EXHIBIT
4.1


 


 


 


 


 


AMERICAN
MEDICAL TECHNOLOGIES, INC.


2007 EQUITY INCENTIVE PLAN


 


















AMERICAN
MEDICAL TECHNOLOGIES, INC.


2007 Equity Incentive Plan


American Medical Technologies, Inc. hereby adopts the
2007 Equity Incentive Plan, effective as of July 2, 2007, as follows:


SECTION 1

BACKGROUND, PURPOSE AND DURATION


1.1           Background and Effective Date.  The Plan provides for the granting of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights
(or SARs), Restricted Stock, Performance Units, and Performance Shares.  The Plan is adopted and effective as of July
2, 2007.  The Company will seek
stockholder approval in the manner and to the degree required under Applicable
Laws.  If the Company fails to obtain stockholder
approval of the Plan within twelve (12) months after the date this Plan is
adopted by the Board, pursuant to Section 422 of the Code, any Option granted
as an Incentive Option at any time under the Plan will not qualify as an
Incentive Option within the meaning of the Code and will be deemed to be a
Non-Statutory Option.


1.2           Purpose of the Plan.  The purpose of the Plan is to promote the
success, and enhance the value, of the Company by aligning the interests of
Participants with those of the Company’s shareholders, and by providing
Participants with an incentive for outstanding performance.  The Plan is further intended to provide
flexibility to the Company in its ability to motivate, attract, and retain the
services of outstanding individuals, upon whose judgment, interest, and special
effort the success of the Company largely is dependent.


1.3           Duration of the Plan.  The Plan shall commence on the date specified
in Section 1.1 and
subject to Section 12 (concerning the Board’s right to amend or terminate the
Plan), shall remain in effect thereafter.


SECTION 2

DEFINITIONS


The following words and phrases shall have the
following meanings unless a different meaning is plainly required by the
context:


2.1           “1934
Act”  means the Securities
Exchange Act of 1934, as amended. 
Reference to a specific section of the Exchange Act or regulation
thereunder shall include such section or regulation, any valid regulation
promulgated under such section, and any comparable provision of any future
legislation or regulation amending, supplementing or superseding such section
or regulation.


2.2           “Affiliate”
means any corporation or any other entity (including, but not limited to,
partnerships and joint ventures) controlling, controlled by, or under common
control with the Company (e.g., a parent or subsidiary of the Company).


2.3           “Affiliated
SAR” means an SAR that is granted in connection with a related
Option, and which automatically will be deemed to be exercised at the same time
that the related Option is exercised.


2.4           “Applicable Laws”  means the requirements relating to the
administration of equity plans under U. S. state corporate laws, U.S. federal
and state securities laws, the Code, any stock exchange or 



 1
 









quotation system on which the Shares are listed or
quoted and the applicable laws of any foreign country or jurisdiction where
Awards are, or will be, granted under the Plan.


2.5           “Award”
means, individually or collectively, a grant under the Plan of Nonqualified
Stock Options, Incentive Stock Options, SARs, Restricted Stock, Performance
Units, or Performance Shares.


2.6           “Award
Agreement” means the written agreement setting forth the terms
and provisions applicable to each Award granted under the Plan.


2.7           “Board”
or “Board of Directors” means the Board of Directors of the
Company.


2.8           “Change
in Control” is defined in Section 15.4.


2.9           “Code”
means the Internal Revenue Code of 1986, as amended.  Reference to a specific section of the Code
or regulation thereunder shall include such section or regulation, any valid
regulation promulgated under such section, and any comparable provision of any
future legislation or regulation amending, supplementing or superseding such
section or regulation.


2.10         “Committee”
means the committee appointed by the Board to administer the Plan pursuant to
Section 3.1, or if no committee has been so appointed, then Committee
means the Board.


2.11         “Company”
means American Medical Technologies, Inc., a Delaware corporation, or any
successor thereto.


2.12         “Consultant”
means an individual who provides bona fide services to the Company and/or an
Affiliate.


2.13         “Director”
means any individual who is a member of the Board of Directors of the Company.


2.14         “Disability”
means a permanent and total disability within the meaning of Code
Section 22(e)(3).


2.15         “Employee”
means an employee of the Company or of an Affiliate, whether such employee is
so employed at the time the Plan is adopted or becomes so employed subsequent
to the adoption of the Plan.


2.16         “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended.  Reference to a specific section of ERISA
shall include such section, any valid regulation promulgated thereunder, and
any comparable provision of any future legislation amending, supplementing or
superseding such section.


2.17         “Fair
Market Value” means as of any date, the value of a Share
determined as follows:


(a)           If the Shares are listed on any established stock exchange
or a national market system, its Fair Market Value shall be the closing sales
price for such Share (or the closing bid, if no sales were reported) as quoted
on such exchange or system on the day of, or the last market trading day prior
to, the day of determination, as reported in The Wall Street Journal or such
other source as the Committee deems reliable;



 2
 









(b)           If the Shares are regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
the Share shall be the mean between the high bid and low asked prices for the
Shares on the day of, or the last market trading day prior to, the day of
determination, as reported in The Wall Street Journal or such other source as
the Committee deems reliable; or


(c)           the Fair Market Value shall be determined in
good faith by the Committee.


2.18         “Freestanding
SAR” means a SAR that is granted independently of any Option.


2.19         “Incentive
Stock Option” or “ISO” means an option to purchase Shares, which
is designated as an Incentive Stock Option and is intended to meet the
requirements of Section 422 of the Code.


2.20         “Nonqualified
Stock Option” means an option to purchase Shares which is not
intended to be an Incentive Stock Option.


2.21         “Option”
means an Incentive Stock Option or a Nonqualified Stock Option.


2.22         “Option
Price” means the price at which a Share may be purchased
pursuant to an Option.


2.23         “Participant”
means an Employee, Consultant or Director who has an outstanding Award.


2.24         “Performance
Share” means an Award granted to an Employee pursuant to Section
8 having an initial value equal to the
Fair Market Value of a Share on the date of grant.


2.25         “Performance
Unit” means an Award granted to an Employee pursuant to Section
8 having an initial value (other than
the Fair Market Value of a Share) that is established by the Committee at the
time of grant.


2.26         “Period
of Restriction” means the period during which the transfer of
Shares of Restricted Stock are subject to restrictions.


2.27         “Plan”
means the American Medical Technologies, Inc. 2007 Equity Incentive Plan, as
set forth in this instrument and as hereafter amended from time to time.


2.28         “Restricted
Stock” means an Award granted to a Participant pursuant to
Section 7.


2.29         “Retirement”
means, in the case of an Employee, a Termination of Employment by reason of the
Employee’s retirement at or after age 62.


2.30         “Rule
16b-3” means Rule 16b-3 promulgated under the 1934 Act, and any
future regulation amending, supplementing or superseding such regulation.


2.31         “Section
16 Person” means a person who, with respect to the Shares, is
subject to Section 16 of the 1934 Act.


2.32         “Shares”
means the shares of common stock of the Company.



 3
 









2.33         “Stock
Appreciation Right” or “SAR” means an Award, granted alone or in
connection with a related Option, that pursuant to the terms of Section 7 is
designated as an SAR.


2.34         “Subsidiary”
means any “subsidiary corporation” (other than the Company) as defined in Code
Section 424(f).


2.35         “Tandem
SAR” means an SAR that is granted in connection with a related
Option, the exercise of which shall require forfeiture of the right to purchase
an equal number of Shares under the related Option (and when a Share is
purchased under the Option, the SAR shall be canceled to the same extent).


2.36         “Termination
of Employment” means a cessation of the employee-employer or
director or other service arrangement relationship between an Employee,
Consultant or Director and the Company or an Affiliate for any reason, including,
but not by way of limitation, a termination by resignation, discharge, death,
Disability, Retirement, or the disaffiliation of an Affiliate, but excluding
any such termination where there is a simultaneous reemployment or
re-engagement by the Company or an Affiliate.


SECTION 3

ADMINISTRATION


3.1           The
Committee.  The Plan shall
be administered by the Board of Directors or by a committee of the Board that
meets the requirements of this Section 3.1 (hereinafter referred to as “the Committee”).  The Committee shall consist of not less than
two (2) Directors.  The members of the
Committee shall be appointed from time to time by, and shall serve at the
pleasure of, the Board of Directors.  At
such time as the Company has independent directors, any Committee shall be
comprised solely of Directors who are both “outside directors” under Rule 16b-3
and “independent directors” under the
requirements of any national securities exchange or system upon which the
Shares are then listed and/or traded.


3.2           Authority
of the Committee.  The
Committee shall have all powers and discretion necessary or appropriate to
administer the Plan and to control its operation, including, but not limited
to, the power (a) to determine which Employees, Consultants and Directors shall
be granted Awards, (b) to prescribe the terms and conditions of such Awards,
(c) to interpret the Plan and the Awards, (d) to adopt rules for the
administration, interpretation and application of the Plan as are consistent
therewith, and (e) to interpret, amend or revoke any such rules.


The Committee, in its sole discretion and on such terms and
conditions as it may provide, may delegate all or any part of its authority and
powers under the Plan to one or more directors and/or officers of the Company; provided, however, that the Committee may not delegate its authority and
powers with respect to Section 16 Persons.


3.3           Decisions
Binding.  All
determinations and decisions made by the Committee shall be final, conclusive,
and binding on all persons, and shall be given the maximum deference permitted
by law.



 4
 









SECTION 4

SHARES SUBJECT TO THE PLAN


4.1           Shares
Available.


4.1.1        Maximum
Shares Available under Plan.  The
aggregate number of Shares available for issuance under the Plan may not exceed
one million (1,000,000) Shares.


4.1.2        Adjustments.
 All Share numbers in this Section 4.1 are subject to adjustment as
provided in Section 15.


4.2           Number of Shares.    The
following rules will apply for purposes of the determination of the number of
Shares available for grant under the Plan:


(a)           While an Award is outstanding, it shall be counted against
the authorized pool of Shares, regardless of its vested status.


(b)           The grant of an Option or Restricted Stock shall reduce
the Shares available for grant under the Plan by the number of Shares subject
to such Award.


(c)           The grant of a Tandem SAR shall reduce the number of
Shares available for grant by the number of Shares subject to the related
Option (i.e., there is no double counting of Options and their related Tandem
SARs); provided, however,
that, upon the exercise of such Tandem SAR, the authorized Share pool shall be
credited with the appropriate number of Shares representing the number of
shares reserved for such Tandem SAR less the number of Shares actually
delivered upon exercise thereof or the number of Shares having a Fair Market
Value equal to the cash payment made upon such exercise.


(d)           The grant of an Affiliated SAR shall reduce the number of
Shares available for grant by the number of Shares subject to the SAR, in addition
to the number of Shares subject to the related Option; provided, however, that,
upon the exercise of such Affiliated SAR, the authorized Share pool shall be
credited with the appropriate number of Shares representing the number of
shares reserved for such Affiliated SAR less the number of Shares actually
delivered upon exercise thereof or the number of Shares having a Fair Market
Value equal to the cash payment made upon such exercise.


(e)           The grant of a Freestanding SAR shall reduce the number of
Shares available for grant by the number of Freestanding SARs granted; provided, however, that, upon the
exercise of such Freestanding SAR, the authorized Share pool shall be credited
with the appropriate number of Shares representing the number of shares reserved
for such Freestanding SAR less the number of Shares actually delivered upon
exercise thereof or the number of Shares having a Fair Market Value equal to
the cash payment made upon such exercise.


(f)            The Committee shall in each case determine the appropriate
number of Shares to deduct from the authorized pool in connection with the
grant of Performance Units and/or Performance Shares.


(g)           To the extent that an Award is settled in cash rather than
in Shares, the authorized Share pool shall be credited with the appropriate
number of Shares having a Fair Market Value equal to the cash settlement of the
Award.


4.3           Lapsed
Awards.  If an Award is
cancelled, terminates, expires, or lapses for any reason (with the exception of
the termination of a Tandem SAR upon exercise of the related Option, or the 



 5
 









termination of a related Option upon exercise of the
corresponding Tandem SAR), any Shares subject to such Award again shall be
available to be the subject of an Award.


SECTION 5

STOCK OPTIONS


5.1           Grant of
Options.  Options may be granted to Employees,
Consultants and Directors at any time and from time to time, as determined by
the Committee in its sole discretion. The Committee, in its sole discretion,
shall determine the number of Shares subject to Options granted to each
Participant.  The Committee may grant
ISOs, NQSOs, or a combination thereof.


5.2           Award
Agreement.  Each Option shall be evidenced by an Award
Agreement that shall specify the Option Price, the expiration date of the
Option, the number of Shares to which the Option pertains, any conditions to
exercise of the Option, and such other terms and conditions as the Committee,
in its discretion, shall determine. The Award Agreement also shall specify
whether the Option is intended to be an ISO or a NQSO.


5.3           Option
Price.  Subject to the provisions of this
Section 5.3, the Option Price for each Option shall be determined by the
Committee in its sole discretion.


5.3.1        Nonqualified
Stock Options.  In the case of a Nonqualified Stock Option,
the Option Price shall be not less than one hundred percent (100%) of the Fair
Market Value of a Share on the date that the Option is granted.


5.3.2        Incentive
Stock Options.     In the case of an Incentive Stock Option,
the Option Price shall be not less than one hundred percent (100%) of the Fair
Market Value of a Share on the date that the Option is granted; provided, however, that if at the time
that the Option is granted, the Employee (together with persons whose stock
ownership is attributed to the Employee pursuant to Section 424(d) of the Code)
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any of its Subsidiaries, the Option Price
shall be not less than one hundred and ten percent (110%) of the Fair Market
Value of a Share on the date that the Option is granted.


5.3.3        Substitute
Options.  Notwithstanding the provisions of
Sections 5.3.1 and 5.3.2, in the event that the Company or an Affiliate
consummates a transaction described in Section 424(a) of the Code (e.g., the
acquisition of property or stock from an unrelated corporation), persons who
become Employees, Consultants or Directors on account of such transaction may
be granted Options in substitution for options granted by their former
employer.  If such substitute Options are
granted, the Committee, in its sole discretion, may determine that such
substitute Options shall have an exercise price less than 100% of the Fair
Market Value of the Shares on the date the Option is granted.


5.4           Expiration of Options. 
Unless the applicable stock option agreement provides otherwise, each
Option shall terminate upon the first to occur of the events listed in Section
5.4.1, subject to Section 5.4.2.


5.4.1        Expiration
Dates.


(a)           The date for termination of the Option set forth in the
Award  Agreement;


(b)           The expiration of ten years from the date the Option was
granted, or



 6
 









(c)           The expiration of three months from the date of the
Participant’s Termination of Employment for a reason other than the Participant’s
death, Disability or Retirement, or


(d)           The expiration of twelve months from the date of the
Participant’s Termination of Employment by reason of Disability, or


(e)           The expiration of twelve months from the
date of the Participant’s death, if such death occurs while the Participant is
in the employ or service of the Company or an Affiliate.


5.4.2        Committee
Discretion.   The
Committee shall provide, in the terms of each individual Option, when such
Option expires and becomes unexercisable. 
After the Option is granted, the Committee, in its sole discretion may
extend the maximum term of such Option. 
The foregoing discretionary authority is subject to the limitations and
restrictions on Incentive Stock Options set forth in Section 5.8.


5.5           Exercise
of Options.  Options granted under the Plan shall be
exercisable at such times, and subject to such restrictions and conditions, as
the Committee shall determine in its sole discretion.  After an Option is granted, the Committee, in
its sole discretion, may accelerate the exercisability of the Option.


5.6           Payment.  The
Committee shall determine the acceptable form of consideration for exercising
an Option, including the method of payment. 
In the case of an Incentive Stock Option, the Committee shall determine
the acceptable form of consideration at the time of grant.  Such consideration may consist entirely of:


(a)           cash;


(b)           check;


(c)           full recourse promissory note;


(d)           other Shares which (i) in the
case of Shares acquired upon exercise of an Option, have been owned by the
Participant for more than six (6) months on the date of surrender, and
(ii) have a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said Option shall be
exercised;


(e)           consideration received by the Company
from a licensed broker under a cashless exercise program implemented by the
Company to facilitate “same day” exercises and sales of Options;


(f)            a reduction in the amount of any
Company liability to the Participant, including any liability attributable to
the Participant’s participation in any Company-sponsored deferred compensation
program or arrangement;


(g)           any combination of the foregoing
methods of payment; or


(h)           such other consideration and method of
payment for the issuance of Shares to the extent permitted by Applicable Laws.


5.7           Restrictions
on Share Transferability.  The Committee may impose such restrictions on
any Shares acquired pursuant to the exercise of an Option, as it may deem
advisable, including, but not limited to, restrictions related to Federal
securities laws, the requirements of any national securities 



 7
 









exchange or system upon
which such Shares are then listed and/or traded, and/or any blue sky or state
securities laws.


5.8           Certain
Additional Provisions for Incentive Stock Options.


5.8.1        Exercisability.  The aggregate Fair Market Value (determined
at the time the Option is granted) of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by any Employee
during any calendar year (under all plans of the Company and its Subsidiaries)
shall not exceed $100,000.


5.8.2        Termination
of Employment.  No
Incentive Stock Option may be exercised more than three months after the
Participant’s termination of employment for any reason other than Disability or
death, unless (a) the Participant dies during such three-month period, and (b)
the Award Agreement and/or the Committee permits later exercise. No Incentive
Stock Option may be exercised more than one year after the Participant’s
termination of employment on account of Disability, unless (a) the Participant
dies during such one-year period, and (b) the Award Agreement and/or the
Committee permit later exercise.


5.8.3        Employees
Only.  Incentive Stock
Options may be granted only to persons who are Employees of the Company and/or
a Subsidiary at the time of grant.


5.8.4        Expiration.
No Incentive Stock Option may be exercised after the expiration of 10 years
from the date such Option was granted; provided, however,
that if the Option is granted to an Employee who, together with persons whose
stock ownership is attributed to the Employee pursuant to Section 424(d) of the
Code, owns stock possessing more than 10% of the total combined voting power of
all classes of the stock of the Company or any of its Subsidiaries, the Option
may not be exercised after the expiration of 5 years from the date that it was
granted.


5.9           Nontransferability of
Options.  No Option granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will, the laws of descent and distribution, or as provided under
Section 9.  All Options granted to a
Participant under the Plan shall be exercisable during his or her lifetime only
by such Participant.


SECTION 6

STOCK APPRECIATION RIGHTS


6.1           Grant of
SARs.  An SAR may be granted to an Employee,
Consultant or Director at any time and from time to time as determined by the
Committee, in its sole discretion.  The
Committee may grant Affiliated SARs, Freestanding SARs, Tandem SARs, or any combination
thereof.  The Committee shall have
complete discretion to determine the number of SARs granted to any Participant,
and consistent with the provisions of the Plan, the terms and conditions
pertaining to such SARs.  However, the
grant price of a Freestanding SAR shall be at least equal to the Fair Market
Value of a Share on the date of grant. 
The grant price of Tandem or Affiliated SARs shall equal the Option
Price of the related Option.


6.2           Exercise
of Tandem SARs.  Tandem SARs may be exercised for all or part
of the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option.  A Tandem SAR may be exercised only with
respect to the Shares for which its related Option is then exercisable.



 8















6.2.1        ISOs.  Notwithstanding any contrary provision of the
Plan, with respect to a Tandem SAR granted in connection with an ISO: (i) the
Tandem SAR shall expire no later than the expiration of the underlying ISO;
(ii) the value of the payout with respect to the Tandem SAR shall be for no
more than one hundred percent (100%) of the difference between the Option Price
of the underlying ISO and the Fair Market Value of the Shares subject to the
underlying ISO at the time the Tandem SAR is exercised; and (iii) the Tandem
SAR shall be exercisable only when the Fair Market Value of the Shares subject
to the ISO exceeds the Option Price of the ISO.


6.3           Exercise
of Affiliated SARs.  An Affiliated SAR shall be deemed to be
exercised upon the exercise of the related Option.  The deemed exercise of an Affiliated SAR
shall not necessitate a reduction in the number of Shares subject to the
related Option.


6.4           Exercise
of Freestanding SARs.  Freestanding SARs shall be exercisable on
such terms and conditions as the Committee, in its sole discretion, shall
determine.


6.5           SAR
Agreement.  Each SAR shall be evidenced by an Award
Agreement that shall specify the grant price, the term of the SAR, the
conditions of exercise, and such other terms and conditions as the Committee,
in its sole discretion, shall determine.


6.6           Expiration
of SARs.  An SAR granted under the Plan shall expire
upon the date determined by the Committee, in its sole discretion, and set
forth in the Award Agreement. 
Notwithstanding the foregoing, the rules of Section 5.4 (pertaining to
Options) also shall apply to SARs.


6.7           Payment of SAR Amount. 
Upon exercise of an SAR, a Participant shall be entitled to receive
payment from the Company in an amount determined by multiplying:


(a)           The difference between the Fair Market Value of a Share on
the date of exercise over the grant price; times


(b)           The number of Shares with respect to which the SAR is
exercised.


At
the discretion of the Committee, the payment upon SAR exercise may be in cash,
in Shares of equivalent value, or in some combination thereof.


6.8           Nontransferability of SARs.  No
SAR granted under the Plan may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will, the laws of descent
and distribution, or as permitted under Section 9.  An SAR granted to a Participant shall be
exercisable during the Participant’s lifetime only by such Participant.


SECTION 7

RESTRICTED STOCK


7.1           Grant of
Restricted Stock.  Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Employees, Consultants or Directors in such amounts as the
Committee, in its sole discretion, shall determine.


7.2           Restricted
Stock Agreement.  Each Award of Restricted Stock shall be
evidenced by an Award Agreement that shall specify the Period of Restriction,
the number of Shares granted, and such other terms and conditions as the
Committee, in its sole discretion, shall determine.  Unless the Committee determines otherwise,
shares of Restricted Stock shall be held by the Company as escrow agent until
the restrictions on such Shares have lapsed.



 9
 









7.3           Transferability. 
Except as provided in this Section 7, Shares of Restricted Stock may not
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated
until the end of the applicable Period of Restriction.  All rights with respect to the Restricted
Stock granted to a Participant under the Plan shall be available during his or her
lifetime only to such Participant.


7.4           Other
Restrictions.  The Committee, in its sole discretion, may
impose such other restrictions on any Shares of Restricted Stock as it may deem
advisable including, without limitation, restrictions based upon the
achievement of specific performance goals (Company-wide, divisional, and/or
individual), and/or restrictions under applicable Federal or state securities
laws; and may legend the certificates representing Restricted Stock to give
appropriate notice of such restrictions. 
For example, the Committee may determine that some or all certificates
representing Shares of Restricted Stock shall bear the following legend:


“The sale or other
transfer of the shares of stock represented by this certificate, whether
voluntary, involuntary, or by operation of law, is subject to certain
restrictions on transfer as set forth in the American Medical Technologies,
Inc. 2007 Equity Incentive Plan, and in a Restricted Stock Agreement.  A copy of the Plan and such Restricted Stock
Agreement may be obtained from the Secretary of American Medical Technologies,
Inc.”


7.5           Removal
of Restrictions.  Except as otherwise provided in this Section
7, Shares of Restricted Stock covered by each Restricted Stock grant made under
the Plan shall be released from escrow as soon as practicable after the last
day of the Period of Restriction.  The
Committee, in its discretion, may accelerate the time at which any restrictions
shall lapse, and/or remove any restrictions. 
After the restrictions have lapsed, the Participant shall be entitled to
have any legend or legends under Section 7.4 removed from his or her Share
certificate, and the Shares shall be freely transferable by the Participant.


7.6           Voting
Rights.  During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder may exercise
full voting rights with respect to those Shares, unless the Committee
determines otherwise.


7.7           Dividends
and Other Distributions.  During the Period of Restriction,
Participants holding Shares of Restricted Stock shall be entitled to receive
all dividends and other distributions paid with respect to such Shares, unless
otherwise provided in the Award Agreement. 
If any such dividends or distributions are paid in Shares, the Shares shall
be subject to the same restrictions on transferability and forfeitability as
the Shares of Restricted Stock with respect to which they were paid.


7.8           Return of Restricted Stock
to Company.  Subject to the applicable Award Agreement and
Section 7.5, upon the earlier of (a) the Participant’s Termination of
Employment, or (b) the date set forth in the Award Agreement, the Restricted
Stock for which restrictions have not lapsed shall revert to the Company and,
subject to Section 4.3, again shall become available for grant under the Plan.


7.9           Repurchase Option.  Unless
the Committee determines otherwise, the Award Agreement shall grant the Company
a repurchase option exercisable upon the voluntary or involuntary termination
of the Participant’s service with the Company for any reason (including death
or Disability).  The purchase price for
Shares repurchased pursuant to the Award Agreement shall be the original price
paid by the Participant and may be paid by cancellation of any indebtedness of
the Participant to the Company.  The
repurchase option shall lapse at a rate determined by the Committee.



 10
 









7.10         Unrestricted Shares.  Notwithstanding anything to the contrary in
this Section 7, and subject to Applicable Laws, the Committee may issue Shares
of Restricted Stock without any applicable restrictions.


SECTION 8

PERFORMANCE UNITS AND PERFORMANCE SHARES


8.1           Grant of
Performance Units/Shares.  Performance Units and Performance Shares may
be granted to Employees, Consultants or Directors at any time and from time to
time, as shall be determined by the Committee, in its sole discretion.  The Committee shall have complete discretion
in determining the number of Performance Units and Performance Shares granted
to each Participant.


8.2           Value of
Performance Units/Shares.  Each Performance Unit shall have an initial
value that is established by the Committee at the time of grant.  Each Performance Share shall have an initial
value equal to the Fair Market Value of a Share on the date of grant.  The Committee shall set performance goals in
its discretion which, depending on the extent to which they are met, will
determine the number and/or value of Performance Units/Shares that will be paid
out to the Participants.  The time period
during which the performance goals must be met shall be called the “Performance Period”.


8.3           Earning
of Performance Units/Shares.  After the applicable
Performance Period has ended, the holder of Performance Units/Shares shall be
entitled to receive a payout of the number of Performance Units/Shares earned
by the Participant over the Performance Period, to be determined as a function
of the extent to which the corresponding performance goals have been
achieved.  After the grant of a
Performance Unit/Share, the Committee, in its sole discretion, may adjust
and/or waive the achievement of any performance goals for such Performance
Unit/Share.


8.4           Form and
Timing of Payment of Performance Units/Shares. 
Payment of earned Performance Units/Shares shall be made as soon as
practicable after the expiration of the applicable Performance Period.  The Committee, in its sole discretion, may
pay earned Performance Units/Shares in the form of cash, in Shares (which have
an aggregate Fair Market Value equal to the value of the earned Performance
Units/Shares at the close of the applicable Performance Period) or in a
combination thereof.


8.5           Cancellation
of Performance Units/Shares.  Subject to the applicable
Award Agreement, upon the earlier of (a) the Participant’s Termination of
Employment, or (b) the date set forth in the Award Agreement, all remaining
Performance Units/Shares shall be forfeited by the Participant to the Company,
and subject to Section 4.3, the Shares subject thereto shall again be available
for grant under the Plan.


8.6           Nontransferability. 
Performance Units/Shares may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will, the laws
of descent and distribution, or as permitted under Section 9.  A Participant’s rights under the Plan shall
be exercisable during the Participant’s lifetime only by the Participant or the
Participant’s legal representative.


SECTION 9

BENEFICIARY DESIGNATION


If permitted by the
Committee, a Participant may name a beneficiary or beneficiaries to whom any
unpaid vested Award shall be paid in event of the Participant’s death.  Each such designation shall revoke all prior
designations by the same Participant and shall be effective only if given in a
form and manner acceptable to the Committee. 
In the absence of any such designation, benefits remaining unpaid at the
Participant’s death shall be paid to the Participant’s estate and, subject to
the terms of the Plan, any unexercised vested Award may be exercised by the
Committee or executor of the Participant’s estate.



 11
 









SECTION 10

DEFERRALS


The Committee, in its
sole discretion, may permit a Participant to defer receipt of the payment of
cash or the delivery of Shares that would otherwise be due to such Participant
under an Award.  Any such deferral
elections shall be subject to such rules and procedures as shall be determined
by the Committee in its sole discretion.


SECTION 11

RIGHTS OF EMPLOYEES AND CONSULTANTS


11.1         No Effect
on Employment or Service.  Nothing in the Plan shall interfere with or
limit in any way the right of the Company to terminate any Participant’s employment
or service at any time, with or without cause.


11.2         Participation.  No
Employee, Consultant or Director shall have the right to be selected to receive
an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.


SECTION 12

AMENDMENT, SUSPENSION, OR TERMINATION


The
Board, in its sole discretion, may alter, amend or terminate the Plan, or any
part thereof, at any time and for any reason. 
However, as required by Applicable Laws, no alteration or amendment
shall be effective without further stockholder approval.  Neither the amendment, suspension, nor
termination of the Plan shall, without the consent of the Participant, alter or
impair any rights or obligations under any Award theretofore granted.  No Award may be granted during any period of
suspension nor after termination of the Plan.


SECTION 13

TAX WITHHOLDING


13.1         Withholding
Requirements.  Prior to the delivery of any Shares or cash
pursuant to an Award, the Company shall have the power and the right to deduct
or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, and local taxes required to be withheld
with respect to such Award.


13.2         Shares Withholding.  The
Committee, in its sole discretion and pursuant to such procedures as it may
specify from time to time, may permit a Participant to satisfy the minimum
statutory tax withholding obligation, in whole or in part, by delivering to the
Company Shares already owned for more than six (6) months having a value equal
to the amount required to be withheld. 
The value of the Shares to be delivered will be based on their Fair
Market Value on the date of delivery.


SECTION 14

INDEMNIFICATION


Each
person who is or shall have been a member of the Committee, or of the Board,
shall be indemnified and held harmless by the Company against and from any
loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, notion,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan or
any Award Agreement and against and from any and all amounts paid by him or her
in settlement thereof, with the Company’s approval, or paid by him or her in
settlement thereof, with the Company’s approval, or paid by him or her 



 12
 









in
satisfaction of any judgment in any such action, suit, or proceeding against
him or her, provided he or she shall give the Company an opportunity, at its
own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf. 
The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Company’s Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold
them harmless.


SECTION 15

ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER
OR ASSET SALE


15.1         Changes in Capitalization; No Award Repricing. 
Subject to any required action by the shareholders of the Company, 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 upon
cancellation or expiration of an Award, as well as the price per Share covered
by each such outstanding Award, shall be proportionately adjusted for 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 any other increase or decrease in the number of issued Shares
effected without receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.”  Such
adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. 
Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to an Award.  Further, except for the adjustments provided
herein, no Award may be amended to reduce its initial exercise price, and no
Award may be cancelled and replaced with an Award with a lower price.


15.2          Dissolution or Liquidation.  In
the event of the proposed dissolution or liquidation of the Company, the
Committee shall notify each Participant as soon as practicable prior to the
effective date of such proposed transaction. 
The Committee in its discretion may provide for a Participant to have
the right to exercise his or her Award until ten (10) days prior to such
transaction as to all of the Shares covered thereby, including Shares as to
which the Award would not otherwise be exercisable.  In addition, the Committee may provide that
any Company repurchase option applicable to any Shares purchased upon exercise
of an Award shall lapse as to all such Shares, provided the proposed
dissolution or liquidation takes place at the time and in the manner
contemplated.  To the extent it has not
been previously exercised, an Award will terminate immediately prior to the
consum­mation of such proposed action.


15.3         Merger or Asset Sale.  In
the event of a merger of the Company with or into another corporation, or the
sale of substantially all of the assets of the Company, each outstanding Award
shall be assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation.  In the event that the successor corporation
refuses to assume or substitute for the Award, the Participant shall fully vest
in and have the right to exercise the Award as to all of the Shares as to which
it would not otherwise be vested or exercisable.  If an Award becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Committee shall notify the Participant in writing or
electronically that the Award shall be fully vested and exercisable for a
period of fifteen (15) days from the date of such notice, and the Award shall
terminate upon the expiration of such period. 
For the purposes of this paragraph, the Award shall be considered assumed
if, following the merger or sale of assets, the option or right confers the
right to purchase or receive, for each Share subject to the Award immediately
prior to the merger or sale of assets, the consideration (whether stock, cash,
or other securities or property) received in the merger or sale of assets 



 13
 









by
holders of Shares for each Share held on the effective date of the transaction
(and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Committee may, with the
consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Award, for each Share subject to the Award,
to be solely common stock of the successor corporation or its Parent equal in
fair market value to the per share consideration received by holders of Shares
in the merger or sale of assets.


15.4         Change in Control.  In
the event of a Change of Control (as defined below), except as otherwise
determined by the Board, the Participant shall fully vest in and have the right
to exercise the Awards as to all of the Shares, including Shares as to which it
would not otherwise be vested or exercisable. 
If an Award becomes fully vested and exercisable as the result of a
Change of Control, the Committee shall notify the Participant in writing or
electronically prior to the Change of Control that the Award shall be fully
vested and exercisable for a period of fifteen (15) days from the date of such
notice, and the Award shall terminate upon the expiration of such period.  For purposes of this Agreement, a “Change of
Control” means the happening of any of the following events:


(a)           When any “person,” as such term is
used in Sections 13(d) and 14(d) of the Exchange Act (other than the
Company, a Subsidiary or a Company employee benefit plan, including any trustee
of such plan acting as trustee) is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the combined voting power of the Company’s then outstanding securities
entitled to vote generally in the election of directors; or


(b)           The stockholders of the Company
approve a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than fifty percent (50%) of the total
voting power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation, or
the stockholders of the Company approve an agreement for the sale or
disposition by the Company of all or substantially all the Company’s assets; or


(c)           A change in the composition of the
Board of Directors of the Company, as a result of which fewer than a majority
of the directors are Incumbent Directors. 
“Incumbent Directors” shall mean directors who either
(A) are directors of the Company as of the date the Plan is approved by
the stockholders, or (B) are elected, or nominated for election, to the
Board of Directors of the Company with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or nomination
(but shall not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the election
of directors to the Company).


SECTION 16
 CONDITIONS UPON ISSUANCE OF SHARES


16.1         Legal
Compliance.  Shares shall not be issued pursuant to the
exercise of an Award unless the exercise of such Award and the issuance and
delivery of Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.


16.2         Investment Representations.  As
a condition to the exercise of an Award, the Company may require the
Participant exercising such Award to represent and warrant at the time of any
such 



 14
 









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.


16.3         No Rights as Stockholder
..  No Participant will have any of
the rights of a stockholder with respect to any shares of Common Stock until
the Shares are issued to the said Participant. 
After Shares are issued to the Participant, the Participant will be a
stockholder and will have all the rights of a stockholder with respect to such
shares of Common Stock, including the right to vote and receive all dividends
or other distributions made or paid with respect to such shares.


SECTION 17

INABILITY TO OBTAIN AUTHORITY


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
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.


SECTION 18

RESERVATION OF SHARES


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


SECTION 19

LEGAL CONSTRUCTION


19.1         Gender
and Number.  Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.


19.2         Severability.  In
the event any provision of the Plan shall be held illegal or invalid for any
reason, such illegality or invalidity shall not affect the remaining parts of
the Plan, and the Plan shall be construed and enforced as if the illegal or
invalid provision had not been included.


19.3         Requirements
of Law.  The granting of Awards and the issuance of
Shares under the Plan shall be subject to all Applicable Laws.


19.4         Governing
Law.  The Plan and all Award Agreements shall be
construed in accordance with and governed by the laws of the State of Delaware.


19.5         Captions. 
Captions are provided herein for convenience only, and shall not serve
as a basis for interpretation or construction of the Plan.


* * * * * * * * *



 15