**EXHIBIT10.1**

 

**MONACOCOACH CORPORATION**

 

**1993INCENTIVE STOCK OPTION PLAN**

 

(as amended May 16, 2002)

 

# 1.             Purposesof the Plan.  The purposes of thisStock Plan are:

 

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

 

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

 

•                                          to promote the success of the Company’sbusiness.

 

Options grantedunder the Plan may be Incentive Stock Options or Nonstatutory Stock Options, asdetermined by the Administrator at the time of grant.  Stock Purchase Rights may also be granted under the Plan.

 

# 2.             Applicabilityof May 2002 Amendments.  Options or,as the case may be, Restricted Stock granted on or prior May 16, 2002 shall notbe subject to Section 11(e) of the Plan. Options or, as the case may be, Restricted Stock granted subsequent toMay 16, 2002 shall be Subject to Section 11(e) of the Plan.

 

# 3.             Definitions.  As used herein, the following definitionsshall apply:

 

# (a)           “Administrator”means the Board or any of its Committees as shall be administering the Plan, inaccordance with Section 5 of the Plan.

 

# (b)           “ApplicableLaws” means the requirements relating to the administration of stock optionplans under U.S. state corporate laws, U.S. federal and state securities laws,the Code, any stock exchange or quotation system on which the Common Stock islisted or quoted and the applicable laws of any foreign country or jurisdictionwhere Options or Stock Purchase Rights are, or will be, granted under the Plan.

 

# (c)           “Board”means the Board of Directors of the Company.

 

# (d)           “Changein 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 thenoutstanding voting securities; or

 

### (ii)           Theconsummation of the sale or disposition by the Company of all or substantiallyall of the Company’s assets;

 

----

 

### (iii)          Achange in the composition of the Board occurring within a two-year period, as aresult of which fewer than a majority of the directors are IncumbentDirectors.  “Incumbent Directors” meansdirectors who either (A) are Directors as of the effective date of thePlan, or (B) are elected, or nominated for election, to the Board with theaffirmative votes of at least a majority of the Incumbent Directors at the timeof such election or nomination (but will not include an individual whoseelection or nomination is in connection with an actual or threatened proxycontest relating to the election of directors to the Company); or

 

### (iv)          Theconsummation of a merger or consolidation of the Company with any othercorporation, other than a merger or consolidation which would result in thevoting securities of the Company outstanding immediately prior theretocontinuing to represent (either by remaining outstanding or by being convertedinto voting securities of the surviving entity or its parent) at least fiftypercent (50%) of the total voting power represented by the voting securities ofthe Company or such surviving entity or its parent outstanding immediatelyafter such merger or consolidation.

 

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

 

# (f)            “Committee”means a committee of Directors appointed by the Board in accordance withSection 5 of the Plan.

 

# (g)           “CommonStock” means the common stock of the Company.

 

# (h)           “Company”means Monaco Coach Corporation, a Delaware corporation.

 

# (i)            “Consultant”means any natural person, including an advisor, engaged by the Company or aParent or Subsidiary to render services to such entity.

 

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

 

# (k)           “Disability”means total and permanent disability as defined in Section 22(e)(3) of theCode.

 

(l)            “Employee” means any person,including Officers and Directors, employed by the Company or any Parent orSubsidiary of the Company.  A ServiceProvider shall not cease to be an Employee in the case of (i) any leave ofabsence approved by the Company or (ii) transfers between locations of theCompany or between the Company, its Parent, any Subsidiary, or anysuccessor.  For purposes of IncentiveStock Options, no such leave may exceed ninety days, unless reemployment uponexpiration of such leave is guaranteed by statute or contract.  If reemployment upon expiration of a leaveof absence approved by the Company is not so guaranteed, then three (3) monthsfollowing the 91st day of such leave any Incentive Stock Option held by theOptionee shall cease to be treated as an Incentive Stock Option and shall betreated for tax purposes as a Nonstatutory Stock Option.  Neither service as a Director nor payment ofa director’s fee by the Company shall be sufficient to constitute “employment”by the Company.

 

# (m)          “ExchangeAct” means the Securities Exchange Act of 1934, as amended.

 

# (n)           “FairMarket Value” means, as of any date, the value of Common Stock deter­minedas follows:

 

### (i)            Ifthe Common Stock is listed on any estab­lished stock exchange or a nationalmarket system, including without limitation the Nasdaq National Market or TheNasdaq SmallCap

###  

2

----

 

### Market of The Nasdaq Stock Market, its Fair MarketValue shall be the closing sales price for such stock (or the closing bid, ifno sales were reported) as quoted on such exchange or system on the day ofdetermination, as reported in *The Wall Street Journal* or such othersource as the Administrator deems reliable;

 

### (ii)           Ifthe Common Stock is regularly quoted by a recognized securities dealer butselling prices are not reported, the Fair Market Value of a Share of CommonStock shall be the mean between the high bid and low asked prices for theCommon Stock on the day of deter­mination, as reported in *The Wall Street Journal* orsuch other source as the Administrator deems reliable; or

 

### (iii)          Inthe absence of an established market for the Common Stock, the Fair MarketValue shall be determined in good faith by the Administrator.

 

## (o)           “IncentiveStock Option” means an Option intended to qualify as an incentive stockoption within the meaning of Section 422 of the Code and the regulationspromulgated thereunder.

 

## (p)           “NonstatutoryStock Option” means an Option not intended to qualify as an Incentive StockOption.

 

## (q)           “Noticeof Grant” means a written or electronic notice evidencing certain terms andconditions of an individual Option or Stock Purchase Right grant.  The Notice of Grant is part of the OptionAgreement.

 

## (r)            “Officer”means a person who is an officer of the Company within the meaning ofSection 16 of the Exchange Act and the rules and regulations promulgatedthereunder.

 

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

 

## (t)            “OptionAgreement” means an agreement between the Company and an Optioneeevidencing the terms and conditions of an individual Option grant.  The Option Agreement is subject to the termsand conditions of the Plan.

 

## (u)           “OptionExchange Program” means a program whereby outstanding Options aresurrendered in exchange for other Options.

##  

## (v)           “OptionedStock” means the Common Stock subject to an Option or Stock Purchase Right.

##  

## (w)          “Optionee”means the holder of an outstanding Option or Stock Purchase Right granted underthe Plan.

##  

## (x)            “Parent”means a “parent corporation,” whether now or hereafter existing, as defined inSection 424(e) of the Code.

##  

## (y)           “Plan”means this1992 Incentive Stock Option Plan, as amended.

##  

## (z)            “RestrictedStock” means shares of Common Stock acquired pursuant to a grant of StockPurchase Rights under Section 12 of the Plan.

##  

## (aa)         “RestrictedStock Purchase Agreement” means a written agreement between the Company andthe Optionee evidencing the terms and restrictions applying to stock purchasedunder a Stock 

##  

3

----

 

## Purchase Right. The Restricted Stock Purchase Agreement is subject to the terms andconditions of the Plan and the Notice of Grant.

##  

## (bb)         “Retirement”means a Service Provider who retires from the Company on or after age sixty-two(62) and such Service Provider has at least five (5) years of service with theCompany at the date of retirement; provided, that, the Administrator,notwithstanding the foregoing, has the discretion to determine when a ServiceProvider retires so long as such determination is not less favorable thanprovided for in the foregoing definition.

##  

## (cc)         “Rule16b-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.

##  

## (dd)         “Section 16(b)“ means Section 16(b) of the Exchange Act.

##  

## (ee)         “ServiceProvider” means an Employee, Director or Consultant.

##  

## (ff)           “Share”means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan.

##  

## (gg)         “StockPurchase Right” means the right to purchase Common Stock pursuant toSection 12 of the Plan, as evidenced by a Notice of Grant.

##  

## (hh)         “Subsidiary”means a “subsidiary corporation”, whether now or hereafter exist­ing, asdefined in Section 424(f) of the Code.

##  

# 4.             Stock Subject to the Plan.  Subject to the provisions of Section 14 of the Plan, the maximum aggregatenumber of Shares that may be optioned and sold under the Plan is 3,257,813 Shares.  The Shares may be authorized, but unissued,or reacquired Common Stock.

#  

If an Option or StockPurchase Right expires or becomes unexercisable without having been exercisedin full, or is surrendered pursuant to an Option Exchange Program, theunpurchased Shares which were subject thereto shall become available for futuregrant or sale under the Plan (unless the Plan has terminated); provided,however, that Shares that have actually been issued under the Plan, whether uponexercise of an Option or Right, shall not be returned to the Plan and shall notbecome available for future distribution under the Plan, except that if Sharesof Restricted Stock are repurchased by the Company at their original purchaseprice, such Shares shall become available for future grant under the Plan.

 

# 5.             Administrationof the Plan.

#  

(a)           Procedure.

##  

### (i)            MultipleAdministrative Bodies.  DifferentCommittees with respect to different groups of Service Providers may administerthe Plan.

###  

### (ii)           Section 162(m).  To the extent that the Administratordetermines it to be desirable to qualify Options granted hereunder as“performance-based compensation” within the meaning of Section 162(m) ofthe Code, the Plan shall be administered by a Committee of two or more “outsidedirectors” within the meaning of Section 162(m) of the Code.

###  

4

----

 

### (iii)          Rule16b-3.  To the extent desirable toqualify transactions hereunder as exempt under Rule 16b-3, the transactionscontemplated hereunder shall be structured to satisfy the requirements forexemption under Rule 16b-3.

###  

### (iv)          OtherAdministration.  Other than asprovided above, the Plan shall be administered by (A) the Board or (B) aCommittee, which committee shall be constituted to satisfy Applicable Laws.

###  

(b)           Powers of the Administrator.  Subject to the provisions of the Plan, andin the case of a Committee, subject to the specific duties delegated by theBoard to such Committee, the Administrator shall have the authority, in itsdiscre­tion:

##  

### (i)            todetermine the Fair Market Value;

###  

### (ii)           toselect the Service Providers to whom Options and Stock Purchase Rights may begranted hereunder;

###  

### (iii)          todetermine the number of shares of Common Stock to be covered by each Option andStock Purchase Right granted hereunder;

###  

### (iv)          toapprove forms of agreement for use under the Plan;

###  

### (v)           todetermine the terms and conditions, not inconsistent with the terms of thePlan, of any Option or Stock Purchase Right granted hereunder.  Such terms and conditions include, but arenot limited to, the exercise price, the time or times when Options or StockPurchase Rights may be exercised (which may be based on performance criteria),any vesting acceleration or waiver of forfeiture restrictions, and anyrestriction or limitation regarding any Option or Stock Purchase Right or theshares of Common Stock relating thereto, based in each case on such factors asthe Administrator, in its sole discretion, shall determine;

###  

### (vi)          toreduce the exercise price of any Option or Stock Purchase Right to the thencurrent Fair Market Value if the Fair Market Value of the Common Stock coveredby such Option or Stock Purchase Right shall have declined since the date theOption or Stock Purchase Right was granted;

###  

### (vii)         toinstitute an Option Exchange Program;

###  

### (viii)        toconstrue and interpret the terms of the Plan and awards granted pursuant to thePlan;

###  

### (ix)           toprescribe, amend and rescind rules and regulations relating to the Plan,including rules and regulations relating to sub-plans established for thepurpose of satisfying applicable foreign laws;

###  

### (x)            tomodify or amend each Option or Stock Purchase Right (subject to Section 16(c) of the Plan), including thediscretionary authority to extend the post-termination exercisability period ofOptions longer than is otherwise provided for in the Plan;

###  

### (xi)           toallow Optionees to satisfy withholding tax obligations by electing to have theCompany withhold from the Shares to be issued upon exercise of an Option orStock Purchase Right that number of Shares having a Fair Market Value equal tothe minimum amount required to be withheld. The

###  

5

----

 

### Fair Market Value of the Shares to be withheld shallbe determined on the date that the amount of tax to be withheld is to bedetermined.  All elections by anOptionee to have Shares withheld for this purpose shall be made in such formand under such conditions as the Administrator may deem necessary or advisable;

###  

### (xii)          toauthorize any person to execute on behalf of the Company any instru­mentrequired to effect the grant of an Option or Stock Purchase Right previouslygranted by the Administrator;

###  

### (xiii)         tomake all other determinations deemed necessary or advisable for administeringthe Plan.

###  

## (c)           Effect ofAdministrator’s Decision.  TheAdministrator’s decisions, determina­tions and interpretations shall be finaland binding on all Optionees and any other holders of Options or Stock PurchaseRights.

##  

# 6.             Eligibility.  Nonstatutory Stock Options and StockPurchase Rights may be granted to Service Providers.  Incentive Stock Options may be granted only to Employees.

#  

# 7.             Limitations.

#  

## (a)           EachOption shall be designated in the Option Agreement as either an Incentive StockOption or a Nonstatutory Stock Option. However, notwithstanding such designa­tion, to the extent that theaggregate Fair Market Value of the Shares with respect to which Incentive StockOptions are exercisable for the first time by the Optionee during any calendaryear (under all plans of the Company and any Parent or Subsidiary) exceeds$100,000, such Options shall be treated as Nonstatutory Stock Options.  For purposes of this Section 7(a),Incentive Stock Options shall be taken into account in the order in which theywere granted.  The Fair Market Value ofthe Shares shall be determined as of the time the Option with respect to suchShares is granted.

##  

## (b)           Neitherthe Plan nor any Option or Stock Purchase Right shall confer upon an Optioneeany right with respect to continuing the Optionee’s relationship as a ServiceProvider with the Company, nor shall they interfere in any way with theOptionee’s right or the Company’s right to terminate such relationship at anytime, with or without cause.

##  

## (c)           Thefollowing limitations shall apply to grants of Options:

##  

### (i)            NoService Provider shall be granted, in any fiscal year of the Company, Optionsto purchase more than 100,000 Shares.

###  

### (ii)           Theforegoing limitations shall be adjusted proportionately in connection with anychange in the Company’s capitalization as described in Section 14.

###  

### (iii)          Ifan Option is cancelled in the same fiscal year of the Company in which it wasgranted (other than in connection with a transaction described in Section 14), the cancelled Option will becounted against the limits set forth in subsections (i) and (ii) above.  For this purpose, if the exercise price ofan Option is reduced, the transaction will be treated as a cancellation of theOption and the grant of a new Option.

###  

# 8.             Termof Plan.  Subject to Section 20****of the Plan, the Plan shall becomeeffective upon its adoption by the Board. It shall continue in effect for a term of ten (10) years unlessterminated earlier under Section 16****ofthe Plan.

#  

6

----

 

# 9.             Termof Option.  The term of each Optionshall be stated in the Option Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)years from the date of grant or such shorter term as may be provided in theOption Agreement.  Moreover, in the caseof an Incentive Stock Option granted to an Optionee who, at the time theIncentive Stock Option is granted, owns stock representing more than tenpercent (10%) of the total combined voting power of all classes of stock of theCompany or any Parent or Subsidiary, the term of the Incentive Stock Optionshall be five (5) years from the date of grant or such shorter term as may beprovided in the Option Agreement.

#  

# 10.           OptionExercise Price and Consideration.

#  

## (a)           ExercisePrice.  The per share exercise pricefor the Shares to be issued pursuant to exercise of an Option shall bedetermined by the Administrator, subject to the following:

##  

### (i)            Inthe case of an Incentive Stock Option

###  

#### (A)          grantedto an Employee who, at the time the Incentive Stock Option is granted, ownsstock representing more than ten percent (10%) of the voting power of allclasses of stock of the Company or any Parent or Subsidiary, the per Shareexercise price shall be no less than 110% of the Fair Market Value per Share onthe date of grant.

####  

#### (B)           grantedto any Employee other than an Employee described in paragraph (A) immediatelyabove, the per Share exercise price shall be no less than 100% of the FairMarket Value per Share on the date of grant.

####  

### (ii)           Inthe case of a Nonstatutory Stock Option, the per Share exercise price shall bedetermined by the Administrator.  In thecase of a Nonstatutory Stock Option intended to qualify as “performance-basedcompensation” within the meaning of Section 162(m) of the Code, the perShare exercise price shall be no less than 100% of the Fair Market Value perShare on the date of grant.

###  

### (iii)          Notwithstandingthe foregoing, Options may be granted with a per Share exercise price of lessthan 100% of the Fair Market Value per Share on the date of grant pursuant to amerger or other corporate transaction.

###  

## (b)           WaitingPeriod and Exercise Dates.  At thetime an Option is granted, the Administrator shall fix the period within whichthe Option may be exercised and shall determine any con­ditions that must besatisfied before the Option may be exercised.

##  

## (c)           Formof Consideration.  The Administratorshall determine the acceptable form of consideration for exercising an Option,including the method of payment.  In thecase of an Incentive Stock Option, the Administrator shall determine theacceptable form of consideration at the time of grant.  Such consideration may consist entirely of:

##  

### (i)            cash;

###  

### (ii)           check;

###  

### (iii)          promissorynote;

###  

### (iv)          otherShares which, in the case of Shares acquired directly or indirectly from theCompany, (A) have been owned by the Optionee for more than six (6)months on the date of surrender,

###  

7

----

 

and (B) have a FairMarket Value on the date of surrender equal to the aggregate exercise price ofthe Shares as to which said Option shall be exercised;

###  

### (v)           considerationreceived by the Company under a cashless exercise program implemented by theCompany in connection with the Plan;

###  

### (vi)          areduction in the amount of any Company liability to the Optionee, including anyliability attributable to the Optionee’s participation in any Company-sponsoreddeferred compensation program or arrangement;

###  

### (vii)         anycombination of the foregoing methods of payment; or

###  

### (viii)        suchother consideration and method of payment for the issuance of Shares to theextent permitted by Applicable Laws.

###  

# 11.           Exerciseof Option.

#  

## (a)           Procedurefor Exercise; Rights as a Stockholder. Any Option granted here­under shall be exercisable according to theterms of the Plan and at such times and under such conditions as determined bythe Administrator and set forth in the Option Agreement.  Unless the Administrator provides otherwise,vesting of Options granted hereunder shall be suspended during any unpaid leaveof absence.  An Option may not beexercised for a fraction of a Share.

##  

An Option shall be deemed exercised when the Companyreceives: (i) written or electronic notice of exercise (in accordance withthe Option Agreement) from the person entitled to exercise the Option, and(ii) full payment for the Shares with respect to which the Option isexercised.  Full payment may consist ofany consideration and method of payment authorized by the Administrator andpermitted by the Option Agreement and the Plan.  Shares issued upon exercise of an Option shall be issued in thename of the Optionee or, if requested by the Optionee, in the name of theOptionee and his or her spouse.  Untilthe Shares are issued (as evidenced by the appropriate entry on the books ofthe Company or of a duly authorized transfer agent of the Company), no right tovote or receive dividends or any other rights as a stockholder shall exist withrespect to the Optioned Stock, notwithstanding the exercise of the Option.  The Company shall issue (or cause to beissued) such Shares promptly after the Option is exercised.  No adjustment will be made for a dividend orother right for which the record date is prior to the date the Shares areissued, except as provided in Section 14****of the Plan.

 

Exercisingan Option in any manner shall decrease the number of Shares thereafteravailable, both for purposes of the Plan and for sale under the Option, by thenumber of Shares as to which the Option is exercised.

 

## (b)           Terminationof Relationship as a Service Provider. If an Optionee ceases to be a Service Provider, other than upon theOptionee’s death, Disability, or Retirement the Optionee may exercise his orher Option within such period of time as is specified in the Option Agreementto the extent that the Option is vested on the date of termination (but in noevent later than the expiration of the term of such Option as set forth in theOption Agreement).  In the absence of aspecified time in the Option Agreement, the Option shall remain exercisable forthree (3) months following the Optionee’s termination.  If, on the date of termination, the Optioneeis not vested as to his or her entire Option, the Shares covered by theunvested portion of the Option shall revert to the Plan.  If, after termination, the Optionee does notexercise his or her Option within the time specified by the Administrator, theOption shall terminate, and the Shares covered by such Option shall revert tothe Plan.

 

8

----

 

## (c)           Disabilityof Optionee.  If an Optionee ceasesto be a Service Provider as a result of the Optionee’s Disability, the Optiongranted hereunder to such Optionee shall become vested and exercisable for thefull number of Shares covered by the Option. The Optionee may exercise his or her Option at any time within twelve(12) months from the date of such termination (but in no event later than theexpiration of the term of such Option as set forth in the Notice ofGrant).  If, after termination, theOptionee does not exercise his or her Option within the time specified herein,the Option shall terminate, and the Shares covered by such Option shall revertto the Plan.

##  

## (d)           Deathof Optionee.  If an Optionee dieswhile a Service Provider, the Option shall become vested and exercisable forthe full number of Shares covered by the Option.  The Option held by the Optionee at the time of death may beexercised at any time within twelve (12) months following the date of death ofOptionee by the Optionee’s designated beneficiary, provided such beneficiaryhas been designated prior to Optionee’s death in a form acceptable to theAdministrator.  In no event shall anOption be exercised later than the expiration of the term of the Option, as setforth in the Option Agreement.  If nosuch beneficiary has been designated by the Optionee, then such Option may beexercised by the personal representative of the Optionee’s estate or by theperson(s) to whom the Option is transferred pursuant to the Optionee’s will orin accordance with the laws of descent and distribution.  If the Option is not so exercised within thetime specified herein, the Option shall terminate, and the Shares covered bysuch Option shall revert to the Plan.

##  

## (e)           Retirementof Optionee.  In the event of an Optionee’sRetirement while a Service Provider, the Option shall become vested andexercisable for the full number of Shares covered by the Option.  The Option held by the Optionee at the timeof Retirement may be exercised at any time within twelve (12) months followingthe date of Retirement; provided, however, that (i) this subsection (e) shallnot apply to grants made on or before May 16, 2002, and (ii) this subsection(e) shall apply to grants made on or after May 17, 2002.  In no event shall an Option be exercisedlater than the expiration of the term of the Option, as set forth in the OptionAgreement.  If the Option is not soexercised within the time specified herein, the Option shall terminate, and theShares covered by such Option shall revert to the Plan.

##  

# 12.           StockPurchase Rights.

#  

## (a)           Rightsto Purchase.  Stock Purchase Rightsmay be issued either alone, in addition to, or in tandem with other awardsgranted under the Plan and/or cash awards made outside of the Plan.  After the Administrator determines that itwill offer Stock Purchase Rights under the Plan, it shall advise the offeree inwriting or electronically, by means of a Notice of Grant, of the terms,conditions and restrictions related to the offer, includ­ing the number ofShares that the offeree shall be entitled to purchase, the price to be paid,and the time within which the offeree must accept such offer.  The offer shall be accepted by execution ofa Restricted Stock Purchase Agreement in the form determined by theAdministrator.

##  

## (b)           RepurchaseOption.  Unless the Administratordetermines otherwise, the Restricted Stock Purchase Agreement shall grant theCompany a repurchase option exercisable upon the voluntary or involuntarytermination of the purchaser’s service with the Company for any reason(including death or Disability).  Thepurchase price for Shares repurchased pursuant to the Restricted Stock PurchaseAgreement shall be the original price paid by the purchaser and may be paid bycancellation of any indebtedness of the purchaser to the Company.  The repurchase option shall lapse at a ratedetermined by the Administrator.

##  

## (c)           OtherProvisions.  The Restricted StockPurchase Agreement shall contain such other terms, provisions and conditionsnot inconsistent with the Plan as may be determined by the Administrator in itssole discretion.

##  

9

----

 

## (d)           Rightsas a Stockholder.  Once the StockPurchase Right is exercised, the purchaser shall have the rights equivalent tothose of a stockholder, and shall be a stockholder when his or her purchase isentered upon the records of the duly authorized transfer agent of theCompany.  No adjustment will be made fora dividend or other right for which the record date is prior to the date the StockPurchase Right is exercised, except as provided in Section 14 of the Plan.

##  

# 13.           Transferabilityof Options and Stock Purchase Rights.  Unlessdetermined otherwise by the Administrator, an Option or Stock Purchase Rightmay not be sold, pledged, assigned, hypothecated, transferred, or disposed ofin any manner other than by will or by the laws of descent or distribution andmay be exercised, during the lifetime of the Optionee, only by theOptionee.  If the Administrator makes anOption or Stock Purchase Right transferable, such Option or Stock PurchaseRight shall contain such additional terms and conditions as the Administratordeems appropriate.

#  

# 14.           AdjustmentsUpon Changes in Capitalization, Merger or Change in Control.

#  

## (a)           Changesin Capitalization.  Subject to anyrequired action by the stockholders of the Company, the number of shares ofCommon Stock that have been authorized for issuance under the Plan but as towhich no Options or Stock Purchase Rights have yet been granted or which havebeen returned to the Plan upon cancellation or expiration of an Option or StockPurchase Right and the number of shares of Common Stock as well as the priceper share of Common Stock covered by each such outstanding Option or StockPurchase Right, shall be proportionately adjusted for any increase or decreasein the number of issued shares of Common Stock resulting from a stock split,reverse stock split, stock dividend, combination or reclassification of theCommon Stock, or any other increase or decrease in the number of issued sharesof Common Stock effected without receipt of consideration by the Company;provided, however, that conversion of any convertible securities of the Companyshall not be deemed to have been “effected without receipt of consideration.”  Such adjustment shall be made by the Board,whose determination in that respect shall be final, binding andconclusive.  Except as expresslyprovided herein, no issuance by the Company of shares of stock of any class, orsecurities convertible into shares of stock of any class, shall affect, and noadjust­ment by reason thereof shall be made with respect to, the number orprice of shares of Common Stock subject to an Option or Stock Purchase Right.

##  

## (b)           Dissolutionor Liquidation.  In the event of theproposed dissolution or liquida­tion of the Company, the Administrator shallnotify each Optionee as soon as practicable prior to the effective date of suchproposed transaction.  The Administratorin its discretion may provide for an Optionee to have the right to exercise hisor her Option until ten (10) days prior to such transaction as to all of theOptioned Stock covered thereby, including Shares as to which the Option wouldnot otherwise be exercisable.  Inaddition, the Administrator may provide that any Company repurchase optionapplicable to any Shares purchased upon exercise of an Option or Stock PurchaseRight shall lapse as to all such Shares, provided the proposed dissolution orliquidation takes place at the time and in the manner contemplated.  To the extent it has not been previouslyexercised, an Option or Stock Purchase Right will terminate immediately priorto the consummation of such proposed action.

##  

## (c)           Mergeror Change in Control.  In the eventof a merger of the Company with or into another corporation, or a Change inControl, each outstanding Option and Stock Purchase Right shall be assumed oran equivalent option or right substituted by the successor corporation or aParent or Subsidiary of the successor corporation.

##  

In the event that thesuccessor corporation refuses to assume or substitute for the Option or StockPurchase Right, the Optionee shall fully vest in and have the right to exercisethe Option or Stock Purchase Right as to all of the Optioned Stock, includingShares as to which it would not otherwise be vested or

 

10

----

 

exercisable.  If an Option or Stock Purchase Right becomesfully vested and exercisable in lieu of assumption or substitution in the eventof a merger or sale of assets, the Administrator shall notify the Optionee inwriting or electronically that the Option or Stock Purchase Right shall befully vested and exercisable for a period of fifteen (15) days from the date ofsuch notice, and the Option or Stock Purchase Right shall terminate upon theexpiration of such period.

 

Forthe purposes of this subsection (c), the Option or Stock Purchase Right shallbe considered assumed if, following the merger or Change in Control, the optionor right confers the right to purchase or receive, for each Share of OptionedStock subject to the Option or Stock Purchase Right immediately prior to themerger or Change in Control, the consideration (whether stock, cash, or othersecurities or property) received in the merger or Change in Control by holdersof Common Stock for each Share held on the effective date of the transaction(and if holders were offered a choice of consideration, the type ofconsideration chosen by the holders of a majority of the outstanding Shares);provided, however, that if such consideration received in the merger or Changein Control is not solely common stock of the successor corporation or itsParent, the Administrator may, with the consent of the successor corporation,provide for the consideration to be received upon the exercise of the Option orStock Purchase Right, for each Share of Optioned Stock subject to the Option orStock Purchase Right, to be solely common stock of the successor corporation orits Parent equal in fair market value to the per share consideration receivedby holders of Common Stock in the merger or Change in Control.

 

# 15.           Dateof Grant.  The date of grant of anOption or Stock Purchase Right shall be, for all purposes, the date on whichthe Administrator makes the determination granting such Option or StockPurchase Right, or such other later date as is determined by theAdministrator.  Notice of thedetermination shall be provided to each Optionee within a reasonable time afterthe date of such grant.

#  

# 16.           Amendmentand Termination of the Plan.

#  

## (a)           Amendmentand Termination.  The Board may atany time amend, alter, suspend or terminate the Plan.

##  

## (b)           StockholderApproval.  The Company shall obtainstockholder approval of any Plan amendment to the extent necessary anddesirable to comply with Applicable Laws.

##  

## (c)           Effectof Amendment or Termination.  Noamendment, alteration, suspension or termination of the Plan shall impair therights of any Optionee, unless mutually agreed otherwise between the Optioneeand the Administrator, which agreement must be in writing and signed by theOptionee and the Company.  Terminationof the Plan shall not affect the Administrator’s ability to exercise the powersgranted to it hereunder with respect to Options granted under the Plan prior tothe date of such termination.

##  

# 17.           ConditionsUpon Issuance of Shares.

#  

## (a)           LegalCompliance.  Shares shall not beissued pursuant to the exercise of an Option or Stock Purchase Right unless theexercise of such Option or Stock Purchase Right and the issuance and deliveryof such Shares shall comply with Applicable Laws and shall be further subjectto the approval of counsel for the Company with respect to such compliance.

##  

## (b)           InvestmentRepresentations.  As a condition tothe exercise of an Option or Stock Purchase Right, the Company may require theperson exercising such Option or Stock Purchase Right to represent and warrantat the time of any such exercise that the Shares are being purchased only forinvestment

##  

11

----

 

## and without any present intention to sell ordistribute such Shares if, in the opinion of counsel for the Company, such arepresentation is required.

##  

# 18.           Inabilityto Obtain Authority.  The inabilityof the Company to obtain authority from any regulatory body havingjurisdiction, which authority is deemed by the Company’s counsel to benecessary to the lawful issuance and sale of any Shares hereunder, shallrelieve the Company of any liability in respect of the failure to issue or sellsuch Shares as to which such requisite authority shall not have been obtained.

#  

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

#  

# 20.           StockholderApproval.  The Plan shall be subjectto approval by the stockholders of the Company within twelve (12) months afterthe date the Plan is adopted.  Suchstockholder approval shall be obtained in the manner and to the degree requiredunder Applicable Laws.

 

12

----