Exhibit 10.2


 


CHINACACHE INTERNATIONAL HOLDINGS LTD.


 


2008 STOCK INCENTIVE PLAN


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 

















 


the Company or a Related Entity; or (iii) commission of a crime
involving dishonesty, breach of trust, or physical or emotional harm to any
person.


 


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


 


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


 


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


 


(l)                                     “Ordinary
Share” means a share of par value US$0.0001,
of the Company having the rights and restrictions set out in the Amended and Restated
Articles of Association.


 


(m)                               “Company”
means
ChinaCache International Holdings Ltd., a company incorporated under the laws of the Cayman Islands or any
successor corporation that adopts the Plan in connection with a Corporate
Transaction.


 


(n)                                 “Competitor”
means any firm, corporate, company, organization or entity that is engaged in
the business in direct competition with the business of the Company and/or the
Related Entities, including but not limited to those listed in IRA.


 


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


 


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


 


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Consultant
(except as otherwise provided in the Award Agreement).  An approved leave of absence shall include
sick leave, military leave, or any other authorized personal leave.  For purposes of each Incentive Share Option
granted under the Plan, if such leave exceeds ninety (90) days, and
reemployment upon expiration of such leave is not guaranteed by statute or
contract, then the Incentive Share Option shall be treated as a Non-Qualified
Share Option on the day three (3) months and one (1) day following
the expiration of such ninety (90) day period.


 


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


 


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


 


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


 


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


 


(iv)                              any reverse
merger or series of related transactions culminating in a reverse merger
(including, but not limited to, a tender offer followed by a reverse merger) in
which the Company is the surviving entity but (A) the Ordinary Shares
outstanding immediately prior to such merger are converted or exchanged by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise, or (B) in which securities possessing more than fifty percent (50%) of the total combined
voting power of the Company’s outstanding securities are transferred to a
person or persons different from those who held such securities immediately
prior to such merger or the initial transaction culminating in such merger, but excluding any such transaction or series of
related transactions that the Administrator determines shall not be a Corporate
Transaction; or


 


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


 


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


 


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


 


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not
less than ninety (90) consecutive days. 
A Grantee will not be considered to have incurred a Disability unless he
or she furnishes proof of such impairment sufficient to satisfy the
Administrator in its discretion.


 


(t)                                    “Dividend
Equivalent Right” means a right entitling the Grantee to compensation
measured by dividends paid with respect to Ordinary Shares.


 


(u)                                 “Drag-Along Event” means any of the following
transactions, which is at arm’s length for
an aggregate consideration of not less than US$400 million:


 


(i)                                     an offer by an entity that is not an Affiliate of
any party hereof to purchase all the Shares in the Company;


 


(ii)                                  a merger or consolidation of the Company with or into
another corporation in which the Company is not the surviving entity but the
Shares of the Company outstanding immediately prior to the merger are converted
by virtue of the merger into other property, whether in the form of securities,
cash, or otherwise; or


 


(iii)                               a sale or transfer of all or substantially all the Company’s
properties and assets to any other person.


 


The conditions and threshold of the Drag-Along Event shall be adjusted
subject to any amendment to the IRA.


 


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


 


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


 


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


 


(i)                                     If the Ordinary
Shares are traded on a securities
exchange, the value shall be deemed to be the average of the security’s closing
prices on such exchange over the thirty (30) day period ending one (1) day
prior to the distribution,


 


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


 


(ii)                                  If the Ordinary
Shares are traded over-the-counter,
the value shall be deemed to be the average of the closing bid prices over the
thirty (30) day period ending three (3) days prior to the distributionas reported in
The Wall Street Journal or such other source as the Administrator deems
reliable; and


 


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


 


The method of valuation of securities subject to investment
letter or other restrictions on free marketability shall be adjusted to make an appropriate
discount from the market value determined as above in sub-clauses (i), (ii) or
(iii) to reflect the fair market value thereof as determined in good faith
by the Administrator., or by a liquidator if one is appointed.


 


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


 


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


 


(aa)                            “IRA” means the Investors Rights Agreement of the
Company dated April 20, 2007 by and among the Company, the holders of
ordinary shares and holders of preferred shares of the Company, including any
amendment thereto from time to time.


 


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


 


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


 


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


 


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


 


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


 


(gg)                          “Qualified
IPO” shall mean a public offering of Shares of the Company (or securities
representing such Shares) registered under the Securities Act and with gross
proceeds to the Company of at least US$50 million and an implied, pre-money valuation
of US$300 million or more, or in a similar public offering of Shares in a
jurisdiction and on an internationally recognized securities exchange or
inter-dealer quotation system outside of the United States, including The Stock
Exchange of Hong Kong Limited, provided such public offering is equivalent to
the aforementioned in terms of offering proceeds and regulatory approval, and
is approved by the holders of at least fifty-one percent (51%) of the then
outstanding preferred shares of the Company.  The conditions and threshold of
the Qualified IPO shall be adjusted subject to any amendment to the IRA.


 


(hh)                          “Registration
Date” means the first to occur of (i) the closing of the first sale to
the general public pursuant to a registration statement filed with and declared
effective by the U.S. Securities and Exchange Commission under the Securities
Act of 1933, as amended, of 


 


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(A) the
Ordinary Shares or (B) the same class of securities of a successor
corporation (or its Parent) issued pursuant to a Corporate Transaction in
exchange for or in substitution of the Ordinary Shares; and (ii) in the
event of a Corporate Transaction, the date of the consummation of the Corporate
Transaction if the same class of securities of the successor corporation (or
its Parent) issuable in such Corporate Transaction shall have been sold to the
general public pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission under the Securities Act of
1933, as amended, on or prior to the date of consummation of such Corporate
Transaction.


 


(ii)                                  “Related Entity” means any Parent
or Subsidiary of the Company and any business, corporation, partnership, company, organization
or other entity in which the Company or a Parent or a Subsidiary of the Company
holds or controls a substantial ownership interest, directly or
indirectly, including but not limited to ChinaCache
Network Technology (Beijing) Limited  and Beijing Blue I.T. Technologies Co., Ltd.
.


 


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


 


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


 


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


 


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


 


(nn)                          “SAR”
means a share appreciation right entitling the Grantee to Shares or cash
compensation, as established by the Administrator, measured by appreciation in
the value of Ordinary Shares.


 


(oo)                          “Share”
means an Ordinary Share of the Company.


 


(pp)                          “Spin-off
Transaction” means a distribution by the Company to its shareholders of all
or any portion of the securities of any Subsidiary of the Company.


 


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


 


(rr)                                “Trade Sale” means a bona fide third party’s offer for the sale
of all or more than fifty percent (50%) of the equity or assets of the Company, whether
through a single transaction or a series of transactions,  for at least the greater of (i) an
amount that represents an implied valuation of the Company that generates a
minimum internal rate of return of thirty-five percent (35%) per annum to each
holder of Preferred Shares (in the event such internal rate of return is calculated for a period of
time that is less than a full year, such rate shall be calculated ratably based
on a 360-day year), and (ii) an amount which
represents an implied valuation of the Company of at least US$300 million.  The conditions and threshold of
the Trade Sale shall be adjusted subject to any amendment to the IRA.


 


3.               Shares Subject
to the Plan.


 


(a)                                  Subject to the
provisions of Section 10, below, the maximum aggregate number of Shares
which may be issued pursuant to all Awards (including Incentive Share Options)
is  8,600,000
Shares (proportionally adjusted to reflect any share dividends, share
splits, or similar transactions).  The Shares to be issued pursuant to Awards
may be authorized, but unissued, or reacquired Ordinary Shares.


 


(b)                                 Any Shares
covered by an Award (or portion of an Award) which is forfeited, canceled or
expires (whether voluntarily or involuntarily) shall be deemed not to have been
issued for purposes of determining the maximum aggregate number of Shares which
may be issued under the Plan.  Shares
that actually have been issued under the Plan pursuant to an Award shall not be
returned to the Plan and shall not become available for future issuance under
the Plan, except that if unvested Shares are forfeited, or repurchased by the
Company at the lower of their original purchase price or their Fair Market
Value at the time of repurchase, such Shares shall become available for future
grant under the Plan.  To the extent not prohibited by
Section 422(b)(1) of the Code (and the corresponding regulations
thereunder), the listing requirements of The Nasdaq National Market (or other
established stock exchange or national market system on which the Ordinary
Shares are traded) and Applicable Law, any Shares covered by an Award which are
surrendered (i) in payment of the Award exercise or purchase price or
(ii) in satisfaction of tax withholding obligations incident to the
exercise of an Award shall be deemed not to have been issued for purposes of
determining the maximum number of Shares which may be issued pursuant to all
Awards under the Plan, unless otherwise determined by the Administrator.


 


4.               Administration
of the Plan.


 


(a)                                  Plan
Administrator.


 


(i)                                     Administration
with Respect to Directors and Officers.  With respect to grants of Awards to Directors
or Employees who are also Officers or Directors of the Company, the Plan shall
be administered by (A) the Board or (B) a Committee designated by the
Board, which Committee shall be constituted in such a manner as to satisfy the
Applicable Laws and to permit such grants and related transactions under the
Plan to be exempt from 


 


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Section 16(b) of the Exchange Act in
accordance with Rule 16b-3.  Once
appointed, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(v)                                 to determine
the terms and conditions of any Award granted hereunder (including the vesting
schedule set forth in the Notice of Stock Option Award);


 


(vi)                              to amend the
terms of any outstanding Award granted under the Plan, provided that
(A) any amendment that would adversely affect the Grantee’s rights under
an outstanding Award shall not be made without the Grantee’s written consent;


 


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


 


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


 


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


 


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


 


5.               Eligibility.  Awards other than Incentive Share Options may
be granted to Employees, Directors and Consultants.  Incentive Share Options may be granted only
to Employees of the Company or a Parent or a Subsidiary of the Company.  An Employee, Director or Consultant who has
been granted an Award may, if otherwise eligible, be granted additional Awards.


 


6.               Terms and
Conditions of Awards.


 


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


 


(b)                                 Designation of
Award.  Each Award shall be designated
in the Award Agreement.  In the case of
an Option, the Option shall be designated as either an Incentive Share Option
or a Non-Qualified Share Option. 
However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as
Incentive Share Options which become exercisable for the first time by a
Grantee during any calendar year (under all plans of the Company or any Parent
or Subsidiary of the Company) exceeds $100,000, such excess Options, to the extent
of the Shares covered thereby in excess of the foregoing limitation, shall be
treated as Non-Qualified Share Options. 
For this purpose, Incentive Share


 


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Options
shall be taken into account in the order in which they were granted, and the
Fair Market Value of the Shares shall be determined as of the grant date of the
relevant Option.


 


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


 


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


 


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


 


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


 


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


 


(h)           Term of Award.  The term of each Award shall be the term
stated in the Award Agreement, provided, however, that the term of an Incentive
Share Option shall be no 


 


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more
than nine (9) years from the date
of grant thereof.  However, in the case
of an Incentive Share Option granted to a Grantee who, at the time the Option
is granted, owns shares representing more than ten percent (10%) of the
voting power of all classes of shares of the Company or any Parent or
Subsidiary of the Company, the term of the Incentive Stock Option shall be
five (5) years from the date of grant thereof or such shorter term as
may be provided in the Award Agreement. 
Notwithstanding the foregoing, the specified term of any Award shall not
include any period for which the Grantee has elected to defer the receipt of
the Shares or cash issuable pursuant to the Award.


 


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


 


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


 


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


 


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


 


(i)            In the case of an Incentive
Share Option:


 


(A)          granted to an Employee who, at the time of the grant
of such Incentive Share Option owns shares representing more than ten percent
(10%) of the voting power of all classes of shares of the Company or any Parent
or Subsidiary of the Company, the per Share exercise price shall be not less
than one hundred ten percent (110%)  of the Fair Market Value per Share on the
date of grant; or


 


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


 


(ii)           In the case of a
Non-Qualified Share Option, the per Share exercise price shall be not less than
eighty-five percent (85%) of the Fair Market Value per Share on the date of
grant unless otherwise determined by the Administrator.


 


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


 


(iv)          Notwithstanding the
foregoing provisions of this Section 7(a), in the case of an Award issued
pursuant to Section 6(d), above, the exercise or purchase price for 


 


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the Award shall be determined in accordance with the
provisions of the relevant instrument evidencing the agreement to issue such
Award.


 


(b)           Consideration.  Subject to Applicable Laws, the consideration
to be paid for the Shares to be issued upon exercise or purchase of an Award
including the method of payment, shall be determined by the Administrator (and,
in the case of an Incentive Share Option, shall be determined at the time of
grant).  In addition to any other types
of consideration the Administrator may determine, the Administrator is
authorized to accept as consideration for Shares issued under the Plan the
following:


 


(i)            cash;


 


(ii)           check;


 


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


 


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


 


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


 


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


 


(c)           Taxes.  No Shares shall be delivered under the Plan
to any Grantee or other person until such Grantee or other person has made
arrangements acceptable to the Administrator for the satisfaction of any
non-U.S., federal, state, or local income and employment tax withholding
obligations, including, without limitation, obligations incident to the receipt
of Shares or the disqualifying disposition of Shares received on exercise of an
Incentive Share Option.  Upon exercise of
an Award the Company shall withhold or collect from Grantee an amount
sufficient to satisfy such tax obligations.


 


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8.     Exercise of Award.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


9.     Conditions Upon Issuance of
Shares.


 


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


 


(b)           As a condition to the exercise of an Award, the
Company may require the person exercising such Award to represent and warrant
at the time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is
required by any Applicable Laws.


 


(c)   As a condition to the
exercise of an Award, the Company may require the person exercising such Award
to acknowledge and agree to be bound by the provisions of the Investors’ Rights
Agreement entered into among the shareholders of the Company from time to time,
as if the Grantee is an Ordinary Shareholder thereunder.


 


13

















 


10.   Adjustments Upon Changes in
Capitalization.  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, the exercise or purchase price
of each such outstanding Award, the maximum number of Shares with respect to
which Awards may be granted to any Grantee in any fiscal year of the Company,
as well as any other terms that the Administrator determines require adjustment
shall be proportionately adjusted for (i) any increase or decrease in the
number of issued Shares resulting from a share split, reverse share split,
share dividend, combination or reclassification of the Shares, or similar
transaction affecting the Shares, (ii) any other increase or decrease in
the number of issued Shares effected without receipt of consideration by the
Company, or (iii) as the Administrator may determine in its discretion,
any other transaction with respect to Ordinary Shares including a corporate
merger, consolidation, acquisition of property or equity, separation (including
a spin-off or other distribution of shares or property), reorganization,
liquidation (whether partial or complete) or any similar transaction; provided,
however that conversion of any convertible securities of the Company shall not
be deemed to have been “effected without receipt of consideration.”  Such adjustment shall be made by the
Administrator and its determination shall be final, binding and
conclusive.  Except as the Administrator
determines, no issuance by the Company of shares of any class, or securities
convertible into shares of any class, shall affect, and no adjustment by reason
hereof shall be made with respect to, the number or price of Shares subject to
an Award.  In the event of a Spin-off
Transaction, the Administrator may in its discretion make such adjustments and
take such other action as it deems appropriate with respect to outstanding
Awards under the Plan, including but not limited to: (i) adjustments to
the number and kind of Shares, the
exercise or purchase price per Share and the
vesting periods of outstanding Awards, (ii) prohibit the exercise of
Awards during certain periods of time prior to the consummation of the Spin-off
Transaction, or (iii) the substitution, exchange or grant of Awards to
purchase securities of the Subsidiary; provided that the Administrator shall
not be obligated to make any such adjustments or take any such action
hereunder.


 


11.   Corporate Transactions and
Changes in Control.


 


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


 


(b)           Acceleration of Award Upon Corporate Transaction or
Change in Control.


 


(1).          Corporate
Transaction.  Except as
provided otherwise in an individual Award Agreement, in the event of a
Corporate Transaction, for the portion of each Award that is neither Assumed
nor Replaced, such portion of the Award shall automatically become fully vested
and exercisable and be released from any repurchase or forfeiture rights (other
than repurchase rights exercisable at Fair Market Value) for all of the Shares
at the time represented by such portion of the Award, immediately prior to the
specified effective date of such Corporate Transaction, provided that the
Grantee’s Continuous Service has not terminated prior to such date.  The portion
of the Award that is not Assumed shall terminate under 


 


14

















 


subsection
(a) of this Section 11 to the extent not exercised prior to the
consummation of such Corporate Transaction.


 


(2)           Change in Control.  Except as provided otherwise in an individual
Award Agreement, in the event of a Change in Control (other than a Change in
Control which also is a Corporate Transaction), each Award which is at the time
outstanding under the Plan automatically shall become fully vested and
exercisable and be released from any repurchase or forfeiture rights (other
than repurchase rights exercisable at Fair Market Value), immediately prior to
the specified effective date of such Change in Control, for all of the Shares
at the time represented by such Award, provided that the Grantee’s Continuous
Service has not terminated prior to such date.


 


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


 


12.   Effective Date and Term of
Plan.  The Plan shall become
effective upon the later to occur of its adoption by the Board or its approval
by the shareholders of the Company.  It
shall continue in effect for a term of nine (9) years unless sooner
terminated.  Subject to Section 17,
below, and Applicable Laws, Awards may be granted under the Plan upon its
becoming effective.


 


13.   Amendment, Suspension or
Termination of the Plan.


 


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


 


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


 


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


 


14.   Reservation of Shares.


 


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


 


(b)           The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in 


 


15

















 


respect
of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.


 


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


 


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


 


17.   Shareholder
Approval.  The grant
of Incentive Share Options under the Plan shall be subject to approval by the
shareholders  of the Company within two (2) months after the date the Plan is
adopted excluding Incentive Share Options issued in substitution for
outstanding Incentive Share Options pursuant to Section 424(a) of the
Code.  Such shareholder approval shall be
obtained in the degree and manner required under Applicable Laws.  The Administrator may grant Incentive Share
Options under the Plan prior to approval by the shareholders, but until such
approval is obtained, no such Incentive Share Option shall be exercisable.  In the event that shareholder approval is not
obtained within the two (2) month period provided above, all Incentive
Share Options previously granted under the Plan shall be exercisable as
Non-Qualified Share Options.


 


18.   Vesting Schedule.  Except as
unanimously approved by the Board, Options to be issued under the Plan shall be
subject to a minimum four (4) year vesting schedule calling for vesting no
faster than the following, counting from the
applicable grant date with respect to the total issued Options: fifty percent (50%) at the end of  twenty-four (24) months, twenty-five percent
(25%) each at the end of  thirty-six (36)
months and forty-eight (48) months, respectively.


 


19.   Drag-Along Event and Trade Sale.  The Award Agreement shall include a provision whereby in the event of a
Drag-Along Event or a Trade Sale, the Grantees who hold
any Shares upon exercise of the Award shall sell, transfer, convey or assign
all of their Shares pursuant to, and so as to give effect to, the Drag-Along
Event or the Trade
Sale, and each of such Grantees shall grant to the
then current chief executive officer of the Company or an authorized officer, a
power of attorney to transfer his/her Shares and to do and carry out all other
acts and to sign all other documents that are necessary or advisable to
complete the Drag-Along Event or the Trade Sale.


 


16

















 


20.   Qualified IPO.   The Award Agreement shall include a provision
whereby in the case of a Qualified IPO, the Grantees shall enter into any
agreements with any underwriter, coordinator, bankers or sponsor elected by the
Company for the purpose of the Qualified IPO, and each of such Grantees shall
grants to the then current chief executive officer or other authorized officer
of the Company a power of attorney to enter into any agreements with any
underwriter, coordinator, bankers or sponsor elected by the Company and to do
and carry out all the acts and to sign all the documents that are necessary or
advisable to complete the Qualified IPO.


 


21.   Service with Competitor. Notwithstanding Section 8(b), in the
event of a Grantee serves as the director, officer, employee (whether full time
or part time), shareholder, representative or agent of a Competitor (the “Service
with Competitor”) after termination of the Grantee’s Continuous Service, with
or without Cause, the Grantee’s right to exercise the Option shall terminate immediately
upon the date of the Service with Competitor, except as otherwise determined by
the Administrator, and the Company shall have rights to repurchase all vested
options and exercised Shares held by the Grantee at a discount price determined
by the Administrator.


 


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


 


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


 


17