
or attestation equal to the aggregate exercise price of the Shares as to which said Award shall be
exercised, provided, however, that Shares acquired under the Plan or any other equity compensation
plan or agreement of the Company must have been held by the Grantee for a period of more than six
(6) months (and not used for another Award exercise by attestation during such period);




               (iv) with respect to Options, payment through a broker-dealer sale and remittance procedure
pursuant to which the Grantee (A) shall provide written instructions to a Company designated
brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the
Company sufficient funds to cover the aggregate exercise price payable for the purchased Shares and
(B) shall provide written directives to the Company to deliver the certificates for the purchased
Shares directly to such brokerage firm in order to complete the sale transaction;




               (v) with respect to Options, payment through a “net exercise” such that, without the payment
of any funds, the Grantee may exercise the Option and receive the net number of Shares equal to
(i) the number of Shares as to which the Option is being exercised, multiplied by (ii) a fraction,
the numerator of which is the Fair Market Value per Share (on such date as is determined by the
Administrator) less the Exercise Price per Share, and the denominator of which is such Fair Market
Value per Share (the number of net Shares to be received shall be rounded down to the nearest whole
number of Shares); or



EXHIBIT 10.1 – Page 11









 






               (vi) any combination of the foregoing methods of payment.


The Administrator may at any time or from time to time, by adoption of or by amendment to the
standard forms of Award Agreement described in Section 4(b)(iv), or by other means, grant Awards
which do not permit all of the foregoing forms of consideration to be used in payment for the
Shares or which otherwise restrict one or more forms of consideration.




          (c) Taxes. No Shares shall be delivered under the Plan to any Grantee or other person
until such Grantee or other person has made arrangements acceptable to the Administrator for the
satisfaction of any non-U.S., federal, state, or local income and employment tax withholding
obligations, including, without limitation, obligations incident to the receipt of Shares. Upon
exercise or vesting of an Award the Company shall withhold or collect from Grantee an amount
sufficient to satisfy such tax obligations, including, but not limited to, by surrender of the
whole number of Shares covered by the Award sufficient to satisfy the minimum applicable tax
withholding obligations incident to the exercise or vesting of an Award (reduced to the lowest
whole number of Shares if such number of Shares withheld would result in withholding a fractional
Share with any remaining tax withholding settled in cash).




     8. Exercise of Award.



          (a) Procedure for Exercise; Rights as a Stockholder.





               (i) Any Award granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator under the terms of the Plan and specified in the Award
Agreement.




               (ii) An Award shall be deemed to be exercised when written notice of such exercise has been
given to the Company (and accepted by the Company) in accordance with the terms of the Award by the
person entitled to exercise the Award and full payment for the Shares with respect to which the
Award is exercised has been made, including, to the extent selected, use of the broker-dealer sale
and remittance procedure to pay the purchase price as provided in Section 7(b)(iv).



          (b) Exercise of Award Following Termination of Continuous Service.





               (i) An Award may not be exercised after the termination date of such Award set forth in the
Award Agreement and may be exercised following the termination of a Grantee’s Continuous Service
only to the extent provided in the Award Agreement.




               (ii) Where the Award Agreement permits a Grantee to exercise an Award following the
termination of the Grantee’s Continuous Service for a specified period, the Award shall terminate
to the extent not exercised on the last day of the specified period or the last day of the original
term of the Award, whichever occurs first.




               (iii) Any Award designated as an Incentive Stock Option to the extent not exercised within the
time permitted by law for the exercise of Incentive Stock Options following the termination of a
Grantee’s Continuous Service shall convert automatically to a Non-Qualified Stock Option and
thereafter shall be exercisable as such to the extent exercisable by its terms for the period
specified in the Award Agreement.



EXHIBIT 10.1 – Page 12









 





     9. Conditions Upon Issuance of Shares.



          (a) If at any time the Administrator determines that the delivery of Shares pursuant to the
exercise, vesting or any other provision of an Award is or may be unlawful under Applicable Laws,
the vesting or right to exercise an Award or to otherwise receive Shares pursuant to the terms of
an Award shall be suspended until the Administrator determines that such delivery is lawful and
shall be further subject to the approval of counsel for the Company with respect to such
compliance. The Company shall have no obligation to effect any registration or qualification of
the Shares under federal or state laws.




          (b) As a condition to the exercise of an Award, the Company may require the person exercising
such Award to represent and warrant at the time of any such exercise 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 Applicable
Laws.




     10. Adjustments Upon Changes in Capitalization. Subject to any required action by the
stockholders of the Company and Section 11 hereof, the number of Shares covered by each outstanding
Award, and the number of Shares which have been authorized for issuance under the Plan but as to
which no Awards have yet been granted or which have been returned to the Plan, the exercise or
purchase price of each such outstanding Award, the maximum number of Shares with respect to which
Awards may be granted to any Grantee in any calendar year, as well as any other terms that the
Administrator determines require adjustment shall be proportionately adjusted for (i) any increase
or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Shares, or similar transaction affecting the
Shares, (ii) any other increase or decrease in the number of issued Shares effected without receipt
of consideration by the Company, or (iii) any other transaction with respect to Common Stock
including a corporate merger, consolidation, acquisition of property or stock, separation
(including a spin-off or other distribution of stock or property), reorganization, liquidation
(whether partial or complete) or any similar transaction; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been “effected without receipt of
consideration.” In the event of any distribution of cash or other assets to stockholders other
than a normal cash dividend, the Administrator shall make adjustments in connection with the events
described in (i) — (iii) of this Section 10 or substitute, exchange or grant Awards with respect to
the shares of a Related Entity (collectively “adjustments”). In determining adjustments to be made
under this Section 10, the Administrator may take into account such factors as it deems
appropriate, including (x) the restrictions of Applicable Law, (y) the potential tax, accounting or
other consequences of an adjustment and (z) the possibility that some Grantees might receive an
adjustment and a distribution or other unintended benefit, and in light of such factors or
circumstances may make adjustments that are not uniform or proportionate among outstanding Awards,
modify vesting dates, defer the delivery of stock certificates or make other equitable adjustments.
Any such adjustments to outstanding Awards will be effected in a manner that precludes the
material enlargement of rights and benefits under such Awards. Adjustments, if any, and any
determinations or interpretations, including any determination of whether a distribution is other
than a normal cash dividend, shall be made by the Administrator and its determination shall be
final, binding and conclusive. In connection with the foregoing adjustments, the Administrator
may, in its discretion, prohibit the exercise of Awards or other issuance of Shares, cash or other
consideration pursuant to Awards during certain periods of time. Except as the Administrator
determines, no issuance by the Company of shares of any class, or securities convertible into
shares of any class, shall affect, and no adjustment by reason hereof shall be made with respect
to, the number or price of Shares subject to an Award.



EXHIBIT 10.1 – Page 13









 





     11. Corporate Transactions and Changes in Control.



          (a) Termination of Award to Extent Not Assumed in Corporate Transaction. Effective
upon the consummation of a Corporate Transaction, all outstanding Awards under the Plan shall
terminate. However, all such Awards shall not terminate to the extent they are Assumed in
connection with the Corporate Transaction.




          (b) Acceleration of Award Upon Corporate Transaction or Change in Control. The
Administrator shall have the authority, exercisable either in advance of any actual or anticipated
Corporate Transaction or Change in Control or at the time of an actual Corporate Transaction or
Change in Control and exercisable at the time of the grant of an Award under the Plan or any time
while an Award remains outstanding, to provide for the full or partial automatic vesting and
exercisability of one or more outstanding unvested Awards under the Plan and the release from
restrictions on transfer and repurchase or forfeiture rights of such Awards in connection with a
Corporate Transaction or Change in Control, on such terms and conditions as the Administrator may
specify. The Administrator also shall have the authority to condition any such Award vesting and
exercisability or release from such limitations upon the subsequent termination of the Continuous
Service of the Grantee within a specified period following the effective date of the Corporate
Transaction or Change in Control. The Administrator may provide that any Awards so vested or
released from such limitations in connection with a Change in Control, shall remain fully
exercisable until the expiration or sooner termination of the Award.




          (c) Effect of Acceleration on Incentive Stock Options. Any Incentive Stock Option
accelerated under this Section 11 in connection with a Corporate Transaction or Change in Control
shall remain exercisable as an Incentive Stock Option under the Code only to the extent the
$100,000 dollar limitation of Section 422(d) of the Code is not exceeded.




     12. Effective Date and Term of Plan. The Plan shall become effective upon the earlier
to occur of its adoption by the Board or its approval by the stockholders of the Company. It shall
continue in effect for a term of ten (10) years unless sooner terminated. Subject to Section 17,
below, and Applicable Laws, Awards may be granted under the Plan upon its becoming effective.



     13. Amendment, Suspension or Termination of the Plan.



          (a) The Board may at any time amend, suspend or terminate the Plan; provided, however, that no
such amendment shall be made without the approval of the Company’s stockholders to the extent such
approval is required by Applicable Laws, or if such amendment would lessen the stockholder approval
requirements of Section 4(b)(vi) or this Section 13(a).




          (b) No Award may be granted during any suspension of the Plan or after termination of the
Plan.




          (c) No suspension or termination of the Plan (including termination of the Plan under
Section 12, above) shall adversely affect any rights under Awards already granted to a Grantee.




     14. Reservation of Shares.



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




          (b) The 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



EXHIBIT 10.1 – Page 14









 






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.




     15. No Effect on Terms of Employment/Consulting Relationship. The Plan shall not
confer upon any Grantee any right with respect to the Grantee’s Continuous Service, nor shall it
interfere in any way with his or her right or the right of the Company or any Related Entity to
terminate the Grantee’s Continuous Service at any time, with or without Cause, and with or without
notice. The ability of the Company or any Related Entity to terminate the employment of a Grantee
who is employed at will is in no way affected by its determination that the Grantee’s Continuous
Service has been terminated for Cause for the purposes of this Plan.



     16. No Effect on Retirement and Other Benefit Plans. Except as specifically provided
in a retirement or other benefit plan of the Company or a Related Entity, Awards shall not be
deemed compensation for purposes of computing benefits or contributions under any retirement plan
of the Company or a Related Entity, and shall not affect any benefits under any other benefit plan
of any kind or any benefit plan subsequently instituted under which the availability or amount of
benefits is related to level of compensation. The Plan is not a “Retirement Plan” or “Welfare
Plan” under the Employee Retirement Income Security Act of 1974, as amended.



     17. Stockholder Approval. The grant of Awards under the Plan shall be subject to
approval of the Plan by the stockholders of the Company within twelve (12) months before or after
the date the Plan is adopted by the Board. Such stockholder approval shall be obtained in the
degree and manner required under Applicable Laws. The Administrator may grant Awards under the
Plan subject to approval of the Plan by the stockholders. In the event that stockholder approval
of the Plan is not obtained within the twelve (12) month period provided above, all Awards
previously granted under the Plan shall be rescinded and be of no force or effect.



     18. Unfunded Obligation. Grantees shall have the status of general unsecured
creditors of the Company. Any amounts payable to Grantees pursuant to the Plan shall be unfunded
and unsecured obligations for all purposes, including, without limitation, Title I of the Employee
Retirement Income Security Act of 1974, as amended. Neither the Company nor any Related Entity
shall be required to segregate any monies from its general funds, or to create any trusts, or
establish any special accounts with respect to such obligations. The Company shall retain at all
times beneficial ownership of any investments, including trust investments, which the Company may
make to fulfill its payment obligations hereunder. Any investments or the creation or maintenance
of any trust or any Grantee account shall not create or constitute a trust or fiduciary
relationship between the Administrator, the Company or any Related Entity and a Grantee, or
otherwise create any vested or beneficial interest in any Grantee or the Grantee’s creditors in any
assets of the Company or a Related Entity. The Grantees shall have no claim against the Company or
any Related Entity for any changes in the value of any assets that may be invested or reinvested by
the Company with respect to the Plan.



     19. Construction. Captions and titles contained herein are for convenience only and
shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise
indicated by the context, the singular shall include the plural and the plural shall include the
singular. Use of the term “or” is not intended to be exclusive, unless the context clearly
requires otherwise.



     20. Nonexclusivity of The Plan. Neither the adoption of the Plan by the Board, the
submission of the Plan to the stockholders of the Company for approval, nor any provision of the
Plan will be construed as creating any limitations on the power of the Board to adopt such
additional compensation arrangements as it may deem desirable, including, without limitation, the
granting of



EXHIBIT 10.1 – Page 15









 




Awards otherwise than under the Plan, and such arrangements may be either generally applicable
or applicable only in specific cases.





EXHIBIT 10.1 – Page 16