EX-10.1






Exhibit 10.1




SOLARFUN POWER HOLDINGS CO., LTD.

2007 EQUITY INCENTIVE PLAN




     1. Purposes of the Plan. The purposes of this Plan are:



     • to attract and retain the best available personnel for positions of substantial
responsibility,



     • to provide additional incentive to Employees, Directors and Consultants, and



     • to promote the success of the Company’s business.



     The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted
Stock, Stock Appreciation Rights, Restricted Stock Units, Performance Units, Performance Shares,
and Other Stock Based Awards.



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



               (a) “Administrator” means the Board or any of its Committees as will be administering
the Plan, in accordance with Section 4 of the Plan.



               (b) “Applicable Laws” means the requirements relating to the administration of
equity-based awards or equity compensation plans under U.S. state corporate laws, U.S. federal and
state securities laws, the Code, any stock exchange or quotation system on which Ordinary 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.



               (c) “Award” means, individually or collectively, a grant under the Plan of Options,
SARs, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares or Other
Stock Based Awards.



               (d) “Award Agreement” means the written or electronic agreement setting forth the
terms and provisions applicable to each Award granted under the Plan. The Award Agreement is
subject to the terms and conditions of the Plan.



               (e) “Awarded Stock” means the Ordinary Shares subject to an Award.



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



               (g) “Change in Control” means the occurrence of any of the following events:



                              (i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or more of the total
voting power represented by the Company’s then outstanding voting securities;



                              (ii) The consummation of the sale or disposition by the Company of all or substantially all of
the Company’s assets;



                              (iii) A change in the composition of the Board occurring within a two-year period, as a result
of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors”
means directors who either (A) are Directors as of the effective date of the Plan, or (B) are
elected, or nominated for election, to the Board with the affirmative votes of at least a majority
of the Incumbent Directors at the time of such election or nomination (but will not include an



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individual whose election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors to the Company); or



                              (iv) The consummation of 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 or its parent) at least fifty
percent (50%) of the total voting power represented by the voting securities of the Company or such
surviving entity or its parent outstanding immediately after such merger or consolidation.



               (h) “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a
section of the Code herein will be a reference to any successor or amended section of the Code.



               (i) “Committee” means a committee of Directors or other individuals satisfying
Applicable Laws appointed by the Board in accordance with Section 4 of the Plan



               (j) “Company” means Jiangsu Linyang Solarfun Co., Ltd., a limited liability company
incorporated under the laws of the Cayman Islands, or any successor thereto.



               (k) “Consultant” means any person, including an advisor, engaged by the Company or a
Parent or Subsidiary to render services to such entity.



               (l) “Director” means a member of the Board.



               (m) “Disability” means total and permanent disability as defined in Section 22(e)(3)
of the Code, provided that in the case of Awards other than Incentive Stock Options, the
Administrator in its discretion may determine whether a permanent and total disability exists in
accordance with uniform and non-discriminatory standards adopted by the Administrator from time to
time.



               (n) “Dividend Equivalent” means a credit, made at the discretion of the Administrator,
to the account of a Participant in an amount equal to the value of dividends paid on one Share for
each Share represented by an Award held by such Participant.



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



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



               (q) “Exchange Program” means a program under which (i) outstanding Awards are
surrendered or cancelled in exchange for Awards of the same type (which may have lower exercise
prices and different terms), Awards of a different type, and/or cash, and/or (ii) the exercise
price of an outstanding Award is reduced. The terms and conditions of any Exchange Program will be
determined by the Administrator in its sole discretion.



               (r) “Fair Market Value” means, as of any date, the value of Ordinary Shares determined
as follows:



                              (i) If the Ordinary Shares are listed on any established stock exchange or a national market
system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of
The Nasdaq Stock Market, its Fair Market Value will be the closing sales price for such stock (or
the closing bid, if no sales were reported) as quoted on such exchange or system for



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the day of determination, as reported in The Wall Street Journal or such other source as the
Administrator deems reliable;



                              (ii) If the Ordinary Shares are regularly quoted by a recognized securities dealer but selling
prices are not reported, the Fair Market Value of an Ordinary Share will be the mean between the
high bid and low asked prices for the Ordinary Shares for the day of determination, 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 Ordinary Shares, the Fair Market Value
will be determined in good faith by the Administrator.



     Notwithstanding the preceding, for federal, state, and local income tax reporting purposes and
for such other purposes as the Administrator deems appropriate, the Fair Market Value shall be
determined by the Administrator in accordance with uniform and nondiscriminatory standards adopted
by it from time to time.



               (s) “Fiscal Year” means the fiscal year of the Company.



               (t) “Incentive Stock Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.



               (u) “Nonstatutory Stock Option” means an Option that by its terms does not qualify or
is not intended to qualify as an Incentive Stock Option.



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



               (w) “Option” means a stock option granted pursuant to the Plan.



               (x) “Ordinary Share” means an ordinary share of the Company or the number or fraction
of American Depositary Shares representing such ordinary share, or in the case of Performance
Units, Restricted Stock Units, and certain Other Stock Based Awards, the cash equivalent thereof,
as applicable.



               (y) “Other Stock Based Awards” means any other awards not specifically described in
the Plan that are valued in whole or in part by reference to, or are otherwise based on, Shares and
are created by the Administrator pursuant to Section 12.



               (z) “Outside Director” means a Director who is not an Employee.



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



               (bb) “Participant” means the holder of an outstanding Award granted under the Plan.



               (cc) “Performance Share” means an Award granted to a Service Provider pursuant to
Section 10 of the Plan.



               (dd) “Performance Unit” means an Award granted to a Service Provider pursuant to
Section 10 of the Plan.



               (ee) “Period of Restriction” means the period during which the transfer of Shares of
Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial
risk of



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forfeiture. Such restrictions may be based on the passage of time, the achievement of target
levels of performance, or the occurrence of other events as determined by the Administrator.



               (ff) “Plan” means this 2007 Equity Incentive Plan.



               (gg) “Restricted Stock” means Shares issued pursuant to a Restricted Stock award under
Section 8 or issued pursuant to the early exercise of an option.



               (hh) “Restricted Stock Unit” means an Award that the Administrator permits to be paid
in installments or on a deferred basis pursuant to Sections 4 and 11 of the Plan.



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



               (jj) “Section 16(b)” means Section 16(b) of the Exchange Act.



               (kk) “Service Provider” means an Employee, Director or Consultant.



               (ll) “Share” means an Ordinary Share, as adjusted in accordance with Section 15 of the
Plan.



               (mm) “Stock Appreciation Right” or “SAR” means an Award that pursuant to
Section 9 of the Plan is designated as a SAR.



               (nn) “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) Stock Subject to the Plan. Subject to the provisions of Section 15 of the Plan,
the maximum aggregate number of Shares that may be issued under the Plan is 10,799,685 plus an
annual increase of on the first day of each Fiscal Year, beginning in 2007, equal to 2% of the
outstanding Shares on the first day of the Fiscal Year; or such lesser amount of Shares as
determined by the Board. The Shares may be authorized, but unissued, or reacquired Ordinary Shares.
Shares shall not be deemed to have been issued pursuant to the Plan with respect to any portion of
an Award that is settled in cash. Upon payment in Shares pursuant to the exercise of an Award, the
number of Shares available for issuance under the Plan shall be reduced only by the number of
Shares actually issued in such payment. If a Participant pays the exercise price (or purchase
price, if applicable) of an Award through the tender of Shares, or if Shares are tendered or
withheld to satisfy any Company withholding obligations, the number of Shares so tendered or
withheld shall again be available for issuance pursuant to future Awards under the Plan.



               (b) Lapsed Awards. If any outstanding Award expires or is terminated or canceled
without having been exercised or settled in full, or if Shares acquired pursuant to an Award
subject to forfeiture or repurchase are forfeited or repurchased by the Company, the Shares
allocable to the terminated portion of such Award or such forfeited or repurchased Shares shall
again be available for grant under the Plan.



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



               (d) Application to American Depositary Shares (“ADSs”). For purposes of calculating
the number of Shares issued under this Plan (and for purposes of calculating any other Share limit
set forth herein), the issuance of an ADS shall be deemed to equal five Shares, provided,



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however, that if the number of Shares represented by an ADS is other than on a one-to-five
basis, the number of Shares issued under this Plan (and any other Share limit set forth herein)
shall be adjusted to reflect such issuance of ADSs.



     4. Administration of the Plan.



               (a) Procedure.



                              (i) Multiple Administrative Bodies. Different Committees with respect to different
groups of Service Providers may administer the Plan.



                              (ii) Section 162(m). To the extent that the Administrator determines it to be
desirable and necessary to qualify Awards granted hereunder as “performance-based compensation”
within the meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of
two or more “outside directors” within the meaning of Section 162(m) of the Code.



                              (iii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt
under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the
requirements for exemption under Rule 16b-3.



                              (iv) Other Administration. Other than as provided above, the Plan will be administered
by (A) the Board or (B) a Committee, which committee will be constituted to satisfy Applicable
Laws.



                              (v) Delegation of Authority for Day-to-Day Administration. Except to the extent
prohibited by Applicable Law, the Administrator may delegate to one or more individuals the
day-to-day administration of the Plan and any of the functions assigned to it in this Plan. Such
delegation may be revoked at any time.



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



                              (i) to determine the Fair Market Value;



                              (ii) to select the Service Providers to whom Awards may be granted hereunder;



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



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



                              (v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any
Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise
price, the time or times when Awards may be exercised (which may be based on performance criteria),
any vesting acceleration or waiver of forfeiture or repurchase restrictions, and any restriction or
limitation regarding any Award or the Shares relating thereto, based in each case on such factors
as the Administrator, in its sole discretion, will determine;



                              (vi) to reduce the exercise price of any Award to the then current Fair Market Value if the
Fair Market Value of the Ordinary Shares covered by such Award shall have declined since the date
the Award was granted;



                              (vii) to institute an Exchange Program;



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                              (viii) to construe and interpret the terms of the Plan and Awards granted pursuant to the
Plan;



                              (ix) to prescribe, amend and rescind rules and regulations relating to the Plan, including
rules and regulations relating to sub-plans established for the purpose of satisfying applicable
foreign laws and/or qualifying for preferred tax treatment under applicable foreign tax laws;



                              (x) to modify or amend each Award (subject to Section 18(c) of the Plan), including (A) the
discretionary authority to extend the post-termination exercisability period of Awards longer than
is otherwise provided for in the Plan and (B) accelerate the satisfaction of any vesting criteria
or waiver of forfeiture or repurchase restrictions;



                              (xi) to allow Participants to satisfy withholding tax obligations by electing to have the
Company withhold from the Shares or cash to be issued upon exercise or vesting of an Award that
number of Shares or cash having a Fair Market Value equal to the minimum amount required to be
withheld. The Fair Market Value of any Shares to be withheld will be determined on the date that
the amount of tax to be withheld is to be determined. All elections by a Participant to have Shares
or cash withheld for this purpose will be made in such form and under such conditions as the
Administrator may deem necessary or advisable;



                              (xii) to authorize any person to execute on behalf of the Company any instrument required to
effect the grant of an Award previously granted by the Administrator,



                              (xiii) to allow a Participant to defer the receipt of the payment of cash or the delivery of
Shares that would otherwise be due to such Participant under an Award;



                              (xiv) to determine whether Awards will be settled in Shares, cash or in any combination
thereof;



                              (xv) to determine whether Awards will be adjusted for Dividend Equivalents;



                              (xvi) to create Other Stock Based Awards for issuance under the Plan;



                              (xvii) to establish a program whereby Service Providers designated by the Administrator can
reduce compensation otherwise payable in cash in exchange for Awards under the Plan;



                              (xviii) to impose such restrictions, conditions or limitations as it determines appropriate as
to the timing and manner of any resales by a Participant or other subsequent transfers by the
Participant of any Shares issued as a result of or under an Award, including without limitation,
(A) restrictions under an insider trading policy, and (B) restrictions as to the use of a specified
brokerage firm for such resales or other transfers; and



                              (xix) to make all other determinations deemed necessary or advisable for administering the
Plan.



               (c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations
and interpretations will be final and binding on all Participants and any other holders of Awards.



     5. Eligibility. Nonstatutory Stock Options, Restricted Stock, Stock Appreciation
Rights, Performance Units, Performance Shares, Restricted Stock Units and Other Stock Based



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Awards may be granted to Service Providers. Incentive Stock Options may be granted only to
Employees.



     6. Limitations.



               (a) ISO $100,000 Rule. Each Option will be designated in the Award Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such
designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by the Participant during any calendar
year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options
will be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock
Options will be taken into account in the order in which they were granted. The Fair Market Value
of the Shares will be determined as of the time the Option with respect to such Shares is granted.



               (b) Special Limits for Grants of Options and Stock Appreciation Rights. Subject to
Section 15 of the Plan, the following special limits shall apply to Shares available for Awards
under the Plan:



                              (i) the maximum number of Shares that may be subject to Options granted to any Service
Provider in any calendar year shall equal to 10,000,000 Shares, plus any Shares which were
available under this Section 6(b)(i) for Awards to such Service Provider in any prior calendar year
but which were not covered by such Awards; and



                              (ii) the maximum number of Shares that may be subject to Stock Appreciation Rights granted to
any Service Provider in any calendar year shall equal to 10,000,000 Shares, plus any Shares which
were available under this Section 6(b)(ii) for Awards to such Service Provider in any prior
calendar year but which were not covered by such Awards.



               (c) No Rights as a Service Provider. Neither the Plan nor any Award shall confer upon
a Participant any right with respect to continuing his or her relationship as a Service Provider,
nor shall they interfere in any way with the right of the Participant or the right of the Company
or its Parent or Subsidiaries to terminate such relationship at any time, with or without cause.



     7. Stock Options.



               (a) Term of Option. The term of each Option will be stated in the Award Agreement. In
the case of an Incentive Stock Option, the term will be ten (10) years from the date of grant or
such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive
Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns
stock representing more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be
five (5) years from the date of grant or such shorter term as may be provided in the Award
Agreement.



               (b) Option Exercise Price and Consideration.



               (i) Exercise Price. The per Share exercise price for the Shares to be issued pursuant
to exercise of an Option will be determined by the Administrator, subject to the following:



               (1) In the case of an Incentive Stock Option



                              (A) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of



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all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price
will be no less than 110% of the Fair Market Value per Share on the date of grant.



                              (B) granted to any Employee other than an Employee described in paragraph (A) immediately
above, the per Share exercise price will be no less than 100% of the Fair Market Value per Share on
the date of grant.



               (2) In the case of a Nonstatutory Stock Option, the per Share exercise price will be
determined by the Administrator. In the case of a Nonstatutory Stock Option intended to qualify as
“performance-based compensation” within the meaning of Section 162 (m) of the Code, the per Share
exercise price will be no less than 100% of the Fair Market Value per Share on the date of grant.



               (3) Notwithstanding the foregoing, Incentive Stock Options may be granted with a per Share
exercise price of less than 100% of the Fair Market Value per Share on the date of grant pursuant
to a transaction described in, and in a manner consistent with, Section 424(a) of the Code.



               (ii) Waiting Period and Exercise Dates. At the time an Option is granted, the
Administrator will fix the period within which the Option may be exercised and will determine any
conditions that must be satisfied before the Option may be exercised. The Administrator, in its
sole discretion, may accelerate the satisfaction of such conditions at any time.



               (c) Form of Consideration. The Administrator will determine the acceptable form of
consideration for exercising an Option, including the method of payment. In the case of an
Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at
the time of grant. Such consideration, to the extent permitted by Applicable Laws, may consist
entirely of:



                              (i) cash;



                              (ii) check;



                              (iii) promissory note;



                              (iv) other Shares which meet the conditions established by the Administrator to avoid adverse
accounting consequences (as determined by the Administrator);



                              (v) consideration received by the Company under a cashless exercise program implemented by the
Company in connection with the Plan;



                              (vi) 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;



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



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



               (d) Exercise of Option.



                              (i) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder will
be exercisable according to the terms of the Plan and at such times and under such conditions as
determined by the Administrator and set forth in the Award Agreement. An Option may not be
exercised for a fraction of a Share.



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     An Option will be deemed exercised when the Company receives: (x) written or electronic notice
of exercise (in accordance with the Award Agreement) from the person entitled to exercise the
Option, and (y) full payment for the Shares with respect to which the Option is exercised
(including provision for any applicable tax withholding). Full payment may consist of any
consideration and method of payment authorized by the Administrator and permitted by the Award
Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the
Participant or, if requested by the Participant, in the name of the Participant and his or her
spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a stockholder will exist with respect to the Awarded Stock,
notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such
Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other
right for which the record date is prior to the date the Shares are issued, except as provided in
Section 15 of the Plan or the applicable Award Agreement.



     Exercising an Option in any manner will decrease the number of Shares thereafter available for
sale under the Option, by the number of Shares as to which the Option is exercised.



                              (ii) Termination of Relationship as a Service Provider. If a Participant ceases to be
a Service Provider, other than upon the Participant’s death or Disability, the Participant may
exercise his or her Option within such period of time as is specified in the Award Agreement to the
extent that the Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Award Agreement). In the absence of a
specified time in the Award Agreement, the Option will remain exercisable for three (3) months
following the Participant’s termination. Unless otherwise provided by the Administrator, if on the
date of termination the Participant is not vested as to his or her entire Option, the Shares
covered by the unvested portion of the Option will revert to the Plan. If after termination the
Participant does not exercise his or her Option as to all of the vested Shares within the time
specified by the Administrator, the Option will terminate, and the remaining Shares covered by such
Option will revert to the Plan.



                              (iii) Disability of Participant. If a Participant ceases to be a Service Provider as a
result of the Participant’s Disability, the Participant may exercise his or her Option within such
period of time as is specified in the Award Agreement to the extent the Option is vested on the
date of termination (but in no event later than the expiration of the term of such Option as set
forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the
Option will remain exercisable for twelve (12) months following the Participant’s termination.
Unless otherwise provided by the Administrator, if on the date of termination the Participant is
not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option
will revert to the Plan. If after termination the Participant does not exercise his or her Option
as to all of the vested Shares within the time specified by the Administrator, the Option will
terminate, and the remaining Shares covered by such Option will revert to the Plan.



                              (iv) Death of Participant. If a Participant dies while a Service Provider, the Option
may be exercised following the Participant’s death within such period of time as is specified in
the Award Agreement to the extent that the Option is vested on the date of death (but in no event
may the Option be exercised later than the expiration of the term of such Option as set forth in
the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary has
been designated prior to the Participant’s death in a form acceptable to the Administrator. If no
such beneficiary has been designated by the Participant, then such Option may be exercised by the
personal representative of the Participant’s estate or by the persons) to whom the Option is
transferred pursuant to the Participant’s will or in accordance with the laws of descent and
distribution. In the absence of a specified time in the Award Agreement, the Option will remain
exercisable for twelve (12) months following the Participant’s death. Unless otherwise provided by
the Administrator, if at the time of death the Participant is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option will immediately revert to the
Plan. If the Option is not exercised as to all of the



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vested Shares within the time specified by the Administrator, the Option will terminate, and
the remaining Shares covered by such Option will revert to the Plan.



     8. Restricted Stock.



               (a) Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the
Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service
Providers in such amounts as the Administrator, in its sole discretion, will determine.



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



               (c) Transferability. Except as provided in this Section 8, 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.



               (d) Other Restrictions. The Administrator, in its sole discretion, may impose such
other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate.



               (e) Removal of Restrictions. Except as otherwise provided in this Section 8, Shares of
Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from
escrow as soon as practicable after the last day of the Period of Restriction. The Administrator,
in its discretion, may accelerate the time at which any restrictions will lapse or be removed.



               (f) Voting Rights. During the Period of Restriction, Service Providers holding Shares
of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares,
unless the Administrator determines otherwise.



               (g) Dividends and Other Distributions. During the Period of Restriction, Service
Providers holding Shares of Restricted Stock will 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 will be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect
to which they were paid.



               (h) Return of Restricted Stock to Company. On the date set forth in the Award
Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company
and again will become available for grant under the Plan.



     9. Stock Appreciation Rights.



               (a) Grant of SARs. Subject to the terms and conditions of the Plan, a SAR may be
granted to Service Providers at any time and from time to time as will be determined by the
Administrator, in its sole discretion.



               (b) Number of Shares. The Administrator will have complete discretion to determine the
number of SARs granted to any Service Provider.



               (c) Exercise Price and Other Terms. The Administrator, subject to the provisions of
the Plan, will have complete discretion to determine the terms and conditions of SARs granted under
the Plan.



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               (d) Exercise of SARs. SARs will be exercisable on such terms and conditions as the
Administrator, in its sole discretion, will determine. The Administrator, in its sole discretion,
may accelerate exercisability at any time.



               (e) SAR Agreement. Each SAR grant will be evidenced by an Award Agreement that will
specify the exercise price, the term of the SAR, the conditions of exercise, and such other terms
and conditions as the Administrator, in its sole discretion, will determine.



               (f) Expiration of SARs. An SAR granted under the Plan will expire upon the date
determined by the Administrator, in its sole discretion, and set forth in the Award Agreement.
Notwithstanding the foregoing, the rules of Sections 7(d)(ii), 7(d)(iii) and 7(d)(iv) also will
apply to SARs.



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



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



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



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



     10. Performance Units and Performance Shares.



               (a) Grant of Performance Units/Shares. Subject to the terms and conditions of the
Plan, Performance Units and Performance Shares may be granted to Service Providers at any time and
from time to time, as will be determined by the Administrator, in its sole discretion. The
Administrator will have complete discretion in determining the number of Performance Units and
Performance Shares granted to each Participant.



               (b) Value of Performance Units/Shares. Each Performance Unit will have an initial
value that is established by the Administrator on or before the date of grant. Each Performance
Share will have an initial value equal to the Fair Market Value of a Share on the date of grant.



               (c) Performance Objectives and Other Terms. The Administrator will set performance
objectives in its discretion which, depending on the extent to which they are met, will determine
the number or value of Performance Units/Shares that will be paid out to the Participant. The time
period during which the performance objectives must be met will be called the “Performance Period.”
Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify
the Performance Period, and such other terms and conditions as the Administrator, in its sole
discretion, will determine. The Administrator may set performance objectives based upon the
achievement of Company-wide, divisional, or individual goals (including solely continued service),
applicable federal or state securities laws, or any other basis determined by the Administrator in
its discretion.



               (d) Earning of Performance Units/Shares. After the applicable Performance Period has
ended, the holder of Performance Units/Shares will 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 objectives have been achieved.
After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce
or waive any performance objectives for such Performance Unit/Share.



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               (e) Form and Timing of Payment of Performance Units/Shares. Payment of earned
Performance Units/Shares will be made after the expiration of the applicable Performance Period at
the time determined by the Administrator. The Administrator, 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 of cash and Shares.



               (f) Cancellation of Performance Units/Shares. On the date set forth in the Award
Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, and
again will be available for grant under the Plan.



     11. Restricted Stock Units. Restricted Stock Units shall consist of a Restricted
Stock, Performance Share or Performance Unit Award that the Administrator, in its sole discretion
permits to be paid out in installments or on a deferred basis, in accordance with rules and
procedures established by the Administrator



     12. Other Stock Based Awards. Other Stock Based Awards may be granted either alone,
in addition to, or in tandem with, other Awards granted under the Plan and/or cash awards made
outside of the Plan. The Administrator shall have authority to determine the Service Providers to
whom and the time or times at which Other Stock Based Awards shall be made, the amount of such
Other Stock Based Awards, and all other conditions of the Other Stock Based Awards including any
dividend and/or voting rights.



     13. Leaves of Absence. Unless the Administrator provides otherwise, vesting of
Awards granted hereunder will be suspended during any unpaid leave of absence and will resume on
the date the Participant returns to work on a regular schedule as determined by the Company;
provided, however, that no vesting credit will be awarded for the time vesting has
been suspended during such leave of absence. A Service Provider will not cease to be an Employee in
the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of
the Company or between the Company, its Parent, or any Subsidiary. For purposes of Incentive Stock
Options, no leave of absence may exceed ninety (90) days, unless reemployment upon expiration of
such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of
absence approved by the Company is not so guaranteed, then three months following the 91st day of
such leave any Incentive Stock Option held by the Participant will cease to be treated as an
Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option.



     14. Non-Transferability of Awards. Unless determined otherwise by the
Administrator, an Award 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 Participant, only by the Participant. If the Administrator makes an
Award transferable, such Award will contain such additional terms and conditions as the
Administrator deems appropriate.



     15. Adjustments; Dissolution or Liquidation; Change in Control.



               (a) Adjustments. In the event that any dividend or other distribution (whether in the
form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or
exchange of Shares or other securities of the Company, or other change in the corporate structure
of the Company affecting the Shares occurs such that an adjustment is determined by the
Administrator (in its sole discretion) to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available under the Plan,
then the Administrator shall, in such manner as it may deem equitable, adjust the number and class
of Shares which may be delivered under the Plan, the number, class and price of Shares subject to
outstanding awards, and the numerical



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limits in Section 3. Notwithstanding the preceding, the number of Shares subject to any Award
always shall be a whole number.



               (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator will notify each Participant as soon as practicable
prior to the effective date of such proposed transaction. The Administrator in its discretion may
provide for a Participant to have the right to exercise his or her Award, to the extent applicable,
until ten (10) days prior to such transaction as to all of the Awarded Stock covered thereby,
including Shares as to which the Award would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option or forfeiture rights applicable to any
Award shall lapse 100%, and that any Award vesting shall accelerate 100%, 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 or vested, an Award will terminate immediately prior to the
consummation of such proposed action.



               (c) Change in Control.



                              (i) Stock Options and SARs. In the event of a Change in Control, each outstanding
Option and SAR shall be assumed or an equivalent option or SAR substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. Unless determined otherwise by
the Administrator, in the event that the successor corporation refuses to assume or substitute for
the Option or SAR, the Participant shall fully vest in and have the right to exercise the Option or
SAR as to all of the Awarded Stock, including Shares as to which it would not otherwise be vested
or exercisable. If an Option or SAR is not assumed or substituted in the event of a Change in
Control, the Administrator shall notify the Participant in writing or electronically that the
Option or SAR shall be exercisable, to the extent vested, for a period of up to fifteen (15) days
from the date of such notice, and the Option or SAR shall terminate upon the expiration of such
period. For the purposes of this paragraph, the Option or SAR shall be considered assumed if,
following the Change in Control, the option or SAR confers the right to purchase or receive, for
each Share of Awarded Stock subject to the Option or SAR immediately prior to the Change in
Control, the consideration (whether stock, cash, or other securities or property) received in the
Change in Control by holders of Ordinary 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 Change in Control is not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the Option or SAR, for each share
of Awarded Stock subject to the Option or SAR, 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 Ordinary Shares in the Change in Control. Notwithstanding anything herein to the
contrary, an Award that vests, is earned, or is paid-out upon the satisfaction of one or more
performance goals will not be considered assumed if the Company or its successor modifies any of
such performance goals without the Participant’s consent; provided, however, a modification to such
performance goals only to reflect the successor corporation’s post-Change in Control corporate
structure will not be deemed to invalidate an otherwise valid Award assumption.



                              (ii) Restricted Stock, Performance Shares, Performance Units, Restricted Stock Units and
Other Stock Based Awards. In the event of a Change in Control, each outstanding Award of
Restricted Stock, Performance Share, Performance Unit, Other Stock Based Award and Restricted Stock
Unit shall be assumed or an equivalent Restricted Stock, Performance Share, Performance Unit, Other
Stock Based Award and Restricted Stock Unit award substituted by the successor corporation or a
Parent or Subsidiary of the successor corporation. Unless determined otherwise by the
Administrator, in the event that the successor corporation refuses to assume or substitute for the
Award, the Participant shall fully vest in the Award including as to Shares/Units that would not
otherwise be vested, all applicable restrictions will lapse, and all performance objectives and
other vesting criteria will be deemed achieved at targeted levels. For the purposes of this
paragraph, an Award of Restricted Stock, Performance Shares, Performance Units, Other Stock Based



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Awards and Restricted Stock Units shall be considered assumed if, following the Change in
Control, the award confers the right to purchase or receive, for each Share subject to the Award
immediately prior to the Change in Control (and if a Restricted Stock Unit or Performance Unit, for
each Share as determined based on the then current value of the unit), the consideration (whether
stock, cash, or other securities or property) received in the Change in Control by holders of
Ordinary 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 Change in
Control is not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide that the consideration to
be received for each Share (and if a Restricted Stock Unit or Performance Unit, for each Share as
determined based on the then current value of the unit) 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 Ordinary Shares in the Change in Control. Notwithstanding anything herein to the
contrary, an Award that vests, is earned, or is paid-out upon the satisfaction of one or more
performance goals will not be considered assumed if the Company or its successor modifies any of
the performance goals without the Participant’s consent; provided, however, a modification to the
performance goals only to reflect the successor corporation’s post-Change in Control corporate
structure will not be deemed to invalidate an otherwise valid Award assumption.



                              (iii) Outside Director Awards. Notwithstanding any provision of Section 15(c)(i) or
15(c)(ii) to the contrary, with respect to Awards granted to an Outside Director that are assumed
or substituted for, if on the date of or following the assumption or substitution the Participant’s
status as a Director or a director of the successor corporation, as applicable, is terminated other
than upon a voluntary resignation by the Participant, then the Participant shall fully vest in and
have the right to exercise his or her Options and Stock Appreciation Rights as to all of the
Awarded Stock, including Shares as to which such Awards would not otherwise be vested or
exercisable, all restrictions on Restricted Stock and Restricted Stock Units, as applicable, will
lapse, and, with respect to Performance Shares, Performance Units, and Other Stock Based Awards,
all performance goals and other vesting criteria will be deemed achieved at target levels and all
other terms and conditions met.



     16. Date of Grant. The date of grant of an Award will be, for all purposes, the
date on which the Administrator makes the determination granting such Award, or such other later
date as is determined by the Administrator. Notice of the determination will be provided to each
Participant within a reasonable time after the date of such grant.



     17. Term of Plan. Subject to Section 22 of the Plan, the Plan will become effective
upon its adoption by the Board. It will continue in effect for a term of ten (10) years unless
terminated earlier under Section 18 of the Plan.



     18. Amendment and Termination of the Plan.



               (a) Amendment and Termination. The Board may at any time amend, alter, suspend or
terminate the Plan.



               (b) Stockholder Approval. The Company will obtain stockholder approval of any Plan
amendment to the extent necessary and desirable to comply with Applicable Laws.



               (c) Effect of Amendment or Termination. No amendment, alteration, suspension, or
termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise
between the Participant and the Administrator, which agreement must be in writing and signed by the
Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to
exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to
the date of such termination.



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     19. Conditions Upon Issuance of Shares.



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



               (b) Investment Representations. As a condition to the exercise or receipt of an Award,
the Company may require the person exercising or receiving such Award to represent and warrant at
the time of any such exercise or receipt 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.



     20. Severability. Notwithstanding any contrary provision of the Plan or an Award to
the contrary, if any one or more of the provisions (or any part thereof) of this Plan or the Awards
shall be held invalid, illegal, or unenforceable in any respect, such provision shall be modified
so as to make it valid, legal, and enforceable, and the validity, legality, and enforceability of
the remaining provisions (or any part thereof) of the Plan or Award, as applicable, shall not in
any way be affected or impaired thereby.



     21. 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, will relieve the Company of
any liability in respect of the failure to issue or sell such Shares as to which such requisite
authority will not have been obtained.



     22. Stockholder Approval. The Plan will be subject to approval by the stockholders
of the Company within twelve (12) months after the date the Plan is adopted. Such stockholder
approval will be obtained in the manner and to the degree required under Applicable Laws.




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